What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-07-28 compared with 2022-04-25 · 403 added, 303 removed, 620 unchanged (53% of the section changed)

1 unchanged sentence

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

As of March 31, 2022

As of June 30, 2022

As of December 31, 2021

26 unchanged sentences

Stockholders’ equity:

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

Preferred stock, 5,000,000 shares authorized at both June 30, 2022 and

December 31, 2021;

no shares were issued and outstanding at

March 31, 2022 and December 31, 2021

June 30, 2022 and December 31, 2021

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

March 31, 2022 and December 31, 2021;

June 30, 2022 and December 31, 2021;

22,757,348 shares issued and

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

15,922,062 shares outstanding at June 30, 2022;

22,700,404 shares

2 unchanged sentences

Retained earnings

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

Treasury stock, at cost, 6,835,286 shares at both June 30, 2022 and

December 31, 2021

Accumulated other comprehensive income (loss)

Accumulated other comprehensive loss

Total stockholders’ equity

1 unchanged sentence

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

STATEMENTS OF CONSOLIDATED INCOME (UNAUDITED)

Quarter Ended March 31,

STATEMENTS OF CONSOLIDATED LOSS (UNAUDITED)

Quarter Ended June 30,

Six Months Ended June 30,

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

4 unchanged sentences

Restructuring costs (benefit)

Other operating charges, net

Total costs and expenses

Operating income

Operating (loss) income

Other expense:

1 unchanged sentence

Other expense, net – Note 8

Income before income taxes

Income tax (provision) benefit

Net income per common share:

Loss before income taxes

Income tax benefit

Net loss per common share:

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

1 unchanged sentence

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME (UNAUDITED)

Quarter Ended March 31,

STATEMENTS OF CONSOLIDATED COMPREHENSIVE (LOSS) INCOME (UNAUDITED)

Quarter Ended June 30,

Six Months Ended June 30,

(In millions of dollars)

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

2 unchanged sentences

Foreign currency translation

Other comprehensive income, net of tax

Comprehensive income

Other comprehensive (loss) income, net of tax

Comprehensive (loss) income

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

1 unchanged sentence

STATEMENTS OF CONSOLIDATED STOCKHOLDERS ’ EQUITY (UNAUDITED)

Quarter Ended March 31, 2022

Six Months Ended June 30, 2022

Outstanding 1,2

1 unchanged sentence

Comprehensive

Income (Loss)

(Loss) Income

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

8 unchanged sentences

BALANCE, March 31, 2022

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.

Other comprehensive loss, 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, 2022

At June 30, 2022, 601,642 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, 2022 and June 30, 2022.

At June 30, 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 quarters ended March 31, 2022 and June 30, 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)

Quarter Ended March 31, 2021

Six Months Ended June 30, 2021

Outstanding 1

1 unchanged sentence

Comprehensive

Income (Loss)

(Loss) Income

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

8 unchanged sentences

BALANCE, March 31, 2021

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.

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 2

Amortization of unearned equity compensation

BALANCE, June 30, 2021

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

Dividends declared per common share were $ 0.72 for the quarters ended March 31, 2021 and June 30, 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)

Quarter Ended March 31,

Six Months Ended June 30,

(In millions of dollars)

Cash flows from operating activities 1 :

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

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

Depreciation of property, plant and equipment

3 unchanged sentences

Non-cash equity compensation

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 (used in) operating activities

Net cash provided by operating activities

Cash flows from investing activities 1 :

1 unchanged sentence

Cash payment for acquisition of the Warrick rolling mill

Purchase of equity securities

Proceeds from disposition of property, plant and equipment

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

Cash paid for debt issuance costs

Repayment of finance lease

2 unchanged sentences

Cash dividends and dividend equivalents paid

Net cash used in financing activities

Net cash (used in) provided by financing activities

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

11 unchanged sentences

Commitments and Contingencies

Accumulated Other Comprehensive Income (Loss )

Accumulated Other Comprehensive (Loss) Income

Other Expense, Net

Income Tax Matters

Net Income Per Share

Net Loss Per Share

Supplemental Cash Flow Information

20 unchanged sentences

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

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.

During the quarter and six months ended June 30, 2022, we sold trade accounts receivable totaling $ 482.0 million and $ 889.4 million, respectively, related to these supply chain financing arrangements, of which our customers’ financial institutions applied discount fees totaling $ 6.3 million and $ 9.2 million, respectively.

During both the quarter and six months ended June 30, 2021, we sold trade accounts receivable totaling $ 316.0 million, of which our customers’ financial institutions applied discount fees totaling $ 1.9 million.

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

As of June 30, 2022, we had been and/or expected to be fully reimbursed by our customers for these discount fees.

Government Grants.

2 unchanged sentences

Government grants related to property, plant and equipment are presented as a reduction to the related asset’s carrying amount.

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.

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

As of June 30, 2022, we received a $ 0.3 million performance grant from the Tennessee Valley Authority, which we recorded as an offset to Property, plant and equipment, net.

To be eligible to receive and keep the full amount of this grant, we must achieve:

(i) minimum cumulative expenditures towards developmental and/or capital expenditures;

(ii) a minimum number of new full-time employees;

and (iii) a minimum average annual wage, all within seven years of our execution of the grant agreement.

Favorable Commodity Contract Intangible Asset Impairment.

During the quarter ended June 30, 2022, we impaired the remaining book value of our favorable commodity contract intangible asset as the supplier associated with the intangible asset ceased all deliveries of magnesium to us and provided no indication of when or if deliveries would resume over the remaining six months of the contract.

The impairment charge of $ 3.1 million was included within Other operating charges, net, in our Statements of Consolidated Loss.

Adoption of New Accounting Pronouncements

2 unchanged sentences

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:

Under ASU 2021-10, the accounting entities with

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

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;

2 unchanged sentences

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.

Our adoption of ASU 2021-10 during the quarter ended March 31, 2022 using a prospective approach did no t 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):

1 unchanged sentence

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.

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.

As of June 30, 2022 , our customers’ supply chain financing contracts have transitioned to the Secured Overnight Financing Rate (“SOFR”) to replace the London Interbank Offered Rate (“LIBOR”).

Our adoption of Topic 848 did not have a material impact on our consolidated financial statements.

Supplemental Balance Sheet Information

As of March 31, 2022

As of June 30, 2022

As of December 31, 2021

28 unchanged sentences

Other long-term liabilities

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

investments elected by the employee.

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

At June 30, 2022 and December 31, 2021 the current cost of our inventory exceeded its stated last-in, first-out (“LIFO”) value by $ 204.5 million and $ 137.1 million , respectively.

Based on market conditions, we temporarily idled projects within Construction in progress totaling $ 20.5 million and $ 24.9 million as of June 30, 2022 and December 31, 2021, respectively, all of which are expected to resume at a future date.

Employee Benefits

Deferred Compensation Plan

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.

The assets in the trust are held in various investment funds at certain registered investment companies and are accounted for as equity investments with changes in fair value recorded within Other expense, net (see Note 8).

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 March 31, 2022 and December 31, 2021 was $ 10.1 million and $ 10.5 million, respectively.

The fair value of these assets at June 30, 2022 and December 31, 2021 was $ 9.8 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”)

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 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.

Certain retirees who retired prior to 2004 and certain employees who were hired prior to February 2002 and have subsequently retired or will retire with the requisite age and service, along with their surviving spouses and eligible dependents, are eligible to participate in a voluntary employees’ beneficiary association (“VEBA”) that provides healthcare cost, medical cost and long-term care insurance cost reimbursement benefits (“Salaried VEBA”).

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.

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.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

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

Quarter Ended March 31,

As of June 30, 2022, we had a liability of $ 5.1 million recorded within Accrued salaries, wages and related expenses for estimated probable future payments relating to the six month performance period of our 2022 STI Plan.

Postretirement Benefit Plans

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

Quarter Ended June 30,

Six Months Ended June 30,

Defined contribution plans 1

4 unchanged sentences

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 Selling, general, administrative, research and development (“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 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 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.

The deferred compensation plan and the current service cost component of Net periodic postretirement benefit cost relating to the voluntary employees’ beneficiary association that provides benefits for certain eligible retirees and their surviving spouses and eligible dependents (“Salaried VEBA”) are included within our Statements of Consolidated Loss 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.

The current service cost component of Net periodic postretirement benefit cost relating to both the pension plans and the healthcare and life insurance postretirement benefit plan (“OPEB”) are included within our Statements of Consolidated Loss 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 Loss.

Components of Net Periodic Postretirement Benefit Cost.

5 unchanged sentences

and (v) amortization of net actuarial differences.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

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

1 unchanged sentence

Salaried VEBA

Quarter Ended March 31,

Quarter Ended June 30,

Interest cost

3 unchanged sentences

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.

Pension Plans 2

Salaried VEBA

Six Months Ended June 30,

Interest cost

Expected return on plan assets

Amortization of prior service cost 1

Amortization of net actuarial loss

Total net periodic postretirement benefit cost

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.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

Net periodic benefit cost for the U.S.

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

Derivatives, Hedging Programs and Other Financial Instruments

11 unchanged sentences

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.

The aggregate fair value of our derivative instruments that were in a net liability position was $ 16.4 million and zero at June 30, 2022 and December 31, 2021, respectively, 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 March 31, 2022 and December 31, 2021.

We had $ 1.3 million and zero cash collateral posted from our customers at June 30, 2022 and December 31, 2021, respectively.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

Cash Flow Hedges

We designate as cash flow hedges forward swap contracts for aluminum, energy and, from time-to-time, zinc and copper (“Alloying Metals”) used in our fabrication operations and foreign currency forward contracts for supplies and services for which payments are due in foreign currency.

Unrealized gains and losses associated with our cash flow hedges are deferred in Other comprehensive income, net of tax, and reclassified to COGS when such hedges settle or when it is probable that the original forecasted transactions will not occur by the end of the originally specified time period.

See Note 7 for the total amount of gain or loss on derivative instruments designated and qualifying as cash flow hedging instruments and fair value hedging instruments that was reported in Accumulated other comprehensive income (loss) (“AOCI”), as well as the related reclassifications into earnings and tax effects.

We designate as cash flow hedges forward swap contracts for aluminum, energy and, from time-to-time, zinc and copper (“Alloying Metals”) used in our fabrication operations and foreign currency forward contracts for equipment and services for which payments are due in foreign currency.

Unrealized gains and losses associated with our cash flow hedges are deferred in Other comprehensive (loss) income, net of tax, and reclassified to COGS when such hedges settle or when it is probable that the original forecasted transactions will not occur by the end of the originally specified time period.

See Note 7 for the total amount of gain or loss on derivative instruments designated and qualifying as cash flow hedging instruments that was reported in Accumulated other comprehensive loss (“AOCI”), as well as the related reclassifications into earnings and tax effects.

Cumulative gains and losses related to cash flow hedges are reclassified out of AOCI and recorded within COGS when the associated hedged commodity purchases impact earnings.

5 unchanged sentences

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

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

Alloying Metals Hedges .

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 .

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 completely or at the time of sale pursuant to the terms of certain customer contracts.

Energy Hedges .

We are exposed to risk of fluctuating prices for natural gas and electricity.

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 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.

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 completely or at the time of sale pursuant to the terms of certain customer contracts.

The following table summarizes the percentages as of June 30, 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.

As our largest supplier of magnesium declared force majeure and, during the quarter ended June 30, 2022, stopped all shipments to us, we excluded its contracts from the above table.

We have included only qualified magnesium suppliers secured to date in place of the excluded contracted volume.

Foreign Currency Hedges.

We are exposed to foreign currency exchange risk related to certain supply and service agreements with vendors for which payments are due in foreign currency.

We are exposed to foreign currency exchange risk related to certain equipment and service agreements with vendors for which payments are due in foreign currency.

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.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

Non-Designated Hedges of Operational Risks

2 unchanged sentences

Notional Amount of Derivative Contracts

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

The following table summarizes our derivative positions at June 30, 2022:

Maturity Period

1 unchanged sentence

Fixed price purchase contracts

4/22 through 12/23

July 2022 through December 2023

Fixed price sales contracts

8/22 through 10/22

July 2022 through December 2022

Midwest premium swap contracts 1

4/22 through 12/23

July 2022 through December 2023

Alloying Metals

2 unchanged sentences

Fixed price purchase contracts

4/22 through 12/22

July 2022 through December 2022

Maturity Period

1 unchanged sentence

Fixed price purchase contracts

4/22 through 12/25

July 2022 through December 2025

Maturity Period

1 unchanged sentence

Fixed price purchase contracts

4/22 through 12/22

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

July 2022 through December 2022

Maturity Period

1 unchanged sentence

Fixed price forward contracts

6/22 through 3/23

September 2022 through February 2024

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

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,

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

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

Quarter Ended June 30,

Six Months Ended June 30,

Statements of Consolidated

Income Classification

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

Loss Classification

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

Cash flow hedges

Cost of products sold

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

Loss (gain) recognized in our Statements of Consolidated Loss related to cash flow hedges:

Cost of products sold

3 unchanged sentences

Cost of products sold

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

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

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

Alloying Metals – Realized gain

Cost of products sold

Alloying Metals – Unrealized gain

Alloying Metals – Unrealized loss

Cost of products sold

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

Total loss (gain) recognized in our Statements of Consolidated Loss 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 March 31, 2022

As of June 30, 2022

As of December 31, 2021

11 unchanged sentences

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

As of March 31, 2022

As of June 30, 2022

As of December 31, 2021

10 unchanged sentences

Debt and Credit Facility

4.50% Senior Notes.

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 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

During the years ended December 31, 2021, December 31, 2020 and December 31, 2019, we issued fixed rate unsecured notes with varying maturity dates (“Senior Notes”).

The stated interest rates and aggregate principal amounts of our Senior Notes were:

(i) 4.50 % and $ 550.0 million (“4.50% Senior Notes”);

(ii) 6.50 % and $ 350.0 million (“6.50% Senior Notes”);

and (iii) 4.625 % and

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

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.

$ 500.0 million (“4.62 5% Senior Notes ” ).

Our Senior Notes do not require us to make any mandatory redemptions or sinking fund payments .

The following table summarizes key details of our Senior Notes:

Outstanding (in millions of dollars)

Issuance Date

Effective Interest Rate

As of June 30, 2022

As of December 31, 2021

4.50 % Senior Notes

In April 2020 and May 2020, we issued $ 300.0 million and $ 50.0 million, respectively, aggregate principal amounts of our 6.50% unsecured senior notes due May 1, 2025 at 100 % and 101 %, respectively, of the principal amounts (“6.50% Senior Notes”).

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 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.

6.50 % Senior Notes 1

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 $ 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.

April/May 2020

4.625 % Senior Notes

November 2019

Unamortized issuance costs

Total carrying amount

In May 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, 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 following table presents the fair value of our outstanding Senior Notes, which are Level 1 liabilities (in millions of dollars):

As of June 30, 2022

As of December 31, 2021

4.50% Senior Notes

4.625% Senior Notes

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.

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.

In April 2022, we entered into Amendment No.

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

The Revolving Credit Facility among others:

(i) increased the commitment from $ 375.0 million to $ 575.0 million (of which up to a maximum of $ 50.0 million may be utilized for letters of credit);

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

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

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

The following table summarizes availability and usage of our Revolving Credit Facility as determined by a borrowing base calculated as of June 30, 2022 (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

Interest Expense

Interest expense relating to our Senior Notes and Revolving Credit Facility was as follows (in millions of dollars):

Quarter Ended June 30,

Six Months Ended June 30,

Senior Notes interest expense, including debt issuance cost amortization

Revolving Credit Facility commitment fees and finance cost amortization

Interest expense capitalized as construction in progress

Total interest expense

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

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.

3 unchanged sentences

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 September 30, 2022.

We are currently preparing the required feasibility study, which we expect to submit to the OEPA for review during the quarter ending December 31, 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 14 to 20 months.

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

At June 30, 2022, our environmental accrual of $ 16.0 million represented our estimate of the incremental remediation cost based on:

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

10 unchanged sentences

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

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.

As of June 30, 2022, our liability related to these CAROs was $ 2.3 million and was included within Long-term liabilities on our Consolidated Balance Sheets.

Other Contingencies.

We are party to various lawsuits, claims, investigations and administrative proceedings that arise in connection with past and current operations.

We evaluate such matters on a case-by-case basis and our policy is to vigorously contest any such claims we believe are without merit.

We evaluate such matters on a case-by-case basis and our policy is to vigorously contest

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

any such claims we believe are without merit.

We accrue for a legal liability when it is both probable that a liability has been incurred and the amount of the loss is reasonably estimable.

1 unchanged sentence

While uncertainties are inherent in the final outcome of such matters and it is presently impossible to determine the actual cost that may ultimately be incurred, we believe that we have sufficiently accrued for such matters and that the ultimate resolution of pending matters will not have a material impact on our consolidated financial position, operating results or liquidity.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

Accumulated Other Comprehensive Income (Loss)

Accumulated Other Comprehensive (Loss) Income

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

Quarter Ended March 31,

Quarter Ended June 30,

Six Months Ended June 30,

Defined Benefit Pension Plan and Salaried VEBA:

7 unchanged sentences

Beginning balance

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 gain reclassified from AOCI to Net income

Other comprehensive income, net of tax

Unrealized (loss) gain on cash flow hedges

income tax benefit (expense)

Net unrealized (loss) gain on cash flow hedges

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

income tax (expense) benefit 2

Net loss (gain) reclassified from AOCI to Net loss

Other comprehensive (loss) income, net of tax

Ending balance 3

5 unchanged sentences

1 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.

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.

2 Income tax amounts reclassified out of AOCI were included as a component of Income tax benefit.

3 As of June 30, 2022, we estimate a net mark-to-market loss before tax of $ 6.0 million in AOCI will be reclassified into Net loss upon settlement within the next 12 months.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

Other Expense , Net

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

Quarter Ended March 31,

Quarter Ended June 30,

Six Months Ended June 30,

Interest income

Net periodic postretirement benefit cost

Unrealized loss on equity securities

Unrealized (loss) gain on equity securities

Gain (loss) on extinguishment of debt

All other, net

Other expense, net

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

Income Tax Matters

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

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.

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

Quarter Ended June 30,

Six Months Ended June 30,

The income tax benefit (provision) for the quarters ended June 30, 2022 and June 30, 2021 was $ 4.1 million and $ 15.5 million, respectively, reflecting an effective tax rate of 23 % and 41 %, respectively.

There was no material difference between the effective tax rate and the projected blended statutory rate for the quarter ended June 30, 2022.

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

(i) an increase of 22 % related to non‑deductible compensation expense;

(ii) an increase of 5 % related to foreign withholding tax;

(iii) an increase of 4 % due to various permanent items not deductible for tax purposes;

(iv) an increase of 1 % related to the valuation allowance for certain state net operating losses;

and (v) an increase of 1 % for the recognition of excess tax benefits from stock-based compensation, partially offset by a decrease of 15 % related to a Federal Research and Development Credit.

The income tax benefit (provision) for the six months ended June 30, 2022 and June 30, 2021 was $ 0.8 million and $ 15.8 million, respectively, reflecting an effective tax rate of 13 % and 47 %, respectively.

The difference between the effective tax rate and the projected blended statutory tax rate for the six months ended June 30, 2022 was primarily due to:

(i) a decrease of 8 % for the recognition of excess book benefits from stock-based compensation;

(ii) a decrease of 5 % related to a Federal Research and Development Credit;

and (iii) a decrease of 1 % related to the valuation allowance for certain state net operating losses, partially offset by:

(i) an increase of 2 % related to non-deductible compensation expense and (ii) an increase of 1 % related to foreign withholding tax.

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

(i) an increase of 22 % related to non-deductible compensation expense;

(ii) an increase of 5 % related to foreign withholding tax;

(iii) an increase of 4 % due to various permanent items not deductible for tax purposes;

(iv) an increase of 3 % related to the valuation allowance for certain state net operating losses ;

(v) an increase of 2 % for a foreign tax rate difference ;

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

and (vii) an increase of 2 % for a change in state tax rate due to the Warrick acquisition, partially offset by a decrease of 15 % related to a Federal Research and Development Credit.

Our gross unrecognized benefits relating to uncertain tax positions were $ 4.7 million and $ 4.1 million at June 30, 2022 and December 31, 2021, respectively, of which, $ 4.7 million and $ 4.1 million would be recorded through our income tax provision and thus, impact the effective tax rate at June 30, 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 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.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

Net Loss Per Share

Basic net loss per share is computed by dividing distributed and undistributed net loss 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 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,

Diluted net loss per share was calculated under the treasury stock method for the quarters and six months ended June 30, 2022 and June 30, 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 loss per share (in millions of dollars, except share and per share amounts):

Quarter Ended June 30,

Six Months Ended June 30,

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

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

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

Net loss per common share, Basic:

Net loss per common share, Diluted:

Quantities in the following discussion are denoted in whole shares.

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.

For the quarters ended June 30, 2022 and June 30, 2021 and the six months ended June 30, 2022 and June 30, 2021, approximately 157,000 , 226,000 , 161,000 and 214,000 shares, respectively, were excluded from the computation of net loss per share as their inclusion would have been anti‑dilutive.

Supplemental Cash Flow Information

Quarter Ended March 31,

Six Months Ended June 30,

(In millions of dollars)

6 unchanged sentences

Finance lease liabilities arising from obtaining finance lease assets

As of March 31,

As of June 30,

(In millions of dollars)

6 unchanged sentences

From time-to-time, such restricted funds could be returned to us or we could be required to pledge additional cash.

KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

Business, Product and Geographical Area Information

7 unchanged sentences

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 March 31,

Quarter Ended June 30,

Six Months Ended June 30,

Aero/HS products

7 unchanged sentences

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

Quarter Ended March 31,

Quarter Ended June 30,

Six Months Ended June 30,

Income taxes paid:

2 unchanged sentences

Dividend Declaration.

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.

On July 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 August 15, 2022 to stockholders of record and the holders of certain restricted stock units at the close of business on July 25, 2022 .

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

32 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 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.

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

10 unchanged sentences

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.

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

Business Overview

15 unchanged sentences

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 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.

Our consolidated Net sales for the six months ended June 30, 2022 totaled $1.9 billion on 670.5 million pounds shipped from our facilities.

We employed approximately 4,015 people at June 30, 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 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.

As of June 30, 2022, approximately 73% of our shipments has been sold direct to manufacturers or tier one suppliers and approximately 27% 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 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:

Metal and Magnesium Supply Chain Issues

As we have previously discussed, Warrick has faced specific challenges with the September 2021 force majeure declaration of its primary magnesium supplier, US Magnesium, LLC (“US Mag”), which resulted in a significant reduction in deliveries while we were also being impacted by the operational challenges Alcoa Corporation was experiencing at its adjacent smelter, which supplies primary aluminum to Warrick.

In June 2022, US Mag deliveries unexpectedly stopped while performance of the smelter also rapidly deteriorated, negatively impacting Warrick’s operating efficiency and financial performance.

As a result of the abrupt and unexpected decline in magnesium supply, on July 7, 2022, we declared force majeure at our Warrick rolling mill due to the limited availability of magnesium utilized in the production of our aluminum beverage and food packaging products, reducing our ability to produce those products at the time.

We are continuing to diversify our magnesium supply chain and qualify additional sources to replace all of the volume previously contracted by US Mag and preparing to operate independently of Alcoa Corporation’s smelter and power plant, which supplies power to Warrick.

See our “Outlook” discussion below for additional details around anticipated production and delivery volumes resulting from these supply chain issues.

Highlights of the quarter ended June 30, 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.

Continued recovery in demand for Aero/HS products;

Higher pricing largely mitigating inflationary and commodity costs;

Continued increase in inflationary cost remains challenging;

Incremental costs of approximately $17.0 million primarily related to metal and magnesium supply chain issues;

Cash dividends and dividend equivalents of $0.77 per share or $12.6 million paid during the quarter ended June 30, 2022.

Results of Operations

Consolidated Results of Operations

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.

Net sales totaled $954.2 million and $741.0 million for the quarters ended June 30, 2022 and June 30, 2021, respectively, reflecting a 1.5 million pound decrease in shipment volume and a $0.65/lb (30%) increase in average realized sales price per pound.

The shipment volume decrease reflected:

(i) a 6.1 million pound (3%) decrease in Packaging, reflecting metal flow issues and magnesium shortages that impacted our ability to ship product to customers and (ii) a 3.6 million pound (55%) decrease in Other products, partially offset by:

(i) a 7.5 million pound (18%) increase in Aero/HS products, reflecting improved pricing, continuing improvement in underling commercial aerospace shipments and steady strength in defense and business jet related applications;

(ii) a 0.4 million pound (2%) increase in Automotive Extrusions, which was relatively flat, reflecting the continuing impact of the ongoing semiconductor shortage and other supply chain disruptions in the automotive industry;

and (iii) a 0.3 million pound (0.4%) increase in GE products reflecting continued strong demand for our products.

The average realized sales price per pound reflected a $0.47/lb (37%) increase in average Hedged Cost of Alloyed Metal price per pound and an $0.18/lb (19%) increase in VAR per pound reflecting higher pricing and surcharges to offset higher inflationary and commodity related costs.

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

Net sales totaled $1,903.0 million and $1,065.0 million for the six months ended June 30, 2022 and June 30, 2021, respectively, reflecting a 197.0 million pound (42%) increase in shipment volume and a $0.59/lb (26%) 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 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.

(i) a 168.6 million pound (91%) increase in Packaging reflecting a full six months of shipments during 2022 as a result of our Warrick acquisition, which was completed on March 31, 2021 ;

(ii) a 16.9 million pound (22%) increase in Aero/HS products reflecting continued strength in demand for our defense related applications and improving demand for commercial aerospace as we continue to see the recovery in air travel and higher shipments of new aircraft from both major airframe producers;

and (iii) a 16.7 million pound (11%) increase in GE products reflecting continued strong underlying demand for semiconductor plate and industrial and machine tools, partially offset by a 3.5 million pound (7%) decrease in Automotive Extrusions driven by the shortage of semiconductors that has impacted North American production levels.

The average realized sales price per pound reflected a $0.51/lb (42%) increase in average Hedged Cost of Alloyed Metal price per pound and an $0.08/lb (8%) increase in VAR per pound reflecting higher pricing and surcharges to offset higher inflationary and commodity related costs.

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 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 $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.

Cost of products sold, excluding depreciation and amortization and other items for the quarter ended June 30, 2022 totaled $898.4 million, or 94% of Net sales, compared to $673.3 million, or 91% of Net sales, for the quarter ended June 30, 2021.

The increase of $225.1 million reflected:

(i) a $154.9 million increase in Hedged Cost of Alloyed Metal and (ii) a $70.2 million increase in net manufacturing conversion and other costs.

$ 154.9 million increase in Hedged Cost of Alloyed Metal, $156.9 million was due to higher hedged metal prices offset by $ 2.

0 million due to lower shipment volume, as discussed above in “ Net Sale s .

” The $ 7 0 .

2 million increase in net manufacturing conversion and other costs reflected:

(i) a $28.8 million increase relate d to lower utilization of scrap, or recycled aluminum, and higher alloy input costs per unit of production , which includes the majority of the US Mag and Alcoa Corporation operational issues as discussed above in “Metal an d Magnesium Supply Chain Issues”;

(ii) a $24.3 million increase in manufacturing costs due to lower efficiencies and higher labor costs ;

(iii) $11.0 million of higher benefits and overhead costs;

and (iv) a $5.8 million increase in energy costs .

See “ Selected Operational and Financial Information ” below for a further discussion of the comparative results of operations for the quarters ended June 30, 2022 and June 30, 2021 .

Cost of products sold, excluding depreciation and amortization and other items for the six months ended June 30, 2022 totaled $1,764.3 million, or 93% of Net sales, compared to $935.8 million, or 88% of Net sales, for the six months ended June 30, 2021.

The increase of $828.5 million reflected:

(i) a $581.0 million increase in Hedged Cost of Alloyed Metal and (ii) a $247.5 million increase in net manufacturing conversion and other costs.

Of the $581.0 million increase in Hedged Cost of Alloyed Metal, $341.7 million was due to higher hedged metal prices and $239.3 million was due to higher shipment volume, as discussed above in “Net Sales.” The $247.5 million increase in net manufacturing conversion and other costs reflected:

(i) a $139.7 million increase related to higher sales, primarily due to a full six months of shipments during 2022 as a result of our Warrick acquisition , which was completed on March 31, 2021 ;

(ii) $59.3 million of additional overhead associated with the increase in Packaging related volume, as well as higher energy, freight and metal costs driven by inflation, transportation bottlenecks and supply chain inefficiencies;

and (iii) $41.9 million of higher benefits and overhead costs.

Principal factors contributing to our inflationary pressures include supply chain disruptions, labor shortages and geopolitical factors.

See “Selected Operational and Financial Information” below for a further discussion of the comparative results of operations for the six months ended June 30, 2022 and June 30, 2021.

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

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.

SG&A and R&D expense totaled $27.5 million and $30.9 million for the quarters ended June 30, 2022 and June 30, 2021, respectively, and $57.7 million and $62.7 million for six months ended June 30, 2022 and June 30, 2021, respectively.

The decrease during the quarter ended June 30, 2022 was primarily due to a $3.5 million decrease in legal, consulting and outsourced services expense primarily related to the winding down of services in conjunction with the Warrick acquisition.

The decrease for the six months ended June 30, 2022 compared with June 30, 2021 was due primarily to an $11.7 million decrease in legal, consulting and outsourced services expense primarily related to the winding down of services in conjunction with the Warrick acquisition, partially offset by:

(i) a $4.1 million increase due to the addition of Warrick operations and (ii) a $3.0 million increase in salaries and benefits.

Restructuring Cost (Benefit).

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

Restructuring cost (benefit) was a benefit of $0.1 million and $0.8 million for the quarter and six months ended June 30, 2021, respectively, due to cost estimate revisions.

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

Other operating charges, net .

Other operating charges, net, of $3.2 million for the quarter and six months ended June 30, 2022 was primarily due to the impairment of our favorable commodity contract intangible asset .

See Note 1 of Notes to Interim Consolidated Financial Statements included in this Report for further details.

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 $12.2 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.

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 and six months ended June 30, 2022 and June 30, 2021 and interest expense capitalized as part of construction in progress.

Other Expense, Net.

See Note 8 of Notes to Interim Consolidated Financial Statements included in this Report for details.

Income Tax (Provision) Benefit.

See Note 9 of Notes to Interim Consolidated Financial Statements included in this Report for disclosure regarding our income tax (provision) benefit.

Income Tax Benefit.

See Note 9 of Notes to Interim Consolidated Financial Statements included in this Report for disclosure regarding our income tax benefit.

Selected Operational and Financial Information

3 unchanged sentences

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

Quarter Ended March 31,

Quarter Ended June 30,

Six Months Ended June 30,

Interest expense

Other expense, net

Income tax provision (benefit)

Income tax benefit

Depreciation and amortization

2 unchanged sentences

Adjustments to plant-level LIFO 1

Mark-to-market gain on derivative instruments 2

Acquisition costs 3

Mark-to-market loss on derivative instruments 2

Non-cash asset impairment charge

Environmental expenses 3

Acquisition (credits) costs 4

Total non-run-rate items

2 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.

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.

For the quarter and six months ended June 30, 2021, this line item reflects a $7.8 million non-run-rate LIFO charge that resulted from a purchase accounting adjustment to step-up Warrick’s inventory to fair value.

Mark-to-market loss on derivative instruments represented:

(i) for 2022 and 2021, the loss 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):

1 unchanged sentence

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

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.

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

See Note 6 of Notes to Interim Consolidated Financial Statements included in this Report for additional information relating to the environmental expenses.

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

Adjusted EBITDA for the quarter ended June 30, 2022 was $17.6 million lower than Adjusted EBITDA for the quarter ended June 30, 2021.

Adjusted EBITDA for the quarter ended June 30, 2022 was impacted by approximately $14.0 million of incremental cost related to supply chain issues in connection with the operational challenges Alcoa Corporation was experiencing at its adjacent smelter, which supplies primary aluminum to Warrick, and US Mag supply chain disruptions as discussed above in “Metal and Magnesium Supply Chain Issues.” In addition, the current quarter was impacted by higher major maintenance, manufacturing, energy and employee related cost, which were partially offset by improved pricing and commodity and freight surcharges as discussed above in “Consolidated Results of Operations.”

Adjusted EBITDA for the six months ended June 30, 2022 was $0.1 million lower than Adjusted EBITDA for the six months ended June 30, 2021.

Adjusted EBITDA for the six months ended June 30, 2022 reflected the full six months of our packaging operations which were offset by:

(i) approximately $20.0 million of incremental cost, primarily driven by the metal and magnesium supply chain issues and (ii) $6.0 million of higher than normal international freight cost at our Trentwood facility.

In addition, we had inflation driven higher energy, manufacturing and employee related cost that were not fully recovered through pricing increases.

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,

Quarter Ended June 30,

Six Months Ended June 30,

Aero/HS Products:

13 unchanged sentences

Hedged Cost of Alloyed Metal

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.

Although our Warrick rolling mill’s supply chain issues remain challenging, we continue to aggressively address these issues as we transform Warrick into a highly efficient and independent operation, while executing on our strategic plans for further growth.

As discussed above in “Metal and Magnesium Supply Chain Issues,” we have adjusted our production levels at Warrick based on the amount of magnesium currently available and otherwise scheduled for delivery from suppliers other than US Mag and are working with our Warrick customers to minimize the impact of supply chain issues on planned deliveries.

At the time of our July 7, 2022 press release announcing our declaration of force majeure, we noted that we anticipated Warrick’s production and deliveries to

be reduced by 30% to 40% in the month of July 2022 and approximately 50% during the remainder of the third quarter ended September 30, 2022 , in each case based on then contracted deliveries of magnesium and assuming no further deliveries from US Mag.

Since that time, US Mag delivered additional magnesium and we continue to identify and qualify additional supplies and suppliers of magnesium.

As such, subject to the successful completion of our qualification process, we believe shipments will be higher than the levels in our previous announcement, which will then allow us to return to full production sooner than previously anticipated.

Given the current environment and the supply chain issues we experienced during the first half of 2022, we will not achieve the Adjusted EBITDA margins (Adjusted EBITDA as a percentage of VAR) of 17% to 20% as we had previously anticipated.

However, as we look forward and continue executing on our strategies and resolve these supply chain issues, our business is positioned to perform at these levels and above.

Notwithstanding these near-term challenges, longer-term, our strategy remains unchanged.

We remain well positioned for continued long-term growth with a diversified portfolio and strong secular growth trends in each of our served end markets.

The fundamentals of our Aero/HS products, Packaging, Automotive Extrusions and GE products end markets are solid and as we continue to execute on our strategic initiatives we will continue to deliver long-term value to all of our stakeholders.

Liquidity and Capital Resources

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

As of March 31, 2022

As of June 30, 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 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.

In April 2022, we executed Amendment No.

3 to our revolving credit facility with Wells Fargo Bank, National Association, as administrative agent, and the other financial institutions party thereto (as amended, the “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 of Notes to Interim Consolidated Financial Statements included in this Report for further details.

Borrowing availability under the Revolving Credit Facility was determined by a borrowing base calculated as of June 30, 2022 and December 31, 2021 using the terms of the Revolving Credit Facility in effect as of those dates.

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

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).

See Note 11 of Notes to Interim Consolidated Financial Statements included in this Report for information regarding restricted cash at June 30, 2022.

There were no borrowings under our Revolving Credit Facility as of both June 30, 2022 and December 31, 2021.

See Note 5 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):

Quarter Ended March 31,

Six Months Ended June 30,

Total cash provided by (used in):

2 unchanged sentences

Financing activities

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.

Cash provided by operating activities for the six months ended June 30, 2022 reflected results of business activity described above within “Consolidated Results of Operations,” as well as the following working capital changes:

(i) an increase in inventory of $64.0 million due primarily to higher inventory pounds to satisfy increased demand, longer lead times, the planned multi-week outage

at our Trentwood facility to refurbish our heavy gauge stretcher, as well as a higher per pound inventory cost;

(ii) an increase in accounts payable of $61.8 million, the majority of which was driven by an increase in inventory as noted above;

and (iii) an increase in contract assets of $30.7 million due primarily to the timing and mix of sales and an increase in metal price .

Cash provided by operating activities for the six months ended June 30, 2021 reflected:

(i) an increase in trade and other receivables of $130.5 million, the majority of which was driven by Warrick receivables added during the quarter ended June 30, 2021 and the remainder of which was due to the timing and mix of sales with extended terms and an increase in metal price;

(ii) an increase in accounts payable of $115.5 million, the majority of which was driven by Warrick payables added during the quarter ended June 30, 2021 and the remainder of which was driven by the volume of metal purchases;

and (iii) an increase in inventory of $21.2 million due primarily to higher inventory pounds to satisfy increased demand.

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 six months ended June 30, 2022 and June 30, 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.

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.

During the six months ended June 30, 2022 and as of July 21, 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, as well as Note 5 of Notes to Interim Consolidated Financial Statements included in this Report for further details regarding Amendment No.

3 of our Revolving Credit Facility, which we executed in April 2022.

We engage in certain customer-based supply chain financing programs to accelerate the receipt of payment for outstanding accounts receivable from certain customers.

1 unchanged sentence

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 March 31, 2022 constituted approximately 43% of our net sales.

Receivables involved with these customer‑based supply chain finance programs for the quarter ended June 30, 2022 constituted approximately 51% 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.

4 unchanged sentences

We strive to strengthen our competitive position across our end markets through strategic capital investment.

Significant investments over the past decade have positioned us well with increased capacity and expanded manufacturing capabilities while more recent capital projects have focused on further enhancing manufacturing cost efficiency, improving product quality and promoting operational security, which we believe are critical to maintaining and strengthening our position in an increasingly competitive market environment.

operational security, which we believe are critical to maintaining and strengthening our position in an increasingly competitive market environment.

A significant portion of our capital spending over the past several years related to the modernization project at our Trentwood facility, which focused on equipment upgrades throughout the process flow to reduce conversion costs, increase efficiency and further improve our competitive cost position on all products produced at our Trentwood facility.

15 unchanged sentences

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 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.

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 June 30, 2022 and June 30, 2021, and declared subsequent to June 30, 2022.

Repurchases of Common Stock

2 unchanged sentences

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;

(i) repurchases of common stock during the quarters ended June 30, 2022 and June 30, 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.

and (iii) minimum statutory tax withholding obligations arising during the quarters ended June 30, 2022 and June 30, 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 quarter ended March 31, 2022, we granted additional stock-based awards to executive officers and certain key employees under our equity incentive plan.

During the six months ended June 30, 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.

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.

Commitment fees on our Revolving Credit Facility increased due to the incremental $200.0 million of borrowing capacity associated with Amendment No.

3 of our Revolving Credit Facility.

See Note 5 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.

8 unchanged sentences

“Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10‑K for the year ended December 31, 2021.

There have been no other material changes in our critical accounting estimates and policies since December 31, 2021.

There have been no material changes in our critical accounting estimates and policies since December 31, 2021.

New Accounting Pronouncements

8 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