Executive Summary

Q2 2025 delivered broad-based beats: net sales $0.823B vs consensus $0.787B, adjusted EPS $1.21 vs $0.76, and adjusted EBITDA $67.7M vs $56.1M; management raised 2025 adjusted EBITDA outlook to +10–15% YoY while maintaining conversion revenue growth +5–10% . S&P Global estimates marked with asterisks and disclaimer below.
Margin trajectory remains solid despite startup and maintenance costs: adjusted EBITDA margin was 18.1% (down from 20.2% in Q1), with tailwinds from ~$14M favorable metal price lag; first-half margins sustained above 19% per CEO .
Packaging ramp/qualifications at Warrick are taking longer than expected, trimming second-half shipments but improving mix; aerospace destocking is expected to dissipate by year-end; tariffs are “neutral to slightly favorable” to earnings .
Free cash flow guidance cut to $50–$70M (from ~$100M) on higher working capital tied to rising metal prices; capex reiterated at $120–$130M; liquidity remains strong at $538M .
Near-term catalysts: continued packaging mix upgrade as qualifications progress, Trentwood capacity additions in Q4, clearer aerospace supply-chain normalization, and tariff-driven domestic demand shift; dividend declared at $0.77/share supports capital return consistency .

What Went Well and What Went Wrong

What Went Well

Strong beats vs Street on revenue, adjusted EPS, and adjusted EBITDA; management raised FY25 EBITDA outlook to +10–15% YoY while maintaining conversion revenue +5–10% . S&P Global estimates marked below.
Pricing/mix improvements and favorable metal price lag (~$14M) supported profitability; first-half margin levels above 19% per CEO: “sustain margin levels above 19% for the first half of 2025” .
Segment momentum: Packaging conversion revenue +9% YoY to $129.7M; General Engineering conversion revenue +3% YoY to $85.7M; automotive pricing/mix offset lower shipments .

Management quote: “Our second quarter results exceeded our expectations… We are raising our full year 2025 Adjusted EBITDA outlook” — Keith A. Harvey, CEO .

What Went Wrong

Warrick coating-line startup delays and converter underperformance pushed packaging qualifications later, modestly reducing second-half shipments despite strong demand .
Aerospace destocking persisted near-term; expected to dissipate by year-end, with Trentwood downtime impacting Q3 shipments .
Free cash flow guidance lowered to $50–$70M (from $100M) due to higher working capital as Midwest Transaction Price rose; net debt leverage ticked up to 4.2x (from 3.9x) .

Financial Results

Metric	Q4 2024	Q1 2025	Q2 2025
Net Sales ($USD Billions)	$0.765	$0.777	$0.823
Conversion Revenue ($USD Billions)	$0.358	$0.363	$0.374
GAAP Diluted EPS ($USD)	$0.43	$1.31	$1.41
Adjusted EPS ($USD)	$0.33	$1.44	$1.21
Adjusted EBITDA ($USD Millions)	$50.2	$73.4	$67.7
Adjusted EBITDA Margin (%)	14.0%	20.2%	18.1%

Segment Conversion Revenue ($USD Millions)	Q4 2024	Q1 2025	Q2 2025
Aerospace/High Strength	$132	$120.5	$127.2
Packaging	$125	$127.4	$129.7
General Engineering	$74	$83.5	$85.7
Automotive Extrusions	$27	$31.8	$31.6

KPIs	Q4 2024	Q1 2025	Q2 2025
Shipments (mm lbs)	292	275.6	288.4
Conversion Revenue per lb ($/lb)	$1.23	$1.32	$1.30
Favorable Metal Price Lag ($USD Millions)	$2.0 (settlement gain)	$21.1	~$14.0
Liquidity ($USD Millions)	$572 (12/31/24)	$577 (3/31/25)	$538 (6/30/25)
Capex ($USD Millions)	$174.6 FY24	$38 Q1	$44 Q2
Net Debt Leverage Ratio (x)	—	3.9x (Q1)	4.2x (Q2)

Results vs Wall Street Consensus (S&P Global)

Metric	Q4 2024 Consensus	Q4 2024 Actual	Q1 2025 Consensus	Q1 2025 Actual	Q2 2025 Consensus	Q2 2025 Actual
Revenue ($USD Billions)	$0.752*	$0.765	$0.800*	$0.777	$0.787*	$0.823
Primary EPS ($USD)	$0.41*	$0.33 (Adj. EPS)	$0.60*	$1.44 (Adj. EPS)	$0.76*	$1.21 (Adj. EPS)
EBITDA ($USD Millions)	$49.0*	$50.2	$53.3*	$73.4	$56.1*	$67.7
# of Revenue Estimates	1*	—	3*	—	2*	—
# of EPS Estimates	2*	—	3*	—	2*	—

Values with asterisks retrieved from S&P Global.

Highlights:

Q2 2025: Revenue beat (+$36M), adjusted EPS beat (+$0.45), and adjusted EBITDA beat (+$11.6M). Bolded: beats . S&P Global estimates marked above.
Q1 2025: Adjusted EPS and adjusted EBITDA significantly beat; revenue modest miss vs consensus . S&P Global estimates marked above.
Q4 2024: Revenue slight beat; adjusted EPS miss vs consensus; EBITDA in line-to-slight beat . S&P Global estimates marked above.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Conversion Revenue Growth	FY 2025	+5% to +10% YoY (Apr)	+5% to +10% YoY (Jul)	Maintained
Adjusted EBITDA Growth	FY 2025	+5% to +10% YoY (Apr)	+10% to +15% YoY (Jul)	Raised
Adjusted EBITDA Contribution Timing	FY 2025	~50–55% 2H (Apr)	Margin performance “slightly better”; EBITDA raised (Jul)	Improved margin outlook
Free Cash Flow	FY 2025	≈$100M (Apr call)	$50–$70M (Jul call)	Lowered
Capex	FY 2025	$120–$130M (Apr call)	$120–$130M (Jul call)	Maintained
Effective Tax Rate	FY 2025	Low–mid 20% (Apr call)	Low–mid 20% (Jul call)	Maintained
Dividend	Q2 2025	$0.77 declared (Apr)	$0.77 payable Aug 15, 2025	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2024, Q1 2025)	Current Period (Q2 2025)	Trend
Tariffs/Macro	Neutral-to-modestly positive for Kaiser; metal-neutral contracts; reshoring tailwinds (Q1)	“Neutral to slightly favorable” to earnings; higher working capital due to rising MWTP	Neutral-to-positive earnings; WC usage higher
Packaging Coating Line	Commissioning with qualifications expected late 2H’25 (Q1)	Qualifications delayed; converters underperformed; full run-rate now late Q4’25	Slightly later ramp; mix improving
Aerospace Destocking	Destocking ongoing; recovery expected as build rates rise (Q1)	Destocking expected to dissipate by YE; Q3 shipments impacted by Trentwood downtime	Improving into 2026
General Engineering	Demand supported by trade uncertainty; shipments up; pricing solid (Q1)	Continued strength; reshoring opportunities; plate mix positive	Strengthening
Automotive Demand	Platform exposure in SUVs/light trucks; production flat-to-down (Q1)	Tariff-related uncertainty; shipments down 15% YoY, pricing/mix mitigating	Stable-to-soft volumes, price/mix offset
Working Capital/FCF	FCF ≈$100M target (Q1)	FCF lowered to $50–$70M on higher metal prices; leverage 4.2x	WC headwinds near-term

Management Commentary

“Our second quarter results exceeded our expectations… This performance enabled us to sustain margin levels above 19% for the first half of 2025, and as a result we are raising our full year 2025 Adjusted EBITDA outlook.” — Keith A. Harvey, CEO .
“Conversion revenue for the second quarter was $374 million, up ~1% YoY. Packaging conversion revenue totaled $130 million, up ~9% YoY on improved mix; General Engineering $86 million, up ~3% YoY; Automotive $32 million, down 4% YoY on a 15% decrease in shipments.” — Neal West, CFO .
“We now anticipate reaching our full run rate in late fourth quarter of this year… revised timing of qualifications to have a slightly negative impact on second half 2025 packaging shipments and Conversion Revenue dollars.” — Keith A. Harvey .
“Tariffs are actually still neutral to positive for us… we pass through the Midwest transaction price.” — Neal West .

Q&A Highlights

Packaging ramp: startup issues on complex equipment and multi-phase customer qualifications; converters underperformed; full run-rate now targeted for late Q4 2025; despite lower shipments, conversion revenue expected up 15–20% YoY .
Aerospace inventory: destocking shifting from distributors to OEMs; expected to dissipate by year end; Q3 shipments to be lower due to Trentwood downtime .
EBITDA cadence: Q2 was better than expected; packaging ramp to offset slight aerospace softness; second half reiteration consistent with February outlook .
Costs and adjustments: ~$17M startup/maintenance costs impacted quarter; not added back to adjusted EBITDA .
Free cash flow: guidance reduced to $50–$70M due to rising metal prices increasing working capital; no simple rule-of-thumb given .

Estimates Context

Q2 2025 beats: revenue, adjusted EPS, and adjusted EBITDA all exceeded S&P Global consensus. Implication: models should reflect stronger pricing/mix, metal price lag benefit (~$14M), and modest packaging shipment deferral offset by conversion revenue resilience .
Q1 2025: significant beats on EPS and EBITDA driven by $21.1M favorable metal price lag and mix, with revenue slightly below consensus; analysts should normalize for metal lag and startup/maintenance costs in sequential modeling .

Values for consensus and estimate counts retrieved from S&P Global.

Key Takeaways for Investors

Q2 delivered across-the-board beats and a guidance raise for FY25 adjusted EBITDA (+10–15% YoY), reinforcing margin expansion trajectory into 2026 as major investments come online .
Packaging delays modestly shift volume timing, but mix and conversion revenue remain strong; expect a clearer inflection as qualifications progress and the line reaches full run-rate in late Q4 .
Aerospace destocking is likely to end by YE; Trentwood capacity expansion supports 2026 growth across aerospace and general engineering; near-term Q3 shipments will be affected by planned downtime .
Free cash flow reset ($50–$70M) reflects higher metal-driven working capital; monitor MWTP trajectory and working capital actions; liquidity at $538M provides flexibility .
Tariff/macro dynamics remain neutral-to-positive to earnings given metal-neutral pass-through and domestic footprint; watch for reshoring benefits in general engineering .
Dividend stability ($0.77) and leverage management (4.2x, no maturities until 2028) support balanced capital allocation while executing growth initiatives .
Trading lens: near-term sentiment hinges on packaging qualification progress and Q3 Trentwood downtime; medium-term thesis rests on margin expansion via mix, pricing discipline, operational efficiencies, and strategic capacity additions .

KAISER ALUMINUM CORP (KALU)·Q2 2025 Earnings Summary