What changed in this filing

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Item 1. Business

2022-03-01 compared with 2021-02-26 · 188 added, 132 removed, 171 unchanged (65% of the section changed)

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(i) aerospace and high strength (“Aero/HS products”);

(ii) automotive (“Automotive Extrusions”);

(iii) general engineering (“GE products”);

and (iv) other industrial (“Other products”).

Our fabricated aluminum mill products include flat-rolled (plate and sheet), extruded (rod, bar, hollows and shapes), drawn (rod, bar, pipe, tube and wire) and certain cast aluminum products.

(ii) beverage and food packaging products (“Packaging”);

(iii) automotive (“Automotive Extrusions”);

(iv) general engineering (“GE products”);

and (v) other industrial (“Other products”).

Our fabricated aluminum mill products include flat-rolled (plate, sheet and coil), extruded (rod, bar, hollows and shapes), drawn (rod, bar, pipe, tube and wire) and certain cast aluminum products.

The sophistication of our products is due to the metallurgy and physical properties of the metal and the special characteristics that are required for particular end uses.

We strategically choose to serve technically challenging applications for which we can deploy our core metallurgical and process technology capabilities to produce highly engineered mill products with differentiated characteristics that present opportunities for us to receive premium pricing and to create long-term profitable growth.

A fundamental part of our business model is to remain neutral to the impact from fluctuations in the market price for aluminum and certain alloys, thereby earning profit predominately from the

conversion of aluminum into semi-fabricated mill products.

We refer to this as “ metal price neutrality.

” See “ Pricing, Metal Price Risk Management and Hedging ” section below for more details.

With respect to the global market for flat-rolled aluminum mill products, our focus is on heat treat plate and sheet for applications that require higher strength and other desired product attributes that cannot be achieved by common alloy rolled products.

The primary end market applications of flat-rolled heat treat plate and sheet are Aero/HS products (which we sell globally) and GE products (which we predominantly sell within North America).

In November 2020, we announced our pending acquisition of Alcoa Warrick LLC and certain assets comprising the aluminum casting and rolling mill facility located in Warrick County, Indiana (collectively, the “Warrick Rolling Mill”).

The Warrick Rolling Mill acquisition serves to expand our flat-rolled product offering to include aluminum sheet produced for demanding end market applications in the beverage and food packaging industry in North America (see “Pending Warrick Rolling Mill Acquisition” below for further details).

Similarly, in the areas of extruded and drawn aluminum mill products, we focus on demanding Aero/HS products, Automotive Extrusions and GE products that require high strength, machinability or other specific properties where we can create and maintain a defensible competitive position because of our technical expertise, strong production capability and high product quality.

On March 31, 2021, with the completion of our acquisition of Alcoa Warrick LLC and certain assets comprising the aluminum casting and rolling mill facility located in Warrick County, Indiana (collectively, “Warrick”), we expanded our flat‑rolled aluminum products to include bare and coated aluminum coil for can stock applications in the beverage and food packaging industry in North America.

Similarly, in the areas of extruded and drawn aluminum mill products, our focus is on Aero/HS products, Automotive Extrusions and GE products for demanding applications that require high strength, machinability or other specific properties where we can create and maintain a defensible competitive position.

We primarily serve North American demand for extruded and drawn aluminum mill products.

Our rolling mill in Spokane, Washington (“Trentwood”) produces heat treat plate and sheet for aerospace and general engineering end market applications.

Our rolling mill in Spokane, Washington (“Trentwood”) produces heat treat plate and sheet for aerospace and general engineering end market applications and our Warrick facility produces bare and coated aluminum coil used for can stock applications in the beverage and food packaging industry.

Our 11 extrusion/drawing facilities, 10 of which are in the United States and one of which is in Canada, serve aerospace, automotive or general engineering applications.

Our newest facility, acquired in 2018 and located in the United States, focuses on multi-material advanced manufacturing methods and techniques which include multi-axis computer numerical control (“CNC”) machining, additive manufacturing (“3D Printing”), welding and fabrication for demanding aerospace and defense, automotive, high tech and general industrial applications.

Our facility located in Columbia, New Jersey focuses on multi-material advanced manufacturing methods and techniques which include multi-axis computer numerical control (“CNC”) machining, additive manufacturing (“3D Printing”), welding and fabrication for demanding aerospace and defense, automotive, high tech and general industrial applications.

In 2021, our consolidated Net sales totaled $2.6 billion on 1,121.6 million pounds shipped from our facilities.

A fundamental part of our business model is to remain neutral to the impact from fluctuations in the market price for aluminum, thereby earning profit predominately from the conversion of aluminum into semi-fabricated mill products.

We refer to this as “metal price neutrality.” We purchase primary and scrap, or recycled, aluminum, our main raw material, at prices that fluctuate on a monthly basis, and our pricing policies generally allow us to pass the underlying cost of metal through to our customers so that we remain neutral to metal pricing.

However, for some of our higher value added revenue products sold on a spot basis, competitive dynamics may limit the amount and/or delay the timing of selling price increases to recover our increased aluminum costs, resulting in a lag up to several months during which we may be exposed to metal price risk.

As a result, we can experience an adverse impact when metal prices increase, and a favorable impact to us when metal prices decline, as we and our competitors tend to defer adjusting pricing unless market dynamics require such in a declining metal cost environment.

We purchase primary and scrap, or recycled, aluminum, our main raw material, and alloys at prices that fluctuate on a monthly basis, and our pricing policies generally allow us to pass the underlying cost of aluminum and alloys through to our customers so that we remain neutral to metal pricing.

However, for some of our higher value added revenue products sold on a spot basis, competitive dynamics may limit the amount and/or delay the timing of selling price increases to recover our increased aluminum and alloy costs, resulting in a lag up to several months during which we may be exposed to metal price risk.

As a result, we can experience an adverse impact when aluminum and alloy prices increase and a favorable impact to us when aluminum and alloy prices decline, as we and our competitors tend to defer adjusting pricing unless market dynamics require such in a declining metal cost environment.

Additionally, we sometimes enter into firm-price customer sales agreements that specify a firm underlying metal price plus a conversion price.

Spot sales with lagged metal price pass through and firm-price sales agreements create metal price exposure for us, which we mitigate through a hedging program with an objective to remain metal price neutral.

We have long-standing relationships with our customers, which consist primarily of blue-chip companies including leading aerospace and automotive manufacturers, tier one aerospace and automotive suppliers and metal service centers.

Spot sales with lagged aluminum and alloy price pass through and firm-price sales agreements create price exposure for us, which we mitigate through hedging and related programs with an objective to remain metal price neutral.

Approximately 71% of our shipments is sold direct to manufacturers or tier one suppliers and approximately 29% is sold to metal service centers.

In our served markets, we seek to be the supplier of choice by pursuing “Best in Class” customer satisfaction driven by quality, availability, service and delivery performance.

We strive to differentiate our product portfolio through our broad product offering and our KaiserSelect ® products, which are engineered and manufactured to deliver enhanced product characteristics with improved consistency, so as to result in better performance, lower waste and, in many cases, lower production cost for our customers.

We believe we differentiate our product portfolio through our broad product offering and our KaiserSelect ® products, which are engineered and manufactured to deliver enhanced product characteristics with improved consistency, so as to result in better performance, lower waste and, in many cases, lower production cost for our customers.

We further strive to enhance the efficiency of product flow to our customers and our status as a supplier of choice by tightly integrating the management of our operations across multiple production facilities, product lines and target markets.

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Using KPS, we seek to continuously reduce our own manufacturing costs and eliminate waste throughout the value chain.

We strive to strengthen our competitive position through strategic capital investments aimed at increasing our capacity and expanding our manufacturing capabilities.

Over the past decade, we have made significant organic investments at our Trentwood rolling mill to more than triple our capacity and have expanded our capabilities to capitalize on the demand growth for heat treat plate in our end markets for Aero/HS products and GE products.

We have also made significant investments to expand capacity and enhance our capabilities across our automotive platform to facilitate sales growth in Automotive Extrusions.

In addition, we have invested, and continue to invest, to enhance manufacturing cost efficiency, to improve product quality and to promote operational security across our platform.

We believe our recent capital projects, which have been focused on further enhancing manufacturing cost efficiency and improving product quality, are critical to maintaining and strengthening our position in an increasingly competitive market environment.

A key component of our business model is to maintain financial strength and flexibility through the business and economic cycles.

We manage and monitor our financial strength through routine analysis of our liquidity position under scenarios of varying business and economic cycles.

We also prioritize our capital allocation toward organic growth, such as efficiencies and quality in each of our end markets, while maintaining a strong balance sheet for inorganic opportunities and market growth potential and providing return to shareholders through dividend and share repurchases.

Details of these capital projects are discussed in Part II, Item 7.

“Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Report under the caption, “Liquidity and Capital Resources.”

Because we recognize that we operate in cyclical markets, another key component of our business model is to maintain financial strength and flexibility through the business and economic cycles to continue to support our strategic growth initiatives and return cash to shareholders.

We manage and monitor our financial strength through routine analysis of our liquidity position under scenarios of varying business and economic cycles.

Pending Warrick Rolling Mill Acquisition

On November 30, 2020, we entered into a purchase agreement with Alcoa Corporation to acquire the Warrick Rolling Mill.

This acquisition will provide us entry into the North American aluminum packaging industry, which is a strong and growing non-cyclical end market driven by sustainability trends and the secular shift from plastic to aluminum in the packaging industry.

We believe the addition of this non‑cyclical end market will be highly complementary to our existing aerospace, automotive and general engineering cyclical end markets and will provide excellent opportunities for long-term growth.

The acquisition of the Warrick Rolling Mill further demonstrates our strategy to serve technically challenging end market applications for which we can deploy our core metallurgical and process technology capabilities to produce highly engineered mill products with differentiated characteristics that present opportunities for us to receive premium pricing and to create long-term profitable growth.

The Warrick Rolling Mill acquisition is subject to a number of closing conditions and there can be no assurance that such conditions will be satisfied or that we will be able to complete the Warrick Rolling Mill acquisition within the planned timeframe or at all.

Our business focuses on producing rolled, extruded and drawn aluminum products used principally for aerospace and defense, automotive and general engineering products that include consumer durables, electronics and products for electrical and machinery and equipment applications.

Our business focuses on producing rolled, extruded and drawn aluminum products used principally for aerospace and defense, aluminum beverage and food packaging, automotive and general engineering products that include consumer durables, electronics and products for electrical and machinery and equipment applications.

Our engineers, metallurgists and sales personnel work collaboratively with our customers to help our customers design products for challenging applications where product performance is critical.

Furthermore, our Centers for Excellence, dedicated research and development centers devoted to product performance enhancement and process development within our production operations, are focused on:

(i) controlling the manufacturing process;

(ii) maximizing the use of recycled aluminum;

(iii) improving product quality;

and (iv) ensuring consistency and enhanced product attributes.

See “ Selected Operational and Financial Information” within Part II, Item 7.

“Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Report for selected shipment and sales information for our fabricated aluminum products by end market application.

We believe aluminum is highly sustainable because it is infinitely recyclable and the recycling process requires significantly less energy compared with the original mining and refining process.

Our highly engineered solutions contribute to reduced carbon emissions by enabling improved performance of consumer products, light‑weighting in applications such as aircraft and transportation for fuel efficiency and increasing the use of recyclable aluminum beverage and food packaging.

Overall, we remain focused on providing products that meet the needs of our customers for demanding applications while being part of the carbon solution for “Best in Class” customer satisfaction.

Aero/HS Products.

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While competing materials such as titanium and composites have displaced aluminum for certain applications on several newer aircraft designs, aluminum continues to be the material used most extensively for structural aerospace and defense applications because it is light weight, can meet demanding performance requirements and is cost effective relative to other materials.

Our Packaging products consist of bare and coated 3000- and 5000-series alloy aluminum coil used in the beverage and food packaging industry, with applications that include coated food stock, coated end and tab stock, body stock and bottle stock.

Our Warrick rolling mill is one of four major aluminum rolling mills currently dedicated to the packaging industry in North America, with one of the world’s largest ingot casting facilities, hot and cold rolling, coated finishing and slitting capacity.

The Warrick rolling mill has a unique capability to produce high-margin coated packaging products representing approximately 62% of our total Packaging shipments.

Automotive Extrusions.

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Other Products.

Other products consist of extruded, drawn and cast billet aluminum products for a variety of North American industrial end uses.

We continue to exit these non-core applications and focus our resources and production capacity on strategic Aero/HS products, Automotive Extrusions and GE products.

Other products consist of rerolled, extruded, drawn and cast billet aluminum products for a variety of North American industrial end uses.

We continue to exit these non-core applications and focus our resources and production capacity on strategic Aero/HS products, Packaging, Automotive Extrusions and GE products.

Sales, Marketing and Distribution

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Sales are made directly to customers by our sales personnel located in the United States, Canada, Western Europe and China and by independent sales agents in other regions of Asia, Latin America and the Middle East.

Our sales and marketing efforts are focused on the markets for Aero/HS products, Automotive Extrusions and GE products.

Our sales and marketing efforts are focused on the markets for Aero/HS products, Packaging, Automotive Extrusions and GE products.

Aero/HS Products.

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Sales are made primarily under long-term agreements, but also on an order-by-order basis.

We serve this market with a North American sales force focused on Aero/HS and GE products and our sales personnel in Western Europe and China.

We serve this market with a North American sales force focused on Aero/HS products and GE products and our sales personnel in Western Europe and China.

Growth in demand for aerospace plate has exceeded demand growth for other forms of Aero/HS products, as aircraft manufacturers have migrated to monolithic component design, where a single piece of aluminum, usually a plate, is heavily machined to form a desired part rather than creating the same part by assembling sub-components made of aluminum sheet, extrusions or forgings that are affixed to one another using rivets, bolts or welds.

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“Risk Factors” included in this Report), we believe the long-term demand for air travel and fuel efficiency will continue to drive long-term growth for our products.

Our Packaging products are sold primarily to North American food packaging manufacturers and beverage can manufacturers and fillers.

Sales are made primarily under long-term agreements by a North American direct sales force.

Aluminum can stock demand is driven by the packaging industry’s shift towards environmentally sustainable materials due to the fact that aluminum is infinitely recyclable and has the highest consumer recycling rate among beverage containers.

Major players have already transitioned some plastic bottled water and carbonated soft drink production to aluminum.

We anticipate further growth will be underpinned by sustainability trends, the secular shift from plastic to aluminum and the fact that North American packaging capacity has been reallocated towards other end markets, including automotive and industrial.

Automotive Extrusions.

Our Automotive Extrusions are sold primarily to tier one automotive suppliers.

Almost all sales of Automotive Extrusions occur through direct channels using a North American direct sales force that works closely with our technical sales support organization.

Almost all sales are made under long-term agreements entered through direct channels using a North American direct sales force that works closely with our technical sales support organization.

Demand for Automotive Extrusions is determined based upon automotive build rates in North America and aluminum content.

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A majority of our GE products are sold to large metal service centers in North America on an order-by-order basis, with orders primarily consisting of standard catalog type items shipped with a relatively short lead-time.

We service this market with a North American sales force focused on GE and Aero/HS products.

We service this market with a North American sales force focused on GE products and Aero/HS products.

Demand for our GE products is closely related to the North America general industrial growth and the recent desire of many companies to lessen their risk of supply chain disruptions by reshoring suppliers and shortening the supply chain.

Demand is also impacted by the destocking and restocking of inventory throughout the supply chain.

In 2020, we had over 680 customers, of which, our two largest customers were Reliance Steel & Aluminum Co.

(“Reliance”) and The Boeing Company (“Boeing”).

While the loss of Reliance or Boeing as customers could have a material adverse effect on us, we believe that our long-standing relationship with each is good and that the risk of losing either as a customer is remote.

In 2021, we had 600 customers, including the following key customers:

(i) Crown Holdings Inc.;

(ii) Ford Motor Company;

(iii) Reliance Steel & Aluminum Co.;

(iv) Silgan Containers Corporation;

and (v) The Boeing Company.

While the loss of any one of these customers could have a material adverse effect on us, we believe that our long-standing relationship with each is good and that the risk of losing any customer is remote.

See Note 17 of Notes to Consolidated Financial Statements included in this Report for information about our significant concentrations.

The fabricated aluminum industry is highly competitive.

We focus our fabricating operations on technically challenging applications for flat-rolled heat treat plate and sheet and extruded/drawn products that allow us to apply our core metallurgical and process technology capabilities to produce highly engineered products with differentiated characteristics.

We seek to further differentiate ourselves from our competitors by providing a broad product offering and striving to deliver “Best in Class” customer satisfaction.

We seek to further differentiate ourselves from our competitors through our ongoing investments to continuously improve the quality and machinability of our products, manufacture and deliver unique

pro duct attributes (KaiserSelect®) and provide a broad product offering while maintain ing a strong customer focus to achieve “Best in Class” status in our markets .

Our primary competitors in the global market for Aero/HS products are Arconic, Inc., Constellium N.V.

and Novelis Inc.

In North America, our primary competitors for Packaging are Arconic, Inc., Constellium N.V., Novelis, Inc.

and Tri-Arrows Aluminum, Inc.

In serving our North American customers for both Automotive Extrusions and GE products, our primary competitors are Arconic, Inc.

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Suppliers must pass a rigorous qualification process to sell to both airframe and automotive manufacturers and must also make significant investments in infrastructure and specialized equipment to supply products for these high strength applications.

Further, sophisticated manufacturing processes make it difficult to

become a qualified supplier, even with proper equipment.

Further, sophisticated manufacturing processes make it difficult to become a qualified supplier, even with proper equipment.

For example, producing heat treat plate and sheet products, particularly for aerospace applications, requires technological expertise that only a few companies have developed through significant investment in research and development and decades of operating experience.

To be a supplier in the packaging market, demanding standards are also required.

Producing coated end, tab and body stock for the can market requires the development of alloys and application of coatings that must pass stringent customer qualifications and be compliant with Food and Drug Administration (“FDA”) regulations.

Our experienced and dedicated research and development team, combined with our Customer Service group, coordinate with coating suppliers, manufacturing operations and our customers to create these alloy and coating systems.

Research and Development

We operate three research and development centers.

Our products are differentiated based on the metallurgy and physical properties of the metal and special characteristics that are required for particular end uses.

A significant amount of our research and development is devoted to product and process development within our production operations, and is largely focused on controlling the manufacturing process to improve product quality, ensure consistency and enhance one or more specific product attributes.

This has resulted in the creation and delivery of our highly differentiated KaiserSelect® products.

We operate four research and development centers.

Our Rolling and Heat Treat Center and our Metallurgical Analysis Center are both located at our Trentwood facility.

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The casting unit is also capable of casting full size billets and ingots for processing on the production extrusion presses and rolling mills.

A significant amount of our research and development is devoted to product and process development within our production operations, largely focused on controlling the manufacturing process to improve product quality, ensure consistency and enhance one or more specific product attributes.

This has resulted in the creation and delivery of our highly differentiated KaiserSelect ® products.

Our fourth center, located in New Kensington, Pennsylvania, is focused on the forming and coating of our packaging products and has the capability on laboratory-scaled equipment to produce beverage end and food cans enabling the evaluation of new coatings and processes for packaging products.

In addition, our packaging research and development center utilizes a scanning electron microscope along with FDA analytical tools to provide technical expertise to our Warrick facility and our packaging customers.

Our Imperial Machine & Tool Co.

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Manufacturing Processes

We use two main processes, flat rolling and extrusion/drawing, to produce our fabricated products in the desired forms and dimensions and with the desired physical properties.

Both processes start by heating aluminum, a rolling ingot or extrusion billet to an elevated temperature at which the metal is malleable and then applying pressure in a manner that both forces the metal into a desired shape and begins the “working” of the metal to enhance its strength and related properties.

We use two main processes, flat rolling and extrusion/drawing, to produce our fabricated products using a cast of alloyed prime and recycled aluminum in the desired forms and dimensions and with the desired physical properties.

Both processes start by heating an aluminum rolling ingot or extrusion billet to an elevated temperature at which the metal is malleable and then applying pressure in

a manner that both forces the metal into a desired shape and begins the “ working ” of the metal to enhance its strength and related properties.

Flat Rolling.

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The ingot is processed through a series of rolling operations that can be done at elevated (hot) or room (cold) temperatures.

Finishing steps may include heat treatment, annealing, stretching, leveling or slitting to achieve the desired metallurgical, dimensional and/or performance characteristics.

Finishing steps may include heat treatment, annealing, stretching, leveling, coating and slitting to achieve the desired metallurgical, dimensional and/or performance characteristics.

Aluminum flat-rolled products are manufactured in a variety of alloys, a range of tempers (hardness), gauges (thickness) and widths and various finishes.

Flat-rolled aluminum semi-finished products are classified as sheet (under 0.25 inches in thickness) or plate (0.25 inches or greater in thickness).

Flat-rolled aluminum semi‑finished products are classified as plate (0.250 inches or greater in thickness), sheet (0.249 inches down to 0.008 inches in thickness) or coil (0.249 inches down to 0.001 inches in thickness).

Extrusion/Drawing.

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Initially in solid form, aluminum is heated in a vessel to a temperature at which it melts.

While in molten form, additional metals (aluminum alloyed scrap, alloy metals, primary aluminum or high purity aluminum) are

introduced to achieve the proper mixture of chemical elements for a particular alloy.

When the desired chemical composition of the molten metal has been achieved, it is poured into a mold in which the molten metal cools in a controlled manner and solidifies into a rolling ingot or extrusion log.

While in molten form, additional metals (aluminum alloyed scrap, alloy metals, primary aluminum or high purity aluminum) are introduced to achieve the proper mixture of chemical elements for a particular alloy.

When the desired chemical composition of the molten metal has been achieved, it is poured through a mold in which the molten metal cools in a controlled manner and solidifies into a rolling ingot or extrusion log.

The size of the mold determines the dimensions of the rolling ingot or extrusion log.

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Newark, Ohio and Sherman, Texas produce extrusion log and cut billet for their operations and for our other facilities that do not have casting operations.

Our Trentwood facility casts rolling ingot for its own consumption.

Our Trentwood and Warrick facilities cast rolling ingot for their own consumption.

IMT is a leader in advanced manufacturing methods and techniques, which include multi-axis CNC machining, 3D Printing, welding and fabrication for aerospace and defense, automotive, high tech and general industrial applications.

The following table provides a description of the manufacturing process(es) and type(s) of products at each of our production facilities as of December 31, 2020:

Types of Products

Manufacturing Process

Chandler, Arizona (Extrusion)

Chandler, Arizona (Tube)

Extrusion/Drawing

Columbia, New Jersey

Aero/HS, Auto, GE, Other

Additive Manufacturing/Machining

Florence, Alabama

Aero/HS, GE, Other

Jackson, Tennessee

Aero/HS, Auto, GE

Extrusion/Drawing

Kalamazoo, Michigan

London, Ontario (Canada)

Los Angeles, California

Extrusion/Rod Rolling

Richland, Washington

Richmond, Virginia (Bellwood)

Extrusion/Drawing

Sherman, Texas

Auto, GE, Other

Spokane, Washington (Trentwood)

As reflected by the table above, many of our facilities employ the same basic manufacturing process and produce the same types of products.

Many of our facilities employ the same basic manufacturing process and produce the same types of products.

We make a significant effort to tightly integrate the management of our multiple manufacturing locations, product lines and end market applications to most efficiently and effectively serve the needs of our customers.

We centralize purchasing of our primary and scrap, or recycled, aluminum requirements and related alloying agents in order to better manage price, credit and other benefits.

Our sales force and the management thereof are also significantly integrated as many customers purchase a number of different products that are produced at different plant facilities.

We believe that integration of our operations allows us to capture efficiencies while allowing our facilities to remain highly focused on their specific processes and end market applications.

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As examples, our London, Ontario facility supplies billet to our Richmond, Virginia facility, and our Newark, Ohio facility supplies log and billet to our Jackson, Tennessee facility.

We purchase raw materials from a wide array of vendors.

In most instances, we have multiple vendors of raw materials to mitigate the risk of an interruption of supply should one of them underperform or discontinue operations.

A number of our input materials are commodities, which are subject to market price fluctuations, which we strive to mitigate with our metal price neutrality and hedging programs.

See Note 17 of Notes to Consolidated Financial Statements included in this Report for information about our significant concentrations.

Pricing, Metal Price Risk Management and Hedging

As noted above, we purchase primary and scrap, or recycled, aluminum, our principal raw material, on a floating price basis typically based on the average Midwest Price.

Our pricing of fabricated aluminum products is generally intended to lock in a conversion margin (representing the value added from the fabrication process(es)) and to pass metal price fluctuation through to our

Our pricing of fabricated aluminum products is generally intended to lock in a conversion margin (representing the value added from the fabrication process(es)) and to pass aluminum and alloy price fluctuations through to our customers.

In order to meet our objective to be metal price neutral, we manage the risk of fluctuations in the price of aluminum through our pricing policies and use of financial derivatives.

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Fluctuation in the underlying aluminum price is a significant factor influencing changes in competitive spot prices.

Through spot pricing, we generally can pass metal price risk through to customers.

For some of our higher value added revenue products sold on a spot basis, however, the pass through of metal price movements can lag by several months (the timing of which depends in part on market conditions), with a favorable impact to us when metal prices decline and an adverse impact to us when metal prices increase.

We, from time to time, enter into hedging transactions with third parties to minimize the impact to us of metal price swings for these higher value added revenue products.

Through spot pricing, we generally can pass aluminum price risk through to customers.

For some of our higher value added revenue products sold on a spot basis, however, the pass through of aluminum price movements can lag by several months (the timing of which depends in part on market conditions), with a favorable impact to us when aluminum prices decline and an adverse impact to us when aluminum prices increase.

We, from time to time, enter into hedging transactions with third parties to minimize the impact to us of aluminum price swings for these higher value added revenue products.

Index-based price.

The pricing structure of our typical automotive and aerospace contracts calls for our customer to pay a product price that incorporates a monthly index-based price for primary aluminum, such as the average Midwest Price for primary aluminum.

Index-based pricing typically allows us to pass metal price risk through to the customer and applies to virtually all of our Automotive Extrusions sales and the majority of our Aero/HS products sales.

Some of our customers who commit to volumes and timing of delivery pay a firm-price, creating metal price risk that we must hedge.

We are able to limit exposure to metal price risks created by firm-price customer sales contracts by using third-party hedging instruments.

Index-based pricing typically allows us to pass aluminum price risk through to the customer and applies to virtually all of our Automotive Extrusions sales and the majority of our Aero/HS products and Packaging sales.

Some of our customers who commit to volumes and timing of delivery pay a firm-price, creating aluminum price risk that we must hedge.

We are able to limit exposure to aluminum price risks created by firm-price customer sales contracts by using third-party hedging instruments.

Total fabricated product shipments for which we were subject to price risk were, in millions of pounds, 187.2, 127.6 and 182.4 during 2021, 2020 and 2019, respectively.

In addition to the aluminum pricing mechanisms described above, we also strive to pass through the cost of alloys through either pricing adders or surcharge mechanisms.

In some cases, the passing through of this alloy cost can lag the actual alloy cost by several months, the timing of which is dependent on market conditions and customer agreements, with a favorable impact to us when alloy price declines and an adverse impact to us when alloy price increases.

As with aluminum, we, from time to time, enter into either hedging transactions with third parties or firm price physical contracts to minimize the impact to us of alloy price fluctuations.

All metal procurement and hedging activities are managed centrally to minimize transaction costs, monitor consolidated net exposures and respond promptly to changes in market factors.

Hedging activities are conducted in compliance with a policy approved by our Board of Directors and administered by our hedging committee (members of which include our principal executive officer, principal financial officer and principal accounting officer).

Under normal operating and economic conditions, we generally have immaterial fluctuations in our quarter-over-quarter results, with shipments being weighted slightly more toward the first half of the year as compared to the second half.

This fluctuation in demand is usually caused by the timing of summer vacation and year-end holiday shut downs and year-end inventory rebalancing by our end customers.

In addition, during these lower demand periods, we take the opportunity to perform major maintenance at our facilities, which can affect cost and operating results.

Under normal operating and economic conditions, we generally have immaterial fluctuations in our overall portfolio quarter‑over‑quarter results.

Within our individual end markets, our Packaging shipments are generally weighted towards the second half of the year as compared to the first half while our Aero/HS products, Automotive Extrusions and GE products shipments are generally weighted slightly more toward the first half of the year as compared to the second half.

This fluctuation in shipments is usually driven by lower demand during summer vacation and year-end holiday shut downs and year-end inventory rebalancing by our end customers.

During these periods of lower demand we generally perform planned major maintenance at our facilities, which can affect cost and operating results.

Government Regulation

Our operations are subject to numerous federal, state and local employment, import/export, reporting, environmental, health and safety laws and regulations.

While we are subject to a wide variety of government regulations, generally those most impactful to our results of operations and capital expenditures are those environmental laws and regulations that impose limitations on the discharge of hazardous materials and pollutants and establish standards for the handling, transportation, distribution, treatment, storage and disposal of hazardous materials and solid and hazardous wastes.

These regulations may require the investigation, assessment, cleanup or monitoring of, or compensation for, environmental impacts, including natural resource damages.

While we are subject to a wide variety of government regulations, generally those most impactful to our

results of operations and capital expenditures are the environmental laws and regulations that impose limitations on the discharge of hazardous materials and pollutants and establish standards for the handling, transportation, distribution, treatment, storage and disposal of hazardous materials and solid and hazardous wastes .

These regulations may require the inv estigation, assessment, cleanup or monitoring of, or compensation for, environmental impacts, including natural resource damages.

We continually monitor our operations with respect to potential environmental issues, including changes in legal requirements and remediation technologies.

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Environmental Protection Agency (“USEPA”) issued an Endangerment Finding under the Clean Air Act, determining that emissions of carbon dioxide, methane and four other greenhouse gases (“GHGs”) threaten the public health and welfare of current and future generations.

Based on these findings, the USEPA has begun adopting and implementing regulations to restrict emissions of GHGs from certain industries and require reporting by certain regulated facilities.

We have invested and continue to invest in our manufacturing operations in order to minimize our air emissions.

The GHG intensity of our products is minimized through maximizing our process efficiencies through technologies such as heat recovery from combustion exhaust gases.

We have invested and continue to invest in our manufacturing operations in order to minimize our GHG emissions.

The GHG intensity of our products is minimized through:

(i) increasing manufacturing efficiencies;

(ii) using clean and reliable energy;

(iii) using recycled and run-around scrap;

and (iv) purchasing low carbon prime.

Government Contracts

We are one of the few remaining United States based aluminum semi-fabricated producers that supply the American defense industry.

Although our products are used in a wide variety of military applications, including military aircraft, armored vehicles and

ordnance, these products are typically sourced from us by a number of service centers and machine shops that are suppliers to the defense industry.

Although our products are used in a wide variety of military applications, including military aircraft, armored vehicles and ordnance, these products are typically sourced from us by a number of service centers and machine shops that are suppliers to the defense industry.

As we generally sell to the chain of suppliers who either subcontract with direct contractors or directly contract with the government, we do not have significant direct government agreements.

Human Capital

At December 31, 2020, we employed approximately 2,575 people, of which approximately 2,515 were employed in our manufacturing locations and approximately 60 were employed in our corporate office in Foothill Ranch, California.

At December 31, 2021, we employed approximately 3,957 people, of which approximately 3,887 were employed in our manufacturing, sales and support office locations and approximately 70 were employed in our corporate office in Foothill Ranch, California.

Governance and Culture

Our talented workforce is a key factor underlying our success.

We strive to be the employer of choice by providing equal employment and a non‑discriminatory workplace, protecting the health and safety of our employees, providing training programs and maintaining a positive and constructive relationship with labor unions of which our employees are members.

Safety and Health

We believe employee safety begins with a strong and consistent tone at the top through our executive leadership with oversight provided by our Corporate Health and Safety team, led by our Chief Legal/Compliance Officer.

To help us achieve and maintain a strong safety culture, we have robust compliance and assessment programs and we partner with the United Steelworkers and various industry groups, including the Aluminum Association, to share and identify best practices.

We use both internal and external resources to assess our compliance with regulatory and internal standards, providing training, performing risk assessments, audits and loss control inspections and developing mitigation strategies with particular emphasis on risks with a greater potential for severe injury.

We stress risk awareness and job safe practices and engage our employees in conversations about safety and safety training using a variety of communication channels, including one-on-one communications.

We also believe that having a culture of health and safety involves every employee at every level throughout the organization assuming responsibility to guard against workplace injuries by recognizing risks and taking other actions to minimize injury risk and severity.

Risk reduction is a key initiative at each of our facilities and part of our annual planning process and we are committed to nurturing a culture consistent with being a preferred employer.

In addition, safety modifiers requiring demanding safety performance are included in each of our short-term incentive compensation plans, including the corporate plan applicable to each of our executive officers and members of senior management.

Over the years, we have implemented programs on a Company-wide basis to increase awareness of the importance of employee wellness.

We have continued to introduce programs to educate and assist employees to make healthy lifestyle choices and have offered incentives and discounts to encourage participation across the organization.

In response to the Coronavirus Disease 2019 (“COVID-19”) pandemic, we implemented local, state and federal recommendations to reduce the spread of the virus at all of our facilities and continue to work closely with our employees and local unions to stress the importance of following Center for Disease Control and Prevention guidelines to mitigate the risk of exposure.

We took initiatives to support our employees by:

(i) engaging with our workforce and implementing protocols and procedures at each of our manufacturing facilities to mitigate the risk of exposure and facilitate contract tracing in the event of potential exposures;

(ii) implementing remote working conditions where possible;

(iii) waiving deductibles for COVID-19 related care under our medical plans;

and (iv) revising our policies to extend our benefits coverage for employees experiencing job interruption.

Additionally, we implemented health and safety protocols for all outside contractors and service providers required to enter our facilities.

Talent Development

Kaiser Aluminum is a learning organization committed to incorporating on-the-job training and development through the Kaiser Leadership Program, the Front Line Leader Development Program, Kaiser University, the Metallurgy Excellence Program, a Skilled Trades Development initiative and through internal and external resources provided to our employees and next generation leaders.

We continue to expand our talent management initiatives to pursue the significant long-term potential for our continued success.

Our success is dependent on the knowledge, skills and abilities of our current and future leaders.

The Kaiser Leadership Program is a full year program that accelerates the readiness of key talent and combines personalized leadership development and Kaiser-management system focused curriculum with a unique opportunity to build relationships with an internal network of leaders across locations and functions.

The Front Line Leader Development Program is a six-month program that strengthens organizational performance through ethical, effective and sustaining tactical leadership for both new and experienced frontline supervisors.

Kaiser University is our web-based learning and development platform offering a catalog of thousands of on-demand courses to employees across a broad range of topics including metallurgy, maintenance, health and safety, Lean Six Sigma, business and computer skills and Kaiser Aluminum policies.

The Metallurgy Excellence Program provides a mentor-centric professional development program for our talented metallurgical professionals providing opportunities for metallurgists to partner with industry icons while helping us keep our competitive advantage.

The Skilled Trades Development initiative enables participating Kaiser facilities or locations to evaluate and build trade skills, in alignment with industry-wide standards, to attract, retain and motivate skilled talent that meets the unique needs of the location.

Diversity, Equity and Inclusion

Our five corporate values include being the preferred employer.

Our efforts to be the preferred employer include:

(i) attracting, developing and retaining the best people from all cultures and segments of the population;

Our values support and serve as the foundation for our strategic initiatives and are intended to reflect the company’s “tone at the top” which we believe sustains our culture;

a culture that continues to drive our behavior.

Additionally, the goal of being a valued corporate citizen guides our environmental, social and governance decisions.

We are, as a result, committed to being socially responsible and active members of our industry and the communities in which we operate and our employees and their families live.

Consistent with our corporate values, we promote fair business practices and a culture of accountability, responsibility and ethical behavior through:

strong emphasis on the importance of integrity and competence;

conducting annual governance surveys to assess our culture and the effectiveness of our training;

adopting and enforcing our policies, including Corporate Governance Guidelines, Code of Business Conduct and Ethics, Human Rights Policy and Diversity, Equity and Inclusion Policy and compliance with applicable laws and regulations;

encouraging the reporting of illegal or unethical behavior, including the use of In-Touch, a third party compliance feedback program.

We believe respecting human rights is a fundamental part of our values and corporate responsibility.

We strive to respect and promote human rights in our relationships with our employees, suppliers, customers and stakeholders and are guided by the principles of the International Bill of Human Rights (the Universal Declaration of Human Rights and the two international covenants) and the International Labor Organization’s Declaration on the Fundamental Principles and Rights at Work.

Our Human Rights Policy is communicated to our employees as part of their annual code of conduct training, and we expect our employees to uphold this policy.

Diversity, Equity , Inclusion and Belonging

We are committed to diversity, equity, inclusion and belonging and strive to be the preferred employer by, among other things:

(i) attracting, developing and retaining people from all cultures and segments of the population based on ability;

(ii) treating all employees with dignity and respect;

(iii) providing an environment of inclusion, empowerment, responsibility and accountability;

(iii) providing an environment of diversity, inclusion, belonging, empowerment, responsibility and accountability;

and (iv) offering competitive and equal pay and benefits that attract and retain employees.

As part of our efforts to continue to emphasize our values, we implemented social media and human rights policies reinforcing our values.

As we move forward, our focus areas include:

(i) continuing to consider ethnic and gender diversity as we identify training cohorts and opportunities;

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and (vi) actively recruiting from military bases for military and veteran hiring.

In 2021, we enhanced our Human Rights Policy and formalized our diversity, equity, inclusion and belonging (“DEIB”) efforts by adopting a Diversity, Equity and Inclusion Policy, which align with our corporate values and Code of Business Conduct and Ethics and is overseen by our Board of Directors and senior leadership team.

Labor Practices and Policies

To help us achieve and maintain a strong safety culture, we have robust compliance and assessment programs such as annual safety planning, monthly safety calls, routine performance reviews against targets and routine audits.

Additionally, we partner with the United Steelworkers and various industry groups, including the Aluminum Association, to share and identify best practices.

We use both internal and external resources, including the American National Standards Institute (“ANSI”) and International Organization for Standardization (“ISO”), to assess our compliance with regulatory and internal standards, providing training, performing risk assessments, audits and loss control inspections and developing mitigation strategies with particular emphasis on risks with a greater potential for severe injury.

Risk reduction is a key initiative at each of our facilities and part of our annual planning process and we are committed to nurturing a culture consistent with being a preferred employer.

We monitor our progress through routine reviews of our safety process and performance.

We utilize both leading and trailing indicators to monitor our progress.

While trailing indicators, such as total case incident rate (“TCIR”), lost- time case incident rate (“LTIR”) and days away, restricted and transfer (“DART”) rate, help us monitor our safety performance, leading indicators, such as significant injury and fatality (“SIF”) potential and actual incident rate, near-misses, timely correction action of internal and external audit findings, on-time safety plan execution information and safety culture risk, help us monitor and assess risks and the effectiveness of our safety plans and processes.

Plant safety metrics are integrated into our monthly quality, production and financial reports and are reviewed by the senior leadership team every month.

In addition, TCIR and LTIR safety modifiers are included in each of our short-term incentive compensation plans, including the corporate plan applicable to each of our executive officers and members of senior management.

Over the years, we have implemented programs on a Company-wide basis to increase awareness of the importance of employee wellness.

We have continued to introduce programs to educate and assist employees to make healthy lifestyle choices and have offered incentives and discounts to encourage participation across the organization, including:

annual onsite health biometric screenings;

on-site flu shots and COVID-19 vaccination;

employee assistance program, providing confidential assistance with healthcare issues and the healthcare system, including crisis and emergency help;

smoking/tobacco cessation program;

internal, as well as third-party, online wellness workshops, including workshops on nutrition and fitness;

wellness coaching.

Labor Union Affiliations .

We believe in freedom of association and respect our employees’ choice to be represented or not represented, by a union in accordance with the laws of the states and countries where we operate, without fear of reprisal, intimidation or harassment.

Approximately 66% of our employees are represented by labor unions under labor contracts with varying durations and expiration dates.

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Los Angeles, California

Newburgh, Indiana (Warrick)

Richland, Washington

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Spokane, Washington (Trentwood)

In February 2021, the Kalamazoo, Michigan agreement was extended through February 2026.

Recruiting, Training, Development and Retention

We are committed to recruiting a workforce that reflects people from all cultures and segments of the population based on ability.

Our initiatives, which go beyond legal compliance, include:

(i) identifying and recruiting diverse talent, including military veterans;

(ii) fostering relationships with universities, employment agencies and professional groups that work with more diverse populations;

(iii) leveraging inclusive job-posting sites;

and (iv) concentrating on diverse candidates for internships, entry‑level positions and scholarships.

We have a well-established talent review process that includes operations and functional leaders that are key in the early identification of high performing and high potential employees.

We also track and review the gender and ethnic diversity of job applicants and new hires to evaluate the diversity of our organization.

The ESG committee of our board oversees, among other things, the succession planning for our executive officers and the leadership, progression and development of key employees.

Training, Development and Retention.

Kaiser Aluminum is committed to the development of our employees through a broad mix of internal and external program resources incorporating on-the-job training and development through the Kaiser Leadership Program, the Front Line Leader Development Program, Kaiser University, the Tuition Assistance Program, the Metallurgy Excellence and Technical Strength Program.

We continue to expand our talent management initiatives to pursue the significant long-term potential for our continued success.

Our success is dependent on the knowledge, skills and abilities of our current and future leaders.

The mission of the Kaiser Leadership Program is to strengthen performance, develop bench strength and accelerate the readiness of key talent across our company.

The program blends classroom, online modules and live web events using a cohort model to deliver a flexible, convenient learning environment and includes training and coaching conducted by Thayer Leadership at West Point.

The program uses a cohort model to encourage collaboration and team-building and to ensure accountability, facilitated group discussions and effective best practice sharing.

Kaiser University is our web-based learning and development platform offering a catalog of thousands of on-demand courses to employees across a broad range of topics including compliance, maintenance, health and safety, Lean Six Sigma, communication skills, business skills, computer skills, cybersecurity, discrimination and harassment prevention and our processes and policies.

The Metallurgy Excellence and Technical Strength Program provides professional development for our talented metallurgical professionals in order to facilitate their ability to develop and implement process control systems and identify new technologies that can benefit the company.

This program provides mentorship opportunities with company leaders and experts as well as participation in career enhancing training to ensure our competitive advantage.

The Tuition Assistance Program provides tuition reimbursement for salaried employees and certain represented employees as stipulated by the collective bargaining agreement.

The mission of this program is to support our workforce in completing a degree that benefits both our employees and our company.

All of our employees, including hourly and salaried employees at our production facilities, participate in short-term incentive compensation plans, which are based on attainment of performance metrics that drive and support our best-in-class commitment.

We also provide stock-based compensation to executive officers, members of senior management throughout the company and other key employees, as well as a deferred compensation plan for certain employees.

All of our U.S.

employees have access to 401(k) savings plans and salaried employees at our London, Ontario facility have access to a defined benefit pension plan with annual contributions based on each salaried employee’s age and years of service.

Through the collective bargaining process, we contribute to four multi‑employer pension plans under the terms of certain collective bargaining agreements for a majority of our union-represented employees and certain union employees at our Warrick facility participate in a defined benefit pension plan, as well as a postretirement benefit plan relating to retiree medical and life insurance benefits.

Additionally, certain hourly and salaried employees are also able to receive defined post-retirement health and welfare benefits through Voluntary Employee Beneficiary Associations.

Information Security

We employ information systems to support our business.

As is the case for other manufacturing companies of comparable size and scope, we, from time to time, experience attempted cyber-attacks on our information system.

We also face risks associated with other potential significant failures or disruptions of our information technology networks.

We utilize a risk-based, multi-layered information security approach following the National Institute of Standards and Technology Cybersecurity Framework and have adopted and implemented an approach to identify and mitigate information security risks that we believe is commercially reasonable for manufacturing companies of our size and scope, including many of the best practices of the National Institute of Standards and Technology Cybersecurity Framework.

Our information security performance and recent cybersecurity industry trends are reviewed by management, including our Chief Information Officer at least monthly and are reported to and reviewed by each of the audit committee and the full board of directors throughout the year (but no less than once a year).

Our entire board of directors is responsible for overseeing management’s risk assessment and risk management processes designed to monitor and mitigate information security risks, including cyber risk and related insurance policies.

We regularly engage independent third parties to test our information security processes and systems as part of our overall enterprise risk management.

We also conduct annual information security training to ensure employees are aware of information security risks and to enable them to take steps to mitigate those risks.

As part of this program, we also take reasonable steps to ensure our executive management and employees, including any employee who may come into possession of confidential financial information, receive appropriate information security awareness training.

To date, no attempted cyber-attack or other attempted intrusion on our information technology networks has resulted in a material adverse impact on our operations or financial results, or in any penalties or settlements.

In the event an attack or other intrusion were to be successful, we have a response team of internal and external resources engaged and prepared to respond.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business