Kaiser Aluminum's Sales Jump 44%, But Cost Of Products Sold Eats Nearly All Of The Gain
Adjusted EBITDA rose just $2.7 million as net sales climbed to $1,214.5 million, and full-year profit is now seen toward the low end of guidance.
Kaiser Aluminum's net sales jumped 44% to $1,214.5 million in the third quarter, from $843.5 million a year earlier, yet adjusted EBITDA rose only $2.7 million, the company said in its 10-Q. Management now expects full-year adjusted EBITDA growth toward the lower end of its 45% to 55% target.
Where the sales went
Kaiser, which makes semi-fabricated specialty aluminum mill products for aerospace, packaging, general engineering and automotive customers, saw cost of products sold reach $1,098.8 million, or 90% of net sales. A year earlier it was $728.8 million, or 86%. The prior quarter's filing put the ratio at 84%.
Most of the increase was metal. Hedged cost of alloyed metal rose $282.6 million, of which $227.9 million came from higher hedged metal prices and $54.7 million from higher shipment volume. A further $82.2 million of manufacturing cost growth came from lower scrap utilization, the Bellwood facility's planned partial outage and a new packaging coating line still ramping up.
Net income fell to $31.0 million, or $1.84 a diluted share, from $39.5 million, or $2.38, a year earlier.
A swing in metal timing
Kaiser's model is to pass aluminum costs through to customers, so earnings should come from converting metal into products. Timing gaps can still bite. Adjusted EBITDA included unfavorable metal price lag of about $1.0 million this quarter, against favorable lag of about $28.0 million a year earlier.
The second-quarter filing had credited a $40.4 million drop in manufacturing costs to favorable metal consumption, and adjusted EBITDA was $98.6 million above the year-ago level. Adjusted EBITDA was $84.0 million this quarter, against $81.3 million.
Volume helped: shipments rose 11% to 300.2 million pounds, with Aero/HS Products up 42% and net sales in packaging up 43%. Automotive extrusions shipments fell 15%.
A lower-end outlook
The 10-Q holds the 45% to 55% adjusted EBITDA growth outlook but now points to its lower end, blaming outages, execution, year-end customer inventory alignment and metal headwinds. Conversion revenue growth is still expected toward the high end of a 10% to 15% outlook. The second-quarter filing had said Kaiser was well positioned, with demand strengthening.
Liquidity improved: cash was $117.3 million and total liquidity $687.2 million at September 30, with no revolver borrowings. Receivables tied to customer supply chain financing programs covered about 31% of net sales in the quarter. Shares closed at $114.99 on Thursday, for a market value of about $2.5 billion.
Fred Stephan succeeds Keith Harvey as chief executive on November 1, the company said in its earnings release.
Kaiser's next quarterly report will show whether adjusted EBITDA growth lands at the low end of the 45% to 55% range.
Sources
- 10-Q Filing — Kaiser Aluminum (KALU) — SEC EDGAR
- 10-Q Filing — Kaiser Aluminum (KALU), Q2 FY2026 filed 2026-07-23 (comparison basis) — SEC EDGAR
- Earnings release (8-K Item 2.02, kalu-ex99_1.htm) — Kaiser Aluminum, filed 2026-10-21 — SEC EDGAR
- Kaiser Aluminum (KALU) Misses Q3 Earnings Estimates — Yahoo Finance
- 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
- Kaiser: Q3 Earnings Snapshot – WTOP News — wtop.com
- Kaiser: Q3 Earnings Snapshot | 9news.com — Associated Press
