Forward-Looking Statements



This Quarterly Report on Form 10-Q ("Report") contains statements which
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements appear throughout
this Report and can be identified by the use of forward-looking terminology such
as "believes," "expects," "may," "estimates," "will," "should," "plans" or
"anticipates," or the negative of the foregoing or other variations of
comparable terminology, or by discussions of strategy. Readers are cautioned
that any such forward­looking statements are not guarantees of future
performance and involve significant risks and uncertainties and that actual
results may vary from those in the forward-looking statements as a result of
various factors. These factors include: (i) the effectiveness of management's
strategies and decisions, including strategic investments, capital spending
strategies and the execution of those strategies; (ii) general economic and
business conditions, including the impact of the global outbreak of Coronavirus
Disease 2019 ("COVID-19") and governmental and other actions taken in response,
cyclicality, reshoring, supply interruptions, including the most recent
disruptions resulting from the supply demand imbalances in the magnesium and
silicon markets, and other conditions that impact demand drivers in the
aerospace/high strength, automotive, general engineering, packaging and other
end markets we serve; (iii) our ability to participate in mature and anticipated
new automotive programs expected to launch in the future and successfully launch
new automotive programs; (iv) changes or shifts in defense spending due to
competing national priorities; (v) developments in technology; (vi) new or
modified statutory or regulatory requirements; and (vii) changing prices and
market conditions. This Item, Part II, Item 1A. "Risk Factors" included in this
Report and Part I, Item 1A. "Risk Factors" included in our Annual Report on Form
10-K for the year ended December 31, 2020 each identify other factors that could
cause actual results to vary. No assurance can be given that these are all of
the factors that could cause actual results to vary materially from the
forward­looking statements.

The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with Part I, Item 1. "Financial
Statements" of this Report and our consolidated financial statements and related
notes included in Part II, Item 8. "Financial Statements and Supplementary Data"
of our Annual Report on Form 10-K for the year ended December 31, 2020.

Non-GAAP Financial Measures



This information contains certain non-GAAP financial measures. A non-GAAP
financial measure is defined as a numerical measure of a company's financial
performance that excludes or includes amounts so as to be different than the
most directly comparable measure calculated and presented in accordance with
generally accepted accounting principles ("GAAP") in the statements of (loss)
income, balance sheets or statements of cash flows of the company. We have
provided a reconciliation of non­GAAP financial measures to the most directly
comparable financial measure in the accompanying tables. We have also provided
discussion of the reasons we believe that presentation of the non-GAAP financial
measures provide useful information to investors, as well as any additional ways
in which we use the non-GAAP financial measures. The non-GAAP financial measures
used in the following discussions are value added revenue ("VAR"), adjusted
earnings before interest, taxes, depreciation and amortization
("Adjusted EBITDA") and ratios related thereto. These measures are presented
because management uses this information to monitor and evaluate financial
results and trends and believes this information to also be useful for
investors.

In the discussion of operating results below, we refer to certain items as
"non-run-rate items." For purposes of such discussion, non-run-rate items are
items that, while they may recur from period-to-period: (i) are particularly
material to results; (ii) affect costs primarily as a result of external market
factors; and (iii) may not recur in future periods if the same level of
underlying performance were to occur. Non-run-rate items are part of our
business and operating environment but are worthy of being highlighted for the
benefit of readers of our financial statements. Our intent is to allow users of
the financial statements to consider our results both in light of and separately
from such items. For a reconciliation of Adjusted EBITDA to Net (loss) income,
see "Results of Operations - Selected Operational and Financial Information"
below. Reconciliations of certain forward-looking non-GAAP financial measures to
comparable GAAP measures are not provided because certain items required for
such reconciliations are outside of our control and/or cannot be reasonably
predicted or provided without unreasonable effort.

Metal Pricing Policies



A fundamental part of our business model is to remain neutral to the impact from
fluctuations in the market price for aluminum, thereby earning profit
predominately from the conversion of aluminum into semi-fabricated mill
products. We refer to this as "metal price neutrality." We purchase primary and
scrap, or recycled, aluminum, our main raw material, at prices that fluctuate on
a monthly basis, and our pricing policies generally allow us to pass the
underlying cost of metal through to our customers so that we remain neutral to
metal pricing. However, for some of our higher VAR products sold on a spot
basis, competitive dynamics may limit the amount and/or delay the timing of
selling price increases to recover our increased aluminum costs, resulting in a
lag up to several months during which we may be exposed to metal price risk. As
a result, we can experience an adverse impact when metal prices

                                       30

--------------------------------------------------------------------------------


increase, and a favorable impact to us when metal prices decline, as we and our
competitors tend to defer adjusting pricing unless market dynamics require such
in a declining metal cost environment. Additionally, we sometimes enter into
firm-price customer sales agreements that specify a firm underlying metal price
plus a conversion price. Spot sales with lagged metal price pass through and
firm-price sales agreements create metal price exposure for us, which we
mitigate through a hedging program with an objective to remain metal price
neutral.

Our pricing policies and hedging program are intended to significantly reduce or
eliminate the impact on our profitability of fluctuations in underlying metal
price so that our earnings are predominantly associated with the conversion of
aluminum to semi­fabricated mill products. To allow users of our financial
statements to consider the impact of metal cost on our Net sales, we disclose
Net sales as well as VAR, which is Net sales less the Hedged Cost of Alloyed
Metal. As used in this discussion, "Hedged Cost of Alloyed Metal" is the cost of
our metal inputs at the average Midwest Transaction Price of aluminum plus the
cost of alloying elements and any realized gains and/or losses on settled hedges
related to the metal sold in the referenced period. The average Midwest
Transaction Price of aluminum reflects the primary aluminum supply/demand
dynamics in North America. For a reconciliation of VAR to Net sales, see
"Results of Operations - Selected Operational and Financial Information" below.

Business Overview



We manufacture and sell semi-fabricated specialty aluminum mill products for the
following end market applications: aerospace and high strength ("Aero/HS
products"); automotive ("Automotive Extrusions"); general engineering ("GE
products"); aluminum beverage and food packaging ("Packaging"), see "Warrick
Acquisition" below; and other industrial ("Other products"). Our fabricated
aluminum mill products include flat-rolled (plate, sheet and coil), extruded
(rod, bar, hollows and shapes), drawn (rod, bar, pipe, tube and wire) and
certain cast aluminum products. The sophistication of our products is due to the
metallurgy and physical properties of the metal and the special characteristics
that are required for particular end uses. We strategically choose to serve
technically challenging applications for which we can deploy our core
metallurgical and process technology capabilities to produce highly engineered
mill products with differentiated characteristics that present opportunities for
us to receive premium pricing and to create long-term profitable growth.

With respect to flat-rolled aluminum mill products, our heat treat plate and
sheet focus is on applications that require higher strength and other desired
product attributes that cannot be achieved by common alloy rolled products. The
primary end market applications of flat-rolled heat treat plate and sheet are
Aero/HS products (which we sell globally) and GE products (which we
predominantly sell within North America). In addition, we also produce
flat-rolled aluminum products for the beverage and food­packaging industry,
primarily serving the North America can market. Our Packaging products require
demanding attributes and can be further processed to include a coating and
slitting depending on customer specifications. Similarly, in the areas of
aluminum extrusions, we focus on demanding Aero/HS products, Automotive
Extrusions and GE products that require high strength, machinability or other
specific properties where we can create and maintain a defensible competitive
position because of our technical expertise, strong production capability and
high product quality. We primarily serve North American demand for extruded mill
products.

Our rolling mill in Spokane, Washington ("Trentwood") produces heat treat plate
and sheet for aerospace and general engineering end market applications and our
rolling mill in Warrick County, Indiana ("Warrick") produces bare and coated
aluminum coil used for can stock applications in the beverage and food packaging
industry. Our 11 extrusion/drawing facilities, 10 of which are in the United
States and one of which is in Canada, serve aerospace, automotive or general
engineering applications. Additionally, we have a facility in Columbia, New
Jersey that focuses on multi-material advanced manufacturing methods and
techniques, which include multi-axis computer numerical control ("CNC")
machining, additive manufacturing ("3D Printing"), welding and fabrication for
demanding aerospace and defense, automotive, high tech and general industrial
applications. Our consolidated Net sales for the nine months ended
September 30, 2021 totaled $1,815.6 million on 788.7 million pounds shipped from
our facilities. We employed approximately 3,900 people at September 30, 2021.

We have long-standing relationships with our customers, which consist primarily
of blue-chip companies including leading aerospace and automotive manufacturers,
tier one aerospace and automotive suppliers, food and beverage packaging
manufacturers and metal service centers. As of September 30, 2021, approximately
69% of our shipments has been sold direct to manufacturers or tier one suppliers
and approximately 31% has been sold to metal service centers. In our served
markets, we seek to be the supplier of choice by pursuing "Best in Class"
customer satisfaction driven by quality, availability, service and delivery
performance. We strive to differentiate our product portfolio through our broad
product offering and our KaiserSelect® products, which are engineered and
manufactured to deliver enhanced product characteristics with improved
consistency, so as to result in better performance, lower waste and, in many
cases, lower production cost for our customers.

                                       31

--------------------------------------------------------------------------------

Warrick Acquisition



On March 31, 2021, after the close of business, we completed our purchase of
Alcoa Warrick LLC and certain assets comprising the aluminum casting and rolling
mill facility located in Warrick County, Indiana from Alcoa Corporation
("Alcoa"). This acquisition will provide us re-entry into the North American
aluminum beverage and food packaging industry, which is a strong and growing
non­cyclical end market driven by sustainability trends and the secular shift
from plastic to aluminum. We believe the addition of this non­cyclical end
market will be highly complementary to our existing aerospace, automotive and
general engineering cyclical end markets and will provide excellent
opportunities for long-term growth. The acquisition of Warrick further
demonstrates our strategy to serve technically challenging end market
applications for which we can deploy our core metallurgical and process
technology capabilities to produce highly engineered mill products with
differentiated characteristics that present opportunities for us to receive
premium pricing and to create long-term profitable growth.

Highlights of the quarter ended September 30, 2021 include:



  • Commercial aerospace recovery continues;


  • General engineering demand remains robust;


    •   Packaging demand continues to demonstrate strong strategic growth
        opportunities;

• Automotive demand strong; recovery delayed due to semiconductor chip

shortage;

• Continued labor constraints and inefficiencies, rapidly rising material


        and other inflationary costs, supply chain disruptions impacted
        efficiencies and production levels; and

• Paid cash dividends and dividend equivalents of $0.72 per share or $11.6

million during the quarter ended September 30, 2021.

Results of Operations

Consolidated Results of Operations

Net Sales. Net sales totaled $750.6 million and $255.7 million for the quarters
ended September 30, 2021 and September 30, 2020, respectively, reflecting a
206.3 million pound (189%) increase in shipment volume and a $0.03/lb (1%)
increase in average realized sales price per pound. The shipment volume increase
reflected: (i) a 173.6 million pound addition in Packaging due to our Warrick
acquisition; (ii) a 21.1 million pound (39%) increase in GE products reflecting
continued strength in underlying demand and restocking in the service center
supply chain; and (iii) a 14.8 million pound (54%) increase in Aero/HS products
compared to the quarter ended September 30, 2020, reflecting continued strength
in demand for defense applications, increasing demand for business jets and
improving demand for commercial aerospace as airline travel recovers, partially
offset by a 5.1 million pound (21%) decrease in Automotive Extrusions driven by
the shortage of semiconductor chips that has impacted North American production
levels. The average realized sales price per pound reflected a $0.48/lb (52%)
increase in average Hedged Cost of Alloyed Metal price per pound offset by a
$0.45/lb (32%) decrease in VAR per pound due primarily to the introduction of
lower VAR per pound Packaging products, as well as approximately $15.0 million
of additional revenue recognized in the quarter ended September 30, 2020 related
to modifications to the 2020 customer declarations under multi-year contracts.
See the table in "Selected Operational and Financial Information" below for
further details.

Net sales totaled $1,815.6 million and $900.7 million for the nine months ended
September 30, 2021 and September 30, 2020, respectively, reflecting a 405.6
million pound (106%) increase in shipment volume and a $0.05/lb (2%) decrease in
average realized sales price per pound. The shipment volume increase primarily
reflected: (i) a 359.5 million pound addition in Packaging due to our Warrick
acquisition; (ii) a 51.4 million pound (29%) increase in GE products reflecting
strong underlying demand; and (iii) an 11.9 million pound (20%) increase in
Automotive Extrusions primarily reflecting the recovery from the COVID­19
pandemic related automotive supply chain shutdowns that occurred during the
quarter ended September 30, 2020, partially offset by a 22.9 million pound (16%)
decrease in Aero/HS products reflecting COVID­19 pandemic related lower demand
for our commercial aerospace products. The decrease in average realized sales
price per pound reflected a $0.36/lb (39%) increase in average Hedged Cost of
Alloyed Metal prices per pound offset by a $0.41/lb (29%) decrease in VAR per
pound due primarily to the introduction of lower VAR per pound Packaging
products. See the table in "Selected Operational and Financial Information"
below for further details.

Cost of Products Sold, Excluding Depreciation and Amortization and Other Items.
Cost of products sold, excluding depreciation and amortization and other items
for the quarter ended September 30, 2021 totaled $677.8 million, or 90% of Net
sales, compared to $208.4 million, or 82% of Net sales, for the quarter ended
September 30, 2020. The increase of $469.4 million was largely attributable to
the addition of Packaging and reflected a $343.9 million increase in Hedged Cost
of Alloyed Metal and a $125.5 million increase in net manufacturing conversion
and other. Of the $343.9 million increase in Hedged Cost of Alloyed Metal,
$191.7 million was due to

                                       32

--------------------------------------------------------------------------------


higher shipment volume, as discussed above in "Net Sales," and $152.2 million
was due to higher hedged metal prices. The $125.5 million increase in net
manufacturing conversion and other costs was primarily due to the addition of
Packaging and additional overhead associated with the related increase in
volume. See "Selected Operational and Financial Information" below for a further
discussion of the comparative results of operations for the quarters ended
September 30, 2021 and September 30, 2020.

Cost of products sold, excluding depreciation and amortization and other items
for the nine months ended September 30, 2021 totaled $1,613.6 million, or 89% of
Net sales, compared to $719.5 million, or 80% of Net sales, for the nine months
ended September 30, 2020. The increase of $894.1 million was largely
attributable to the addition of Packaging and reflected a $665.4 million
increase in Hedged Cost of Alloyed Metal and a $228.7 million increase in net
manufacturing conversion and other costs. Of the $665.4 million increase in
Hedged Cost of Alloyed Metal, $375.9 million was due to higher shipment volume
and $289.5 million was due to higher hedged metal prices, as discussed above in
"Net Sales." The $228.7 million increase in net manufacturing conversion and
other costs was primarily due to the addition of Packaging and additional
overhead associated with the related increase in volume. See "Selected
Operational and Financial Information" below for a further discussion of the
comparative results of operations for the nine months ended September 30, 2021
and September 30, 2020.

Selling, General, Administrative, Research and Development ("SG&A and R&D").
SG&A and R&D expense totaled $28.1 million and $21.3 million for the quarters
ended September 30, 2021 and September 30, 2020, respectively and $90.8 million
and $67.9 million for the nine months ended September 30, 2021 and September 30,
2020, respectively. The increase during the quarter ended September 30, 2021 was
primarily due to a $4.0 million increase in costs related to the addition of
Warrick operations and related transition service agreements ("TSAs") with Alcoa
to facilitate the integration and a $2.4 million increase in salaries, benefits
and incentives. The increase for the nine months ended September 30, 2021
compared with September 30, 2020 was due primarily to: (i) a $13.7 million
increase in acquisition related costs, which were primarily comprised of
professional fees; (ii) an $8.1 million increase in costs related to the
addition of Warrick operations and related TSAs with Alcoa to facilitate the
integration; and (iii) a $4.2 million increase in salaries and benefits,
partially offset by a $1.7 million reduction in legacy environmental expenses.

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



Other Operating Charges (Income), net. Other operating charges (income), net,
was $0.3 million of charges for the quarter ended September 30, 2020 and $0.8
million of income for the nine months ended September 30, 2020. During the
quarter and nine months ended September 30, 2020, we recognized $0.4 million and
$0.5 million of impairment charges related to property, plant and equipment,
which in both periods were offset by government grants received (see Note 1 of
Notes to Interim Consolidated Financial Statements included in this Report for
details of government grants received).

Interest Expense. Interest expense represents cash and non-cash interest expense
incurred on our unsecured senior notes and our credit agreement with Wells Fargo
Bank, National Association, as administrative agent, and the other financial
institutions party thereto ("Revolving Credit Facility"), net of capitalized
interest. Interest expense was $12.5 million and $12.1 million for the quarters
ended September 30, 2021 and September 30, 2020, respectively, and $37.2 million
and $28.7 million for the nine months ended September 30, 2021 and September 30,
2020, respectively. See Note 7 of Notes to Interim Consolidated Financial
Statements included in this Report for a discussion of our debt and credit
facilities that were in effect during the quarters and nine months ended
September 30, 2021 and September 30, 2020 and interest expense capitalized as
part of construction in progress.

Other Expense, Net. See Note 11 of Notes to Interim Consolidated Financial Statements included in this Report for details.



Income Tax (Provision) Benefit. See Note 12 of Notes to Interim Consolidated
Financial Statements included in this Report for disclosure regarding our income
tax (provision) benefit.

Selected Operational and Financial Information



The following data should be read in conjunction with our consolidated financial
statements and the notes thereto included in Part I, Item 1. "Financial
Statements" of this Report. Interim results are not necessarily indicative of
those for a full year.

                                       33

--------------------------------------------------------------------------------


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



                                               Quarter Ended September 30,              Nine Months Ended September 30,
                                               2021                  2020                2021                     2020
Net (loss) income                          $        (2.3 )       $         0.4     $          (20.2 )       $           22.9
Interest expense                                    12.5                  12.1                 37.2                     28.7
Other expense, net                                   1.2                   0.5                 38.2                      0.8
Income tax provision (benefit)                       8.4                  (0.7 )               (7.4 )                   10.2
Depreciation and amortization                       24.9                  12.9                 64.2                     39.1
Non-run-rate items:
Restructuring cost (benefit)                           -                   0.5                 (0.8 )                   12.4
Adjustments to plant-level LIFO1                    (0.3 )                 1.2                 10.9                      3.2
Mark-to-market loss (gain) on derivative
instruments2                                         2.0                  (1.7 )                2.1                     (1.1 )
Workers' compensation cost due to
discounting                                            -                   0.7                    -                      1.4
Non-cash asset impairment charge                       -                   0.5                    -                      0.5
Environmental expenses3                              0.2                   3.8                  0.2                      5.9
Acquisition costs4                                   3.8                   1.3                 22.2                      1.3
Total non-run-rate items                             5.7                   6.3                 34.6                     23.6
Adjusted EBITDA                            $        50.4         $        31.5     $          146.6         $          125.3



1 We manage our business on a monthly last-in, first-out ("LIFO") basis at each

plant, but report inventory externally on an annual LIFO basis in accordance

with GAAP on a consolidated basis. This line item represents the conversion

from GAAP LIFO applied on a consolidated basis to monthly LIFO applied on a

plant-by-plant basis. For the quarter and nine months ended

September 30, 2021, this line item reflects a $1.4 million non-run-rate LIFO

benefit and a $6.4 million non-run-rate LIFO charge, respectively, that

resulted from a purchase accounting adjustment to step-up Warrick's inventory


    to fair value.


2   Mark-to-market loss (gain) on derivative instruments for 2021 and 2020
    represents: (i) the reversal of mark-to-market loss (gain) on commodity

hedges entered into prior to the adoption of Accounting Standards Update

("ASU") No. 2017-12, Derivatives and Hedging (Topic 815): Targeted

Improvements to Accounting for Hedging Activities ("ASU 2017-12") and settled

in the periods presented above; (ii) loss (gain) on non-designated commodity

hedges; and (iii) reclassifications out of Accumulated other comprehensive

loss due to forecasted transactions no longer probable of occurring. Adjusted

EBITDA reflects the realized gains and losses related to these derivatives


    upon settlement.


3   Non-run-rate environmental expenses are related to legacy activities at

operating facilities prior to July 6, 2006. See Note 8 of Notes to Interim

Consolidated Financial Statements included in this Report for additional

information relating to the environmental expenses.

4 Acquisition costs are non-run-rate acquisition-related transaction costs,

which include legal and consulting fees, as well non­cash hedging charges

recorded in connection with our Warrick acquisition. The results for both the

quarter and nine months ended September 30, 2020 were adjusted to reflect

$1.3 million now classified as Warrick acquisition-related costs.




Adjusted EBITDA for the quarter ended September 30, 2021 was $18.9 million
higher than Adjusted EBITDA for the quarter ended September 30, 2020, which was
inclusive of the additional $15.0 million of revenue as discussed in "Net sales"
above. Adjusted EBITDA for the quarter ended September 30, 2021 reflected the
addition of Packaging and improvement in our Aero/HS products and GE products,
partially offset by higher costs as discussed in "Consolidated Results of
Operations" above.

Adjusted EBITDA for the nine months ended September 30, 2021 was $21.3 million
higher than Adjusted EBITDA for the nine months ended September 30, 2020, which
had the benefit of the additional $15.0 million of revenue as discussed in "Net
sales" above. Adjusted EBITDA for the nine months 2021 reflected the benefit of
Packaging in addition to improvement in our Automotive Extrusions and GE
products, partially offset by higher costs related to labor, materials and
supply chain disruptions and approximately $1.5 million of redundancy costs
associated with the Warrick integration.

                                       34

--------------------------------------------------------------------------------

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





                                   Quarter Ended September 30,                      Nine Months Ended September 30,
                                  2021                     2020                      2021                      2020
Aero/HS Products:
Shipments (mmlbs)                 42.1                     27.3                     119.0                     141.9
                             $         $ / lb         $         $ / lb          $          $ / lb         $         $ / lb
Net sales                 $  142.0     $  3.37     $  100.9     $  3.70     $    387.6     $  3.26     $  441.5     $  3.11
Less: Hedged Cost of
Alloyed Metal                (60.5 )     (1.43 )      (27.6 )     (1.02 )       (155.2 )     (1.31 )     (135.8 )     (0.96 )
VAR1                      $   81.5     $  1.94     $   73.3     $  2.68     $    232.4     $  1.95     $  305.7     $  2.15

Packaging:
Shipments (mmlbs)                173.6                      -                       359.5                       -
                             $         $ / lb         $         $ / lb          $          $ / lb         $         $ / lb
Net sales                 $  367.3     $  2.12     $      -     $     -     $    726.1     $  2.02     $      -     $     -
Less: Hedged Cost of
Alloyed Metal               (241.3 )     (1.39 )          -           -         (468.2 )     (1.30 )          -           -
VAR                       $  126.0     $  0.73     $      -     $     -     $    257.9     $  0.72     $      -     $     -

Automotive Extrusions:
Shipments (mmlbs)                 19.6                     24.7                      70.4                      58.5
                             $         $ / lb         $         $ / lb          $          $ / lb         $         $ / lb
Net sales                 $   50.1     $  2.56     $   46.2     $  1.87     $    163.3     $  2.32     $  110.3     $  1.89
Less: Hedged Cost of
Alloyed Metal                (29.0 )     (1.48 )      (22.0 )     (0.89 )        (89.7 )     (1.27 )      (53.1 )     (0.91 )
VAR                       $   21.1     $  1.08     $   24.2     $  0.98     $     73.6     $  1.05     $   57.2     $  0.98

GE Products:
Shipments (mmlbs)                 75.8                     54.7                     226.7                     175.3
                             $         $ / lb         $         $ / lb          $          $ / lb         $         $ / lb
Net sales                 $  187.1     $  2.47     $  105.1     $  1.92     $    518.4     $  2.29     $  337.6     $  1.93
Less: Hedged Cost of
Alloyed Metal               (111.7 )     (1.48 )      (49.7 )     (0.91 )       (294.3 )     (1.30 )     (159.7 )     (0.92 )
VAR                       $   75.4     $  0.99     $   55.4     $  1.01     $    224.1     $  0.99     $  177.9     $  1.01

Other Products:
Shipments (mmlbs)                 4.1                      2.2                       13.1                      7.4
                             $         $ / lb         $         $ / lb          $          $ / lb         $         $ / lb
Net sales                 $    4.1     $  1.00     $    3.5     $  1.59     $     20.2     $  1.54     $   11.3     $  1.53
Less: Hedged Cost of
Alloyed Metal                 (2.7 )     (0.66 )       (2.0 )     (0.91 )        (13.2 )     (1.01 )       (6.5 )     (0.88 )
VAR                       $    1.4     $  0.34     $    1.5     $  0.68     $      7.0     $  0.53     $    4.8     $  0.65

Total:
Shipments (mmlbs)                315.2                    108.9                     788.7                     383.1
                             $         $ / lb         $         $ / lb          $          $ / lb         $         $ / lb
Net sales                 $  750.6     $  2.38     $  255.7     $  2.35     $  1,815.6     $  2.30     $  900.7     $  2.35
Less: Hedged Cost of
Alloyed Metal               (445.2 )     (1.41 )     (101.3 )     (0.93 )     (1,020.6 )     (1.29 )     (355.1 )     (0.93 )
VAR                       $  305.4     $  0.97     $  154.4     $  1.42     $    795.0     $  1.01     $  545.6     $  1.42

1 Included in the VAR per pound calculations for the quarter and nine months

ended September 30, 2020 for Aero/HS products is approximately $15.0 million

of additional revenue recognized related to modifications to the 2020

customer declarations under multi-year contracts.

Outlook



VAR for the quarter ended December 31, 2021 is anticipated to increase low
single digits on a percentage basis from the quarter ended September 30, 2021
with EBITDA margin (Adjusted EBITDA as a percentage of VAR) to remain similar to
the quarter ended September 30, 2021. While our end market demand remains
positive, we anticipate cost issues and supply chain disruptions will

                                       35

--------------------------------------------------------------------------------


continue during the quarter ended December 31, 2021. In addition, the most
recent industry wide disruptions in the magnesium and silicon markets and
resulting supply demand imbalances are continuing to evolve and remain uncertain
at this time. Although our outlook contemplates the anticipated impact to our
costs and operations, the situation is fluid and could further impact our
results for the quarter ended December 31, 2021.

Longer-term, our strategy remains unchanged, and we are well positioned for
continued long-term growth with a diversified portfolio and strong secular
growth trends in each of our served end markets. Notwithstanding near-term
challenges, the fundamentals of our Aero/HS products, Automotive Extrusions and
GE products end markets are solid and we are increasingly optimistic in our
ability to deliver significant margin expansion and long-term profitability for
our Packaging end market where we have a significant market position. We remain
confident around the timing of the recovery in commercial aerospace and we are
optimistic that as semiconductor chip shortages are alleviated, automotive
production will ramp back up and, our program launches will resume.

Liquidity and Capital Resources

Summary

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





                                                     As of September       As of December
                                                        30, 2021              31, 2020
Available cash and cash equivalents                 $           295.7     $ 

780.3


Borrowing availability under Revolving Credit
Facility, net of letters of credit1                             367.3                251.5
Total liquidity                                     $           663.0     $        1,031.8

1 Borrowing availability under the Revolving Credit Facility as determined by a

borrowing base calculated as of September 30, 2021 and December 31, 2020.

We place our cash in bank deposits and money market funds with high credit quality financial institutions. Cash equivalents consist primarily of investment-grade commercial paper, money market accounts and investments which, when purchased, have a maturity of 90 days or less.

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

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

Cash Flows

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





                                         Nine Months Ended September 30,
                                          2021                     2020
Total cash provided by (used in):
Operating activities                $            33.3         $         150.7
Investing activities                $          (639.5 )       $          41.6
Financing activities                $           121.4         $         293.2




Cash provided by operating activities for the nine months ended
September 30, 2021 reflected results of business activity described within
"Consolidated Results of Operations" above, as well as the following working
capital changes: (i) an increase in trade and other receivables of
$110.7 million, the majority of which was driven by Warrick receivables added
during the nine months ended September 30, 2021 and the remainder of which was
due to the timing and mix of sales and an increase in metal price; (ii) an
increase in accounts payable of $105.8 million, the majority of which was driven
by Warrick payables added during the nine months ended September 30, 2021 and
the remainder of which was driven by the volume of metal purchases; and (iii) an
increase in inventory of $52.5 million due primarily to higher inventory pounds
to satisfy increased demand.

                                       36

--------------------------------------------------------------------------------


Cash provided by operating activities for the nine months ended
September 30, 2020 reflected results of business activity described within
"Consolidated Results of Operations" above, as well as the following working
capital changes: (i) a decrease in trade and other receivables of $43.4 million
driven primarily by lower Net sales; (ii) a decrease in accounts payable of
$27.6 million driven predominantly by the volume of metal purchases; and (iii) a
reduction in contract assets of $19.8 million driven primarily by timing and
volume of shipments related to revenue on products recognized over-time.

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

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.

We do not believe that covenants contained in the Revolving Credit Facility are
reasonably likely to limit our ability to raise additional debt or equity should
we choose to do so during the next 12 months, nor do we believe it is likely
that during the next 12 months we will trigger the availability threshold that
would require measuring and maintaining a fixed charge coverage ratio. At
October 18, 2021, there were no borrowings under the Revolving Credit Facility.

See Note 9 of Notes to Consolidated Financial Statements included in our Annual
Report on Form 10-K for the year ended December 31, 2020 for a description of
our Revolving Credit Facility.

We engage in certain customer-based supply chain financing programs to
accelerate the receipt of payment for outstanding accounts receivable from
certain customers. Costs of these programs are typically reimbursed to us by the
customer. 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 customer­based supply chain finance
programs for the quarter ended September 30, 2021 constituted approximately 52%
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.

Debt



See "Contractual Obligations, Commercial Commitments and Off-Balance Sheet
Arrangements - Contractual Obligations and Commercial Commitments" included in
Part II, Item 7. "Management's Discussion and Analysis of Financial Condition
and Results of Operations" in our Annual Report on Form 10-K for the year ended
December 31, 2020 for mandatory principal and cash interest payments on the
outstanding borrowings.

The following table provides an update to our contractual obligations and
commercial commitments table in Part II, Item 7. "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in our Annual Report
on Form 10­K for the year ended December 31, 2020 with respect to our 4.50%
Senior Notes (as defined in Note 7 of Notes to Interim Consolidated Financial
Statements included in this Report), consisting of mandatory principal and cash
interest payments (in millions of dollars):



                                                                     Payments Due by Period
                                                    Less than                                       More than
                                       Total         1 year         1-3 years       3-5 years        5 years
Principal and interest on 4.50%
Senior Notes                          $  798.3     $      13.1     $      

49.5 $ 49.5 $ 686.2

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

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


                                       37

--------------------------------------------------------------------------------

Capital Expenditures and Investments



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. 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. In addition, a significant portion
of the investment also focused on modernizing legacy equipment and the process
flow for thin gauge plate to achieve KaiserSelect® quality enhancements for
these Aero/HS and GE products. These improvements have allowed us to gain
incremental manufacturing capacity to enable future sales growth.

Our capital investment plans remain focused on supporting demand growth. The
$150.0 million investment in a new roll coat line at our Warrick packaging
facility that we initiated during the quarter ended June 30, 2021 is proceeding
as planned, and by early 2024 is expected to provide additional capacity to
support further growth in our higher margin coated products. In addition, we
continue to deploy our capital thoughtfully to ensure that our investment
decisions are aligned with our demand expectations in order to maximize the
earnings potential of our business. Deploying our capital thoughtfully has
allowed us to create value and maintain our financial strength and flexibility
over time, and we will continue to manage our business with a long-term focus.

Excluding our cash payment for the acquisition of Warrick, we anticipate that
total capital spending in 2021 will be approximately $70.0 million to
$80.0 million. Capital investments will be funded using cash generated from
operations, available cash and cash equivalents, short­term investments,
borrowings under the Revolving Credit Facility and/or other third-party
financing arrangements. The level of anticipated capital expenditures may be
adjusted from time to time depending on our business plans, our price outlook
for fabricated aluminum products, our ability to maintain adequate liquidity and
other factors. No assurance can be provided as to the timing of any such
expenditures or the operational benefits expected therefrom.

Dividends



We have consistently paid a quarterly cash dividend since the second quarter of
2007 to holders of our common stock, including holders of restricted stock, and
have increased the dividend in each year since 2011. Nevertheless, as in the
past, the future declaration and payment of dividends, if any, will be at the
discretion of our Board of Directors and will depend on a number of factors,
including our financial and operating results, financial position and
anticipated cash requirements and contractual restrictions under our Revolving
Credit Facility, the indenture for our unsecured senior notes or other
indebtedness we may incur in the future. We can give no assurance that dividends
will be declared and paid in the future. See Note 9 of Notes to Consolidated
Financial Statements included in our Annual Report on Form 10-K for the year
ended December 31, 2020, as well as Note 7 of Notes to Interim Consolidated
Financial Statements included in this Report for additional information about
restrictions on dividend payments contained in the Revolving Credit Facility and
in the indenture for our unsecured senior notes.

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

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

Repurchases of Common Stock

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



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

                                       38

--------------------------------------------------------------------------------


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

Environmental Commitments and Contingencies

See Note 8 of Notes to Interim Consolidated Financial Statements included in this Report for information regarding our environmental commitments and contingencies.

Contractual Obligations, Commercial Commitments and Off-Balance Sheet Arrangements



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

Beginning March 31, 2021, we assumed $500.0 million to $550.0 million of
contractual obligations and commercial commitments of Warrick, for which the
majority of spending will be completed by December 31, 2021. These commitments
related primarily to the purchase of aluminum and related alloys used in their
production process in the ordinary course of business. For updated maturities of
lease liabilities, as well as net benefits expected to be paid for pension and
other postretirement benefit obligations that include Warrick, see Note 3 and
Note 5, respectively, of Notes to Interim Consolidated Financial Statements
included in this Report.

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,
2020.

Critical Accounting Estimates and Policies



Our consolidated financial statements are prepared in accordance with GAAP. In
connection with the preparation of our financial statements, we are required to
make assumptions and estimates about future events and apply judgments that
affect the reported amounts of assets, liabilities, revenue and expenses and the
related disclosures. We base our assumptions, estimates and judgments on
historical experience, current trends and other factors that management believes
to be relevant at the time our consolidated financial statements are prepared.
On a regular basis, management reviews the accounting policies, assumptions,
estimates and judgments to ensure that our financial statements are presented
fairly and in accordance with GAAP. However, because future events and their
effects cannot be determined with certainty, actual results could differ from
our assumptions and estimates and such differences could be material.

Our significant accounting policies are discussed in Note 1 of Notes to
Consolidated Financial Statements included in our Annual Report on Form 10-K for
the year ended December 31, 2020. We discuss our critical accounting estimates
in Part II, Item 7. "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, 2020.

There have been no other material changes in our critical accounting estimates and policies since December 31, 2020.

New Accounting Pronouncements

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


                                       39

--------------------------------------------------------------------------------

Available Information



Our website is located at www.kaiseraluminum.com. The website includes a section
for investor relations under which we provide notifications of news or
announcements regarding our financial performance, including Securities and
Exchange Commission ("SEC") filings, investor events and press and earnings
releases. In addition, all Kaiser Aluminum Corporation filings submitted to the
SEC, including our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q,
Current Reports on Form 8-K and Proxy Statements for our annual meeting of
stockholders, as well as other Kaiser Aluminum Corporation reports and
statements, are available on the SEC's web site at www.sec.gov. Such filings are
also available for download free of charge on our website. In addition, we
provide and archive on our website webcasts of our quarterly earnings calls and
certain events in which management participates or hosts with members of the
investment community, and related investor presentations. The contents of the
website are not intended to be incorporated by reference into this Report or any
other report or document filed by us, and any reference to the websites are
intended to be inactive textual references only.

© Edgar Online, source Glimpses