Kaiser Aluminum CEO Says Bellwood Restart 'Didn't Handle' Well, Steers Profit To Low End Of Outlook
Keith Harvey, retiring after 46 years, calls demand the strongest he has seen while shading 2026 adjusted EBITDA toward the low end.
Kaiser Aluminum, which makes specialty aluminum plate, sheet, extrusions and can-packaging products, now expects 2026 adjusted EBITDA growth toward the low end of its roughly 45% outlook, Chairman, President and CEO Keith Harvey said on the company's third-quarter earnings call. Harvey also conceded the company stumbled bringing its Bellwood automotive line back online after a major outage.
A restart that went poorly
Pressed by a Wells Fargo analyst on why the outlook slipped when outages and scrap costs had been anticipated, Harvey pointed to Bellwood. The major outage there had effects on coming back online, he said, adding: "We didn't handle that extremely well."
He also defended the company's earlier warning: "We probably blew everyone's expectations away in the first half and nobody believed us for the second half." Harvey said the lower-end view reflects second-half outages, execution performance, customer year-end inventory alignments and metal-related headwinds.
An analyst asked about the phrase "execution performance," which the analyst said is not what Kaiser usually says. Harvey replied that furnace and casting-house outages forced the company to forgo scrap and buy costlier metal, and said he does not expect that to extend into ongoing quarterly results.
Metal swing and a 640-point margin hit
Third-quarter adjusted EBITDA was $84 million, up $3 million from a year earlier but down $82 million, about 50%, from the second quarter. CFO Neal West said metal price lag cost $1 million, against a $28 million benefit a year earlier. Of the $82 million sequential drop, about $54 million came from tighter scrap spreads, lower scrap use and higher purchased-metal costs, and $28 million from metal price lag.
Higher metal costs and inefficiencies, predominantly the partial Bellwood outage and Roll Coat IV startup costs, equaled about 640 basis points of margin impact, West said. Conversion revenue, the revenue Kaiser earns above metal cost, rose 25% to $439 million. Net income was $31 million, or $1.84 a share, against $40 million, or $2.38, a year earlier.
Kaiser shares fell 21.7% to $120.55 from a prior close of $153.95, according to market data as of 11:41 a.m. ET Thursday.
Demand called the strongest in 46 years
Harvey said bookings extend further into 2027 and that he has not seen demand this strong in any of his 46 years. Packaging shipment growth is now seen at 5% to 10%, down from 10% to 15%, as customers trim year-end inventories; conversion revenue guidance is kept. Automotive shipments are now seen declining 5% to 10%, from 0% to 5%, because of the outage rather than weaker demand.
Asked by a UBS analyst how much of the second-half cost would linger, Harvey said he sees none of it moving into 2027, with no planned Bellwood outages that year. Full-year free cash flow is now expected to exceed $200 million, and net debt leverage improved to two times from 3.4 times at year end.
Succession and the February update
Harvey will become executive chair and advise Fred Steffen, who takes over as CEO on November 1. Harvey said Steffen will lay out plans for meeting the growth in February, when the team returns with an update on the fourth-quarter call.
Kaiser also declared a quarterly dividend of 77 cents a share, announced October 13.
Sources
- EX-99.1 — sec.gov
- Kaiser Aluminum (KALU) Misses Q3 Earnings Estimates — Yahoo Finance
- Kaiser: Q3 Earnings Snapshot – WTOP News — wtop.com
- Kaiser Aluminum Corporation Reports Third Quarter 2026 Financial Results – Company Announcement - FT.com — Financial Times
- Kaiser Aluminum Q3 Adj. EPS $1.89 Misses $2.3... — benzinga.com
