What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-04-25 compared with 2021-10-26 · 331 added, 658 removed, 592 unchanged (63% of the section changed)

1 unchanged sentence

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

As of September 30, 2021

As of March 31, 2022

As of December 31, 2021

9 unchanged sentences

Operating lease assets

Deferred tax assets, net

Intangible assets, net

14 unchanged sentences

Stockholders’ equity:

Preferred stock, 5,000,000 shares authorized at both September 30, 2021 and

Preferred stock, 5,000,000 shares authorized at both March 31, 2022 and

December 31, 2021;

no shares were issued and outstanding at

September 30, 2021 and December 31, 2020

March 31, 2022 and December 31, 2021

Common stock, par value $ 0.01 , 90,000,000 shares authorized at both

September 30, 2021 and December 31, 2020;

March 31, 2022 and December 31, 2021;

22,739,402 shares issued and

15,862,672 shares outstanding at September 30, 2021;

15,904,116 shares outstanding at March 31, 2022;

22,700,404 shares

2 unchanged sentences

Retained earnings

Treasury stock, at cost, 6,835,286 shares at both September 30, 2021 and

Treasury stock, at cost, 6,835,286 shares at both March 31, 2022 and

December 31, 2021

3 unchanged sentences

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

STATEMENTS OF CONSOLIDATED (LOSS) INCOME (UNAUDITED)

Quarter Ended September 30,

Nine Months Ended September 30,

STATEMENTS OF CONSOLIDATED INCOME (UNAUDITED)

Quarter Ended March 31,

(In millions of dollars, except share and per share amounts)

4 unchanged sentences

Restructuring costs (benefit)

Other operating charges (income), net

Total costs and expenses

3 unchanged sentences

Other expense, net – Note 8

Income (loss) before income taxes

Income before income taxes

Income tax (provision) benefit

Net (loss) income

Net (loss) income per common share:

Net income per common share:

Weighted-average number of common shares outstanding (in thousands):

2 unchanged sentences

STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME (UNAUDITED)

Quarter Ended September 30,

Nine Months Ended September 30,

(In millions of dollars)

Quarter Ended March 31,

(In millions of dollars)

Net (loss) income

Other comprehensive income (loss), net of tax – Note 7:

Defined benefit pension plan and Salaried VEBA

Available for sale securities

Cash flow hedges

5 unchanged sentences

STATEMENTS OF CONSOLIDATED STOCKHOLDERS ’ EQUITY (UNAUDITED)

Nine Months Ended September 30, 2021

Quarter Ended March 31, 2022

Outstanding 1,2

12 unchanged sentences

BALANCE, March 31, 2022

Other comprehensive income, net of tax

Common shares issued (including impacts from

Long-Term Incentive programs)

Cancellation of shares to cover employees' tax

withholdings upon vesting of non-vested shares

Cash dividends declared 3

Amortization of unearned equity compensation

BALANCE, June 30, 2021

Other comprehensive income, net of tax

Common shares issued (including impacts from

Long-Term Incentive programs)

Cancellation of shares to cover employees' tax

withholdings upon vesting of non-vested shares

Cash dividends declared 3

Amortization of unearned equity compensation

BALANCE, September 30, 2021

At September 30, 2021, 710,580 shares were available for awards under the Kaiser Aluminum Corporation 2021 Equity and Incentive Compensation Plan (“2021 Plan”).

There were no repurchases of common stock during the quarters ended March 31, 2021, June 30, 2021 and September 30, 2021.

At September 30, 2021, $ 93.1 million remained available to repurchase our common shares pursuant to the stock repurchase program.

Dividends declared per common share was $ 0.72 for the quarters ended March 31, 2021, June 30, 2021 and September 30, 2021.

At March 31, 2022, 593,072 shares were available for awards under the Kaiser Aluminum Corporation 2021 Equity and Incentive Compensation Plan (“2021 Plan”).

There were no repurchases of common stock during the quarter ended March 31, 2022.

At March 31, 2022, $ 93.1 million remained available to repurchase our common shares pursuant to the stock repurchase program.

Dividends declared per common share were $ 0.77 for the quarter ended March 31, 2022.

The accompanying notes to interim consolidated financial statements are an integral part of these statements.

1 unchanged sentence

STATEMENTS OF CONSOLIDATED STOCKHOLDERS ’ EQUITY CONTINUED (UNAUDITED)

Nine Months Ended September 30, 2020

Quarter Ended March 31, 2021

Outstanding 1

Paid in Capital

3 unchanged sentences

BALANCE, December 31, 2020

Other comprehensive loss, net of tax

Other comprehensive income, net of tax

Common shares issued (including impacts from

2 unchanged sentences

withholdings upon vesting of non-vested shares

Repurchase of common stock 1

Cash dividends declared 2

1 unchanged sentence

BALANCE, March 31, 2021

Other comprehensive income, net of tax

Common shares issued (including impacts from

Long-Term Incentive programs)

Cash dividends declared 2

Amortization of unearned equity compensation

BALANCE, June 30, 2020

Other comprehensive income, net of tax

Cash dividends declared 2

Amortization of unearned equity compensation

BALANCE, September 30, 2020

Weighted-average repurchase price (dollars per share) for the quarter ended March 31, 2020 was $ 81.94 .

There was no repurchase of common stock for the quarters ended June 30, 2020 and September 30, 2020.

Dividends declared per common share was $ 0.67 for each of the quarters ended March 31, 2020, June 30, 2020 and September 30, 2020.

There were no repurchases of common stock during the quarter ended March 31, 2021.

Dividends declared per common share were $ 0.72 for the quarter ended March 31, 2021.

The accompanying notes to interim consolidated financial statements are an integral part of these statements.

1 unchanged sentence

STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED)

Nine Months Ended September 30,

Quarter Ended March 31,

(In millions of dollars)

Cash flows from operating activities 1 :

Net (loss) income

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation of property, plant and equipment

3 unchanged sentences

Non-cash equity compensation

Loss (gain) on disposition of short-term investments

Non-cash asset impairment charge

Loss on extinguishment of debt

Loss on disposition of property, plant and equipment

7 unchanged sentences

Long-term assets and liabilities, net

Net cash provided by operating activities

Net cash provided by (used in) operating activities

Cash flows from investing activities 1 :

Capital expenditures

Cash payment for acquisition of Warrick, net of cash received – Note 4

Purchase of short-term investments

Purchase of equity securities

Proceeds from disposition of short-term investments

Proceeds from disposition of property, plant and equipment

Net cash (used in) provided by investing activities

Cash payment for acquisition of the Warrick rolling mill

Net cash used in investing activities

Cash flows from financing activities 1 :

Repayment of principal and redemption premium of 6.50% Senior Notes

Issuance of 4.50 % Senior Notes

Issuance of 6.50 % Senior Notes

Cash paid for debt issuance costs

Repayment of finance lease

1 unchanged sentence

vesting of non-vested shares

Repurchase of common stock

Cash dividends and dividend equivalents paid

Net cash provided by financing activities

Net (decrease) increase in cash, cash equivalents and restricted cash during the period

Net cash used in financing activities

Net decrease in cash, cash equivalents and restricted cash during the period

Cash, cash equivalents and restricted cash at beginning of period

6 unchanged sentences

Supplemental Balance Sheet Information

Business Combinations, Goodwill and Intangible Assets

Employee Benefits

3 unchanged sentences

Accumulated Other Comprehensive Income (Loss )

Restructuring

Other Expense, Net

Income Tax Matters

Net (Loss) Income Per Share

Net Income Per Share

Supplemental Cash Flow Information

11 unchanged sentences

The financial information as of December 31, 2021 is derived from our audited consolidated financial statements and footnotes included in our Annual Report on Form 10-K for the year ended December 31, 2021.

We have reclassified certain amounts in prior-period financial statements to conform to the current period's presentation.

On the Consolidated Balance Sheets, prior period presentation of the Canadian pension plan in Long-term liabilities is now reflected in Pension and other postretirement benefits.

On the Statements of Consolidated Cash Flows, prior period presentation of Other non-cash changes in assets and liabilities is now reflected in Changes in operating assets and liabilities within the following categories:

(i) Prepaid expenses and other current assets;

(ii) Accrued liabilities;

and (iii) Long-term assets and liabilities, net.

Use of Estimates in the Preparation of Financial Statements.

3 unchanged sentences

Supply Chain Financing .

Upon our acquisition of Warrick (as defined in Note 4 below), we became party to several supply chain financing arrangements, in which we may sell certain of our customers’ trade accounts receivable to such customers’ financial institutions without recourse.

We are party to several supply chain financing arrangements, in which we may sell certain of our customers’ trade accounts receivable to such customers’ financial institutions without recourse.

We sell our undivided interests in certain of these receivables at our discretion when we determine that the cost of these arrangements is less than the cost of servicing our receivables with existing debt.

1 unchanged sentence

As such, these transactions are being accounted for as a sale.

During the quarter and nine months ended September 30, 2021, we sold trade accounts receivable totaling $ 390.2 million and $ 706.2 million, respectively, related to these supply chain financing arrangements, of which our customers’ financial institutions applied discount fees totaling $ 2.1 million and $ 4.0 million, respectively.

During the quarter ended March 31, 2022, we sold trade accounts receivable totaling $ 407.4 million related to these supply chain financing arrangements, of which our customers’ financial institutions applied discount fees totaling $ 2.9 million.

We did no t sell any of our trade accounts receivable during the quarter ended March 31, 2021.

To the extent discount fees related to the sale of trade accounts receivable under supply chain financing arrangements are not reimbursed by our customers, they are included in Other expense, net.

As of September 30, 2021, we had been and/or expected to be fully reimbursed by our customers for these discount fees.

Fair Value of Goodwill and Intangible Assets.

Fair values and useful lives are determined based on, among other factors, the expected future period of benefit of the asset, the various characteristics of the asset, long‑term forecasts of the business, market prices, projected cash flows and the rate used in discounting those cash flows.

As the determination of an asset’s fair value and useful life involves management making certain estimates and because these estimates form the basis for the determination of whether or not an impairment charge should be recorded, these estimates are considered to be critical accounting estimates.

As of March 31, 2022, we had been and/or expected to be fully reimbursed by our customers for these discount fees.

Government Grants.

3 unchanged sentences

Grants related to compensation for costs already incurred or for immediate financial support, with no future related costs, are recognized as income in the period in which it is receivable.

During the quarter and nine months ended September 30, 2020, our subsidiary Kaiser Aluminum Canada Limited received $ 0.1 million and $ 1.3 million, respectively, of payroll subsidies under the Canada Emergency Wage Subsidy Program.

These subsidies were recorded within Other operating charges (income), net.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

Adoption of New Accounting Pronouncements

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2019-12, Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which is intended to simplify the accounting for income taxes by eliminating certain exceptions and implementing additional requirements which result in a more consistent application of Accounting Standards Codification (“ASC”) 740 Income Taxes.

Most amendments within ASU 2019-12 are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis.

Our adoption of ASU 2019-12 during the quarter ended March 31, 2021 did not result in a material impact on our consolidated financial statements.

Accounting Pronouncements Issued But Not Yet Adopted

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848):

Accounting Standard Update (“ASU”) No.

2021-10, Government Assistance (Topic 832):

Disclosures by Business Entities about Government Assistance (“ASU 2021-10”) was issued in November 2021.

Under ASU 2021-10, the accounting entities with transactions with a government that are accounted for by analogy to a grant or contribution accounting model are required to annually disclose certain information regarding the transaction including:

(i) nature and related accounting policy used;

(ii) line items on the balance sheet and income statement affected by the transactions;

(iii) amounts applicable to each line item;

and (iv) significant terms and conditions.

Our adoption of ASU 2021-10 during the quarter ended March 31, 2022 using a prospective approach did not have a material impact on our consolidated financial statements.

In March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU 2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”) and also issued subsequent amendments to the initial guidance (collectively, “Topic 848”).

Topic 848 is effective for all entities as of March 12, 2020 through December 31, 2022 and provides optional guidance for contract modifications and certain hedging relationships associated with the transition from reference rates that are expected to be discontinued.

We will adopt Topic 848 when our relevant contracts are modified upon transition to alternative reference rates.

We do not expect our adoption of Topic 848 to have a material impact on our consolidated financial statements.

As of March 31, 2022 , some of our customers’ supply chain financing contracts have transitioned to the Secured Overnight Financing Rate (“SOFR”) to replace the London Interbank Offered

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

Rate (“LIBOR”).

Our adoption of Topic 848 did not have a material impact on our consolidated financial statements and we will continue to assess contract modifications in accordance with Topic 848.

Supplemental Balance Sheet Information

As of September 30, 2021

As of March 31, 2022

As of December 31, 2021

21 unchanged sentences

Accrued income taxes and other taxes payable

Accrued annual contribution to Salaried VEBA

Accrued interest

Short-term environmental accrual – Note 6

Other – Note 3 and Note 6

Other – Note 4

Long-Term Liabilities

2 unchanged sentences

Other long-term liabilities

At September 30, 2021 and December 31, 2020 the current cost of our inventory exceeded its stated last-in, first-out (“LIFO”) value by $ 124.1 million and $ 8.4 million , respectively.

We treated inventory acquired in conjunction with the Warrick acquisition (as defined in Note 4 below) as current year purchases within our existing single LIFO pool.

Based on market conditions during the nine months ended September 30, 2021, $ 19.8 million within Construction in progress as of September 30, 2021 related to temporarily idled projects, all of which are expected to resume at a future date.

Temporary idled projects as of December 31, 2020 totaled $ 20.0 million.

We determine whether an agreement is a lease at inception.

We have operating and finance leases for equipment and real estate that primarily have fixed lease payments.

Our leases have remaining lease terms of approximately one to 59 years , some of which may include options to extend the lease for up to 60 years and some of which may include options to terminate the lease within one year .

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

For purposes of calculating lease liabilities, these options are included within the lease term when it has become reasonably certain that we will exercise such options .

Short-term leases with an initial term of 12 months or less are not recorded on our Consolidated Balance Sheets.

As most of our leases do not provide an implicit rate, we use information available at the lease commencement date in determining an incremental borrowing rate when calculating our right-of-use lease assets and liabilities.

In determining the inputs to the incremental borrowing rate calculation, we make judgments about the value of the leased asset, our credit rating and the lease term, including the probability of our exercising options to extend or terminate the underlying lease.

Additionally, we make judgments around contractual asset substitution rights in determining whether a contract contains a lease.

We have lease agreements with lease and non-lease components, which are generally accounted for separately.

These non-lease components include items such as common area maintenance, taxes and insurance for our real estate leases, as well as maintenance charges related to our equipment leases.

We have, however, applied the practical expedient within ASU No.

2016-02, Leases (Topic 842):

Amendments to the Financial Accounting Standards Board Accounting Standards Codification (“ASU 2016-02”), to not separate lease and non-lease components to our embedded supply system equipment leases and have therefore accounted for both lease and non‑lease components in determining the lease assets and liabilities.

Many of our equipment leases contain clauses that require us to return the equipment with certain functionality intact.

We account for these costs as residual value guarantees when the guarantee becomes probable of being owed.

Our lease agreements do not contain any material restrictive covenants.

The following table presents lease terms and discount rates as of September 30, 2021:

Finance Leases

Operating Leases

Weighted-average lease term (in years)

Weighted-average discount rate

The following table summarizes the classification of lease assets and lease liabilities on our Consolidated Balance Sheets (in millions of dollars):

Classification

As of September 30, 2021

As of December 31, 2020

Operating lease assets

Finance lease assets

Property, plant and equipment, net

Total lease assets

Operating lease liabilities

Other accrued liabilities

Finance lease liabilities

Other accrued liabilities

Operating lease liabilities

Long-term portion of operating lease liabilities

Finance lease liabilities

Long-term liabilities

Total lease liabilities

The following table summarizes the components of lease cost on our Statements of Consolidated (Loss) Income (in millions of dollars):

Quarter Ended September 30,

Nine Months Ended September 30,

Operating lease cost

Short-term lease cost

Finance lease cost:

Amortization of leased assets

Interest on lease liabilities

Total lease cost

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

The following table presents the maturity of our lease liabilities as of September 30, 2021 (in millions of dollars):

Maturity of Lease Liabilities

Finance Leases

Operating Leases

Remainder of 2021

Total minimum lease payments

Present value

Business Combinations, Goodwill and Intangible Assets

Warrick Rolling Mill Acquisition .

On March 31, 2021, we acquired Alcoa Warrick LLC and certain assets comprising the aluminum casting and rolling mill facility located in Warrick County, Indiana (collectively, “Warrick”) for a purchase price of $ 670.0 million.

Warrick is a leading producer of bare and coated aluminum coil used for can stock applications in the beverage and food packaging industry in North America.

The transaction provides us with non-cyclical end market diversification and re-entry into the packaging end market.

Acquisition-related costs incurred and expensed during the quarter and nine months ended September 30, 2021 were $ 1.0 million and $ 15.0 million, respectively, primarily related to legal and consulting fees and included within Selling, general, administrative , research and development (“SG&A and R& D”) .

The preliminary purchase consideration to allocate was determined as follows (in millions of dollars):

Contract purchase price

Preliminary working capital adjustment

Initial outstanding indebtedness – Other postretirement benefits liabilities

Cash paid at acquisition close on March 31, 2021

Cash received for post-close adjustments

Total purchase consideration to allocate

We prepared an initial allocation of the purchase consideration as of the acquisition date based on our understanding of the fair value of the acquired assets and assumed liabilities.

As we continue to obtain additional information supporting the final valuation of inventories, property, plant and equipment, intangible assets, other assets and long-term liabilities, we will refine the estimates of fair value and may revise our allocation of the purchase consideration.

We expect to finalize the valuation of the assets and liabilities as soon as practicable, but in any event no later than one year from the acquisition date.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

The following table summarizes the preliminary fair values of assets acquired and liabilities assumed as of the acquisition date as well as adjustments made up to September 30, 2021 (in millions of dollars):

Initial Allocation

Updated Allocation

Trade receivables

Other receivables

Inventories, including step up

Prepaid expenses and other current assets

Property, plant and equipment

Operating lease assets

Intangible assets

Accounts payable

Accrued salaries, wages and related expenses

Other accrued liabilities

Long-term portion of operating lease liabilities

Pension and other postretirement benefits

Long-term liabilities

Preliminary allocated purchase consideration

Intangible Assets.

The following table presents the components of acquired intangible assets and their estimated useful lives (in millions of dollars):

Favorable lease contract

Favorable commodity contracts

Customer relationships

Goodwill related to the Warrick acquisition is primarily attributable to the assembled workforce and is expected to be deductible for income tax purposes.

The following table presents the changes to goodwill during the nine months ended September 30, 2021 (in millions of dollars):

Gross Carrying Value

Accumulated Impairment Loss

Net Carrying Value

Balance as of December 31, 2020

Warrick acquisition

Balance as of September 30, 2021

Other Assets.

Represents assets to be purchased or constructed by Alcoa Corporation (“Alcoa”) following the close of the acquisition and subsequently conveyed to us in connection with separating the rolling mill from the other businesses retained by Alcoa.

Results of Warrick.

See Note 15 for the quarter and six months net sales from the continuing operations of Warrick included in our Statements of Consolidated (Loss) Income for the quarter and nine months ended September 30, 2021, respectively.

Net (loss) income for the quarter and nine months ended September 30, 2021 are not provided as the Warrick results have been fully integrated and discrete financial information cannot be obtained without unreasonable effort.

Certain Unaudited Pro Forma Information.

The following unaudited pro forma financial information presents what our results would have been had

At March 31, 2022 and December 31, 2021 the current cost of our inventory exceeded its stated last-in, first-out (“LIFO”) value by $ 210.5 million and $ 137.1 million , respectively.

Based on market conditions, we temporarily idled projects within Construction in progress totaling $ 20.6 million and $ 24.9 million as of March 31, 2022 and December 31, 2021, respectively, all of which are expected to resume at a future date.

Employee Benefits

Defined Contribution Plans

We sponsor defined contribution 401(k) savings plans for certain hourly and salaried employees.

Employees may contribute a portion of their compensation to the plans and we match a specified percentage of these contributions in equivalent form of the

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

Warrick been acquired on January 1, 2020.

The unaudited pro forma information include s adjustments and consequential tax effects related to :

(i) amortization and depreciation for intangible assets and property , plant and equipment acquired ;

(ii) the effects of certain reclassifications and conforming accounting policies ;

and (iii) acquisition-related transaction costs .

The unaudited pro forma information presented below is for informational purposes only and is not necessarily indicative of our consolidated results of operations of the consolidated business had the acquisition occurred at the beginning of fiscal year 2020 or of the results of our future operations of the consolidated business .

Quarter Ended September 30,

Nine Months Ended September 30,

Net (loss) income

The Warrick rolling mill has historically purchased aluminum and electrical power from Alcoa’s smelter and power plant in Warrick County, Indiana.

Alcoa’s Warrick smelter historically sold the aluminum to the Warrick rolling mill at smelter cost and electrical power from Alcoa’s power plant at negotiated prices between the parties.

As part of the acquisition of Warrick, we negotiated pricing for aluminum and electrical power with Alcoa at alternative rates which more closely align with market pricing.

The table above does not reflect the cost of aluminum and electrical power under these negotiated rates.

Employee Benefits

Short-Term Incentive Plans (“STI Plans”).

We have annual short-term incentive compensation plans for senior management and certain other employees payable at our election in cash, shares of common stock or a combination of cash and shares of common stock.

Amounts earned under STI Plans are based on our adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”), modified for certain safety, quality, delivery, cost and individual performance factors.

The Adjusted EBITDA targets are determined based on the return on adjusted net assets.

Most of our production facilities have similar programs for both hourly and salaried employees.

As of September 30, 2021, we had a liability of $ 7.3 million recorded within Accrued salaries, wages and related expenses for estimated probable future payments relating to the nine month performance period of our 2021 STI Plan.

Pension and Similar Benefit Plans.

We provide contributions to:

(i) defined contribution 401(k) savings plans for salaried employees and certain hourly employees;

(ii) a non-qualified, unfunded, unsecured plan of deferred compensation (see “ Deferred Compensation Plan ” below);

(iii) multi-employer pension plans sponsored by the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, AFL-CIO, CLC, the International Association of Machinists and certain other unions at certain of our production facilities;

and (iv) a defined benefit pension plan for salaried employees at our London, Ontario (Canada) facility.

investments elected by the employee.

Additionally, we make fixed annual contributions for certain hourly and salaried employees in varying amounts depending on hire date.

Deferred Compensation Plan

We have a non-qualified, unfunded, unsecured plan of deferred compensation for certain employees who would otherwise suffer a loss of benefits under our defined contribution plan as a result of the limitations imposed by the Internal Revenue Code of 1986.

We sponsor a non-qualified, unfunded, unsecured plan of deferred compensation for certain employees who would otherwise suffer a loss of benefits under our defined contribution plan as a result of the limitations imposed by the Internal Revenue Code of 1986.

Despite the plan being an unfunded plan, we make an annual contribution to a rabbi trust to fulfill future funding obligations, as contemplated by the terms of the plan.

1 unchanged sentence

Assets of our deferred compensation plan are included in Other assets, classified within Level 1 of the fair value hierarchy and are measured and recorded at fair value based on their quoted market prices.

The fair value of these assets at September 30, 2021 and December 31, 2020 was $ 10.4 million and $ 9.6 million, respectively.

The fair value of these assets at March 31, 2022 and December 31, 2021 was $ 10.1 million and $ 10.5 million, respectively.

Offsetting liabilities relating to the deferred compensation plan are included in Other accrued liabilities and Long-term liabilities.

Other Benefits

Short-Term Incentive Plans (“STI Plans”).

The Adjusted EBITDA targets are determined based on the return on adjusted net assets.

Most of our production facilities have similar programs for both hourly and salaried employees.

As of March 31, 2022, we had a liability of $ 4.8 million recorded within Accrued salaries, wages and related expenses for estimated probable future payments relating to the three month performance period of our 2022 STI Plan.

We provide other benefits for certain members of senior management, including certain of our named executive officers, related to terminations of employment in specified circumstances, including in connection with a change in control, by us without cause and by the executive officer with good reason.

Defined Benefit Plans

We sponsor defined benefit pension plans for certain hourly bargaining unit employees and salaried employees.

Pension benefits generally depend on length of service, job grade and remuneration.

Substantially all benefits are paid through pension trusts that are sufficiently funded to ensure that all plans can pay benefits to retirees as they become due.

We use a December 31 measurement date for our pension plans.

We also provide contributions to multi-employer pension plans sponsored by the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, AFL-CIO, CLC, the International Association of Machinists and certain other unions at certain of our production facilities.

We sponsor a healthcare and life insurance postretirement benefit plan (“OPEB”) covering certain eligible retirees.

Generally, the medical plans are unfunded and pay a percentage of medical expenses, reduced by deductibles and other coverage.

Life benefits are generally provided by insurance contracts.

We use a December 31 measurement date for our OPEB plan.

Salaried VEBA Postretirement Obligation.

1 unchanged sentence

We have an ongoing obligation with no express termination date to make annual variable cash contributions up to a maximum of $ 2.9 million to the Salaried VEBA.

We paid $ 1.7 million with respect to 2020 during the quarter ended March 31, 2021.

No payment was required with respect to 2021 during the quarter ended March 31, 2022.

We account for the Salaried VEBA as a defined benefit plan in our financial statements.

1 unchanged sentence

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

Warrick Pension and Other Postretirement Benefits .

In conjunction with the Warrick acquisition, we assumed certain defined benefit pension obligations for certain union employees hired prior to January 1, 2020 and other postretirement benefit (“OPEB”) obligations relating to retiree medical and life insurance benefits for certain union employees hired prior to July 1, 2010, and were active union employees of the Warrick rolling mill on March 31, 2021 and we agreed to establish new plans with respect to each.

Pension and OPEB liabilities and expenses are determined using actuarial methodologies and incorporate significant assumptions, including the interest rate used to discount the future estimated liability, the expected long-term rate of return on plan assets and several assumptions relating to the employee workforce (salary increases, health care cost trend rates, retirement age and mortality).

The following data presents the key assumptions used and the amounts reflected in our consolidated financial statements with respect to the Warrick pension plan and OPEB.

We used a March 31 measurement date for both of the plans.

The following table presents the assumptions used to determine the Warrick pension and OPEB obligations:

Warrick Pension Plan

As of March 31, 2021

Discount rate

Expected long-term return on plan assets

Trend rate (initial)

Trend rate (ultimate)

Years to reach ultimate trend

Rate of compensation increase

The accumulated benefit obligation included in the opening balance sheet at March 31, 2021 for the Warrick pension plan and OPEB was $ 6.5 million and $ 78.1 million, respectively, of which $ 1.1 million was recorded within Accrued salaries, wages and related expenses.

Our expected minimum contributions to the Warrick pension plan and OPEB in 2021 is $ 0.1 million and $ 0.7 million, respectively.

The following table presents the minimum net benefits expected to be paid (in millions of dollars):

Year Ended December 31,

Warrick pension plan benefit payments

Warrick OPEB plan benefit payments

Total net benefits

The following table presents the total expense related to all postretirement benefit plans (in millions of dollars):

Quarter Ended September 30,

Nine Months Ended September 30,

Quarter Ended March 31,

Defined contribution plans 1

1 unchanged sentence

Multiemployer pension plans 1

Net periodic postretirement benefit cost relating to Salaried VEBA 2

Net periodic postretirement benefit cost relating to Warrick pension plan 3

Net periodic postretirement benefit cost relating to Warrick OPEB plan 3

Substantially all of the expense related to employee benefits are in Cost of products sold, excluding depreciation and amortization and other items (“Cost of products sold” or “COGS”) with the remaining balance in SG&A and R&D.

The deferred compensation plan and the current service cost component of Net periodic postretirement benefit cost relating to Salaried VEBA are included within our Statements of Consolidated (Loss) Income in SG&A and R&D for all periods presented.

All other components of Net periodic postretirement benefit cost relating to Salaried VEBA are included within Other expense, net, on our Statements of Consolidated (Loss) Income.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

The current service cost component of Net periodic postretirement benefit cost relating to both the Warrick pension plan and the Warrick OPEB plan are included within our Statements of Consolidated (Loss) Income in COGS for all periods presented.

All other components of Net periodic postretirement benefit cost relating to both the Warrick pension plan and the Warrick OPEB plan are included within Other expense, net, on our Statements of Consolidated (Loss) Income.

Salaried VEBA 2

Pension plans 3

All other components of Net periodic postretirement benefit cost relating to Salaried VEBA are included within Other expense, net, on our Statements of Consolidated Income.

The current service cost component of Net periodic postretirement benefit cost relating to both the pension plans and the OPEB are included within our Statements of Consolidated Income in COGS for all periods presented.

All other components of Net periodic postretirement benefit cost relating to both the pension plans and the OPEB are included within Other expense, net, on our Statements of Consolidated Income.

Components of Net Periodic Postretirement Benefit Cost.

Our results of operations included the following impacts associated with our Canadian pension plan, the Salaried VEBA, Warrick pension plan and Warrick OPEB plan:

Our results of operations included the following impacts associated with the Salaried VEBA, pension plans and OPEB:

(i) a charge for service rendered by employees;

3 unchanged sentences

and (v) amortization of net actuarial differences.

Net periodic benefit cost related to our Canadian pension plan was not material for the quarters and nine months ended September 30, 2021 and September 30, 2020.

The following table presents the components of Net periodic postretirement benefit cost relating to Salaried VEBA (in millions of dollars):

Quarter Ended September 30,

Nine Months Ended September 30,

The following table presents the components of Net periodic postretirement benefit cost (in millions of dollars):

Pension Plans 1

Salaried VEBA

Quarter Ended March 31,

Interest cost

2 unchanged sentences

Amortization of net actuarial loss

Total net periodic postretirement benefit cost relating to Salaried VEBA

Total net periodic postretirement benefit cost

Net periodic benefit cost for the quarter ended March 31, 2021 included only the Canadian pension plan.

Net periodic benefit cost for the U.S.

pension plan was not included in our Statements of Consolidated Income until the March 31, 2021 acquisition date of our Warrick County, Indiana (“Warrick”) facility.

We amortize prior service cost on a straight-line basis over the average remaining years of service to full eligibility for benefits of the active plan participants

The following table presents the components of Net periodic postretirement benefit cost relating to Warrick Pension (in millions of dollars):

Quarter Ended September 30,

Nine Months Ended September 30,

Warrick pension plan:

Interest cost

Total net periodic postretirement benefit cost relating to Warrick pension plan

The following table presents the components of Net periodic postretirement benefit cost relating to Warrick OPEB (in millions of dollars):

Quarter Ended September 30,

Nine Months Ended September 30,

Warrick OPEB plan:

Interest cost

Total net periodic postretirement benefit cost relating to Warrick OPEB plan

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

2 unchanged sentences

In conducting our business, we enter into derivative transactions, including forward contracts and options, to limit our exposure to:

(i) metal price risk related to our sale of fabricated aluminum products and the purchase of metal used as raw material for our fabrication operations;

(i) metal price risk related to our sale of fabricated aluminum products and the purchase of metal, including primary and scrap, or recycled, aluminum, our main raw material, and certain alloys used as raw material for our fabrication operations;

(ii) energy price risk relating to fluctuating prices of natural gas and electricity used in our production processes;

5 unchanged sentences

Management reviews the scope of the Hedging Committee’s activities with our Board of Directors.

We are exposed to counterparty credit risk on all of our derivative instruments, which we manage by monitoring the credit quality of our counterparties and allocating our hedging positions among multiple counterparties to limit exposure to any single entity.

Our counterparties are major investment grade financial institutions or trading companies.

Hedging transactions are governed by negotiated reciprocal credit lines, which generally require collateral to be posted above specified credit thresholds.

We believe the risk of loss is remote and contained due to counterparty credit quality, our diversification practice and collateral requirements.

In a majority of our hedging counterparty agreements, our counterparty offers us a credit line that adjusts up or down, depending on our liquidity.

Below specified liquidity thresholds, we may have to post collateral if the fair value of our net liability with such counterparty exceeds our reduced credit line.

We manage this risk by allocating hedging transactions among multiple counterparties, using options as part of our hedging activities or both.

The aggregate fair value of our derivative instruments that were in a net liability position was zero at September 30, 2021 and $ 2.7 million at December 31, 2020, and we had no collateral posted as of those dates.

We are exposed to counterparty credit risk on all of our derivative instruments, which we manage by monitoring the credit quality of our counterparties, allocating our hedging positions among multiple counterparties to limit exposure to any single entity and using options as part of the hedging strategy.

Our counterparties are major investment grade financial institutions or trading companies and our hedged transactions are governed by negotiated reciprocal credit lines, which generally require collateral to be posted above specified credit thresholds which may adjust up or down, depending on our liquidity.

As a result, we believe the risk of loss is remote and contained.

The aggregate fair value of our derivative instruments that were in a net liability position was zero at March 31, 2022 and December 31, 2021 and we had no collateral posted as of those dates.

Additionally, our firm-price customer sales commitments create incremental customer credit risk related to metal price movements.

Under certain circumstances, we mitigate this risk by periodically requiring cash collateral from them, which we classify as deferred revenue and include as a component of Other accrued liabilities.

We had no cash collateral posted from our customers at September 30, 2021 and December 31, 2020.

For more information about concentration risks concerning customers and suppliers, see Note 15.

We had no cash collateral posted from our customers at March 31, 2022 and December 31, 2021.

Cash Flow Hedges

4 unchanged sentences

Aluminum Hedges .

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 through metal price fluctuations to our customers.

For some of our higher value added products sold on a spot basis, the pass through of metal price movements can sometimes lag by as much as several months, with a favorable impact to us when metal prices decline and an adverse impact to us when metal prices increase.

For some of our higher value added products sold on a spot basis, the pass through of aluminum price movements can sometimes lag by as much as several months, with a favorable impact to us when aluminum prices decline and an adverse impact to us when aluminum prices increase.

Additionally, in certain instances, we enter into firm-price arrangements with our customers for stipulated volumes to be delivered in the future.

Because we generally purchase primary and secondary aluminum on a floating price basis, the lag in passing through metal price movements to customers on some of our higher value added products sold on a spot basis and the volume that we have committed to sell to our customers under a firm-price arrangement create metal price risk for us.

We use third-party hedging instruments to limit exposure to metal price risk related to the metal pass through lag on some of our products and firm-price customer sales contracts.

Because we generally purchase primary and secondary aluminum on a floating price basis, the lag in passing through aluminum price movements to customers on some of our higher value added products sold on a spot basis and the volume that we have committed to sell to our customers under a firm-price arrangement create aluminum price risk for us.

We use third-party hedging instruments to limit exposure to aluminum price risk related to the aluminum pass through lag on some of our products and firm-price customer sales contracts.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

1 unchanged sentence

Alloying Metals Hedges .

We are exposed to risk of fluctuating prices for Alloying Metals used as raw materials in our fabrication operations.

We, from time to time, in the ordinary course of business, enter into hedging transactions and/or physical delivery commitments with third parties to mitigate our risk from fluctuations in Alloying Metals prices that are not passed through customer contracts .

We are exposed to risk of fluctuating prices for a lloying m etals used as raw materials in our fabrication operations.

We, from time to time, in the ordinary course of business, enter into hedging transactions and/or physical delivery commitments with third parties to mitigate our risk from fluctuations in a lloying m etals prices that are not passed through pursuant to the terms of our customer contracts .

Energy Hedges .

1 unchanged sentence

We, from time to time, in the ordinary course of business, enter into hedging transactions and/or physical delivery commitments with third parties to mitigate our risk from fluctuations in natural gas and electricity prices that are not passed through pursuant to the terms of our customer contracts.

The following table summarizes the volume of our derivative and/or physical delivery commitments with energy companies in place to cover our exposure to price fluctuations of our expected variable priced energy purchases as of September 30, 2021:

The following table summarizes the percentages as of March 31, 2022 of our expected variable priced purchases of metal alloys and energy for which we have executed derivative and/or physical delivery commitments to reduce price fluctuations for each of the following years:

We have contracts in place to cover the noted percentage of our requirements at a firm or predetermined price, however our primary supplier of magnesium declared force majeure and is supplying less than the full volume contracted and our magnesium cost will fluctuate for any shortfalls until our supplier’s capacity is fully restored.

Foreign Currency Hedges.

1 unchanged sentence

We, from time to time, in the ordinary course of business, use foreign currency forward contracts in order to mitigate the exposure to currency exchange rate fluctuations related to these purchases.

Fair Value Hedges

We are exposed to foreign currency exchange risk related to firm-price commitments for equipment purchases from foreign manufacturers.

We, from time to time, in the ordinary course of business, use third-party hedging instruments to mitigate our exposure to currency exchange rate fluctuations on these purchases and designate such hedging instruments as fair value hedges.

Gain or loss related to components excluded from the assessment of effectiveness from these fair value hedges is first recognized in AOCI and subsequently reclassified to Depreciation and amortization on a straight-line basis over the term of the hedge.

Gain or loss on the hedged item (e.g., equipment purchase firm commitments) and the remaining gain or loss on the fair value hedge is recorded within Depreciation and amortization in the period that the gain or loss occurs.

Any difference between the change in the fair value of the excluded component and amounts recognized in income on a straight-line basis over the term of the hedge is recognized in AOCI.

Non-Designated Hedges of Operational Risks

From time-to-time, we enter into commodity and foreign currency exchange contracts that are not designated as hedging instruments to mitigate certain short-term commodity and currency impacts, as identified.

For derivative instruments that are not designated as hedging instruments, the gain or loss on these derivatives is recognized within COGS or Other expense, net, depending on whether it relates to commodity risk or foreign currency risk, respectively.

From time-to-time, we enter into commodity contracts that are not designated as hedging instruments to mitigate certain short‑term commodity impacts, as identified.

The gain or loss on these derivatives is recognized within COGS.

Notional Amount of Derivative Contracts

The following table summarizes our derivative positions at September 30, 2021:

The following table summarizes our derivative positions at March 31, 2022:

Maturity Period

11 unchanged sentences

4/22 through 12/22

Fixed price sales contracts

10/21 through 12/21

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

Maturity Period

6 unchanged sentences

4/22 through 12/22

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

Maturity Period

3 unchanged sentences

Regional premiums represent the premium over the London Metal Exchange price for primary aluminum which is incurred on our purchases of primary aluminum.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

The following table summarizes the amount of (gain) loss included on our Statements of Consolidated (Loss) Income associated with all derivative contracts (in millions of dollars):

Quarter Ended September 30,

Nine Months Ended September 30,

The following table summarizes the amount of gain included on our Statements of Consolidated Income associated with all derivative contracts (in millions of dollars):

Quarter Ended March 31,

Statements of Consolidated

(Loss) Income Classification

Total of income and expense line items presented in our Statements of Consolidated (Loss) Income in which the effects of hedges are recorded:

Income Classification

Total of income and expense line items presented in our Statements of Consolidated Income in which the effects of hedges are recorded:

Cash flow hedges

Cost of products sold

Fair value hedges

Depreciation and amortization

Fair value hedges

Other expense, net

(Gain) loss recognized in our Statements of Consolidated (Loss) Income related to cash flow hedges:

Gain recognized in our Statements of Consolidated Income related to cash flow hedges:

Cost of products sold

1 unchanged sentence

Cost of products sold

Alloying Metals (reclassification from AOCI due to forecasted transactions no longer probable of occurring)

Cost of products sold

Total (gain) loss recognized in our Statements of Consolidated (Loss) Income related to cash flow hedges

Loss (gain) recognized in our Statements of Consolidated (Loss) Income related to fair value hedges:

Foreign exchange contracts

Depreciation and amortization

Excluded component amortized from AOCI

Depreciation and amortization

Reclassification from AOCI related to early termination of firm commitment

Other expense, net

Net settlement related to early termination of forward contracts

Other expense, net

Total loss recognized in our Statements of Consolidated (Loss) Income related to fair value hedges

(Gain) loss recognized in our Statements of Consolidated (Loss) Income related to non-designated hedges:

Total gain recognized in our Statements of Consolidated Income related to cash flow hedges

Gain recognized in our Statements of Consolidated Income related to non-designated hedges:

Alloying Metals – Realized (gain) loss

Cost of products sold

Alloying Metals – Unrealized loss (gain)

Alloying Metals – Unrealized gain

Cost of products sold

Total loss (gain) recognized in our Statements of Consolidated (Loss) Income related to non-designated hedges

Total gain recognized in our Statements of Consolidated Income related to non-designated hedges

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

7 unchanged sentences

The following table presents the fair value of our derivative financial instruments (in millions of dollars):

As of September 30, 2021

As of March 31, 2022

As of December 31, 2021

9 unchanged sentences

Fixed price purchase contracts

Fixed price sales contracts

Total non-designated hedges

The following table presents the total amounts of derivative assets and liabilities on our Consolidated Balance Sheets (in millions of dollars):

As of September 30, 2021

As of March 31, 2022

As of December 31, 2021

12 unchanged sentences

In May 2021, we issued $ 550.0 million aggregate principal amount of 4.50 % unsecured senior notes due June 1, 2031 at 100 % of the principal amount (“4.50% Senior Notes”).

The restrictions and covenants related to our 4.50% Senior Notes are similar to those governing our pre-existing 4.625% unsecured senior notes due March 1, 2028 (“4.625% Senior Notes”).

The unamortized amount of debt issuance costs as of March 31, 2022 relating to the 4.50% Senior Notes was $ 7.8 million.

Interest expense, including amortization of debt issuance costs and debt premium, relating to the 4.50% Senior Notes was $ 6.4 million for the quarter ended March 31, 2022.

The effective interest

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

The unamortized amount of debt issuance costs as of September 30, 2021 relating to the 4.50% Senior Notes was $ 8.3 million .

Interest expense, including amortization of debt issuance costs and debt premium, relating to the 4 .50% Senior Notes was $ 6.4 million and $ 9.3 million for the quarter and nine months ended September 30, 2021 .

Interest accrues on the 4.50 % Senior Notes beginning May 20, 2021 at a rate of 4.50% per annum and is payable semiannually on June 1 and December 1 of each year.

The first interest payment date is December 1, 2021 .

The effective interest rate of the 4 .50% Senior Notes is approximately 4.7 % per annum, taking into account the amortization of debt issuance costs.

The 4.50% Senior Notes were offered and sold in transactions not required to be registered under the Securities Act of 1933 and are not entitled to any registration rights.

The fair value of the outstanding 4.50% Senior Notes, which are Level 1 liabilities calculated based on pricing from trades around the balance sheet date, was approximately $ 565.4 million at September 30, 2021.

The 4.50% Senior Notes are unsecured obligations and are guaranteed by each of our existing and future domestic subsidiaries that is a borrower or guarantor under the revolving credit facility (see Revolving Credit Facility below).

We may redeem the 4.50% Senior Notes at our option in whole or part at any time on or after June 1, 2026 at a redemption price (expressed as a percentage of principal amount) of 102.25 %, declining to 101.50 %, 100.75 % and 100 % on or after June 1, 2027, June 1, 2028 and June 1, 2029, respectively, in each case plus any accrued and unpaid interest.

At any time prior to June 1, 2026, we may also redeem up to 40 % of the 4.50% Senior Notes using the net proceeds from certain equity offerings at a redemption price equal to 104.50 % of the principal amount plus any accrued and unpaid interest.

rate of the 4 .50% Senior Notes is approximately 4.7 % per annum, taking into account the amortization of debt issuance costs.

The fair value of the outstanding 4.50% Senior Notes, which are Level 1 liabilities calculated based on pricing from trades around the balance sheet date, was approximately $ 492.2 million and $ 542.6 million at March 31, 2022 and December 31, 2021 , respectively.

6.50% Senior Notes.

1 unchanged sentence

On May 21, 2021 we redeemed in full the remaining balance of our 6.50% Senior Notes at a redemption price of 108.83 % of the principal amount plus $ 1.3 million of accrued and unpaid interest for a total net cash outflow of $ 382.2 million.

Upon redemption of the 6.50% Senior Notes, we recorded a loss on extinguishment of debt of $ 35.9 million within Other expense, net on our Statements of Consolidated (Loss) Income, which included the premium payment of $ 30.9 million and a write-off of the remaining unamortized premium and debt issuance costs of $ 5.0 million (See Note 11 for details).

The effective interest rate of the 6.50% Senior Notes is approximately 6.8 % per annum, taking into account the amortization of premium and debt issuance costs.

Interest expense, including amortization of debt issuance costs, relating to the 6.50 % Senior Notes was $ 9.2 million for the nine months ended September 30, 2021.

Interest expense, including amortization of debt issuance costs, relating to the 6.50 % Senior Notes was $ 6.0 million and $ 10.2 million for the quarter and nine months ended September 30, 2020, respectively.

The fair value of the outstanding 6.50% Senior Notes, which are Level 1 liabilities calculated based on pricing from trades around the balance sheet date, was approximately $ 376.8 million at December 31, 2020.

Upon redemption of the 6.50% Senior Notes, we recorded a loss on extinguishment of debt of $ 35.9 million within Other expense, net on our Statements of Consolidated Income, which included the premium payment of $ 30.9 million and a write-off of the remaining unamortized premium and debt issuance costs of $ 5.0 million.

The effective interest rate of the 6.50% Senior Notes was approximately 6.8 % per annum, taking into account the amortization of premium and debt issuance costs.

Interest expense, including amortization of debt issuance costs, relating to the 6.50 % Senior Notes was $ 6.0 million for the quarter ended March 31, 2021.

4.625% Senior Notes.

In November 2019, we issued $ 500.0 million aggregate principal amount of 4.625 % unsecured senior notes due March 1, 2028 at 100 % of the principal amount.

The unamortized amount of debt issuance costs as of September 30, 2021 was $ 5.8 million.

Interest expense, including amortization of debt issuance costs, relating to the 4.625% Senior Notes was $ 6.0 million and $ 18.0 million for both the quarters and nine months ended September 30, 2021 and September 30, 2020, respectively.

In November 2019, we issued $ 500.0 million aggregate principal amount of 4.625 % unsecured senior notes due March 1, 2028 at 100 % of the principal amount (“4.625% Senior Notes”).

The unamortized amount of debt issuance costs as of March 31, 2022 was $ 5.4 million.

Interest expense, including amortization of debt issuance costs, relating to the 4.625% Senior Notes was $ 6.0 million for both quarters ended March 31, 2022 and March 31, 2021, respectively.

The effective interest rate of the 4.625% Senior Notes was approximately 4.8 % per annum, taking into account the amortization of debt issuance costs.

The fair value of the outstanding 4.625% Senior Notes, which are Level 1 liabilities, was approximately $ 517.9 million and $ 521.3 million at September 30, 2021 and December 31, 2020, respectively.

The amount of interest expense capitalized as construction in progress was $ 0.2 million and $ 0.3 million during the quarters ended September 30, 2021 and September 30, 2020, respectively.

The amount of interest expense capitalized as construction in progress was $ 0.6 million and $ 0.8 million during the nine months ended September 30, 2021 and September 30, 2020, respectively.

The fair value of the outstanding 4.625% Senior Notes, which are Level 1 liabilities, was approximately $ 470.2 million and $ 506.9 million at March 31, 2022 and December 31, 2021, respectively.

The amount of interest expense capitalized as construction in progress was $ 0.6 million and $ 0.1 million during the quarters ended March 31, 2022 and March 31, 2021, respectively.

Revolving Credit Facility

Our credit agreement with Wells Fargo Bank, National Association, as administrative agent, and the other financial institutions party thereto (“Revolving Credit Facility”) provides us with a $ 375.0 million funding commitment through October 2024.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

The following table summarizes availability and usage of our Revolving Credit Facility as determined by a borrowing base calculated as of September 30, 2021 (in millions of dollars):

Revolving Credit Facility borrowing commitment

Borrowing base availability

Outstanding borrowings under Revolving Credit Facility

Outstanding letters of credit under Revolving Credit Facility

Remaining borrowing availability

On April 7, 2022, we entered Amendment No.

3 to our Revolving Credit Facility.

See Note 13 for details regarding the revised terms of the Revolving Credit Facility as amended.

Commitments and Contingencies

12 unchanged sentences

Furthermore, based on advancements in technology, we signed an Amended Agreed Order with Ecology in 2020 to evaluate and implement new technologies for PCB removal from groundwater on a pilot basis.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

The primary technology we are evaluating is Ultraviolet Light Advanced Oxidation Process.

As the long-term success of the new methodology cannot be reasonably determined at this time, it is possible we may need to make upward adjustments to our related accruals and cost estimates as the long term results become available.

Pursuant to a consent agreement with the Ohio Environmental Protection Agency (“OEPA”), we initiated an investigational study of our Newark facility related to historical on-site waste disposal.

Pursuant to a consent agreement with the Ohio Environmental Protection Agency (“OEPA”), we initiated an investigational study of our Newark, Ohio (“Newark”) facility related to historical on-site waste disposal.

During the quarter ended December 31, 2018, we submitted our remedial investigation study to the OEPA for review and approval.

The final remedial investigation report was approved by the OEPA during the quarter ended December 31, 2020.

We are currently preparing the required feasibility study, which we expect to submit to the OEPA for review during the quarter ending December 31, 2021.

We are currently preparing the required feasibility study, which we expect to submit to the OEPA for review during the quarter ending September 30, 2022.

The actual and final remediation cost estimates will not be fully determinable until the feasibility study has been accepted by the OEPA and the selected remediation design work plans are completed, which we expect to occur in the next 17 to 23 months .

At September 30, 2021, our environmental accrual of $ 17.2 million represented our estimate of the incremental remediation cost based on:

At March 31, 2022, our environmental accrual of $ 16.4 million represented our estimate of the incremental remediation cost based on:

(i) proposed alternatives in the final feasibility study related to the Trentwood facility;

5 unchanged sentences

It is reasonably possible that our recorded estimate will change in the next 12 months.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

Warrick Rolling Mill Potential CARO Liability.

We identified potential conditional asset retirement obligations (“CAROs”) related to the future removal and disposal of asbestos that is contained within the Warrick rolling mill facility.

Warrick Rolling Mill CARO Liability.

During the quarter ended March 31, 2022, we identified conditional asset retirement obligations (“CAROs”) related to the future removal and disposal of asbestos that is contained within the Warrick rolling mill facility.

We believe that the asbestos is appropriately contained in accordance with current environmental regulations.

1 unchanged sentence

We are required to record the fair value of CAROs if they can be reasonably estimated.

As of September 30, 2021, we are in the process of evaluating and determining the fair value of a potential CARO, if any, acquired as part of the Warrick acquisition.

No liability has been recorded on our accompanying Consolidated Balance Sheets as the liability is currently indeterminable.

We may conclude at a future date that a CARO exists and we could be required to record a liability for the related obligations in amounts that are material to our consolidated financial statements.

While we do not currently expect that the CARO liability will be material to our consolidated financial statements, there can be no assurance as to the existence of a CARO obligation and corresponding liabilities that we may be required to record in the future.

As of March 31, 2022, we established a liability of $ 2.3 million related to these CAROs within Long-term liabilities on our Consolidated Balance Sheets.

Other Contingencies.

8 unchanged sentences

The following table presents the changes in the accumulated balances for each component of AOCI (in millions of dollars):

Quarter Ended September 30,

Nine Months Ended September 30,

Quarter Ended March 31,

Defined Benefit Pension Plan and Salaried VEBA:

3 unchanged sentences

income tax expense 2

Net amortization reclassified from AOCI to Net (loss) income

Translation impact on Canadian pension plan AOCI balance

Other comprehensive income, net of tax

Ending balance

Available for Sale Securities:

Beginning balance

Unrealized gain on available for sale securities

income tax benefit (expense)

Net unrealized gain on available for sale securities

Reclassification of unrealized loss (gain) upon sale of available for sale securities 3

income tax benefit 2

Net loss (gain) reclassified from AOCI to Net (loss) income

Other comprehensive income (loss), net of tax

Ending balance

Cash Flow Hedges:

Beginning balance

Unrealized gain (loss) on cash flow hedges

income tax (expense) benefit

Net unrealized gain (loss) on cash flow hedges

Reclassification of unrealized (gain) loss upon settlement of cash flow hedges

Reclassification due to forecasted transactions no longer probable of occurring

income tax benefit (expense) 2

Net (gain) loss reclassified from AOCI to Net (loss) income

Other comprehensive income, net of tax

Ending balance 4

Fair Value Hedges:

Beginning balance

Unrealized gain (loss) on fair value hedges

Unrealized gain on cash flow hedges

income tax expense

Net unrealized gain on cash flow hedges

Reclassification of unrealized gain upon settlement of cash flow hedges

income tax benefit 2

Net unrealized gain (loss) on fair value hedges

Excluded component amortized from OCI to Net (loss) income

Reclassification due to cancellation of firm commitment

income tax benefit (expense) 2

Net loss reclassified from AOCI to Net (loss) income

Net gain reclassified from AOCI to Net income

Other comprehensive income, net of tax

5 unchanged sentences

Total AOCI ending balance

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

Amounts amortized out of AOCI relating to Salaried VEBA adjustments were included within Other expense, net, as a component of Net periodic postretirement benefit cost relating to Salaried VEBA.

Income tax amounts reclassified out of AOCI were included as a component of Income tax (provision) benefit.

Amounts reclassified out of AOCI relating to sales of available for sale securities were included as a component of Other expense, net.

We use the specific identification method to determine the amount reclassified out of AOCI.

As of September 30, 2021, we estimate a net mark-to-market gain before tax of $ 38.8 million in AOCI will be reclassified into Net (loss) income upon settlement within the next 12 months.

Restructuring

In order to align our projected operational requirements with reduced short and mid-term commercial aerospace demand as a result of the Coronavirus Disease 2019 (“COVID-19”) pandemic, we initiated a restructuring plan during the quarter ended June 30, 2020, which consisted primarily of reduction in force measures (“2020 Plan”).

Employee costs related to the 2020 Plan were included within Restructuring costs in our Statements of Consolidated (Loss) Income and consisted of severance, voluntary buyout packages, outplacement services, estimated medical costs and associated payroll costs .

Substantially all of the costs associated with the restructuring efforts initiated under the 2020 Plan were incurred and expensed as of December 31, 2020.

We have incurred total Restructuring costs of $ 6.7 million under the 2020 Plan through September 30, 2021.

The following table summarizes the changes to our 2020 Plan liabilities during the nine months ended September 30, 2021 (in millions of dollars):

Nine Months Ended September 30, 2021

Balance as of December 31, 2020

Cash payments

Other adjustments 1

Balance as of September 30, 2021

In March 2021 and May 2021, we revised our production forecast for 2021, thereby reducing the estimated number of headcount reductions necessary as compared with our initial restructuring plan.

As such, included in Other adjustments is a reduction to our estimated restructuring liability of $ 0.8 million with an offset to Restructuring costs to accommodate the revised headcount requirements.

As of March 31, 2022, we estimate a net mark-to-market gain before tax of $ 41.6 million in AOCI will be reclassified into Net income upon settlement within the next 12 months.

Other Expense , Net

Other expense , net, consisted of the following (in millions of dollars):

Quarter Ended September 30,

Nine Months Ended September 30,

Quarter Ended March 31,

Interest income

Net periodic postretirement benefit cost

Realized gain on available for sale securities

Unrealized gain on equity securities

Gain (loss) on extinguishment of debt

Unrealized loss on equity securities

All other, net

4 unchanged sentences

The income tax (provision) benefit consisted of the following (in millions of dollars):

Quarter Ended September 30,

Nine Months Ended September 30,

The income tax (provision) benefit for the quarters ended September 30, 2021 and September 30, 2020 was $( 8.4 ) million and $ 0.7 million, respectively, reflecting an effective tax rate of 137 % and 222 %, respectively.

The difference between the effective tax rate and the projected blended statutory tax rate for the quarter ended September 30, 2021 was primarily due to an increase of 116 % of taxable income for a change in forecasted earnings and its impact on the annual effective tax rate, partially offset by a decrease of 2 % related to the valuation allowance for certain state net operating losses and a decrease of 1 % for the recognition of excess tax benefits from stock-based compensation.

The difference between the effective tax rate and the projected blended statutory tax rate for the quarter ended September 30, 2020 was primarily due to a decrease of 211 % of taxable income for a change in forecasted earnings and its impact on the annual effective tax rate, partially offset by an increase of 22 % of taxable income to the valuation allowance for certain state net operating losses.

The income tax benefit (provision) for the nine months ended September 30, 2021 and September 30, 2020 was $ 7.4 million and $( 10.2 ) million, respectively, reflecting an effective tax rate of 27 % and 31 % respectively.

The difference between the effective tax rate and the projected blended statutory tax rate for the nine months ended September 30, 2021 was primarily due to:

(i) an increase of 4 % related to the valuation allowance for certain state net operating losses;

(ii) an increase of 3 % related to tax credits;

(iii) an increase of 2 % for the recognition of excess tax benefits from stock-based compensation;

and (iv) an increase of 2 % for a change in state tax rate due to the Warrick acquisition, partially offset by a decrease related to permanent items of 7 %, including non-deductible compensation expense and foreign withholding tax.

The difference between the effective tax rate and the projected blended statutory tax rate for the nine months ended September 30, 2020, was primarily due to an increase of 4 % of taxable income related to non-deductible compensation expense and an increase of 4 % of taxable income to the valuation allowance for certain state net operating losses, partially offset by a decrease of 2 % of taxable income for the recognition of excess tax benefits from stock-based compensation.

Our gross unrecognized benefits relating to uncertain tax positions were $ 4.1 million and $ 3.8 million at September 30, 2021 and December 31, 2020, respectively, of which, $ 4.1 million and $ 3.8 million would be recorded through our income tax provision and thus impact the effective tax rate at September 30, 2021 and December 31, 2020, respectively, if the gross unrecognized tax benefits were to be recognized.

Quarter Ended March 31,

The income tax (provision) benefit for the quarters ended March 31, 2022 and March 31, 2021 was $( 3.3 ) million and $ 0.3 million, respectively, reflecting an effective tax rate of 29 % and ( 6 %), respectively.

The difference between the effective tax rate and the projected blended statutory tax rate for the quarter ended March 31, 2022 was primarily due to:

(i) an increase of 4 % of pre‑tax income for the recognition of excess book benefits from stock based compensation;

(ii) an increase of 1 % of pre-tax income related to state tax adjustments for certain state net operating losses;

and (iii) an increase of 1 % of pre-tax income related to non‑deductible compensation expense, partially offset by a decrease of 2 % of pre-tax income related to a Federal Research and Development credit.

The difference between the effective tax rate and the projected blended statutory tax rate for the quarter ended March 31, 2021 was primarily due to:

(i) a decrease of 15 % of pre-tax income for a change in state tax rate due to the Warrick rolling mill acquisition;

(ii) a decrease of 10 % of pre-tax income related to the valuation allowance for certain state net operating losses;

and (iii) a decrease of 6 % of pre-tax income for the recognition of excess tax benefits from stock-based compensation.

Our gross unrecognized benefits relating to uncertain tax positions were $ 4.6 million and $ 4.1 million at March 31, 2022 and December 31, 2021, respectively, of which, $ 4.6 million and $ 4.1 million would be recorded through our income tax provision and thus impact the effective tax rate at March 31, 2022 and December 31, 2021, respectively, if the gross unrecognized tax benefits were to be recognized.

We do not expect our gross unrecognized tax benefits to significantly change within the next 12 months.

Net (Loss) Income Per Share

Basic net (loss) income per share is computed by dividing distributed and undistributed net (loss) income allocable to common shares by the weighted-average number of common shares outstanding during the applicable period.

Net Income Per Share

Basic net income per share is computed by dividing distributed and undistributed net income allocable to common shares by the weighted-average number of common shares outstanding during the applicable period.

The basic weighted-average number of common shares outstanding during the period excludes non-vested share-based payment awards.

Diluted net (loss) income per share was calculated under the treasury stock method for the quarters and nine months ended September 30, 2021 and September 30, 2020, which in both periods was more dilutive than the two-class method.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

The following table sets forth the computation of basic and diluted net (loss) income per share (in millions of dollars, except share and per share amounts):

Quarter Ended September 30,

Nine Months Ended September 30,

Net (loss) income

Diluted net income per share was calculated under the treasury stock method for the quarters ended March 31, 2022 and March 31, 2021, which in both periods was more dilutive than the two-class method.

The following table sets forth the computation of basic and diluted net income per share (in millions of dollars, except share and per share amounts):

Quarter Ended March 31,

Denominator – Weighted-average common shares outstanding (in thousands):

dilutive effect of non-vested common shares, restricted stock units and performance shares 1

Net (loss) income per common share, Basic:

Net (loss) income per common share, Diluted:

Net income per common share, Basic:

Net income per common share, Diluted:

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

Quantities in the following discussion are denoted in whole shares.

During the quarter and nine months ended September 30, 2021, approximately 210,000 and 198,000 potentially dilutive shares, respectively, were excluded from the computation of net loss per share as their effect would have been anti-dilutive.

During the quarter and nine months ended September 30, 2020, approximately, 69,000 and 41,000 shares, respectively, were excluded from the weighted-average diluted shares computation as their inclusion would have been anti‑dilutive.

During the quarters ended March 31, 2022 and March 31, 2021, approximately 33,000 and 22,000 shares, respectively, were excluded from the weighted-average diluted shares computation as their inclusion would have been anti‑dilutive.

Supplemental Cash Flow Information

Nine Months Ended September 30,

Quarter Ended March 31,

(In millions of dollars)

6 unchanged sentences

Finance lease liabilities arising from obtaining finance lease assets

As of September 30,

As of March 31,

(In millions of dollars)

7 unchanged sentences

Business, Product and Geographical Area Information

Our primary line of business is the production of semi-fabricated specialty aluminum mill products, such as aluminum plate and sheet and extruded and drawn products, primarily used in aerospace and high strength (“Aero/HS products”), beverage and food

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

packaging products (“Packaging”), automotive ( “ Automotive Extrusions ” ), general engineering ( “ GE products ” ) and other industrial ( “ Other products ” ).

Our primary line of business is the production of semi-fabricated specialty aluminum mill products, such as bare and coated coils, plate and sheet and extruded and drawn products, for the following end market applications:

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

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

(iii) automotive (“Automotive Extrusions”);

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

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

We operate 13 focused production facilities in the United States and one in Canada.

Our chief operating decision maker reviews and evaluates our business as a single operating segment.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

The following table presents Net sales by end market applications and by timing of control transfer (in millions of dollars):

Quarter Ended September 30,

Nine Months Ended September 30,

Quarter Ended March 31,

Aero/HS products

7 unchanged sentences

The following table presents geographic information for income taxes paid (in millions of dollars):

Quarter Ended September 30,

Nine Months Ended September 30,

Quarter Ended March 31,

Income taxes paid:

2 unchanged sentences

Dividend Declaration.

On October 15, 2021 , we announced that our Board of Directors declared a quarterly cash dividend of $ 0.72 per common share.

As such, we expect to pay approximately $ 11.6 million (including dividend equivalents) on or about November 15, 2021 to stockholders of record and the holders of certain restricted stock units at the close of business on October 25, 2021 .

On April 14, 2022 , we announced that our Board of Directors declared a quarterly cash dividend of $ 0.77 per common share.

As such, we expect to pay approximately $ 12.5 million (including dividend equivalents) on or about May 13, 2022 to stockholders of record and the holders of certain restricted stock units at the close of business on April 25, 2022 .

Revolving Credit Facility Amendment.

On April 7, 2022, we entered into the Amendment No.

3 to our Revolving Credit Facility (as amended, the “Amended Credit Agreement”) with Wells Fargo Bank, National Association, the administrative agent, and the other financial institutions party thereto.

The Amended Credit Agreement among others:

(i) increased the commitment from $ 375.0 million to $ 575.0 million (of which up to a maximum of $ 50 million may be utilized for letters of credit);

(ii) extended the maturity date from the earlier of (a) February 15, 2024 (if certain conditions were met) and (b) October 30, 2024 to April 7, 2027;

(iii) removed eligible equipment from the borrowing base and as collateral;

and (iv) updated relevant benchmark provisions to reference SOFR instead of LIBOR.

The following table summarizes availability and usage of our Revolving Credit Facility as determined by a borrowing base calculated as follows (in millions of dollars):

Pro Forma as of March 31, 2022 1

As of December 31, 2021

Revolving Credit Facility borrowing commitment

Borrowing base availability

Outstanding borrowings under Revolving Credit Facility

Outstanding letters of credit under Revolving Credit Facility

Remaining borrowing availability

Represents borrowing base calculated as if the agreement was in effect at March 31, 2022.

Management ’ s Discussion and Analysis of Financial Condition and Results of Operations

4 unchanged sentences

These factors include:

(i) the effectiveness of management ’ s strategies and decisions, including strategic investments, capital spending strategies and the execution of those strategies;

(i) the effectiveness of management ’ s strategies and decisions, including strategic investments, capital spending strategies, processes and countermeasures implemented to address operational and supply chain challenges and the execution of those strategies;

(ii) general economic and business conditions, including the impact of the global outbreak of Coronavirus Disease 2019 (“COVID-19”) and governmental and other actions taken in response, cyclicality, reshoring, supply interruptions, including the most recent disruptions resulting from the supply demand imbalances in the magnesium and silicon markets, and other conditions that impact demand drivers in the aerospace/high strength, automotive, general engineering, packaging and other end markets we serve;

1 unchanged sentence

(iv) changes or shifts in defense spending due to competing national priorities;

(v) developments in technology;

(vi) new or modified statutory or regulatory requirements;

and (vii) changing prices and market conditions.

This Item, Part II, Item 1A.

“Risk Factors” included in this Report and Part I, Item 1A.

(v) pricing, market conditions and our ability to effectively execute commercial and labor strategies, pass through cost increases, including the institution of surcharges, and flex costs in response to changing economic conditions and inflation;

(vi) developments in technology;

(vii) the impact of our future earnings, cash flows, financial condition, capital requirements and other factors on our financial strength and flexibility;

(viii) new or modified statutory or regulatory requirements;

and (ix) the successful integration of acquired operations and technologies continue to drive innovative solutions and further advance our capabilities.

This Item and Part I, Item 1A.

“ Risk Factors ” included in our Annual Report on Form 10-K for the year ended December 31, 2021 each identify other factors that could cause actual results to vary.

5 unchanged sentences

This information contains certain non-GAAP financial measures.

A non-GAAP financial measure is defined as a numerical measure of a company’s financial performance that excludes or includes amounts so as to be different than the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles (“GAAP”) in the statements of (loss) income, balance sheets or statements of cash flows of the company.

A non-GAAP financial measure is defined as a numerical measure of a company’s financial performance that excludes or includes amounts so as to be different than the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles (“GAAP”) in the statements of income, balance sheets or statements of cash flows of the company.

We have provided a reconciliation of non‑GAAP financial measures to the most directly comparable financial measure in the accompanying tables.

8 unchanged sentences

Our intent is to allow users of the financial statements to consider our results both in light of and separately from such items.

For a reconciliation of Adjusted EBITDA to Net (loss) income, see “Results of Operations - Selected Operational and Financial Information ” below.

For a reconciliation of Adjusted EBITDA to Net income, see “Results of Operations - Selected Operational and Financial Information ” below.

Reconciliations of certain forward-looking non-GAAP financial measures to comparable GAAP measures are not provided because certain items required for such reconciliations are outside of our control and/or cannot be reasonably predicted or provided without unreasonable effort.

Metal Pricing Policies

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 VAR 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.

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.” 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 VAR 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.

Our pricing policies and hedging program are intended to significantly reduce or eliminate the impact on our profitability of fluctuations in underlying metal price so that our earnings are predominantly associated with the conversion of aluminum to semi‑fabricated mill products.

To allow users of our financial statements to consider the impact of metal cost on our Net sales, we disclose Net sales as well as VAR, which is Net sales less the Hedged Cost of Alloyed Metal.

As used in this discussion, “Hedged Cost of Alloyed Metal” is the cost of our metal inputs at the average Midwest Transaction Price of aluminum plus the cost of alloying elements and any realized gains and/or losses on settled hedges related to the metal sold in the referenced period.

The average Midwest Transaction Price of aluminum reflects the primary aluminum supply/demand dynamics in North America.

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

Our pricing policies and hedging program are intended to significantly reduce or eliminate the impact on our profitability of fluctuations in underlying price of primary and scrap, or recycled, aluminum, our main raw material, and alloys so that our earnings are predominantly associated with the conversion of aluminum to semi‑fabricated mill products.

To allow users of our financial statements to consider the impact of aluminum and alloy cost on our Net sales, we disclose Net sales as well as VAR, which is Net sales less the Hedged Cost of Alloyed Metal.

As used in this discussion, “Hedged Cost of Alloyed Metal” is the cost of aluminum at the average Midwest Transaction Price (“Midwest Price”) plus the cost of alloying elements and any realized gains and/or losses on settled hedges related to the metal sold in the referenced period.

The average Midwest Price of aluminum reflects the primary aluminum supply/demand dynamics in North America.

For a reconciliation of VAR to Net sales, see “Results of Operations - Selected Operational and Financial Information ” below.

1 unchanged sentence

We manufacture and sell semi-fabricated specialty aluminum mill products for the following end market applications:

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

automotive (“Automotive Extrusions”);

general engineering (“GE products”);

aluminum beverage and food packaging (“Packaging”), see “Warrick Acquisition” below;

and other industrial (“Other products”).

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

(ii) aluminum beverage and food packaging (“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.

1 unchanged sentence

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.

With respect to flat-rolled aluminum mill products, our heat treat plate and sheet focus is on 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 addition, we also produce flat-rolled aluminum products for the beverage and food‑packaging industry, primarily serving the North America can market.

Our Packaging products require demanding attributes and can be further processed to include a coating and slitting depending on customer specifications.

Similarly, in the areas of aluminum extrusions, 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.

We primarily serve North American demand for extruded mill products.

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

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, which are produced at our rolling mill in Spokane, Washington (“Trentwood”), are Aero/HS products (which we sell globally) and GE products (which we predominantly sell within North America).

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.

Our Packaging products require demanding attributes and can be further processed to include coating and slitting depending on customer specifications.

In the areas of aluminum extrusions, 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.

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

Additionally, we have a facility in Columbia, New Jersey, that 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 consolidated Net sales for the nine months ended September 30, 2021 totaled $1,815.6 million on 788.7 million pounds shipped from our facilities.

We employed approximately 3,900 people at September 30, 2021.

Our consolidated Net sales for the three months ended March 31, 2022 totaled $948.8 million on 335.4 million pounds shipped from our facilities.

We employed approximately 3,972 people at March 31, 2022.

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, food and beverage packaging manufacturers and metal service centers.

As of September 30, 2021, approximately 69% of our shipments has been sold direct to manufacturers or tier one suppliers and approximately 31% has been sold to metal service centers.

As of March 31, 2022, approximately 72% of our shipments has been sold direct to manufacturers or tier one suppliers and approximately 28% has been 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.

Warrick Acquisition

On March 31, 2021, after the close of business, we completed our purchase of Alcoa Warrick LLC and certain assets comprising the aluminum casting and rolling mill facility located in Warrick County, Indiana from Alcoa Corporation (“Alcoa”).

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

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 Warrick 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.

Highlights of the quarter ended September 30, 2021 include:

Commercial aerospace recovery continues;

General engineering demand remains robust;

Packaging demand continues to demonstrate strong strategic growth opportunities;

Automotive demand strong;

recovery delayed due to semiconductor chip shortage;

Continued labor constraints and inefficiencies, rapidly rising material and other inflationary costs, supply chain disruptions impacted efficiencies and production levels;

Paid cash dividends and dividend equivalents of $0.72 per share or $11.6 million during the quarter ended September 30, 2021.

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.

Highlights of the quarter ended March 31, 2022 include:

Strong demand for GE products and Packaging;

Steadily increasing demand for Aero/HS products;

Flat demand for Automotive Extrusions due to continued shortage of semiconductor chips;

Higher freight costs due to rail and port shipping constraints;

Lingering supply chain issues related to metal and magnesium impacted results;

Cash dividends and dividend equivalents of $0.77 per share or $12.5 million paid during the quarter ended March 31, 2022.

Results of Operations

Consolidated Results of Operations

Net sales totaled $750.6 million and $255.7 million for the quarters ended September 30, 2021 and September 30, 2020, respectively, reflecting a 206.3 million pound (189%) increase in shipment volume and a $0.03/lb (1%) increase in average realized sales price per pound.

Net sales totaled $948.8 million and $324.0 million for the quarters ended March 31, 2022 and March 31, 2021, respectively, reflecting a 198.5 million pound (145%) increase in shipment volume and a $0.46/lb (19%) increase in average realized sales price per pound.

The shipment volume increase reflected:

(i) a 174.7 million pound addition in Packaging due to our Warrick acquisition;

(ii) a 21.1 million pound (39%) increase in GE products reflecting continued strength in underlying demand and restocking in the service center supply chain;

and (iii) a 14.8 million pound (54%) increase in Aero/HS products compared to the quarter ended September 30, 2020, reflecting continued strength in demand for defense applications, increasing demand for business jets and improving demand for commercial aerospace as airline travel recovers, partially offset by a 5.1 million pound (21%) decrease in Automotive Extrusions driven by the shortage of semiconductor chips that has impacted North American production levels.

The average realized sales price per pound reflected a $0.48/lb (52%) increase in average Hedged Cost of Alloyed Metal price per pound offset by a $0.45/lb (32%) decrease in VAR per pound due primarily to the introduction of lower VAR per pound Packaging products, as well as approximately $15.0 million of additional revenue recognized in the quarter ended September 30, 2020 related to modifications to the 2020 customer declarations under multi-year contracts.

See the table in “ Selected Operational and Financial Information” below for further details.

Net sales totaled $1,815.6 million and $900.7 million for the nine months ended September 30, 2021 and September 30, 2020, respectively, reflecting a 405.6 million pound (106%) increase in shipment volume and a $0.05/lb (2%) decrease in average realized sales price per pound.

The shipment volume increase primarily reflected:

(i) a 359.5 million pound addition in Packaging due to our Warrick acquisition;

(ii) a 51.4 million pound (29%) increase in GE products reflecting strong underlying demand;

and (iii) an 11.9 million pound (20%) increase in Automotive Extrusions primarily reflecting the recovery from the COVID‑19 pandemic related automotive supply chain shutdowns that occurred during the quarter ended September 30, 2020, partially offset by a 22.9 million pound (16%) decrease in Aero/HS products reflecting COVID‑19 pandemic related lower demand for our commercial aerospace products.

The decrease in average realized sales price per pound reflected a $0.36/lb (39%) increase in average Hedged Cost of Alloyed Metal prices per pound offset by a $0.41/lb (29%) decrease in VAR per pound due primarily to the introduction of lower VAR per pound Packaging products.

(ii) a 16.4 million pound (23%) increase in GE products reflecting continued strength in underlying demand, restocking in the service center supply chain and improved pricing;

and (iii) a 9.4 million pound (26%) increase in Aero/HS products, reflecting strong demand for defense and business jet applications and a steady recovery in demand for commercial aerospace applications, partially offset by a 3.9 million pound (14%) decrease in Automotive Extrusions driven by the shortage of semiconductor chips that has impacted North American production levels.

The average realized sales price per pound reflected a $0.61/lb (54%) increase in average Hedged Cost of Alloyed Metal price per pound offset by a $0.15/lb (12%) decrease in VAR per pound due primarily to the introduction of lower VAR per pound Packaging products.

See the table in “ Selected Operational and Financial Information” below for further details.

Cost of Products Sold, Excluding Depreciation and Amortization and Other Items.

Cost of products sold, excluding depreciation and amortization and other items for the quarter ended September 30, 2021 totaled $677.8 million, or 90% of Net sales, compared to $208.4 million, or 82% of Net sales, for the quarter ended September 30, 2020.

The increase of $469.4 million was largely attributable to the addition of Packaging and reflected a $343.9 million increase in Hedged Cost of Alloyed Metal and a $125.5 million increase in net manufacturing conversion and other.

Of the $343.9 million increase in Hedged Cost of Alloyed Metal, $191.7 million was due to

higher shipment volume, as discussed above in “ Net Sales,” and $152.2 million was due to higher hedged metal prices .

The $125.5 million increase in net manufacturing conversion and other costs was primari ly due to the addition of Packaging and additional overhead associated with the related increase in volume.

See “ Selected Operational and Financial Information ” below for a further discussion of the comparative results of operations for the quarters ended September 30, 2021 and September 30, 2020 .

Cost of products sold, excluding depreciation and amortization and other items for the nine months ended September 30, 2021 totaled $1,613.6 million, or 89% of Net sales, compared to $719.5 million, or 80% of Net sales, for the nine months ended September 30, 2020.

Cost of products sold, excluding depreciation and amortization and other items for the quarter ended March 31, 2022 totaled $865.9 million, or 91% of Net sales, compared to $262.5 million, or 81% of Net sales, for the quarter ended March 31, 2021.

The increase of $603.4 million was largely attributable to the addition of Packaging and reflected a $426.1 million increase in Hedged Cost of Alloyed Metal and a $177.3 million increase in net manufacturing conversion and other costs.

Of the $665.4 million increase in Hedged Cost of Alloyed Metal, $375.9 million was due to higher shipment volume and $289.5 million was due to higher hedged metal prices, as discussed above in “ Net Sales.

” The $228.7 million increase in net manufacturing conversion and other costs was primarily due to the addition of Packaging and additional overhead associated with the related increase in volume.

See “ Selected Operational and Financial Information” below for a further discussion of the comparative results of operations for the nine months ended September 30, 2021 and September 30, 2020.

Of the $426.1 million increase in Hedged Cost of Alloyed Metal, $220.8 million was due to higher shipment volume, as discussed above in “ Net Sales,” and $205.3 million was due to higher hedged metal prices .

The $177.3 million increase in net manufacturing conversion and other costs was primarily due to the addition of Packaging and additional overhead associated with the related increase in volume, as well as higher energy, freight, benefit and metal costs driven by inflation, transportation bottlenecks and supply chain inefficiencies.

See “ Selected Operational and Financial Information” below for a further discussion of the comparative results of operations for the quarters ended March 31, 2022 and March 31, 2021.

Selling, General, Administrative, Research and Development ( “ SG&A and R&D ” ).

SG&A and R&D expense totaled $28.1 million and $21.3 million for the quarters ended September 30, 2021 and September 30, 2020, respectively and $90.8 million and $67.9 million for the nine months ended September 30, 2021 and September 30, 2020, respectively.

The increase during the quarter ended September 30, 2021 was primarily due to a $4.0 million increase in costs related to the addition of Warrick operations and related transition service agreements (“TSAs”) with Alcoa to facilitate the integration and a $2.4 million increase in salaries, benefits and incentives.

The increase for the nine months ended September 30, 2021 compared with September 30, 2020 was due primarily to:

(i) a $13.7 million increase in acquisition related costs, which were primarily comprised of professional fees;

(ii) an $8.1 million increase in costs related to the addition of Warrick operations and related TSAs with Alcoa to facilitate the integration;

and (iii) a $4.2 million increase in salaries and benefits, partially offset by a $1.7 million reduction in legacy environmental expenses.

Restructuring (Benefit) Cost.

See Note 10 of Notes to Interim Consolidated Financial Statements included in this Report for further information regarding the restructuring plan.

Other Operating Charges (Income), net .

Other operating charges (income), net, was $0.3 million of charges for the quarter ended September 30, 2020 and $0.8 million of income for the nine months ended September 30, 2020.

During the quarter and nine months ended September 30, 2020, we recognized $0.4 million and $0.5 million of impairment charges related to property, plant and equipment, which in both periods were offset by government grants received (see Note 1 of Notes to Interim Consolidated Financial Statements included in this Report for details of government grants received).

SG&A and R&D expense totaled $30.2 million and $31.8 million for the quarters ended March 31, 2022 and March 31, 2021, respectively.

The decrease during the quarter ended March 31, 2022 was primarily due to a $8.3 million decrease in consulting costs, partially offset by:

(i) a $3.9 million increase in salaries, benefits and incentives and (ii) a $3.1 million increase in costs related to the addition of Warrick operations and related transition service agreements (“TSAs”) with Alcoa Corporation to facilitate the integration.

Restructuring Cost (Benefit).

Restructuring cost (benefit) was a benefit of $0.7 million for the quarter March 31, 2021 due to cost estimate revisions.

We fulfilled all remaining obligations under this restructuring plan as of December 31, 2021.

Interest Expense.

Interest expense represents cash and non-cash interest expense incurred on our unsecured senior notes and our credit agreement with Wells Fargo Bank, National Association, as administrative agent, and the other financial institutions party thereto (“Revolving Credit Facility”), net of capitalized interest.

Interest expense was $12.5 million and $12.1 million for the quarters ended September 30, 2021 and September 30, 2020, respectively, and $37.2 million and $28.7 million for the nine months ended September 30, 2021 and September 30, 2020, respectively.

See Note 7 of Notes to Interim Consolidated Financial Statements included in this Report for a discussion of our debt and credit facilities that were in effect during the quarters and nine months ended September 30, 2021 and September 30, 2020 and interest expense capitalized as part of construction in progress.

Interest expense was $12.2 million and $12.3 million for the quarters ended March 31, 2022 and March 31, 2021, respectively.

See Note 5 of Notes to Interim Consolidated Financial Statements included in this Report for a discussion of our debt and credit facilities that were in effect during the quarters ended March 31, 2022 and March 31, 2021 and interest expense capitalized as part of construction in progress.

Other Expense, Net.

7 unchanged sentences

The table below provides selected operational and financial information (in millions of dollars):

Quarter Ended September 30,

Nine Months Ended September 30,

Net (loss) income

Quarter Ended March 31,

Interest expense

5 unchanged sentences

Adjustments to plant-level LIFO 1

Mark-to-market loss (gain) on derivative instruments 2

Workers' compensation cost due to discounting

Non-cash asset impairment charge

Environmental expenses 3

Mark-to-market gain on derivative instruments 2

Acquisition costs 3

3 unchanged sentences

This line item represents the conversion from GAAP LIFO applied on a consolidated basis to monthly LIFO applied on a plant-by-plant basis.

For the quarter and nine months ended September 30, 2021, this line item reflects a $1.4 million non-run-rate LIFO benefit and a $6.4 million non-run-rate LIFO charge, respectively, that resulted from a purchase accounting adjustment to step-up Warrick’s inventory to fair value.

Mark-to-market loss (gain) on derivative instruments for 2021 and 2020 represents:

(i) the reversal of mark-to-market loss (gain) on commodity hedges entered into prior to the adoption of Accounting Standards Update (“ASU”) No.

Mark-to-market gain on derivative instruments represented:

(i) for 2022 and 2021, the gain on non-designated commodity hedges and (ii) for 2021, the reversal of mark-to-market (gain) loss on commodity hedges entered into prior to the adoption of Accounting Standards Update (“ASU”) No.

2017-12, Derivatives and Hedging (Topic 815):

Targeted Improvements to Accounting for Hedging Activities (“ASU 2017-12”) and settled in the periods presented above.

(ii) loss (gain) on non-designated commodity hedges;

and (iii) reclassifications out of Accumulated other comprehensive loss due to forecasted transactions no longer probable of occurring.

Adjusted EBITDA reflects the realized gains and losses related to these derivatives upon settlement.

Non-run-rate environmental expenses are related to legacy activities at operating facilities prior to July 6, 2006.

See Note 8 of Notes to Interim Consolidated Financial Statements included in this Report for additional information relating to the environmental expenses.

Acquisition costs are non-run-rate acquisition-related transaction costs, which include legal and consulting fees, as well non‑cash hedging charges recorded in connection with our Warrick acquisition.

The results for both the quarter and nine months ended September 30, 2020 were adjusted to reflect $1.3 million now classified as Warrick acquisition-related costs.

Adjusted EBITDA for the quarter ended September 30, 2021 was $18.9 million higher than Adjusted EBITDA for the quarter ended September 30, 2020, which was inclusive of the additional $15.0 million of revenue as discussed in “Net sales” above.

Adjusted EBITDA for the quarter ended September 30, 2021 reflected the addition of Packaging and improvement in our Aero/HS products and GE products, partially offset by higher costs as discussed in “Consolidated Results of Operations” above.

Adjusted EBITDA for the nine months ended September 30, 2021 was $21.3 million higher than Adjusted EBITDA for the nine months ended September 30, 2020, which had the benefit of the additional $15.0 million of revenue as discussed in “Net sales” above.

Adjusted EBITDA for the nine months 2021 reflected the benefit of Packaging in addition to improvement in our Automotive Extrusions and GE products, partially offset by higher costs related to labor, materials and supply chain disruptions and approximately $1.5 million of redundancy costs associated with the Warrick integration.

The table below provides our shipment and VAR information (in millions of dollars, except shipments and VAR per po und) by end market applications :

Quarter Ended September 30,

Nine Months Ended September 30,

Acquisition costs are non-run-rate acquisition-related transaction costs, which include professional fees, as well non‑cash hedging charges recorded in connection with our Warrick acquisition.

Adjusted EBITDA for the quarter ended March 31, 2022 was $17.5 million higher than Adjusted EBITDA for the quarter ended March 31, 2021.

Adjusted EBITDA for the quarter ended March 31, 2022 reflected the addition of Packaging and improvement in Aero/HS products and GE products, partially offset by higher costs, supply chain challenges and operating inefficiencies as discussed in “Consolidated Results of Operations” above.

The following table provides our shipment and VAR information (in millions of dollars, except shipments and VAR per po und) by end market applications :

Quarter Ended March 31,

Aero/HS Products:

13 unchanged sentences

Hedged Cost of Alloyed Metal

Included in the VAR per pound calculations for the quarter and nine months ended September 30, 2020 for Aero/HS products is approximately $15.0 million of additional revenue recognized related to modifications to the 2020 customer declarations under multi-year contracts.

VAR for the quarter ended December 31, 2021 is anticipated to increase low single digits on a percentage basis from the quarter ended September 30, 2021 with EBITDA margin (Adjusted EBITDA as a percentage of VAR) to remain similar to the quarter ended September 30, 2021.

While our end market demand remains positive, we anticipate cost issues and supply chain disruptions will

continue during the quarter ended December 31, 2021 .

In addition, the most recent industry wide disruptions in the magnesium and silicon markets and resulting supply demand imbalances are continuing to evolve and remain uncertain at this time.

Although our outlook contemplates the anticipated impact to our costs and operations, the situation is fluid and could further impact our results for the quarter ended December 31, 2021.

Longer-term, our strategy remains unchanged, and we are well positioned for continued long-term growth with a diversified portfolio and strong secular growth trends in each of our served end markets.

Notwithstanding near-term challenges, the fundamentals of our Aero/HS products, Automotive Extrusions and GE products end markets are solid and we are increasingly optimistic in our ability to deliver significant margin expansion and long-term profitability for our Packaging end market where we have a significant market position.

We remain confident around the timing of the recovery in commercial aerospace and we are optimistic that as semiconductor chip shortages are alleviated, automotive production will ramp back up and, our program launches will resume.

While we continue to navigate through an inflationary cost environment and manage supply chain challenges, we remain confident in the initiatives we are taking to further improve manufacturing efficiencies and operating performance.

As we look to the remainder of the year, we reiterate our outlook and continue to anticipate a year-over-year increase in VAR of 20% to 25% and a consolidated EBITDA margin (Adjusted EBITDA as a percentage of VAR) of 17% to 20% for the full year 2022.

In line with the outlook provided for our full year major maintenance spending, we expect major maintenance expense for the quarter ended June 30, 2022 to be approximately $8.0 million to $10.0 million higher than the quarter ended March 31, 2022 due to the timing of projects planned at several facilities.

Liquidity and Capital Resources

The following table summarizes our liquidity (in millions of dollars):

As of September 30, 2021

As of March 31, 2022

As of December 31, 2021

2 unchanged sentences

Total liquidity

Borrowing availability under the Revolving Credit Facility as determined by a borrowing base calculated as of September 30, 2021 and December 31, 2020.

Borrowing availability under the Revolving Credit Facility as determined by a borrowing base calculated as of March 31, 2022 using the terms of our amended Revolving Credit Facility ( see “ Sources of Liquidity” below for discussion of amendment made to our Revolving Credit Facility on April 7, 2022) and December 31, 2021 using the terms of the Revolving Credit Facility in effect as of that date.

We place our cash in bank deposits and money market funds with high credit quality financial institutions.

Cash equivalents consist primarily of investment-grade commercial paper, money market accounts and investments which, when purchased, have a maturity of 90 days or less.

See Note 14 of Notes to Interim Consolidated Financial Statements included in this Report for information regarding restricted cash at September 30, 2021.

There were no borrowings under our Revolving Credit Facility (see Note 7 of Notes to Interim Consolidated Financial Statements included in this Report) as of September 30, 2021 or as of December 31, 2020.

Cash equivalents primarily consist of money market funds, which are highly liquid.

See Note 11 of Notes to Interim Consolidated Financial Statements included in this Report for information regarding restricted cash at March 31, 2022.

There were no borrowings under our Revolving Credit Facility as of both March 31, 2022 and December 31, 2021 (see Note 5 and Note 13 of Notes to Interim Consolidated Financial Statements included in this Report).

The following table summarizes our cash flows from operating, investing and financing activities (in millions of dollars):

Nine Months Ended September 30,

Quarter Ended March 31,

Total cash provided by (used in):

2 unchanged sentences

Financing activities

Cash provided by operating activities for the nine months ended September 30, 2021 reflected results of business activity described within “Consolidated Results of Operations” above, as well as the following working capital changes:

(i) an increase in trade and other receivables of $110.7 million, the majority of which was driven by Warrick receivables added during the nine months ended September 30, 2021 and the remainder of which was due to the timing and mix of sales and an increase in metal price;

(ii) an increase in accounts payable of $105.8 million, the majority of which was driven by Warrick payables added during the nine months ended September 30, 2021 and the remainder of which was driven by the volume of metal purchases;

and (iii) an increase in inventory of $52.5 million due primarily to higher inventory pounds to satisfy increased demand.

Cash provided by operating activities for the nine months ended September 30, 2020 reflected results of business activity described within “Consolidated Results of Operations” above, as well as the following working capital changes :

(i) a decrease in trade and other receivables of $43.4 million driven primarily by lower Net sales;

(ii) a decrease in accounts payable of $27.

6 million driven predominantly by the volume of metal purchases;

and (iii) a reduction in contract assets of $19.8 million driven primarily by timing and volume of shipments related to revenue on products recognized over-time.

See Statements of Consolidated Cash Flows included in this Report for further details on our cash flows from operating, investing and financing activities for the nine months ended September 30, 2021 and September 30, 2020.

Cash provided by operating activities for the quarter ended March 31, 2022 reflected results of business activity described within “Consolidated Results of Operations” above, as well as the following working capital changes:

(i) an increase in trade and other receivables of $97.1 million, the majority of which was driven by Warrick receivables added during the quarter ended March 31, 2022 and the remainder of which was due to the timing and mix of sales and an increase in metal price;

(ii) an increase in accounts payable of $92.9 million, the majority of which was driven by Warrick payables added during the quarter ended March 31, 2022 and higher metal cost;

and (iii) an increase in inventory of $26.9 million due primarily to higher inventory pounds to satisfy increased demand, as well as a higher per pound inventory cost.

Cash used in operating activities for the quarter ended March 31, 2021 reflected:

(i) an increase in accounts payable of $33.0 million driven predominantly by the volume of metal purchases;

(ii) an increase in trade and other receivables of $31.7 million driven primarily by improved Net sales;

(iii) an increase in inventory of $24.3 million;

and (iv) an increase in spending of $11.0 million for acquisition costs, primarily comprised of professional fees.

See Statements of Consolidated Cash Flows included in this Report for further details on our cash flows from operating, investing and financing activities for the quarters ended March 31, 2022 and March 31, 2021.

Sources of Liquidity

We believe our available cash and cash equivalents, borrowing availability under the Revolving Credit Facility and funds generated from operations are our most significant sources of liquidity, and that our Revolving Credit Facility and unsecured notes have covenants that allow us to operate our business with limited restrictions and significant flexibility for the foreseeable future.

While we believe these sources will be sufficient to finance our working capital requirements, planned capital expenditures, investments, debt service obligations and other cash requirements for at least the next 12 months, and while we also believe that alternative sources of liquidity will remain available in the event we seek to add liquidity for opportunistic or other reasons in the future, our ability to fund such cash requirements will depend upon our future operating performance (which will be affected by prevailing economic conditions) and financial, business and other factors, some of which are beyond our control.

While we believe these sources will be sufficient to finance our working capital requirements, planned capital expenditures,

investments, debt service obligations and other cash requirements for at least the next 12 months, and while we also believe that alternative sources of liquidity will remain available in the event we seek to add liquidity for opportunistic or other reasons in the future, our ability to fund such cash requirements will depend upon our future operating performance (which will be affected by prevailing economic conditions) and financial, business and other factors, some of which are beyond our control.

We do not believe that covenants contained in the Revolving Credit Facility are reasonably likely to limit our ability to raise additional debt or equity should we choose to do so during the next 12 months, nor do we believe it is likely that during the next 12 months we will trigger the availability threshold that would require measuring and maintaining a fixed charge coverage ratio.

At October 18, 2021, there were no borrowings under the Revolving Credit Facility.

On April 7, 2022, we executed Amendment No.

3 of our Revolving Credit Facility to:

(i) increase the commitment to $575.0 million;

(ii) extend the maturity date;

(iii) update our borrowing base;

and (iv) update relevant benchmark provisions to reference the Secured Overnight Financing Rate (“SOFR”).

See Note 5 and Note 13 of Notes to Interim Consolidated Financial Statements included in this Report for further details.

During the quarter ending March 31, 2022 and as of April 18, 2022, there were no borrowings under the Revolving Credit Facility.

See Note 9 of Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2021 for a description of our Revolving Credit Facility.

2 unchanged sentences

Receivables transferred under these customer-based supply chain financing programs generally meet the requirements to be accounted for as sales resulting in the derecognition of such receivables from our consolidated balance sheets.

Receivables involved with these customer‑based supply chain finance programs for the quarter ended September 30, 2021 constituted approximately 52% of our net sales.

Receivables involved with these customer‑based supply chain finance programs for the quarter ended March 31, 2022 constituted approximately 43% of our net sales.

See Note 1 of Notes to Interim Consolidated Financial Statements included in this Report for further details with respect to these supply chain financing programs.

See “Contractual Obligations, Commercial Commitments and Off-Balance Sheet Arrangements – Contractual Obligations and Commercial Commitments ” included in Part II, Item 7.

“Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2020 for mandatory principal and cash interest payments on the outstanding borrowings.

The following table provides an update to our contractual obligations and commercial commitments table in Part II, Item 7.

“Management's Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10‑K for the year ended December 31, 2020 with respect to our 4.50% Senior Notes (as defined in Note 7 of Notes to Interim Consolidated Financial Statements included in this Report), consisting of mandatory principal and cash interest payments (in millions of dollars):

Payments Due by Period

Principal and interest on 4.50% Senior Notes

See Note 7 of Notes to Interim Consolidated Financial Statements included in this Report for further details with respect to the 4.50% Senior Notes.

We do not believe that covenants in the indentures governing the unsecured senior notes are likely to limit our ability to obtain additional debt or equity financing should we choose to do so during the next 12 months.

See Note 9 of Notes to Consolidated Financial Statements included in Part II, Item 8.

“Financial Statements and Supplementary Data” in our Annual Report on Form 10-K for the year ended December 31, 2021 for mandatory principal and cash interest payments on the outstanding borrowings.

We do not believe that covenants in the indentures governing the 4.50% Senior Notes due 2031 (“4.50% Senior Notes”) and 4.625% Senior Notes due 2028 (“4.625% Senior Notes”) are reasonably likely to limit our ability to obtain additional debt or equity financing should we choose to do so during the next 12 months.

Capital Expenditures and Investments

4 unchanged sentences

These improvements have allowed us to gain incremental manufacturing capacity to enable future sales growth.

Our capital investment plans remain focused on supporting demand growth.

The $150.0 million investment in a new roll coat line at our Warrick packaging facility that we initiated during the quarter ended June 30, 2021 is proceeding as planned, and by early 2024 is expected to provide additional capacity to support further growth in our higher margin coated products.

In addition, we continue to deploy our capital thoughtfully to ensure that our investment decisions are aligned with our demand expectations in order to maximize the earnings potential of our business.

Deploying our capital thoughtfully has allowed us to create value and maintain our financial strength and flexibility over time, and we will continue to manage our business with a long-term focus.

Excluding our cash payment for the acquisition of Warrick, we anticipate that total capital spending in 2021 will be approximately $70.0 million to $80.0 million.

Capital investments will be funded using cash generated from operations, available cash and cash equivalents, short‑term investments, borrowings under the Revolving Credit Facility and/or other third-party financing arrangements.

Our capital investment plans remain focused on supporting demand growth through capacity expansion, sustaining our operations, enhancing product quality and increasing operating efficiencies.

We anticipate total capital spending in 2022 of approximately $180.0 million to $200.0 million, of which approximately 60% of total spending will be focused on growth initiatives, primarily reflecting investment in the new roll coat line at Warrick and modest spending related to the Trentwood facility expansion project.

In addition, we have prepared for a multiple week outage early in the third quarter 2022 to refurbish the large plate stretcher at our Trentwood facility.

The investment of approximately $30.0 million is a highly efficient use of capital that will allow us to defer the $145.0 million purchase for a new stretcher planned prior to the COVID-19 pandemic.

We will continue to deploy capital thoughtfully to ensure that investment decisions align with demand expectations in order to maximize the earnings potential of the business and maintain financial strength and flexibility.

Capital investments will be funded using cash generated from operations, available cash and cash equivalents, borrowings under the Revolving Credit Facility and/or other third-party financing arrangements.

The level of anticipated capital expenditures may be adjusted from time to time depending on our business plans, our price outlook for fabricated aluminum products, our ability to maintain adequate liquidity and other factors.

1 unchanged sentence

We have consistently paid a quarterly cash dividend since the second quarter of 2007 to holders of our common stock, including holders of restricted stock, and have increased the dividend in each year since 2011.

Nevertheless, as in the past, the future declaration and payment of dividends, if any, will be at the discretion of our Board of Directors and will depend on a number of factors, including our financial and operating results, financial position and anticipated cash requirements and contractual restrictions under our Revolving Credit Facility, the indenture for our unsecured senior notes or other indebtedness we may incur in the future.

Nevertheless, as in the past, the future declaration and payment of dividends, if any, will be at the discretion of our Board of Directors and will depend on a number of factors, including our financial and operating results, financial position and anticipated cash requirements and contractual restrictions under our Revolving Credit Facility, the indenture for our 4.50% Senior Notes and 4.625% Senior Notes or other indebtedness we may incur in the future.

We can give no assurance that dividends will be declared and paid in the future.

See Note 9 of Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2020, as well as Note 7 of Notes to Interim Consolidated Financial Statements included in this Report for additional information about restrictions on dividend payments contained in the Revolving Credit Facility and in the indenture for our unsecured senior notes.

See Note 9 of Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2021 for additional information about restrictions on dividend payments contained in the Revolving Credit Facility and in the indenture for our unsecured senior notes.

We also pay quarterly dividend equivalents to the holders of certain restricted stock units.

Holders of performance shares are not paid a quarterly dividend equivalent, but instead are entitled to receive, in connection with the issuance of underlying shares of common stock for performance shares that ultimately vest, a one-time payment equal to the dividends such holder would have received if the number of such shares of common stock so issued had been held of record by such holder from the date of grant of such performance shares through the date of such issuance.

See our Statements of Consolidated Stockholders’ Equity and Note 16 of Notes to Interim Consolidated Financial Statements included in this Report for information regarding dividends paid during the quarters ended September 30, 2021 and September 30, 2020, and declared subsequent to September 30, 2021.

See our Statements of Consolidated Stockholders’ Equity and Note 13 of Notes to Interim Consolidated Financial Statements included in this Report for information regarding dividends paid during the quarters ended March 31, 2022 and March 31, 2021, and declared subsequent to March 31, 2022.

Repurchases of Common Stock

In response to prevailing economic conditions, we suspended repurchases of common stock as of March 18, 2020.

See our Statements of Consolidated Stockholders’ Equity included in this Report for information regarding repurchases of common stock during the quarters ended September 30, 2021 and September 30, 2020 and the amount authorized and available for future repurchases of common stock under our stock repurchase program.

See our Statements of Consolidated Stockholders ’ Equity included in this Report for information regarding minimum statutory tax withholding obligations arising during the quarters and nine months ended September 30, 2021 and September 30, 2020 , in connection with the vesting of non-vested shares, restricted stock units and performance shares.

We suspended share repurchases as of March 18, 2020.

We will continue to assess share repurchases as a part of our capital allocation priorities and strategic investment opportunities identified to support further growth in our business.

See our Statements of Consolidated Stockholders’ Equity included in this Report for information regarding:

(i) repurchases of common stock during the quarters ended March 31, 2022 and March 31, 2021;

(ii) the amount authorized and available for future repurchases of common stock under our stock repurchase program;

and (iii) minimum statutory tax withholding obligations arising during the quarters ended March 31, 2022 and March 31, 2021 in connection with the vesting of non-vested shares, restricted stock units and performance shares.

Environmental Commitments and Contingencies

1 unchanged sentence

Contractual Obligations, Commercial Commitments and Off-Balance Sheet Arrangements

During the nine months ended September 30, 2021, we granted additional stock-based awards to executive officers, certain key employees and non-employee directors under our equity incentive plan.

During the quarter ended March 31, 2022, we granted additional stock-based awards to executive officers and certain key employees under our equity incentive plan.

Additional awards are expected to be made in future years.

Beginning March 31, 2021, we assumed $500.0 million to $550.0 million of contractual obligations and commercial commitments of Warrick, for which the majority of spending will be completed by December 31, 2021.

These commitments related primarily to the purchase of aluminum and related alloys used in their production process in the ordinary course of business.

For updated maturities of lease liabilities, as well as net benefits expected to be paid for pension and other postretirement benefit obligations that include Warrick, see Note 3 and Note 5, respectively, of Notes to Interim Consolidated Financial Statements included in this Report.

Future commitment fees on our Revolving Credit Facility are calculated based on 0.250% of the unused credit under the facility.

Future commitment fees are expected to increase beginning in the quarter ended June 30, 2022 due to the incremental $200.0 million of borrowing capacity associated with our April 7, 2022 Amendment No.

3 of the Revolving Credit Facility.

See Note 5 and Note 13 of Notes to Interim Consolidated Financial Statements included in this Report.

Except as otherwise disclosed in this Report, there has been no material change in our contractual obligations, commercial commitments or off-balance sheet arrangements other than in the ordinary course of business since December 31, 2021.

10 unchanged sentences

New Accounting Pronouncements

For a discussion of recently adopted and recently issued but not yet adopted accounting pronouncements, see “ New Accounting Pronouncements ” in Note 1 of Notes to Interim Consolidated Financial Statements included in this Report.

For a discussion of recently adopted and recently issued but not yet adopted accounting pronouncements, see “ Adoption of New Accounting Pronouncements ” in Note 1 of Notes to Interim Consolidated Financial Statements included in this Report.

Available Information

6 unchanged sentences

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-Q

Item 1. Financial Statements