Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes included in Item 8. “Financial Statements and Supplementary Data” of this Form 10-K. For a detailed discussion of items impacting the year ended December 31, 2023, as well as a year‑to‑year comparison of our financial position and results of operations for the years ended December 31, 2024 and December 31, 2023, refer to Part II, Item 7. “Management’s Discussion and Analysis” of our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on February 20, 2025.
Basis of Presentation
Effective January 1, 2025, we changed our inventory valuation methodology from LIFO to WAC. The effects of this change in accounting principle have been retrospectively applied to all periods presented with a cumulative effect adjustment reflected in the January 1, 2023 beginning retained earnings. See Note 18 of our consolidated financial statements included in Item 8. “Financial Statements and Supplementary Data” of this Form 10-K for further information. Prior period information provided in this Management’s Discussion and Analysis has been updated to reflect the retrospective application of the change in accounting principle.
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 US GAAP in the statements of income, balance sheets, or statements of cash flows of the company. We have provided a reconciliation of non-GAAP financial measures to the most directly comparable financial measure in the accompanying tables. We have also provided a discussion of the reasons we believe that presentation of the non-GAAP financial measures provides 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 Conversion Revenue (defined as Net Sales less the Hedged Cost of Alloyed Metal, see below in “Metal Pricing Policies” discussion), 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 Conversion Revenue to Net sales and Adjusted EBITDA to Net income, see below in “Results of Operations - Selected Operational and Financial Information.”
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 and certain alloys, thereby earning profit predominantly from the conversion of aluminum into semi-fabricated mill products. We refer to this as “metal price neutrality.” We purchase primary, rolling ingot and scrap, or recycled, aluminum, our main raw material, and alloys at prices that fluctuate on a monthly basis, and our pricing policies generally allow us to pass the current month underlying index cost of aluminum and certain alloys through to our customers so that we remain neutral to metal pricing. We may also enter into firm-price customer sales agreements that specify a firm underlying metal price plus a conversion price. Firm-price sales agreements create price exposure for us, which we mitigate through hedging and related programs with an objective to remain metal price neutral. Additionally, we have certain contracts that may adjust certain alloy prices for a forward period based on an average prior period cost for such alloys. As a result, until the selling price resets, we can experience an adverse impact when alloy prices increase and a favorable impact when alloy prices decrease.
In order to allow users of our financial statements to consider the impact of aluminum and alloy cost on our Net sales, we disclose Net sales as well as Conversion Revenue, which is Net sales less the Hedged Cost of Alloyed Metal. As used in this discussion, “Hedged Cost of Alloyed Metal” is the cost of aluminum at the average MWTP 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 MWTP of aluminum reflects the primary aluminum supply/demand dynamics in North America. For a reconciliation of Conversion Revenue to Net sales, see below in “Results of Operations - Selected Operational and Financial Information.”
Results of Operations
Fiscal 2025 Summary
Net income of $112.5 million and Net income per diluted share of $6.77;
Net sales of $3.37 billion; Conversion Revenue of $1.45 billion;
Adjusted EBITDA of $310.2 million;
Issuance of a new $500.0 million aggregate principal amount of 5.875% unsecured Senior Notes, due 2034 replacing the $500.0 million aggregate principal amount of 4.625% unsecured Senior Notes due in 2028;
As of December 31, 2025, we had $547.2 million of combined cash and cash equivalents and net borrowing availability under our Revolving Credit Facility; and
We paid a total of approximately $51.3 million, or $3.08 per common share, in cash dividends during 2025.
Consolidated Selected Operational and Financial Information
The following data should be read in conjunction with our consolidated financial statements and the notes thereto included in Item 8. “Financial Statements and Supplementary Data” of this Form 10-K.
Net Sales. The following table sets forth the 2025 and 2024 shipments (in millions of pounds) and Net sales (in millions of dollars) by end market applications and the respective fluctuations.
Year Ended December 31,
Shipments
Net sales
Shipments
Net sales
Shipment Change
% Increase (Decrease)
Net sales Change
% Increase (Decrease)
Aero/HS Products
Packaging
GE Products
Automotive Extrusions
Other Products 1
Total
Beginning January 1, 2025, Other Products is combined with GE Products.
The increase in Net sales reflected an increase in the average realized sales price per pound of $0.46 (18%). This benefit was partially offset by a 64.1 million pound (5%) decrease in shipment volume. The decrease in shipment volume primarily reflects the impact of a planned partial outage at our Trentwood facility in conjunction with the Phase VII capacity expansion project, destocking of plate products in the commercial aerospace portion of Aero/HS Products, and the delayed ramp up of our fourth coating line at our Warrick facility.
COGS. COGS for 2025 totaled $2,930.6 million, or 87% of Net sales, compared to $2,666.6 million, or 88% of Net sales, in 2024. The increase reflected the following (in millions of dollars):
Year Ended December 31,
As Adjusted 1
Change
% Increase (Decrease)
Hedged cost of alloyed metal
Manufacturing costs
Plant overhead
Freight costs
Other cost of products sold
Total
Adjusted to reflect the retrospective change in inventory valuation methodology from LIFO to WAC. See Note 18 to the Consolidated Financial Statements included in this Form 10-K for further discussion.
Of the $352.0 million increase in Hedged Cost of Alloyed Metal, $437.7 million was due to an increase in underlying metal prices, partially offset by an $85.7 million decrease attributed to lower shipment volume (see above in our “Net Sales” discussion for further details). The $89.7 million decrease in manufacturing costs was primarily due to favorable metal consumption cost and lower shipment volume, partially offset primarily by lower manufacturing efficiencies associated with a planned partial outage at Trentwood for the Phase VII capacity expansion project and the commissioning and start-up of the fourth coating line at Warrick. The $7.5 million decrease in freight costs was primarily due to lower shipment volume. The $6.2 million increase in other cost of products sold was primarily driven by an increase in major maintenance costs, partially offset by a decrease in legacy environmental costs and a gain on the disposition of operating assets. See “Selected Operational and Financial Information” below for a further discussion of the comparative results of operations for 2025 and 2024.
Depreciation and Amortization. Depreciation and amortization for 2025 was $122.5 million compared to $116.4 million for 2024. The increase of $6.1 million was primarily attributable to the fourth coating line and Phase VII capacity growth initiatives being placed in service at Warrick and Trentwood, respectively.
Selling, General, Administrative, Research and Development (“SG&A and R&D”). SG&A and R&D expense totaled $129.2 million in 2025 compared to $120.8 million in 2024. The increase reflected the following (in millions of dollars), with employee costs being driven primarily by higher incentive costs:
Year Ended December 31,
Change
% Increase (Decrease)
Research and development costs
Employee costs
Other selling, general and administrative costs
Total
Restructuring Costs. Restructuring costs of $1.9 million and $7.6 million for the years ended December 31, 2025 and 2024, respectively, reflect the impacts of our restructuring plans. See Note 12 of Notes to Consolidated Financial Statements included in this Form 10-K for further information regarding the restructuring plans.
Other Operating Charges, Net . Other operating charges, net, of $0.4 million for the year ended December 31, 2024 represented an impairment charge on land classified as held for sale.
Interest Expense. Interest expense represents cash and non-cash interest expense incurred on our Senior Notes and our Revolving Credit Facility, net of capitalized interest. See Note 9 of Notes to Consolidated Financial Statements included in this Form 10-K for further information regarding interest expense, capitalized interest expense, and a discussion of our debt and credit facilities that were in effect during each of the years 2025 and 2024.
Other Income, Net. See Note 13 of Notes to Consolidated Financial Statements included in this Form 10-K for details.
Income Tax Provision. The income tax provision for 2025 was $37.5 million, resulting in an effective tax rate of 25.0%. The income tax provision for 2024 was $22.3 million, resulting in an effective tax rate of 25.4%. There was no material difference between the effective tax rate and the projected blended statutory tax rate for either 2025 or 2024.
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 II, Item 8. “Financial Statements and Supplementary Data” of this Form 10-K.
The following table provides selected operational and financial information (in millions of dollars):
Year Ended December 31,
As Adjusted 1
Net income
Interest expense
Other income, net
Income tax provision
Depreciation and amortization
Non-run-rate items:
Restructuring costs
Non-cash asset impairment charge
Environmental expenses 2
Gain on disposition of operating property, plant and equipment
Total non-run-rate items
Adjusted EBITDA 3
Adjusted to reflect the retrospective change in inventory valuation methodology from LIFO to WAC. See Note 18 to the Consolidated Financial Statements included in this Form 10-K for further discussion.
Non-run-rate environmental expenses are related to legacy contingencies from activities at operating facilities prior to July 6, 2006. See Note 10 to the Consolidated Financial Statements included in this Form 10-K for additional information relating to environmental expenses.
Includes favorable Metal Price Lag of approximately $93.0 million and approximately $45.0 million for the years ended December 31, 2025 and 2024, respectively.
Adjusted EBITDA for 2025 was $69.2 million higher than Adjusted EBITDA for 2024. Adjusted EBITDA for the year ended December 31, 2025 was impacted by: (i) improved product pricing and mix and (ii) favorable metal consumption cost. This was partially offset by: (i) lower shipment volume; (ii) lower manufacturing efficiencies primarily due to costs associated with the Trentwood Phase VII outage and startup of the fourth coating line at Warrick; (iii) higher employee and employee-related costs, including higher incentive and benefits cost; and (iv) higher major maintenance costs. See above in “Consolidated Results of Operations” for further details.
The following table provides our shipment and Conversion Revenue information (in millions of dollars, except shipments and Conversion Revenue per pound) by end market applications:
Year Ended December 31,
Aero/HS Products:
Shipments (mmlbs)
Net sales
Less: Hedged Cost of Alloyed Metal
Conversion Revenue
Packaging:
Shipments (mmlbs)
Net sales
Less: Hedged Cost of Alloyed Metal
Conversion Revenue
GE Products:
Shipments (mmlbs)
Net sales
Less: Hedged Cost of Alloyed Metal
Conversion Revenue
Automotive Extrusions:
Shipments (mmlbs)
Net sales
Less: Hedged Cost of Alloyed Metal
Conversion Revenue
Other Products 1 :
Shipments (mmlbs)
Net sales
Less: Hedged Cost of Alloyed Metal
Conversion Revenue
Total:
Shipments (mmlbs)
Net sales
Less: Hedged Cost of Alloyed Metal 2
Conversion Revenue
Beginning January 1, 2025, Other Products is combined with GE Products.
Hedged Cost of Alloyed Metal for 2025 and 2024 included $1,946.8 million and $1,567.6 million, respectively, reflecting the cost of aluminum at the average MWTP and the cost of certain alloys used in the production process, as well as metal price exposure on shipments that we hedged with realized gains (losses) upon settlement of $27.0 million and ($0.2) million in 2025 and 2024, respectively, all of which were included within both Net sales and COGS in our Statements of Consolidated Income. See Note 8 of Notes to Consolidated Financial Statements included in this Form 10-K for the total realized gains and losses on aluminum hedges for which we hedged the metal price exposure externally.
Liquidity and Capital Resources
Summary
The following table summarizes our liquidity (in millions of dollars):
As of December 31,
Available cash and cash equivalents
Borrowing availability under Revolving Credit Facility, net of letters of credit 1
Total liquidity
Borrowing availability under the Revolving Credit Facility was determined by a borrowing base calculated as of December 31, 2025 and December 31, 2024. See Note 9 of Notes to Consolidated Financial Statements included in this Form 10-K for further details.
We place our cash in bank deposits with high credit quality financial institutions. See Note 16 of Notes to Consolidated Financial Statements included in this Form 10-K for information regarding restricted cash at December 31, 2025.
We had $22.3 million of outstanding borrowings under our Revolving Credit Facility as of December 31, 2025, reflecting borrowings of $653.3 million and repayments of $631.0 million during the year ended December 31, 2025, and we had no outstanding borrowings under our Revolving Credit Facility during the year ended December 31, 2024. See “Sources of Liquidity” below for a further discussion of subsequent borrowing activity.
Cash Flows
The following table summarizes our cash flows from operating, investing, and financing activities (in millions of dollars):
Year Ended December 31,
As Adjusted 1
Total cash provided by (used in):
Operating activities
Investing activities
Financing activities
Adjusted to reflect the retrospective change in inventory valuation methodology from LIFO to WAC. See Note 18 to the Consolidated Financial Statements included in this Form 10-K for further discussion.
Cash provided by operating activities for the year ended December 31, 2025 reflected results of business activity described within “Consolidated Selected Operational and Financial Information” above, as well as the following working capital changes: (i) an increase in inventory of $125.3 million primarily driven by higher metal costs, partially offset by a reduction in total inventory pounds; (ii) an increase in trade and other receivables of $81.9 million, primarily due to an increase in metal prices in addition to the timing of collections; (iii) an increase in accounts payable of $15.1 million due to an increase in metal costs in addition to the timing of payments; (iv) an increase in accrued liabilities of $13.4 million, primarily due to timing of uncleared cash disbursements; and (v) a decrease in contract assets of $10.0 million, primarily driven by timing of customer shipments.
Cash provided by operating activities for the year ended December 31, 2024 reflected results of business activity described within “Consolidated Selected Operational and Financial Information” above, as well as the following working capital changes: (i) an increase in inventory of $50.4 million, primarily driven by higher metal costs; (ii) an increase in contract assets of $14.9 million, primarily driven by timing of customer shipments; (iii) an increase in accounts payable of $14.1 million due to an increase in metal costs in addition to the timing of payments; and (iv) an increase in trade and other receivables of $4.5 million, primarily due to an increase in metal costs in addition to the timing of collections.
See Statements of Consolidated Cash Flows included in this Form 10-K for further details on our cash flows from operating, investing, and financing activities for the years ended December 31, 2025 and December 31, 2024.
Sources of Liquidity
Our most significant sources of liquidity include available cash and cash equivalents, available credit under the Revolving Credit Facility, and funds generated from operations. We believe we have sufficient liquidity to fund our operations and meet our short-term and long-term obligations.
Our Revolving Credit Facility and outstanding Senior Notes have covenants that, we believe, allow us to operate our business with limited restrictions and significant flexibility for the foreseeable future. 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 to satisfy our foreseeable liquidity needs during the next 12 months, should we choose to do so, 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. During the fourth quarter of 2025, we entered into amendment No. 5 to our Revolving Credit Facility to, among other things, extend the maturity date to October 2030 and incorporate certain improved terms offering greater operational flexibility. See Note 9 of Notes to Consolidated Financial Statements included in this Report for further details.
At February 16, 2026, we had no outstanding borrowings under the Revolving Credit Facility after repaying borrowings of $62.4 million, including $40.1 million incurred subsequent to December 31, 2025. See Note 9 of Notes to Consolidated Financial Statements included in this Form 10-K 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. The 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 customer‑based supply chain finance programs for the year ended December 31, 2025 constituted approximately 32% of our Net sales. See Note 1 and Note 13 of Notes to Consolidated Financial Statements included in this Form 10-K for further details with respect to these supply chain financing programs.
Material Cash Requirements
The discussion below summarizes our material cash requirements from significant contractual obligations, commercial commitments and off-balance sheet arrangements as of December 31, 2025.
Debt. As of December 31, 2025, we have outstanding fixed-rate notes with varying maturities for an aggregate principal amount of $1.05 billion. See Note 9 of Notes to Consolidated Financial Statements included in this Form 10-K for further details with respect to the 5.875% Senior Notes maturing in 2034 (“5.875% Senior Notes”) and the 4.50% Senior Notes maturing in 2031 (“4.50% Senior Notes”). At December 31, 2025, future interest payments associated with our outstanding notes total $380.6 million, with $48.9 million payable within 12 months. We do not believe that covenants in the indentures governing the outstanding Senior Notes are reasonably likely to limit our ability to obtain additional debt or equity financing should we choose to do so during the next 12 months.
Purchase Obligations. Cash outlays for purchase obligations consist primarily of commitments to purchase primary aluminum, recycled scrap aluminum, alloys, energy, and equipment. We have various contracts with suppliers of metals that require us to purchase minimum quantities of these metals in future years based primarily at the associated metal price at the time of payment. However, we believe the minimum required purchase quantities are lower than our current requirements for these metals. Physical delivery commitments with energy companies are in place to cover our exposure to fluctuations in utility prices and are based on fixed contractual rates and quantities. Equipment purchase obligations are based on scheduled payments to equipment manufacturers.
Leases. We have operating and finance leases for certain manufacturing facilities, warehouses, office space, equipment, and non-cancelable capital commitments. See Note 3 of Notes to Consolidated Financial Statements included in this Form 10-K for the maturity of our lease liabilities.
Deferred Compensation Plan Liability. As of December 31, 2025, we had deferred compensation plan liabilities for certain key employees, which were contingent upon investment performance, vesting and other eligibility requirements, including retirement dates. See Note 5 of Notes to Consolidated Financial Statements included in this Form 10-K for further information, including the total expense related to all benefit plans.
Revolving Credit Facility. We are required to pay a monthly commitment fee, calculated at a rate of either 0.20% or 0.25% per annum (depending on average revolver usage), on the unused commitments under the Revolving Credit Facility. Borrowings of $22.3 million were outstanding under our Revolving Credit Facility as of December 31, 2025. Additionally, under our Revolving Credit Facility, we issue standby letters of credit to provide financial assurance of our payment of obligations, primarily related to workers’ compensation claims. The specific timing of payments with respect to such matters is uncertain. The letters of credit generally automatically renew every 12 months and terminate when the underlying obligations no longer require assurance or upon the maturity of our Revolving Credit Facility in October 2030. See Note 9 of Notes to Consolidated Financial Statements included in this Form 10-K for additional information.
Uncertain Tax Liabilities . At December 31, 2025, we had uncertain tax positions which ultimately could result in tax payments. See Note 14 of Notes to Consolidated Financial Statements included in this Form 10-K for further information.
Pension, OPEB, and Salaried VEBA. See Note 5 of Notes to Consolidated Financial Statements included in this Form 10-K for information regarding the future net benefits we expect to pay with respect to our pension plans, OPEB, and our variable cash contributions to the Salaried VEBA. Additionally, we are required to pay $0.3 million in annual administrative fees related to the hourly VEBA that provides benefits for eligible retirees represented by certain unions and their surviving spouses and eligible dependents through September 2030.
Multiemployer Pension Plans. See Note 6 of Notes to Consolidated Financial Statements included in this Form 10-K for information regarding the future contributions we expect to make under the terms of collective bargaining agreements that cover our union-represented employees at certain facilities. Additionally, in 2027 we expect to pay a partial withdrawal liability of approximately $4.6 million resulting from the exit of our soft alloy aluminum extrusion facility located in Sherman, Texas and the corresponding cessation of ongoing contributions to the multiemployer pension plan for those former covered employees.
While we believe our available cash on hand, anticipated available borrowing capacity under the Revolving Credit Facility, and funds generated from operations 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.
Capital Expenditures and Investments
We strive to strengthen our competitive position across our end markets through strategic capital investment aimed at increasing our capacity and expanding our manufacturing capabilities. While some of our recent capital projects have focused on further enhancing manufacturing cost efficiency, improving product quality, and promoting operational security, a significant portion over the past several years related to our investment in a fourth coating line at Warrick to increase our capacity for higher margin coated aluminum material for packaging applications and the Trentwood modernization projects, 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 Trentwood. A significant portion of the Trentwood investment also focused on modernizing legacy equipment and the process flow for thin gauge plate to achieve Kaiser Select ® quality enhancements for these Aero/HS Products and GE Products. These improvements have allowed us to gain incremental manufacturing capacity to enable future sales growth. Total capital expenditures were $136.9 million in 2025 and $180.8 million in 2024.
Our capital investment plans remain focused on supporting demand growth through capacity expansion, sustaining our operations, enhancing product quality, and increasing operating efficiencies. We anticipate total capital spending in 2026 of approximately $120.0 million to $130.0 million. We expect to continue to deploy capital thoughtfully so that investment decisions align with demand expectations in order to maximize the earnings potential of the business and maintain financial strength and flexibility.
Capital investments will be funded using cash generated from operations, available cash and cash equivalents, borrowings under the Revolving Credit Facility, and/or other third-party financing arrangements. The level of anticipated capital expenditures may be adjusted from time to time depending on our business plans, our price outlook for fabricated aluminum products, our ability to maintain adequate liquidity, and other factors. 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. 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, the availability of surplus and/or net profits, liquidity position, anticipated cash requirements, contractual restrictions under our Revolving Credit Facility, and the indentures for our outstanding 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.
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 19 of Notes to Consolidated Financial Statements included in this Form 10-K for information regarding dividends declared during 2025 and 2024 and subsequent to December 31, 2025.
Repurchases of Common Stock
We are not obligated to repurchase any specific number of shares under our stock repurchase program. We suspended share repurchases as of March 2020. We will continue to assess share repurchases as a part of our capital allocation priorities and strategic investment opportunities identified to support further growth in our business. At December 31, 2025, $93.1 million remained authorized and available for future repurchases of common stock under our stock repurchase program. See our Statements of Consolidated Stockholders’ Equity included in this Form 10-K for information regarding minimum statutory tax withholding obligations arising during 2025 and 2024 in connection with the vesting of non-vested shares, restricted stock units, and performance shares.
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.
In addition to the accounting estimates we discuss in Note 1 of Notes to Consolidated Financial Statements included in this Form 10-K, management believes that the following accounting estimates are critical to aid in fully understanding and evaluating our reported financial results and require management’s most difficult, subjective or complex judgments, resulting from the need to make estimates about the effects of matters that are inherently uncertain. Management has reviewed these critical accounting estimates and related disclosures with the Audit Committee of our Board of Directors.
Revenue Recognition
We decide at the outset of entering into contracts with customers whether our performance obligations as specified in these contracts are satisfied over time or at a point in time. To recognize revenue over time means that we will need to synchronize revenue recognition with progress toward completion of the performance obligation. If we have determined that revenue will be recognized over time for a specific customer order, the earliest point in our production process that we will recognize revenue will be the point that the product cannot be directed to another customer. In most cases, this happens at the time we begin to mold the ingot or billet, either by flat rolling the ingot or by extruding the billet through a die. For custom alloys, we would begin recognizing revenue over time at the point the custom alloy billet is cast. Approximately 78% of our business is recognized at a point in time with the remaining 22% recognized over time.
We follow the input method of recognizing revenue over time. Under this approach, revenue is recognized for products in production based on the cost incurred to date plus a reasonable margin. Cost incurred to date is based on resources consumed, labor hours expended, and other costs incurred relative to the total inputs expected in order to satisfy a performance obligation. Reasonable margins are estimated using an average margin of the respective production facility producing the product. For purposes of recognizing revenue over time on products that are in work‑in-process as of the period end, we make the assumption that the average margins at the respective production facilities are reasonably close to the individual product margins that are in work‑in-process.
Although we believe that the judgments and estimates around recognizing revenue over time discussed herein are reasonable, actual results could differ and we may be exposed to losses or gains that could be material. For the portion of revenue recognized over time, a 5% change in our estimated average margins would have impacted Net income for the year ended December 31, 2025 by approximately $0.1 million.
Environmental Commitments and Contingencies
We are subject to environmental laws and regulations and may incur fines, penalties, or claims related to compliance. Based on our evaluation, we have recorded accruals primarily for solid waste disposal and soil and groundwater remediation. These accruals represent our best estimate of costs expected considering current laws, available information, and likely remediation actions.
Estimating environmental costs involves uncertainty, and actual results may differ. When a range of possible losses exists and no amount within the range is more likely, we record the minimum amount in accordance with ASC 450, Contingencies. Changes in facts, remediation plans, regulatory approvals, or technology could result in costs exceeding current accruals.
We believe our estimates are reasonable; however, actual costs could be materially higher or lower. It is reasonably possible that undiscounted costs may exceed current accruals by up to approximately $14.1 million over the remediation period. See Note 10 for additional details.
Pension and Other Postretirement and Postemployment Benefits
Our liabilities and expenses for pension and other postretirement and postemployment benefits are determined using actuarial methods and significant assumptions, including the discount rate, expected long-term rate of return (“LTRR”) on plan assets, and workforce-related factors such as salary growth, health care cost trends, retirement age, and mortality. The discount rate and expected LTRR are the most significant assumptions.
Changes in assumptions or plan provisions can materially affect obligations and expense. For example, a lower discount rate increases the present value of obligations, while a higher expected return reduces future expense. We also make variable annual contributions to the Salaried VEBA based on cash flow; the VEBA’s funding status does not affect our contribution amount. We have no control over any aspect of the Salaried VEBA plan and rely on information provided by the VEBA administrator for plan details.
A 0.25% change in the weighted average discount rate would impact the combined pension and other postretirement obligations by approximately $3.4 million as of December 31, 2025 and impact pretax earnings in 2026 by approximately $0.3 million. A 0.25% change in the expected LTRR would impact pretax earnings by about $0.2 million in 2026. See Note 5 for additional information.
New Accounting Pronouncements
For a discussion of all recently adopted and recently issued but not yet adopted accounting pronouncements, see Note 1 of Notes to Consolidated Financial Statements included in this Form 10-K.
Item 7A. Quantitative and Qualitat ive Disclosures About Market Risk
The following quantitative and qualitative disclosures about market risk should be read in conjunction with Note 8 and Note 11 of Notes to Consolidated Financial Statements included in this Form 10-K. Our operating results are sensitive to changes in the prices of primary aluminum, certain alloying metals, natural gas, electricity, foreign currency, and also depend to a significant degree upon the volume and mix of products sold to customers. We have historically utilized hedging transactions to lock in a specified price or range of prices for certain products which we sell or consume in our production process, and to mitigate our exposure to changes in energy prices.
Aluminum
In 2025 and 2024, settlements of derivative contracts were for 126.7 million pounds and 154.9 million pounds, respectively, of hedged shipments sold on pricing terms that created aluminum price risk for us. At December 31, 2025, we had derivative contracts with respect to approximately 23.9 million pounds and 0.7 million pounds to hedge sales to be made in 2026 and 2027, respectively, on pricing terms that create aluminum price risk for us.
Based on the aluminum derivative positions held by us to hedge firm-price customer sales agreements, we estimate that a $0.10/lb decrease in the LME market price of aluminum as of December 31, 2025 and December 31, 2024, with all other variables held constant, would have resulted in an unrealized mark-to-market loss of $2.5 million and $4.7 million, respectively, with corresponding changes to the net fair value of our aluminum derivative positions. In addition, we estimate that a $0.05/lb decrease in the Midwest premium for aluminum as of December 31, 2025 and December 31, 2024, with all other variables held constant, would have resulted in an unrealized mark-to-market loss of $0.8 million and $2.0 million, respectively, with corresponding changes to the net fair value of our aluminum derivative positions.
Alloying Metals
We are exposed to the risk of fluctuating prices of certain alloying metals, especially copper, zinc, and magnesium, to the extent that changes in their prices do not highly correlate with price changes for aluminum. Copper, zinc, magnesium, and certain other metals are used in our remelt operations to cast rolling ingot and extrusion billet with the proper chemistry for our products. From time to time, we enter into forward contract swaps and/or physical delivery commitments with third parties to mitigate our risk from fluctuations in the prices of these alloys. As of December 31, 2025, we had forward swap contracts with settlement dates designed to align with the timing of scheduled purchases of copper and zinc by our manufacturing facilities. We estimate that a $0.10/lb decrease in the market price of zinc and copper as of December 31, 2025 and December 31, 2024, with all other variables held constant, would have resulted in an unrealized mark-to-market loss of $0.6 million and $0.9 million, respectively, with corresponding changes to the net fair value of our zinc and copper derivative positions.
Energy
We are exposed to the 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 firm prices with third parties to mitigate our risk from fluctuations in natural gas and electricity prices. We estimate that a $1.00 per mmbtu decrease in natural gas prices would have resulted in an unrealized mark-to-market loss of $3.1 million and $2.8 million as of December 31, 2025 and December 31, 2024, respectively, with corresponding changes to the net fair value of our natural gas derivative positions. We had no outstanding electricity derivative positions as of December 31, 2025 or December 31, 2024.
Foreign Currency
As of December 31, 2025, we hedged the foreign currency exchange rate risk related to certain lease transactions and equipment purchases denominated in Euros using forward swap contracts with settlement dates through July 2027. We estimate that a 10% decrease in the exchange rate of our hedged foreign currencies to U.S. dollars would have resulted in an unrealized mark-to-market loss of $0.1 million and $0.8 million as of December 31, 2025 and December 31, 2024, respectively, with corresponding changes to the net fair value of our foreign currency derivative positions.
Our primary foreign exchange exposure is the operating costs of our London, Ontario facility. We estimate that a 10% change in the Canadian dollar exchange rate as of December 31, 2025 and December 31, 2024 would have resulted in an annual operating cost impact of $2.9 million and $2.8 million, respectively.
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
Item 8. Financial Statemen ts and Supplementary Data
Report of Independent Registered Public Accounting Firm (PCAOB ID: 34 )
Consolidated Balance Sheets
Statements of Consolidated Income
Statements of Consolidated Comprehensive Income
Statements of Consolidated Stockholders’ Equity
Statements of Consolidated Cash Flows
Notes to Consolidated Financial Statements
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of Kaiser Aluminum Corporation
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Kaiser Aluminum Corporation and subsidiaries (the "Company") as of December 31, 2025 and 2024, the related consolidated statements of income, comprehensive income, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the "financial statements"). We also have audited the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.
Change in Accounting Principle
As discussed in Note 18 to the financial statements, in 2025 the Company elected to change its method of accounting for determining the cost of inventory for finished goods, work in process, and raw materials from the last-in, first-out (LIFO) inventory accounting method to the weighted average cost (WAC) inventory accounting method. All periods presented in the financial statements have been adjusted to reflect this change.
Basis for Opinions
The Company's management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on these financial statements and an opinion on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (CONTINUED)
prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Revenue Recognition - Refer to Notes 1 and 17 to the financial statements
Critical Audit Matter Description
The Company recognizes revenue as it satisfies its performance obligations and transfers control of products to its customers. For products that have an alternative use and/or for which the Company does not have an enforceable right to payment (including a reasonable profit) during the production process, revenue is recognized at a point in time. For revenue recognized at a point in time, transfer of control usually occurs upon shipment or upon customer receipt of the product, depending on the shipping terms. For certain products with no alternative use and for which the Company has an enforceable right to payment (including a reasonable profit), revenue is recognized over time. For contracts recognized over time, control transfer occurs incrementally during the Company’s production process, as progress is made on fulfilling the performance obligation. The Company uses the input method of determining the progress, capturing direct costs beginning at the point that billet or cast ingot is introduced into production at either the extrusion phase or the rolling phase, respectively. For products in production, the Company recognizes revenue using estimates of the cost incurred to date plus a reasonable margin.
Contract assets represent amounts for work performed but not yet billed, including amounts related to finished goods in transit at period end.
Given the volume of contracts that are recognized over time and the complexity of the determination of over time revenue, we identified revenue for over time contracts as a critical audit matter.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to revenue recognized over time included the following, among others:
We tested management’s controls over revenue recognized over time, including those over cost incurred to date and estimates of reasonable margin.
We tested the mathematical accuracy of management’s calculation of revenue recognized over time and the related contract asset.
We selected a sample of invoices with customers and performed the following:
- We evaluated whether revenue was properly recognized as over time according to the contract terms with the customer.
- We tested that the revenue associated with work-in-process and finished goods inventory was properly recognized at December 31, 2025.
/s/ Deloitte & Touche LLP
Nashville, Tennessee
February 19, 2026
We have served as the Company's auditor since 2002.
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED B ALANCE SHEETS
As of December 31,
As Adjusted 1
(In millions of dollars, except share
and per share amounts)
ASSETS
Current assets:
Cash and cash equivalents
Receivables:
Trade receivables, net
Other
Contract assets
Inventories
Prepaid expenses and other current assets
Total current assets
Property, plant and equipment, net
Operating lease assets
Deferred tax assets, net
Intangible assets, net
Goodwill
Other assets
Total assets
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
Accrued salaries, wages and related expenses
Other accrued liabilities
Total current liabilities
Long-term portion of operating lease liabilities
Pension and OPEB
Deferred tax liabilities
Long-term liabilities
Long-term debt, net
Total liabilities
Commitments and contingencies – Note 10
Stockholders’ equity:
Preferred stock, 5,000,000 shares authorized at both December 31, 2025 and
December 31, 2024; no shares were issued and outstanding at
December 31, 2025 and December 31, 2024
Common stock, par value $ 0.01 , 90,000,000 shares authorized at both
December 31, 2025 and December 31, 2024; 23,045,729 shares issued and
16,210,443 shares outstanding at December 31, 2025; 22,931,184 shares
issued and 16,095,898 shares outstanding at December 31, 2024
Additional paid in capital
Retained earnings
Treasury stock, at cost, 6,835,286 shares at both December 31, 2025 and
December 31, 2024
Accumulated other comprehensive income
Total stockholders’ equity
Total liabilities and stockholders' equity
Adjusted to reflect the retrospective change in inventory valuation methodology from LIFO to WAC. See Note 18 for further discussion.
The accompanying notes to consolidated financial statements are an integral part of these statements.
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
STATEMENTS OF CON SOLIDATED INCOME
Year Ended December 31,
As Adjusted 1
As Adjusted 1
(In millions of dollars, except share and per share amounts)
Net sales
Costs and expenses:
Cost of products sold, excluding depreciation and amortization
Depreciation and amortization
Selling, general, administrative, research and development
Restructuring costs
Other operating charges, net
Total costs and expenses
Operating income
Other (expense) income:
Interest expense
Other income, net – Note 13
Income before income taxes
Income tax provision
Net income
Net income per common share:
Basic
Diluted
Weighted-average number of common shares outstanding (in thousands):
Basic
Diluted
Adjusted to reflect the retrospective change in inventory valuation methodology from LIFO to WAC. See Note 18 for further discussion.
The accompanying notes to consolidated financial statements are an integral part of these statements.
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
STATEMENTS OF CONSOLIDAT ED COMPREHENSIVE INCOME
Year Ended December 31,
As Adjusted 1
As Adjusted 1
(In millions of dollars)
Net income
Other comprehensive income (loss), net of tax – Note 11:
Defined benefit plans
Cash flow hedges
Other comprehensive income, net of tax
Comprehensive income
Adjusted to reflect the retrospective change in inventory valuation methodology from LIFO to WAC. See Note 18 for further discussion.
The accompanying notes to consolidated financial statements are an integral part of these statements.
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
STATEMENTS OF CONSOLIDAT ED STOCKHOLDERS’ EQUITY
Common
Shares
Outstanding
Common
Stock
Additional
Paid In
Capital
Retained
Earnings As Adjusted 1
Treasury
Stock
AOCI
Total As Adjusted 1
(In millions of dollars, except share and per share amounts)
BALANCE, December 31, 2022
Cumulative effect of change in inventory valuation methodology, net of tax
Net income
Other comprehensive income, net of tax
Common shares issued (including impacts from
Long-Term Incentive programs)
Cancellation of shares to cover tax withholdings
upon common shares issued
Cash dividends declared 2
Amortization of unearned equity compensation
BALANCE, December 31, 2023
Net income
Other comprehensive income, net of tax
Common shares issued (including impacts from
Long-Term Incentive programs)
Cancellation of shares to cover tax withholdings
upon common shares issued
Cash dividends declared 2
Amortization of unearned equity compensation
BALANCE, December 31, 2024
Net income
Other comprehensive income, net of tax
Common shares issued (including impacts from
Long-Term Incentive programs)
Cancellation of shares to cover tax withholdings
upon common shares issued
Cash dividends declared 2
Amortization of unearned equity compensation
BALANCE, December 31, 2025
Adjusted to reflect the retrospective change in inventory valuation methodology from LIFO to WAC. See Note 18 for further discussion.
Dividends declared per common share were $ 3.08 for each of the years ended December 31, 2025, 2024, and 2023 .
The accompanying notes to consolidated financial statements are an integral part of these statements.
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
STATEMENTS OF CONSO LIDATED CASH FLOWS
Year Ended December 31,
As Adjusted 1
As Adjusted 1
(In millions of dollars)
Cash flows from operating activities 2 :
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property, plant and equipment
Amortization of definite-lived intangible assets
Amortization and write-off of debt issuance costs
Deferred income taxes
Non-cash equity compensation
Non-cash asset impairment charges 3
Gain on disposition of property, plant and equipment and asset write-offs, net
Bad debt expense
Non-cash postretirement and postemployment defined benefit plan cost
Changes in operating assets and liabilities:
Trade and other receivables
Contract assets
Inventories
Prepaid expenses and other current assets
Accounts payable
Accrued liabilities
Annual variable cash contributions to Salaried VEBA
Long-term assets and liabilities, net
Net cash provided by operating activities
Cash flows from investing activities 2 :
Capital expenditures
Purchase of equity securities
Proceeds from sale of equity securities
Proceeds from disposition of property, plant and equipment
Net cash used in investing activities
Cash flows from financing activities 2 :
Borrowings under the Revolving Credit Facility
Repayment of borrowings under the Revolving Credit Facility
Issuance of 5.875 % Senior Notes
Repayment of principal of 4.625 % Senior Notes
Cash paid for debt issuance costs
Repayment of finance lease
Cancellation of shares to cover tax withholdings upon common shares issued
Cash dividends and dividend equivalents paid
Net cash used in financing activities
Net (decrease) increase in cash, cash equivalents and restricted cash during the period
Cash, cash equivalents and restricted cash at beginning of period
Cash, cash equivalents and restricted cash at end of period
Adjusted to reflect the retrospective change in inventory valuation methodology from LIFO to WAC. See Note 18 for further discussion.
See Note 16 for supplemental disclosure of cash flow information.
Non-cash asset impairment charges for the year ended December 31, 2025 are comprised of a $ 2.0 million write-down of certain replacement parts. Non-cash asset impairment charges for the year ended December 31, 2024 are comprised of: (i) a $ 3.2 million inventory write-down related to certain alloying metals and (ii) a $ 0.4 million impairment charge on land held for sale.
The accompanying notes to consolidated financial statements are an integral part of these statements.
Notes Index
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTES INDEX
Note 1
Summary of Significant Accounting Policies
Note 2
Supplemental Balance Sheet Information
Note 3
Leases
Note 4
Goodwill and Intangible Assets
Note 5
Employee Benefits
Note 6
Multiemployer Pension Plans
Note 7
Employee Incentive Plans
Note 8
Derivatives, Hedging Programs and Other Financial Instruments
Note 9
Debt and Credit Facility
Note 10
Commitments and Contingencies
Note 11
Accumulated Other Comprehensive Income
Note 12
Restructuring
Note 13
Other Income, Net
Note 14
Income Tax Matters
Note 15
Net Income Per Share
Note 16
Supplemental Cash Flow Information
Note 17
Business, Product and Geographical Area Information and Concentration of Risk
Note 18
Change in Accounting Principle
Note 19
Subsequent Events
Notes Index
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significa nt Accounting Policies
In this Form 10-K, unless the context otherwise requires, references in these notes to consolidated financial statements to “Kaiser Aluminum Corporation,” “Kaiser,” “we,” “us,” “our,” “the Company” and “our Company” refer collectively to Kaiser Aluminum Corporation and its subsidiaries.
Organization and Nature of Operations. Kaiser Aluminum Corporation specializes in the production of semi-fabricated specialty aluminum mill products, such as aluminum plate and sheet, bare and coated coil and extruded and drawn products, for the following end market applications: (i) Aero/HS Products; (ii) Packaging; (iii) GE Products; and (iv) Automotive Extrusions. Our business is organized into one operating segment. See Note 17 for additional information regarding our business, product and geographical area information and concentration of risk.
Principles of Consolidation and Basis of Presentation. Our consolidated financial statements include the accounts of our wholly owned subsidiaries and are prepared in accordance with GAAP and the rules and regulations of the SEC. Intercompany balances and transactions are eliminated. We have reclassified certain items in prior periods to conform to current classifications.
Use of Estimates in the Preparation of Financial Statements. The preparation of financial statements in accordance with GAAP requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities known to exist as of the date the financial statements are published and the reported amounts of revenues and expenses during the reporting period. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of our consolidated financial statements; accordingly, it is possible that the actual results could differ from these estimates and assumptions, which could have a material effect on the reported amounts of our consolidated financial position and results of operations.
Fair Value Measurements. We apply the GAAP fair value hierarchy to measure certain assets and liabilities. Classification within the hierarchy is based on the lowest level input significant to the fair value measurement. We use valuation techniques that prioritize observable inputs and consider counterparty risk. Transfers between levels are assessed based on changes in inputs.
Recurring fair value measurements include derivative instruments (see Note 8) and equity investments related to our deferred compensation plan (see Note 5). Additionally, we measure at fair value once each year at December 31 the plan assets of our defined benefit pension and postretirement and postemployment plans, including the Salaried VEBA (see Note 5). In determining the fair value of the plan assets, we utilize the results of valuations supplied by the investment advisors responsible for managing the assets of each plan, which we independently review for reasonableness.
We believe that the fair values of our financial assets (accounts receivable, contract assets, current assets, accounts payable, and accrued liabilities) approximate their respective carrying values due to their short maturities and nominal credit risk. Most non-financial assets, such as inventories and long-lived assets, are not measured at fair value on a recurring basis. However, fair value may be assessed if impairment or other triggering events occur. See “Property, Plant and Equipment, Net” and “Goodwill and Intangible Assets” below for a discussion of impairment charges on long-lived physical assets. See Note 9 for the fair value of our Long-term debt, net.
Government Grants. We occasionally receive grants from state and local governments. Grants are recognized when we have reasonable assurance that we will meet the grant conditions and the funds will be received. Grants related to property, plant, and equipment reduce the carrying amount of the related asset. Grants intended to reimburse expenses already incurred or provide immediate financial support are recognized as income in the period they become receivable. The following table presents the total government assistance recognized during the year ended December 31, 2025 (in millions of dollars):
Grantor
Grant
Amount
Duration
Classification
Indiana Economic Development Corporation
IN EDGE Tax Credit
Cost of products sold, excluding depreciation and amortization
Total
To be eligible to receive and keep the full amount of the IN EDGE Tax Credit, we must achieve: (i) minimum cumulative expenditures towards capital expenditures and (ii) a minimum number of full-time employees.
Cash and Cash Equivalents. We consider short-term, highly liquid investments with original maturities of 90 days or less to be cash equivalents. Our cash equivalents primarily consist of money market deposit accounts.
Notes Index
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Restricted Cash. We maintain certain cash deposits that are pledged or held as collateral for workers’ compensation and other agreements. These amounts are classified as restricted cash (see Note 16 ). Restricted funds may be released to us or additional amounts may be required to be pledged in the future.
Trade Receivables and Allowance for Credit Losses. Trade receivables primarily consist of amounts billed to customers for products sold, with payment terms generally between 30 to 90 days . We record an allowance for credit losses based on historical collection experience, current conditions, and reasonable forecasts. Factors considered include customer credit quality, aging of receivables, bankruptcy filings, and overall economic conditions. Specific allowances are recorded when we identify a customer’s inability or unwillingness to pay. Accounts are written off when deemed uncollectible, and any recoveries are recorded as a reduction of bad debt expense in the period received. In 2025 , we wrote off $ 0.7 million of trade receivables. Write-offs in 2024 and 2023 were immaterial to our consolidated financial statements.
We have arrangements that allow us to sell certain customer trade receivables to those customers’ financial institutions without recourse. These sales are made at our discretion when the cost is lower than servicing the receivables with existing debt. After the sale, we retain no rights or obligations and do not service the receivables. Accordingly, these transactions are accounted for as sales (see Note 13 ).
Inventories. Inventories are stated at the lower of cost or net realizable value. Inventory costs include materials, labor, and manufacturing overhead. Abnormal costs, such as idle facility expenses, freight, handling, and spoilage, are expensed as incurred. See Note 2 for inventory components. Other inventories, consisting of operating supplies, are valued using the FIFO method.
Effective January 1, 2025, the Company changed its inventory valuation methodology for finished products, work-in-process, and raw materials from LIFO to WAC. This change is preferable because it improves the comparability of the Company’s operational results between periods by removing LIFO income or charge in a period resulting from LIFO valuation and changes to historical LIFO layers, better reflects the physical flow of goods, and simplifies the financial close process by utilizing the WAC valuation methodology for all internal and external reporting purposes. The effects of this change have been retrospectively applied to all prior periods presented. See Note 18 for additional details.
Replacement Parts. Replacement parts consist of equipment spare parts, which are valued using the FIFO method. Replacement parts are recorded within Prepaid expenses and other current assets or Other assets depending on whether the utilization of the replacement parts is expected to occur within the next 12 months.
Property, Plant and Equipment, Net. Property, plant and equipment, net, is recorded at cost and includes construction in progress (see Note 2). Interest on qualifying construction projects is capitalized (see Note 9).
Depreciation is computed using the straight-line method over estimated useful lives. Depreciable finance lease assets and leasehold improvements are amortized on a straight-line basis over the shorter of the estimated useful lives of the assets or the lease term. Depreciation expense is included in Depreciation and amortization within our Statements of Consolidated Income. The estimated useful lives are as follows:
Range
(in years)
Land improvements
Buildings and leasehold improvements
Machinery and equipment
Depreciable finance lease assets
We review property, plant and equipment for impairment when events indicate the carrying amount may not be recoverable, using undiscounted cash flows to assess recoverability. We regularly assess whether events and circumstances with the potential to trigger impairment have occurred and rely on a number of factors, including operating results, business plans, economic projections, and anticipated future cash flow, to make such assessments. We use an estimate of the future undiscounted cash flows of the related asset or asset group over the estimated remaining life of such asset or asset group in measuring whether the asset or asset group is recoverable.
There were no impairment charges in 2025 or 2023. In 2024 , we recorded a $ 0.4 million impairment on land classified as held for sale. Asset impairment charges are included in Other operating charges, net, in our Statements of Consolidated Income.
Notes Index
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Assets are classified as held for sale when actively marketed and expected to sell within 12 months. These assets are measured at the lower of carrying amount or fair value less costs to sell.
Goodwill and Intangible Assets. Goodwill is tested for impairment annually in the fourth quarter or when events indicate potential impairment. We may perform a qualitative assessment or a quantitative test. In 2025, we completed a qualitative assessment and concluded that it is not more likely than not that the fair value of any reporting unit was below its carrying amount.
Intangible assets are initially recorded at fair value using an income approach and amortized over their estimated useful lives. We review intangible assets for impairment when circumstances indicate the carrying amount may not be recoverable. See Note 4 for discussion on goodwill and intangible assets .
Leases. We determine if an agreement contains a lease at inception. We have operating and finance leases for equipment and real estate, generally with fixed payments. Lease liabilities include options to extend or terminate when it is reasonably certain we will exercise them. Short-term leases (12 months or less) are not recorded on our Consolidated Balance Sheets. Because most leases do not provide an implicit rate, we use an incremental borrowing rate based on factors such as lease term, asset value, and our credit profile. We exclude non-lease components from lease liabilities and recognize variable lease payments as incurred. Operating lease expense is recognized on a straight-line basis over the lease term. Some equipment leases include return conditions, which we account for as residual value guarantees when probable. Our lease agreements do not contain material restrictive covenants.
Derivative Financial Instruments. We use derivative instruments to manage commodity price, energy cost, and foreign currency risks. We do not use derivatives for trading or speculative purposes. Derivatives are recorded at fair value on our Consolidated Balance Sheets. Those settling within one year are included in Prepaid expenses and other current assets or Other accrued liabilities. Derivatives settling after one year are included in Other assets or Long-term liabilities. Cash flows related to derivative instruments are classified in the Statements of Consolidated Cash Flows based on the nature of the underlying hedged item. See Note 8 for additional information.
Self-Insurance of Workers’ Compensation and Employee Healthcare Liabilities . We self-insure most workers’ compensation and employee healthcare costs and maintain insurance to limit exposure to large individual claims. Workers’ compensation liabilities include estimates for incurred but not reported claims and the ultimate cost of reported claims, based on historical experience and actuarial analysis. Accrued healthcare liabilities represent estimated unpaid medical and prescription costs provided by our plan administrators. These amounts were $ 7.9 million a n d $ 7.8 million a t December 31, 2025 and December 31, 2024 , respectively.
Debt Issuance and Deferred Financing Costs. Costs related to debt arrangements are capitalized and amortized over the term of the related borrowing. Amortization is included in Interest expense in our Statements of Consolidated Income. Unamortized debt issuance costs for Senior Notes are presented within Long-term debt, net on our Consolidated Balance Sheets. Unamortized deferred financing costs for the Revolving Credit Facility are presented in Other assets on our Consolidated Balance Sheets. When debt is extinguished, any remaining unamortized debt issuance or deferred financing costs are charged to Other income, net. For amendments or refinancings of the Revolving Credit Facility, such costs are written off only when the transaction is accounted for as an extinguishment; otherwise, the existing costs continue to be amortized over the term of the modified facility in accordance with ASC 470-50 (see Note 9 ).
Conditional Asset Retirement Obligations ( “ CAROs ” ). We have CAROs at certain manufacturing facilities, primarily related to (i) legal obligations for asbestos removal and disposal and (ii) future lease terminations. Most CAROs relate to asbestos that is contained within walls, floors, roofs, piping, or equipment insulation at older facilities. These costs would be incurred if the facilities undergo major renovation or demolition. We estimate the incremental removal and disposal costs, discount them to present value using a credit-adjusted, risk-free rate, and apply probability weighting when the timing of settlement is uncertain. See Note 10 for additional information.
Environmental Contingencies. We record environmental loss contingencies when they are probable and reasonably estimable (see Note 10). Accruals for remediation costs are generally recognized no later than the completion of the remedial feasibility study and are adjusted as new information becomes available. Future remediation costs are not discounted to their present value. Accrued environmental costs are included in Other accrued liabilities or Long-term liabilities, as appropriate (see Note 2 ). Environmental expenses for operating locations are included in COGS, while expenses for non-operating locations are included in SG&A and R&D in our Statements of Consolidated Income.
Notes Index
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Revenue Recognition. We recognize revenue as we satisfy performance obligations and transfer control of products to our customers. For products that have an alternative use and/or for which we do not have an enforceable right to payment (including a reasonable profit) during the production process, we recognize revenue at a point in time. For revenue recognized at a point in time, transfer of control usually occurs upon shipment or upon customer receipt of the product, depending on shipping terms. For certain products with no alternative use and where we have an enforceable right to payment (including a reasonable profit), revenue is recognized over time. For contracts recognized over time, control transfer occurs incrementally during our production process as progress is made on fulfilling the performance obligation. We use the input method of determining our progress, capturing direct costs beginning at the point that billet or cast ingot is introduced into production at either the extrusion phase or the rolling phase, respectively. We believe the input method more accurately reflects the transfer of control as it represents the best information available of work completed to date for which we have an enforceable right to payment. For products in production, we recognize revenue using estimates of the cost incurred to date plus a reasonable margin. As the duration of our contracts for accounting purposes is typically less than one year, we do not present quantitative information about the aggregate transaction price allocated to unsatisfied performance obligations at the end of the reporting period.
Contracts are generally short-term and based on customer purchase orders, although purchase orders may reference a longer term “blanket purchase order” or a “terms and conditions” agreement, both of which may span multiple years. We adjust revenue for variable consideration such as metal price adjustments, volume rebates, and sales discounts, estimated based on forecasted order data and historical payment trends for specific customers. Accounts receivable is recorded when our right to payment becomes unconditional. We do not adjust for financing components as payment terms are generally less than one year.
Contract assets represent amounts for work performed but not yet billed, including amounts related to finished goods in transit at period end.
Incremental Costs of Obtaining a Contract . We expense the costs of obtaining a contract as incurred if the amortization period of the asset that we otherwise would have recognized is one year or less. If the expected benefit exceeds one year, the costs are recorded as an asset to Other assets on our Consolidated Balance Sheets and amortized over the term of the contract.
Shipping and Handling Activities. We account for shipping and handling activities that occur after the customer has obtained control of a product as fulfillment activities (i.e., an expense) rather than as a promised service (i.e., a revenue element).
Advertising Costs. Advertising costs, which are included in SG&A and R&D, are expensed as incurred. Advertising costs for 2025, 2024, and 2023 were $ 0.3 million , $ 0.4 million, and $ 0.1 million, respectively.
Research and Development Costs. Research and development costs, which are included in SG&A and R&D, are expensed as incurred. Research and development costs, inclusive of personnel costs, for 2025, 2024, and 2023 were $ 10.7 million , $ 12.0 million and $ 11.1 million , respectively.
Stock-Based Compensation. We grant stock-based compensation to executives, certain employees, and non-employee directors in the form of service-based and performance-based awards. Compensation cost is measured at grant-date fair value and recognized over the service period, generally on a straight-line basis. Forfeitures are accounted for as they occur. Service-based awards are valued using the market price of our common stock on the grant date. Performance-based awards are valued based on the type of performance condition. Market-based awards, such as those tied to total shareholder return, are valued using a Monte Carlo model. Non-market performance-based awards are valued using our stock price at grant. Holders of performance-based awards receive a one-time dividend equivalent payment when vested shares are issued. Expense for market-based awards is recognized if the service condition is met, regardless of market performance. For non-market awards, expense is adjusted quarterly based on the most probable outcome. See Note 7 for additional details.
Adoption of New Accounting Pronouncements
Income Taxes. In December 2023, the FASB issued ASU No. 2023-09 (“ASU 2023-09”), Improvements to Income Tax Disclosures. The guidance is primarily intended to improve income tax disclosure requirements by requiring (i) consistent categories and greater disaggregation of information in the rate reconciliation and (ii) the disaggregation of income taxes paid by jurisdiction. The guidance makes several other changes to the income tax disclosure requirements. The amendments in ASU 2023-09 are effective for fiscal years beginning after December 15, 2024, with early adoption permitted, and is required to be applied prospectively with the option of retrospective application. We adopted ASU 2023-09 effective December 31, 2025 using a retrospective approach. See Note 14 for the required disclosures related to our adoption of ASU 2023-09. This standard update did no t affect our operating results.
Notes Index
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Credit Losses for Accounts Receivable and Contract Assets. In July 2025, the FASB issued ASU No. 2025-05 (“ASU 2025-05”), Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which provides entities with a practical expedient to simplify the estimation of expected credit losses by assuming that the current conditions as of the balance sheet date will not change for the remaining life of the asset. We adopted ASU 2025-05 effective December 31, 2025 using a prospective approach. The adoption of this ASU did no t have a material impact on our consolidated financial statements.
Accounting Pronouncements Issued But Not Yet Adopted
Disclosure Improvements. In October 2023, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2023-06 (“ASU 2023-06”), Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative. The guidance amends GAAP to reflect updates and simplifications to certain disclosure requirements referred to the FASB by the SEC. The amendments in ASU 2023-06 will become effective on the date which the SEC’s removal of the related disclosure becomes effective. If by June 30, 2027, the SEC does not remove the related disclosure, the pending amendment will be removed from ASC 2023-06 and it will not be effective. Adoption of ASU 2023-06 is expected to modify the disclosure and presentation requirements only and is not expected to have a material impact on our consolidated financial statements.
Disaggregation of Income Statement Expenses. In November 2024, the FASB issued ASU No. 2024-03 (“ASU 2024-03”), Disaggregation of Income Statement Expenses. The guidance requires additional, disaggregated disclosure about certain income statement expense line items. The amendments in ASU 2024-03 are effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027, with early adoption permitted, and is required to be applied prospectively with the option of retrospective application. We plan to adopt the provisions of ASU 2024-03 prospectively in the fourth quarter of fiscal 2027 and continue to evaluate the disclosure requirements related to the new standard.
Accounting for Internal-Use Software. In September 2025, the FASB issued ASU No. 2025-06 (“ASU 2025-06”), Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which improves the operability of the guidance by removing all references to software development stages so that the guidance is neutral to different software development methods. ASU 2025-06 is effective for fiscal years beginning after December 15, 2027 and interim reporting periods within those annual reporting periods, with early adoption permitted as of the beginning of the annual reporting period. The amendments may be applied by using a prospective transition approach, a retrospective transition approach, or a modified transition approach based on the status of the project and whether software costs were capitalized before the date of adoption. We are currently evaluating the impact of this pronouncement on our consolidated financial statements.
Hedge Accounting Improvements. In November 2025, the FASB issued ASU No. 2025-09 (“ASU 2025-09”), Derivatives and Hedging (Topic 815): Hedge Accounting Improvements. The guidance introduces targeted refinements intended to improve the operability of hedge accounting and better align financial reporting with risk management activities, including greater flexibility in hedge designation and clarifications for certain instruments. ASU 2025-09 is effective for fiscal years beginning after December 15, 2026, with early adoption permitted. We are currently evaluating the impact of this pronouncement on our consolidated financial statements.
Government Grants. In December 2025, the FASB issued ASU No. 2025-10 (“ASU 2025-10”), Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities, to establish authoritative guidance on the accounting for government grants received by business entities. ASU 2025-10 is effective for fiscal years beginning after December 15, 2028, with early adoption permitted, and is required to be applied using a modified prospective, modified retrospective, or full retrospective transition method. We are currently evaluating the impact of this pronouncement on our consolidated financial statements.
Interim Reporting Narrow-Scope Improvements. In December 2025, the FASB issued ASU No. 2025-11 (“ASU 2025-11”), Interim Reporting (Topic 270): Narrow-Scope Improvements, which clarifies the scope, form and content, and required disclosures in interim financial statements prepared under GAAP. ASU 2025-11 enhances guidance for entities that issue condensed interim statements and reinstates a principles-based requirement to disclose material events since the last annual period. ASU 2025-11 is effective for interim periods in fiscal years beginning after December 15, 2027, with early adoption permitted and retrospective application optional. We are currently evaluating the impact of this standard on our consolidated financial statements.
Notes Index
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. Supplemental Balan ce Sheet Information
As of December 31,
As Adjusted 1
(In millions of dollars)
Trade Receivables, Net
Billed trade receivables
Allowance for doubtful receivables
Trade receivables, net
Inventories
Finished products
Work-in-process
Raw materials
Operating supplies
Inventories
Property, Plant and Equipment, Net
Land and improvements
Buildings and leasehold improvements
Machinery and equipment 2
Construction in progress
Property, plant and equipment, gross
Accumulated depreciation and amortization
Land held for sale
Property, plant and equipment, net
Other Assets
Assets to be conveyed associated with Warrick acquisition 2
Restricted cash – Note 16
Long-term replacement parts
Net assets of Salaried VEBA – Note 5
Other
Other assets
Other Accrued Liabilities
Uncleared cash disbursements
Accrued income taxes and other taxes payable
Accrued annual contribution to Salaried VEBA – Note 5
Accrued interest
Current operating lease liabilities – Note 3
Current finance lease liabilities – Note 3
Current deferred compensation plan liabilities – Note 5
Other – Note 8
Other accrued liabilities
Long-Term Liabilities
Workers' compensation accrual
Long-term environmental accrual – Note 10
Other long-term liabilities
Long-term liabilities
Notes Index
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Adjusted to reflect the retrospective change in inventory valuation methodology from LIFO to WAC. See Note 18 for further discussion.
During the yea r ended Dece mber 31, 2025, all of the remaining assets associated with our acquisition of Warrick were conveyed to us and placed in service. At December 31, 2025, such assets are presented within Machinery and equipment.
3. Le ases
The following table summarizes key finance and operating lease terms and discount rates:
As of December 31,
Weighted-average remaining lease term (in years):
Finance leases
Operating leases
Weighted-average discount rate:
Finance leases
Operating leases
The following table summarizes the classification of lease assets and lease liabilities on our Consolidated Balance Sheets (in millions of dollars):
As of December 31,
Description
Classification
Operating lease assets
Operating lease assets
Finance lease assets
Property, plant and equipment, net
Current operating lease liabilities
Other accrued liabilities
Non-current operating lease liabilities
Long-term portion of operating lease liabilities
Total operating lease liabilities
Current finance lease liabilities
Other accrued liabilities
Non-current finance lease liabilities
Long-term liabilities
Total finance lease liabilities
The following table summarizes the components of lease cost in our Statements of Consolidated Income (in millions of dollars):
Year Ended December 31,
Operating lease cost
Short-term lease cost
Finance lease cost:
Amortization of leased assets
Interest on lease liabilities
Total lease cost
Notes Index
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table presents the maturity of our lease liabilities as of December 31, 2025 (in millions of dollars):
Finance Leases
Operating Leases
Thereafter
Total minimum lease payments
Less: interest
Present value
4. Go odwill and Intangible Assets
Goodwill. We identified no indicators of goodwill impairment during the years ended December 31, 2025, 2024, and 2023.
The following table presents the changes in the carrying value of our goodwill (in millions of dollars):
As of December 31,
Gross carrying value 1
Accumulated impairment loss 1
Net carrying value
The gross carrying value and accumulated impairment loss excludes $ 25.2 million of goodwill recorded in conjunction with our acquisition of IMT.
Intangible Assets. The following table presents the gross carrying amount and accumulated amortization of our intangible assets by major intangible asset class (in millions of dollars):
Gross
Amount
Accumulated
Amortization
Intangible
Assets, Net
As of December 31, 2025
Customer relationships
Trade name
Favorable lease contracts
Total
As of December 31, 2024
Customer relationships
Trade name
Non-compete agreement
Favorable lease contracts
Total
We identified no indicators of impairment associated with our intangible assets during the years ended December 31, 2025, 2024, and 2023.
Notes Index
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Amortization expense relating to definite-lived intangible assets was $ 4.5 million , $ 4.5 million and $ 5.3 million for 2025, 2024, and 2023 , respectively. The following table presents the expected amortization of intangible assets for each of the next five calendar years and thereafter as of December 31, 2025 (in millions of dollars):
Thereafter
Total
5. Employe e Benefits
Defined Contribution Plans
We sponsor defined contribution 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 investments elected by the employee. In addition, we make fixed annual contributions for certain hourly and salaried employees in varying amounts depending on hire date.
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 (see discussion below in “Fair Value of Plan Assets”) and are at all times subject to the claims of our general creditors. No participant has a claim to any assets of the trust; however, participants are eligible to receive distributions from the trust subject to vesting and other eligibility requirements. Offsetting liabilities relating to the deferred compensation plan are included within Other accrued liabilities and Long-term liabilities. Assets in the trust are accounted for as equity investments with changes in fair value recorded within Other income, net (see Note 13).
Other Benefits
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
Pension. 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.
OPEB. We sponsor an OPEB plan covering certain eligible retirees. Generally, the medical plans are unfunded and pay a percentage of medical expenses, reduced by deductibles and other coverage. Life insurance 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 Salaried VEBA. The accumulated postretirement benefit obligation (“APBO”) for the Salaried VEBA was computed based on the level of benefits being provided. Since the Salaried VEBA pays out a fixed annual amount to its participants, no future cost trend rate increase was assumed in computing the APBO for the Salaried VEBA.
Notes Index
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
We have an ongoing obligation with no express termination date to make variable cash contributions up to a maximum of $ 2.9 million annually to the Salaried VEBA. The Salaried VEBA assets are invested in various managed funds based on information we received from the trustee of the Salaried VEBA. Our variable payment, if any, is treated as a funding/contribution policy and not counted as a Salaried VEBA asset at the accrual date for actuarial purposes. We determined that in the first quarter of 2026 we will pay $ 2.9 million with r espect to 2025. During the first quarter of 2025 , we paid $ 0.7 million with respect to 2024. Such amounts were recorded within Other accrued liabilities (see Note 2). We account for the Salaried VEBA as a defined benefit plan in our financial statements using a December 31 measurement date.
Key Assumptions. The following table presents the weighted average assumptions used to determine benefit obligations:
Pension Plans 1
OPEB
Salaried VEBA
As of December 31,
As of December 31,
As of December 31,
Discount rate
Rate of compensation increase
Assumptions for our pension plans are weighted based on the total benefit obligations of each.
In measuring the benefit obligation under our OPEB plan, we estimate a healthcare cost trend rate representing the annual rates of change in the costs of the healthcare benefits currently provided. The 2025 actuarial valuation assumed an 8.5 % annual rate of increase in the per capita cost of covered healthcare claims with the rate decreasing gradually until reaching 4.5 % in 2039.
The following table presents the weighted average assumptions used to determine net periodic postretirement and postemployment bene fit cost:
Pension Plans 1
OPEB
Salaried VEBA
Year Ended December 31,
Year Ended December 31,
Year Ended December 31,
Discount rate
Expected long-term return on plan assets 2
Rate of compensation increase
Assumptions for our pension plans are weighted based on the total benefit obligations of each.
The expected long-term rate of return assumption for the Salaried VEBA is based on the targeted investment portfolios provided to us by the trustee of the Salaried VEBA.
Notes Index
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Benefit Obligations and Funded Status. The following table presents the benefit obligations and funded status of our pension plans, OPEB, and the Salaried VEBA and the corresponding amounts that are included in our Consolidated Balance Sheets (in millions of dollars):
Pension Plans
OPEB
Salaried VEBA
As of December 31,
As of December 31,
As of December 31,
Change in benefit obligation:
Obligation at beginning of year
Foreign currency translation loss (gain)
Service cost
Interest cost
Prior service cost 1
Actuarial loss (gain) 2
Plan participants contributions
Benefits paid
Settlements 3
Obligation at end of year 4
Change in plan assets:
Fair market value of plan assets at beginning of year
Foreign currency translation gain
Actual return on assets
Plan participants contributions
Company contributions
Benefits paid
Settlements 3
Fair market value of plan assets at end of year
Net funded status
Amounts recognized on our Consolidated Balance Sheets:
Other assets
Accrued salaries, wages and related expenses
Pension and OPEB
Total
Cumulative gain (loss) recognized in AOCI:
Accumulated net actuarial gain
Prior service cost
Total
In 2024, prior service cost for our pension plans resulted from a plan amendment clarifying certain plan provisions of the Kaiser Aluminum Warrick pension plan going back to the date of our acquisition of Warrick.
Actuarial gains and losses for our defined benefit plans primarily resulted from changes in certain key actuarial assumptions and updates to census data.
In 2024, we entered into a group annuity purchase agreement under which approximately $ 4.5 million of obligations for certain participants of the Kaiser Aluminum Canada Limited Retirement Plan for Salaried Employees were transferred to an insurance company. The annuitization was funded through existing plan assets and does not change the amount of the monthly pension benefits received by the affected participants.
For the pension plans, the benefit obligation is the projected benefit obligation. For the Salaried VEBA and OPEB, the benefit obligation is the APBO.
Notes Index
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The accumulated benefit obligation for the pension plans was $ 35.2 million and $ 29.8 million at December 31, 2025 and December 31, 2024, respectively. We expect to contribute $ 5.2 million to the pension plans in 2026.
The following table presents the net benefits expected to be paid (in millions of dollars):
Year Ended December 31,
Pension benefit payments
Salaried VEBA benefit payments 1
OPEB payments
Total
Such amounts are based on benefit amounts and certain key assumptions obtained from the Salaried VEBA trustees and will be paid out of the Salaried VEBA plan assets. We have an ongoing obligation to make variable cash contributions to the Salaried VEBA, up to a maximum of $ 2.9 million annually based on our cash flow.
Plan Assets. The fundamental goal underlying our pension plan investment policy is to ensure that the assets of the plans are invested in a prudent manner to earn a long-term rate of return sufficient to meet the benefit obligations as they come due. Risk management practices include diversification across asset classes and periodic rebalancing toward established asset allocation targets. Our investment policy permits variances from the targets within certain parameters.
The following table presents the weighted-average target and actual asset class allocations for our pension plans:
Asset class
2025 Target allocation
As of December 31, 2025
Equities
Fixed income
Real estate investments
Fair Value of Plan Assets. The plan assets of our pension plans and the Salaried VEBA are measured annually on December 31 and reflected in our Consolidated Balance Sheets at fair value. In determining the fair value of the plan assets at an annual period end, we utilize primarily the results of valuations supplied by the investment advisors responsible for managing the assets of each plan, which we independently review for reasonableness. With respect to the Salaried VEBA, the investment advisors providing the valuations are engaged by the Salaried VEBA trustees.
Certain plan assets are valued based upon unadjusted quoted market prices in active markets that are accessible at the measurement date for identical, unrestricted assets (e.g., liquid securities listed on an exchange). Such assets are classified within Level 1 of the fair value hierarchy.
The following table presents the fair value of plan assets at December 31, 2025 and 2024, classified under the appropriate level of the fair value hierarchy (in millions of dollars):
December 31, 2025
December 31, 2024
Plan Assets in the Fair Value Hierarchy:
Level 1
Salaried VEBA – Equity investment funds in registered investment companies 1
Salaried VEBA – Fixed income investment funds in registered investment companies 2
Salaried VEBA – Cash and money market investments
Pension plans – Diversified investment funds in pooled separate accounts 3
Pension plans – Fixed income investment funds in registered investment companies 2
Pension plans – Diversified investment funds in registered investment companies 4
Deferred compensation program – Diversified investment funds in registered investment companies 4
Total plan assets in the fair value hierarchy
Equity investment funds in registered investment companies . This category represents investments in equity funds.
Notes Index
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Fixed income investment funds in registered investment companies . This category represents investments in various fixed income funds with multiple registered investment companies. Such funds invest primarily in bonds, debentures, notes, securities with equity and fixed-income characteristics, cash equivalents, securities backed by mortgages and other assets, loans, pooled or collective investment vehicles made up of fixed‑income securities and other fixed-income obligations of banks, corporations, and governmental authorities.
Diversified investment funds in pooled separate accounts. This category represents investments in various pooled separate accounts that hold a diversified portfolio of: (i) equity and equity-related securities of U.S. and non-U.S. issuers across all market capitalizations; (ii) fixed income securities such as corporate bonds and government bonds; and (iii) commercial real estate, including mortgage loans which are backed by the associated properties. The pooled separate accounts are valued daily based on the market value of the underlying net assets in each separate account. The majority of the underlying net assets have observable Level 1 pricing inputs which are used to determine the unit value of the pooled separate account which is not publicly quoted.
Diversified investment funds in registered investment companies . This category represents investments in funds that hold a diversified portfolio of: (i) U.S. and international debt and equity securities; (ii) fixed income securities such as corporate bonds and government bonds; (iii) mortgage-related securities; and (iv) cash and cash equivalents.
The following table presents the total expense related to all benefit plans (in millions of dollars):
Year Ended December 31,
Defined contribution plans 1
Deferred compensation plan 2
Multiemployer pension plans 1,3
Net periodic postretirement and postemployment benefit cost relating to defined benefit plans 4
Total
Substantially all of these charges related to employee benefits are in COGS with the remaining balance in SG&A and R&D within our Statements of Consolidated Income.
Deferred compensation plan expense is included within SG&A and R&D in our Statements of Consolidated Income.
See Note 6 for more information on our multiemployer defined benefit pension plans. For the year ended December 31, 2024, the expense presented excludes a $ 4.6 million charge to Restructuring costs (see Note 12).
The current service cost component of Net periodic postretirement and postemployment benefit cost relating to both the pension plans and the OPEB plan is included within COGS in our Statements of Consolidated Income for all periods presented. All other components of Net periodic postretirement and postemployment benefit cost are included within Other income, net, in our Statements of Consolidated Income.
Components of Net Periodic Postretirement and Postemployment Benefit Cost. The following table presents the components of Net periodic postretirement and postemployment benefit cost relating to our defined benefit plans (in millions of dollars):
Pension Plans
OPEB
Salaried VEBA
Year Ended December 31,
Year Ended December 31,
Year Ended December 31,
Service cost
Interest cost
Expected return on plan assets
Amortization of prior service cost 1
Amortization of net actuarial gain
Settlement gain recognized
Total net periodic postretirement and postemployment benefit cost
We amortize prior service cost on a straight-line basis over the average remaining years of service of the active plan participants.
Notes Index
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. Multiemploye r Pension Plans
Overview. We contribute to multiemployer defined benefit pension plans under the terms of collective bargaining agreements that cover our union-represented employees at certain facilities. At December 31, 2025, approximately 36 % of our total employees were union-represented employees at facilities participating in these multiemployer pension plans. We currently estimate that contributions will range from $ 5.5 million to $ 6.5 million in 2026.
The risks of participating in these multiemployer plans are different from single-employer plans in the following aspects:
Assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of other participating employers.
If a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers.
If we choose to stop participating in any of our multiemployer plans, we may be required to pay those plans an amount based on the underfunded status of the plan, referred to as a withdrawal liability.
The following table presents information about multiemployer pension plans in which we participate:
Pension
FIP/RP Status
Contributions of
Employer
Protection Act
Pending/
the Company
Surcharge
Expiration Date
Identification
Zone Status 1
Implemented
Year Ended December 31,
Imposed
of Collective-
Pension Fund
Number
Bargaining Agreements
(in millions of dollars)
USW 3
Green
Green
Mar 2026 - Sep 2030
Other Funds 4
The zone status is based on information that we received from the plan and is certified by the plan’s actuary. Among other factors, plans in the green zone are at least 80 % funded.
The “FIP/RP Status Pending/Implemented” column indicates if a Financial Improvement Plan (“FIP”) or a Rehabilitation Plan (“RP”) is either pending or has been implemented for the plan under the Pension Protection Act.
We are party to three collective bargaining agreements with the USW that require contributions to the Steelworkers Pension Trust (“SPT”). As of December 31, 2025, USW collective bargaining agreements covering employees at Newark and Trentwood covered 83 % of our USW-represented employees with SPT benefits and expire in September 2030. Our monthly contributions per hour worked by each bargaining unit employee at Newark and Trentwood were (in whole dollars) $ 2.06 in 2025. The union contracts covering employees at our Richmond, Virginia facility and Florence, Alabama facility cover 15 % and 2 % , respectively, of our USW-represented employees with SPT benefits and expire in November 2026 and March 2026, respectively. Our monthly contributions per hour worked by each bargaining unit employee at our Richmond, Virginia facility and Florence, Alabama facility were (in whole dollars) $ 1.55 and $ 1.35 , respectively, in 2025.
Other Funds consists of plans that are not individually significant.
We were not listed in any of the plans’ Forms 5500 as providing more than 5 % of the total contributions for any of the plan years disclosed. At the date the Company’s financial statements were issued, Forms 5500 were not available for the plan year ending in 2025 . Further, there were no significant changes to the number of employees covered by our multiemployer plans that would affect the period-to-period comparability of the contributions for the years presented.
7. Employee In centive Plans
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 EBITDA, modified for certain safety, quality, delivery, cost, and individual performance factors. The Adjusted EBITDA targets are determined based on our board approved business plans. Most of our production facilities have similar programs for both hourly and salaried employees. In addition, we have discretionary bonus programs that allow for management to incentivize employees based on performance. As of December 31, 2025, we had a liability of $ 23.8 million recorded within Accrued salaries, wages and related expenses for estimated probable future payments relating to the 12-month performance period of our 2025 STI Plans.
Notes Index
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Long-Term Incentive Programs (“LTI Programs”)
General . Executive officers and other key employees of the Company, as well as non-employee directors of the Company, are eligible to participate in the Kaiser Aluminum Corporation 2021 Equity and Incentive Compensation Plan, as amended and restated (“2021 Plan”). The 2021 Plan was initially approved by stockholders on June 3, 2021, amended and restated on June 11, 2024 and replaced and succeeded, in its entirety, the Kaiser Aluminum Corporation Amended and Restated 2016 Equity and Performance Incentive Plan, except with regard to awards previously granted thereunder that continued to be outstanding. At December 31, 2025, 452,688 shares were available for awards under the 2021 Plan.
Non-Vested Common Shares and Restricted Stock Units. We grant non-vested common shares (“RSAs”) to our non-employee directors and restricted stock units (“RSUs”) to our executive officers and other key employees. The RSAs and RSUs have similar rights and each RSU that becomes vested entitles the recipient to receive one common share, for which we issue new shares of our common stock upon vesting under the 2021 Plan. The service period is generally one year for RSAs and three years for RSUs.
The following table summarizes activity relating to RSAs and RSUs for the year ended December 31, 2025:
Shares
(in whole shares)
Weighted-
Average
Grant-Date
Fair Value
per Share
(in whole dollars)
Outstanding at December 31, 2024
Granted
Vested
Forfeited
Outstanding at December 31, 2025
Performance Shares. We grant performance shares to executive officers and other key employees that vest upon the achievement of specified market or internal performance goals. Performance goals can include: (i) our achieving a total shareholder return (“TSR”) compared to the TSR of a specified group of peer companies over a three-year performance period (“TSR-Based Performance Shares”) and/or (ii) achieving targeted improvements to our Adjusted EBITDA margin performance, measured by our Adjusted EBITDA as a percentage of Conversion Revenue, over a three-year performance period. Each performance share that becomes vested and earned entitles the recipient to receive one common share. The number of performance shares that may be earned and result in the issuance of common shares ranges between 0 % to 200 % of the target number of underlying performance shares.
The following table presents the weighted average inputs and assumptions used in the Monte Carlo simulations to calculate the fair value at the grant date of our TSR-Based Performance Shares:
Year Ended December 31,
Grant date fair value (in whole dollars)
Grant date stock price (in whole dollars)
Expected volatility of Kaiser Aluminum 1
Expected volatility of peer companies 1
Risk-free interest rate
Dividend yield
Weighted average expected volatility based on 2.8 ye ars of daily closing share prices from the valuation date to the end of the performance period.
Notes Index
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table summarizes activity relating to performance shares for the year ended December 31, 2025:
Shares
(in whole shares)
Weighted-
Average
Grant-Date
Fair Value
per Share
(in whole dollars)
Outstanding at December 31, 2024
Granted 1
Vested
Forfeited 1
Canceled 1
Outstanding at December 31, 2025
The number of shares granted and forfeited are presented at their maximum payout; and the number of shares canceled includes the number of shares that did not vest due to performance results falling below those required for maximum payout.
Non-Cash Compensation Expense. Non-cash compensation expense is primarily included in SG&A and R&D. The following table presents non-cash compensation expense by type of award under LTI Programs (in millions of dollars):
Year Ended December 31,
RSAs and RSUs
Performance shares
Total non-cash compensation expense
Recognized tax benefits relating to the non-cash compensation expense presented in the table above were $ 4.2 million , $ 3.2 million , and $ 3.6 million for 2025, 2024, and 2023, respectively.
The aggregate fair value of awards that vested was $ 10.3 million , $ 8.5 million , and $ 6.2 million for 2025, 2024, and 2023, respectively, which represents the market value of our common stock on the date that the awards vested.
Unrecognized Gross Compensation Cost Data. The following table presents unrecognized gross compensation costs and the expected period over which the remaining gross compensation costs will be recognized by type of award as of December 31, 2025:
Unrecognized Gross Compensation Costs
(in millions
of dollars)
Expected Period
(in years)
Over Which the Remaining Gross Compensation Costs Will Be Recognized
RSAs and RSUs
Performance shares
The following table presents the weighted-average grant-date fair value per share for shares granted by type of award (in whole dollars):
Year Ended December 31,
RSAs and RSUs
Performance shares
Notes Index
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
We withhold common shares to satisfy minimum statutory tax withholding obligations arising in connection with the vesting of awards granted to our executive officers and other key employees. We cancel any such shares withheld on the applicable vesting dates or earlier dates when service requirements are satisfied, which correspond to the times at which income to the participant is recognized. When we withhold these common shares, we are required to remit to the appropriate taxing authorities the fair value of the shares withheld as of the vesting date. The withholding of common shares by us could be deemed a purchase of the common shares. See Statements of Consolidated Stockholders’ Equity for details on cancellation of shares to cover tax withholdings upon common shares issued.
8. Derivatives, Hedging Programs and Other Financial Instruments
Overview
We utilize derivative instruments to manage exposure to: (i) metal price risk related to aluminum and certain alloys used as raw material for our fabrication operations; (ii) energy price risk related to natural gas and electricity used in our production processes; and (iii) foreign currency exchange rate risk related to certain equipment and service agreements. We do not use derivative financial instruments for trading or other speculative purposes. Hedging transactions are executed centrally on behalf of all of our operations to minimize transaction costs, monitor consolidated net exposures, and allow for increased responsiveness to changes in market factors.
Our derivative activities are overseen by a committee (“Hedging Committee”), which is composed of our Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer, Treasurer, Executive Vice President – Manufacturing, and other officers and employees selected by the Chief Executive Officer. The Hedging Committee meets regularly to review commodity price exposure, derivative positions, and strategy. Management reviews the scope of the Hedging Committee’s activities with our Board of Directors.
We are exposed to counterparty credit risk on all of our derivative instruments, which we manage by monitoring the credit quality of our counterparties and allocating our hedging positions among multiple counterparties to limit exposure to any single entity. Our counterparties are major investment grade financial institutions or trading companies, and our hedging transactions are governed by negotiated International Swaps and Derivatives Association Master Agreements, which generally require collateral to be posted by our counterparties above specified credit thresholds which may adjust up or down, based on changes in counterparty credit ratings. 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 $ 0.1 million and $ 0.8 million at December 31, 2025 and December 31, 2024, respectively, and we had no collateral posted as of those dates.
In addition, 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 to be posted by our customers, which we classify as deferred revenue and include as a component of Other accrued liabilities. We had no cash collateral posted by our customers at both December 31, 2025 and December 31, 2024. For more information about concentration risks concerning customers and suppliers, see Note 17.
The above described derivative instruments are typically designated as cash flow hedges. 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 11 for the total amount of gain or loss on derivative instruments designated and qualifying as cash flow hedging instruments that was reported in 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.
From time to time, we enter into commodity and foreign currency forward contracts that are not designated as hedging instruments to mitigate certain short‑term impacts, as identified. The gain or loss on these commodity and foreign currency derivatives is recognized within COGS and Other income, net, respectively. As of December 31, 2025 and December 31, 2024 , we had no outstanding non-designated derivative positions.
Notes Index
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notional Amount of Derivative Contracts
The following table summarizes our derivative positions at December 31, 2025:
Aluminum
Maturity Period
Notional Amount of Contracts (mmlbs)
Fixed price purchase contracts for LME
January 2026 through May 2027
Fixed price sale contracts for LME
January 2026 through March 2026
Fixed price purchase contracts for MWTP
January 2026 through May 2027
Fixed price sale contracts for MWTP
January 2026 through May 2026
Alloying Metals
Maturity Period
Notional Amount of Contracts (mmlbs)
Fixed price purchase contracts
January 2026 through December 2027
Natural Gas
Maturity Period
Notional Amount of Contracts (mmbtu)
Fixed price purchase contracts
January 2026 through December 2027
Euros
Maturity Period
Notional Amount of Contracts (EUR)
Fixed price forward purchase contracts
January 2026 through July 2027
(Gain) Loss on Derivative Contracts
The following table summarizes the amount of (gain) loss on derivative contracts recorded within our Statements of Consolidated Income in COGS (in millions of dollars):
Year Ended December 31,
As Adjusted 1
As Adjusted 1
Total of income and expense line items presented in our Statements of Consolidated Income in which the effects of hedges are recorded:
Cash flow hedges
(Gain) loss recognized in our Statements of Consolidated Income related to cash flow hedges:
Aluminum
Alloying Metals
Natural gas
Electricity
Foreign exchange contracts
Total (gain) loss recognized in our Statements of Consolidated Income related to cash flow hedges
Loss recognized in our Statements of Consolidated Income related to non-designated hedges:
Alloying Metals
Electricity
Total loss recognized in our Statements of Consolidated Income related to non-designated hedges
Adjusted to reflect the retrospective change in inventory valuation methodology from LIFO to WAC. See Note 18 for further discussion.
Notes Index
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Fair Values of Derivative Contracts
The fair values of our derivative contracts are based upon trades in liquid markets. Valuation model inputs can be verified, and valuation techniques do not involve significant judgment. The fair values of such derivatives are classified within Level 2 of the fair value hierarchy.
All of our derivative contracts with counterparties are subject to enforceable master netting arrangements. We reflect the fair value of our derivative contracts on a gross basis on our Consolidated Balance Sheets. The following table presents the fair value of our derivative financial instruments (in millions of dollars):
As of December 31, 2025
As of December 31, 2024
Assets
Liabilities
Net Amount
Assets
Liabilities
Net Amount
Aluminum –
Fixed price purchase contracts for LME
Fixed price sale contracts for LME
Fixed price purchase contracts for MWTP
Fixed price sale contracts for MWTP
Alloying Metals – Fixed price purchase contracts
Natural gas – Fixed price purchase contracts
Foreign Currency – Fixed price forward contracts
Total
The following table presents the total amounts of derivative assets and liabilities on our Consolidated Balance Sheets (in millions of dollars):
As of December 31,
Derivative assets:
Prepaid expenses and other current assets
Other assets
Total derivative assets
Derivative liabilities:
Other accrued liabilities
Long-term liabilities
Total derivative liabilities
Notes Index
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
9. Debt and C redit Facility
Senior Notes
Issuance of $ 500.0 million Senior Notes Due 2034. In November 2025, we issued $ 500.0 million aggregate principal amount of our 5.875 % unsecured senior notes due March 1, 2034 (“5.875% Senior Notes”) at par. The 5.875 % Senior Notes bear interest at a rate of 5.875 % per annum, payable semi-annually on March 1 and September 1, beginning in March 2026. Upon certain asset sales or changes in control accompanied by a ratings decline, we may be required to offer to repurchase the 5.875 % Senior Notes. The indenture includes customary covenants and events of default provisions. In the event of default, the trustee or holders of at least 25 % in aggregate principal amount of the 5.875 % Senior Notes may declare the entire principal amount and the interest accrued to be immediately due and payable.
Redemption of $ 500.0 million Senior Notes Due 2028. In November 2025, we redeemed all $ 500.0 million aggregate principal amount of our outstanding 4.625 % unsecured senior notes (“4.625% Senior Notes”) at a redemption price of 100 % of the principal amount thereof, plus accrued and unpaid interest. The redemption was funded using the net proceeds from the issuance of the 5.875 % Senior Notes (as further described above), together with existing cash on hand and borrowings under the Revolving Credit Facility. In connection with the redemption of the 4.625% Senior Notes, during the year ended December 31, 2025, we wrote-off the remaining unamortized debt issuance costs of $ 2.1 million within Other income, net in our Statements of Consolidated Income.
Senior Notes Outstanding. During the years ended December 31, 2025 and 2024, we had outstanding fixed-rate unsecured Senior Notes with varying maturity dates. The stated interest rates and aggregate principal amounts of such Senior Notes were, respectively: (i) 4.625 % and $ 500.0 million; (ii) 4.50 % and $ 550.0 million (“4.50% Senior Notes”); and (iii) 5.875 % and $ 500.0 million. Our Senior Notes do not require us to make any mandatory redemptions or sinking fund payments. The following table summarizes key details of our outstanding Senior Notes:
Outstanding (in millions of dollars)
Issuance Date
Maturity
Effective Interest Rate
As of December 31, 2025
As of December 31, 2024
4.625 % Senior Notes
November 2019
March 2028
4.50 % Senior Notes
May 2021
June 2031
5.875 % Senior Notes
November 2025
March 2034
Total debt
Unamortized issuance costs
Total carrying amount
The following table presents the fair value of our outstanding Senior Notes, which are Level 1 liabilities (in millions of dollars):
As of December 31,
4.625% Senior Notes
4.50% Senior Notes
5.875% Senior Notes
Revolving Credit Facility
In October 2019, we entered into a Revolving Credit Facility. Joining us as borrowers under the Revolving Credit Facility are four of our wholly owned domestic operating subsidiaries: (i) Kaiser Aluminum Investments Company; (ii) Kaiser Aluminum Fabricated Products, LLC; (iii) Kaiser Aluminum Washington, LLC; and (iv) Kaiser Aluminum Warrick, LLC.
Notes Index
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In October 2025, we entered into amendment No. 5 to our Revolving Credit Facility. As amended, the Revolving Credit Facility is set to mature in October 2030 , and, among other things: (i) contains a maximum commitment amount of $ 575.0 million (of which up to a maximum of $ 50.0 million may be utilized for letters of credit) and (ii) allows the Company to request an increase of the revolving commitments by up to an amount equal to $ 200.0 million plus an additional amount for a first-in last-out tranche, subject to certain conditions and the agreement of one or more lenders to provide such increased commitment. The amount we can borrow under the Revolving Credit Facility is determined by the value of our eligible accounts receivable and inventory and certain other assets, which serve as collateral for the Revolving Credit Facility. Borrowings under the amended Revolving Credit Facility bear interest at a rate equal to either a base rate or the SOFR, plus, in each case, a specified variable percentage between 125 - 150 basis points for SOFR loans (or 25 - 50 basis points for base rate loans) determined by reference to the then-remaining borrowing availability under the Revolving Credit Facility and, in certain instances, a fixed margin. Outstanding borrowings under the Revolving Credit Facility are reported within Long-term debt, net, on our Consolidated Balance Sheets. We had $ 22.3 million of outstanding borrowings under our Revolving Credit Facility as of December 31, 2025 , reflecting borrowings of $ 653.3 million and repayments of $ 631.0 million during the year ended December 31, 2025 . We had no outstanding borrowings under our Revolving Credit Facility as of or during the year ended December 31, 2024.
The following table summarizes availability and usage of our Revolving Credit Facility as determined by a borrowing base calculated as of December 31, 2025 (in millions of dollars):
Revolving Credit Facility borrowing commitment
Borrowing base availability
Less: Outstanding borrowings under Revolving Credit Facility
Less: Outstanding letters of credit under Revolving Credit Facility
Remaining borrowing availability
Interest Expense and Future Maturities
The following table presents interest expense relating to our Senior Notes and Revolving Credit Facility (in millions of dollars):
Year Ended December 31,
Senior Notes interest expense, including debt issuance cost amortization
Revolving Credit Facility interest expense, including commitment fees and finance cost amortization
Interest expense on finance lease liabilities
Interest expense capitalized as construction in progress
Total interest expense
The following table presents the future principal payments for our Senior Notes and Revolving Credit Facility as of December 31, 2025 (in millions of dollars):
Year ending December 31,
Thereafter
Total
10. Commitments a nd Contingencies
Commitments. We have a variety of financial commitments, including purchase agreements, forward foreign exchange and forward sales contracts, indebtedness, and letters of credit (see Note 3, Note 8, and Note 9).
Notes Index
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CAROs. The inputs in estimating the fair value of CAROs include: (i) the timing of when any such CARO cash flows may be incurred; (ii) incremental costs associated with special handling or treatment of CARO materials; and (iii) the credit-adjusted risk-free rate applicable at the time additional CARO cash flows are estimated. The majority of these inputs are considered Level 3 inputs as they involve significant judgment from us.
The following table summarizes activity relating to CARO liabilities (in millions of dollars):
Year Ended December 31,
Beginning balance
Liabilities added during the period
Liabilities settled during the period
Accretion expense
Ending balance
The estimated fair values of CARO liabilities were based upon the application of a weighted-average credit-adjusted risk-free rate of 8.34 % and 8.30 % at December 31, 2025 and December 31, 2024, respectively. CAROs are included in Other accrued liabilities or Long-term liabilities, as appropriate.
Environmental Contingencies. We are subject to several environmental laws and regulations, potential fines or penalties assessed for alleged breaches of such laws and regulations, and potential claims based upon such laws and regulations. We are also subject to legacy environmental contingencies related to activities that occurred at our operating facilities prior to July 6, 2006, which represent the majority of our environmental accruals of $ 17.9 million as of December 31, 2025. This accrual represents our undiscounted estimate of costs reasonably expected to be incurred based on current laws and regulations, available facts, existing technologies, and our assessment of the likely remediation actions to be taken.
At Trentwood, we continue to pursue remediation activities in coordination with the Washington State Department of Ecology (“Ecology”), primarily to address the historical use of oils containing polychlorinated biphenyls (“PCBs”). During 2024, we implemented a full-scale Ultraviolet Light Advanced Oxidation Process (“UV/AOP”) for PCB removal. We are currently working with Ecology, as required by the Amended Agreed Order, to finalize details of the UV/AOP and to determine future remediation steps to be taken at which time there may be revisions to our estimated liabilities for this matter.
At Newark, pursuant to a consent agreement with the Ohio Environmental Protection Agency (“OEPA”), we submitted an Alternate Arrays Document (“AAD”) to the OEPA for review in 2023. During the quarter ended September 30, 2024, we increased our accrual by $ 2.9 million to reflect preliminary estimates for the most likely remediation activities, as laid out in the AAD. Based on input received from the OEPA, we plan to submit a revised AAD to the OEPA in 2026. Once the revised AAD is reviewed and accepted by the OEPA, a final feasibility study will be submitted to the OEPA, which we expect to occur in 2026 .
The following table presents the changes in our environmental accrual. We classify the short-term and long-term liabilities within Other accrued liabilities and Long-term liabilities, respectively, on our Consolidated Balance Sheets (in millions of dollars):
Year Ended December 31,
Beginning balance
Additional accruals
Less: expenditures
Ending balance
Based on approved and proposed remediation action plans for the various facilities, we expect that the implementation and ongoing monitoring could occur over a period of 30 or more years. As additional facts are developed, feasibility studies are completed, remediation plans are modified, necessary regulatory approvals for the implementation of remediation are obtained, alternative technologies are developed and/or other factors change, there may be revisions to management’s estimates, and actual costs may exceed the current environmental accruals by up to $ 14.1 million . Changes to our estimates may occur within the next 12 months as new information becomes available.
Notes Index
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 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. Quarterly, in addition to when changes in facts and circumstances require it, we review and adjust these accruals to reflect the impacts of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular case. 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.
11. Accumulated Other Co mprehensive Income
The following table presents the changes in the accumulated balances for each component of AOCI (in millions of dollars):
Year Ended December 31,
Defined Benefit Plans:
Beginning balance
Actuarial gain arising during the period
Less: income tax expense
Net actuarial gain arising during the period
Prior service (cost) credit arising during the period
Less: income tax benefit (expense)
Net prior service (cost) credit arising during the period
Amortization of net actuarial gain 1,2
Amortization of prior service cost 1
Less: income tax expense 3
Net amortization reclassified from AOCI to Net income
Other comprehensive income, net of tax
Ending balance
Cash Flow Hedges:
Beginning balance
Unrealized gain (loss) on cash flow hedges
Less: income tax (expense) benefit
Net unrealized gain (loss) on cash flow hedges
Reclassification of unrealized (gain) loss upon settlement
of cash flow hedges
Reclassification due to forecasted transactions probable of not
occurring
Less: income tax benefit (expense) 3
Net (gain) loss reclassified from AOCI to Net income
Other comprehensive income (loss), net of tax
Ending balance 4
Total AOCI ending balance
Amounts amortized out of AOCI related to pension and other postretirement and postemployment benefits were included within Net periodic postretirement and postemployment benefit cost (see Note 5 ).
Amounts amortized out of AOCI during the year ended December 31, 2024 include net actuarial gains recognized on a pro-rata basis in conjunction with a group annuity purchase (see Note 5 ).
Income tax amounts reclassified out of AOCI were included as a component of Inc ome tax provision.
As of December 31, 2025, we estimate a net mark-to-market gain before tax of $ 5.2 million in AOCI will be reclassified into Net income upon settlement within the next 12 months.
Notes Index
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
12. Res tructuring
2025 Restructuring Plan. During the quarter ended March 31, 2025, we initiated a plan to reduce certain operating costs (“2025 Restructuring Plan”). Through December 31, 2025, we have recorded a char ge of $ 1.9 million for severance and related benefits. Substantially all of the costs associated with the restructuring efforts initiated under the 2025 Restructuring Plan were incurred and expensed as of December 31, 2025. The costs are recorded within Restructuring costs in our Statements of Consolidated Income.
The following table summarizes activity relating to the 2025 Restructuring Plan liabilities (in millions of dollars):
BALANCE, December 31, 2024
Restructuring costs
Costs paid or otherwise settled 1
BALANCE, December 31, 2025
Cash paid during the year end ed December 31, 2025 was $ 1.8 million.
2024 Restructuring Plan. During the quarter ended June 30, 2024, we initiated a plan to exit our soft alloy aluminum extrusion facility located in Sherman, Texas (“2024 Restructuring Plan”), resulting in a charge of $ 7.5 million. This charge included a $ 4.6 million multiemployer pension obligation which is expected to be paid in 2027 and a $ 2.9 million charge fo r severance, related benefits, and other costs. Substantially all of the costs associated with the restructuring efforts initiated under the 2024 Restructuring Plan were incurred and expensed as of December 31, 2024. The costs are recorded within Restructuring costs in our Statements of Consolidated Income. The Sherman, Texas facility was sold in the fourth quarter of 2025.
The following table summarizes activity relating to the 2024 Restructuring Plan liabilities (in millions of dollars):
BALANCE, December 31, 2023
Restructuring costs
Costs paid or otherwise settled 1
BALANCE, December 31, 2024
Restructuring costs
Costs paid or otherwise settled 1
BALANCE, December 31, 2025
Cash paid during the years ended December 31, 2025 and December 31, 2024 was $ 0.1 million and $ 2.6 million, respectively.
13. Other Income , Net
The following table presents the components of Ot her income, net, (in millions of dollars):
Year Ended December 31,
Interest income
Net periodic postretirement and postemployment benefit cost
Unrealized gain on equity securities
Loss on extinguishment of debt – Note 9
Gain on disposition of non-operating property, plant and equipment
Gain on business interruption insurance recoverie s 1
All other, net
Other income, net
Represents advances and final settlements against business interruption insurance claims. We recognize such advances in the period in which the insurance proceeds are received or become realizable. During the years ended December 31, 2025 and December 31, 2024, we received net cash proce eds of $ 7.0 million an d 15.9 million, respectively.
Notes Index
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Supply Chain Financing . During the years ended December 31, 2025 and December 31, 2024, we sold trade accounts receivable totaling $ 1,042.6 million and $ 1,078.6 million , respectively, related to these supply chain financing arrangements, of which the financial institutions of our customers applied discount fees totaling $ 24.1 million and $ 24.8 million , respectively. 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 income, net. As of December 31, 2025 , we had been and/or expected to be substantially reimbursed by our customers for these discount fees, in accordance with the underlying sales agreements.
14. Income Tax Matters
The following table presents Income before income taxes by geographic area (in millions of dollars):
Year Ended December 31,
As Adjusted 1
As Adjusted 1
Domestic
Foreign
Income before income taxes
Adjusted to reflect the retrospective change in inventory valuation methodology from LIFO to WAC. See Note 18 for further discussion.
Tax (Provision) Benefit . Income taxes are classified as either domestic or foreign based on whether payment is made or due to the United States or a foreign country. Certain income classified as foreign is also subject to domestic income taxes.
The following table presents the components of Income tax (provision) benefit (in millions of dollars):
Federal
Foreign
State
Total
Year Ended December 31, 2025
Current
Deferred
Benefit applied to decrease AOCI
Income tax provision
Year Ended December 31, 2024 1
Current
Deferred
Benefit applied to decrease AOCI
Income tax provision
Year Ended December 31, 2023 1
Current
Deferred
Benefit applied to decrease AOCI
Income tax (provision) benefit
Adjusted to reflect the retrospective change in inventory valuation methodology from LIFO to WAC. See Note 18 for further discussion.
Notes Index
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table presents a reconciliation between the (provision) benefit for income taxes and the amount computed by applying the federal statutory income tax rate to Income before income taxes (in millions of dollars):
Year Ended December 31,
As Adjusted 1
As Adjusted 1
Amount ($)
Percent (%)
Amount ($)
Percent (%)
Amount ($)
Percent (%)
U.S. federal statutory income tax
State and local income (tax) benefit, net of federal (national) income tax effect 2
Foreign tax effects
Canada
Income tax expense
Undistributed earnings
Nontaxable or nondeductible items
Nondeductible compensation
Other items
Tax credits
R&D credits
R&D ASC 740 reserve
Income tax provision
Adjusted to reflect the retrospective change in inventory valuation methodology from LIFO to WAC. See Note 18 for further discussion.
For the year ended December 31, 2025, the state that contributed the majority (greater than 50 %) of the tax effect in this category was California. The reconciling items primarily relate to current state tax expense, state NOL and rate true‑ups, and valuation allowance changes. For 2024 and 2023, the states that contributed the majority (greater than 50 %) of the tax effect in this category was driven by California, Indiana, and South Carolina.
The following table presents the amounts of cash income taxes paid (in millions of dollars):
Year Ended December 31,
Federal
State
California
Michigan
New York
Oregon
Texas
All Other States
Foreign
Canada
Ontario
Income taxes, net of amounts refunded
Notes Index
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
* The amount of income taxes paid during the year does not meet the 5.0 percent disaggregation threshold.
Deferred Income Taxes. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and amounts used for income tax purposes. The following table presents the components of our net deferred income tax assets and liabilities (in millions of dollars):
As of December 31,
As Adjusted 1
Deferred income tax assets:
Loss and credit carryforwards
Defined benefit plans
Other assets
Lease assets
Inventories
Excess interest carryforward
Research & development capitalization
Valuation allowances
Total deferred income tax assets
Deferred income tax liabilities:
Property, plant and equipment
Lease liabilities
Undistributed foreign earnings
Total deferred income tax liabilities
Net deferred income tax liabilities
Tax Attributes. At December 31, 2025, we had $ 123.9 million of NOL carryforwards available to reduce future cash payments for federal income taxes in the United States. H.R.1, commonly referred to as the Tax Cut and Jobs Act and which became law in 2017, states that NOL carryforwards generated after December 31, 2017 do not expire and can be carried forward indefinitely, but are limited to 80 % of the excess (if any) of taxable income. Our state NOL carryforwards expire periodically through 2045 .
In addition, we had $ 22.1 million of federal R&D credit carryforwards to offset regular federal income tax requirements. Our R&D credit carryforwards expire periodically through 2045 . We also had $ 4.6 million of state credit carryforwards that will expire periodically through 2050 .
In assessing the realizability of deferred tax assets, management considers whether it is “more likely than not” that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers taxable income in carryback years, the scheduled reversal of deferred tax liabilities, tax planning strategies, and projected future taxable income in making this assessment. Due to uncertainties surrounding the realization of some of our deferred tax assets, primarily including state NOL carryforwards sustained during the prior years and expiring tax benefits, we have a valuation allowance against certain deferred tax assets. When recognized, the tax benefits relating to any reversal of this valuation allowance will be recorded as a reduction of income tax expense. There was a decrease in the valuation allowance of $ 3.8 million in 2025 and an increase in the valuation allowance of $ 2.8 million in 2024.
The decrease in the valuation allowance for 2025 was primarily due to expiration of state NOL carryforwards and the related reversal of their valuation allowances, along with a decrease in valuation allowance for state credits that are now expected to be utilized before expiration. The increase in the valuation allowance for 2024 was primarily due to unutilized state NOL and credit carryforwards.
Other . We and our subsidiaries file income tax returns in the U.S. federal jurisdiction and various states and foreign jurisdictions. The Company has various state income tax examinations that are currently in progress. Generally, with few exceptions, the Company’s 2021 and later tax years remain open for examination by the various state taxing authorities.
On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act ("OBBBA"). The OBBBA made permanent key elements of the Tax Cuts and Jobs Act, including 100 % bonus depreciation, domestic research cost expensing, and the business interest expense limitation. ASC 740, “Income Taxes”, requires the effects of changes in tax rates and laws on deferred tax balances to be
Notes Index
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
recognized in the period in which the legislation is enacted. Consequently, as of the date of enactment, the Company evaluated all deferred tax balances under the newly enacted tax law and made all changes required for the year ended December 31, 2025.
We have evaluated the effects of the Global anti-Base Erosion rules set forth by the Organization for Economic Co-Operation and Development, referred to as “Pillar 2,” which establishes a global minimum corporate tax rate of 15 percent. We have (i) determined that Pillar 2 legislation has been enacted in one or more of the jurisdictions in which the Company operates and the Company is within the scope of such legislation, (ii) assessed such enacted legislation and, as applicable, the Transitional Safe Harbor provisions for Pillar 2 that apply, and (iii) determined the impact will be immaterial to our financial results. We intend to file a Qualified Country-by-Country Report for the current year for each jurisdiction in which we intend to rely on the Transitional Country-by-Country Reporting Safe Harbor provisions.
We have gross unrecognized benefits relating to uncertain tax positions. The following table presents a reconciliation of changes in the gross unrecognized tax benefits (in millions of dollars):
Year Ended December 31,
As Adjusted 1
As Adjusted 1
Gross unrecognized tax benefits at beginning of period
Gross increases for tax positions of current year
Gross increases for tax positions of prior years
Gross decreases for tax positions of prior years
Settlements
Gross unrecognized tax benefits at end of period
If and when the $ 7.4 million of gross unrecognized tax benefits at December 31, 2025 are recognized, $ 7.4 million will be reflected in our income tax provision and thus affect the effective tax rate in future periods.
We recognize interest and penalties related to unrecognized tax benefits within the income tax provision. Accrued interest and penalties, if any, are included in Long-term liabilities on our Consolidated Balance Sheets. At December 31, 2025 , we had no accrued interest or penalties related to unrecognized tax benefits. At December 31, 2024 , we had $ 0.1 million accrued for interest and penalties.
We do not expect our gross unrecognized tax benefits to significantly change within the next 12 months.
Notes Index
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
15. Net Inco me Per Share
Basic net income per share is computed by dividing distributed and undistributed net income allocable to common shares by the weighted-average number of common shares outstanding during the applicable period. The basic weighted-average number of common shares outstanding during the period excludes non-vested share-based payment awards. Basic and diluted net income per share was calculated under the two-class method for the years ended December 31, 2025, 2024, and 2023.
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):
Year Ended December 31,
As Adjusted 1
As Adjusted 1
Numerator:
Net income
Less: earnings attributable to participating securities 2
Net income available to common shareholders
Denominator – Weighted-average common shares
outstanding (in thousands):
Basic
Add: dilutive effect of non-vested common shares,
restricted stock units and performance shares 3
Diluted
Net income per common share, Basic
Net income per common share, Diluted
Adjusted to reflect the retrospective change in inventory valuation methodology from LIFO to WAC. See Note 18 for further discussion.
Represents distributed and undistributed earnings allocated to non-vested RSAs that contain non-forfeitable rights to dividends.
Quantities in the following discussion are denoted in wh ole shares. For the years ended December 31, 2025, 2024, and 2023, approximately 200 , 1,100 , and 35,000 shares, respectively, were excluded from the weighted-average diluted shares computation as their inclusion would have been anti-dilutive.
Notes Index
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
16. Supplemental Ca sh Flow Information
Year Ended December 31,
(in millions of dollars)
Interest paid
Non-cash investing and financing activities (included in Accounts payable):
Unpaid purchases of property and equipment
Supplemental lease disclosures:
Operating lease liabilities arising from obtaining operating lease assets
Cash paid for amounts included in the measurement of
operating lease liabilities
Finance lease liabilities arising from obtaining finance lease assets
As of December 31,
(in millions of dollars)
Components of cash, cash equivalents and restricted cash:
Cash and cash equivalents
Restricted cash included in Other assets
Total cash, cash equivalents and restricted cash presented on our Statements
of Consolidated Cash Flows
17. Business, Product and Geographical Ar ea Information and Concentration of Risk
Our primary line of business is the production of semi-fabricated specialty aluminum mill products, such as plate and sheet, bare and coated coils, and extruded and drawn products, primarily used in our Aero/HS Products, Packaging, GE Products, and Automotive Extrusions end markets. We operate production facilities in the United States and Canada. Our Chairman, President and Chief Executive Officer is the chief operating decision maker (“CODM”) who evaluates our business as a single operating segment and makes decisions regarding resource allocations based on Net income. The CODM uses Net income to measure segment profitability in deciding whether to reinvest profits into the segment or into other parts of the entity, such as for acquisitions or to pay dividends.
Notes Index
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table provides the significant segment expenses that are provided to the CODM (in millions of dollars):
Year Ended December 31,
As Adjusted 1
As Adjusted 1
Net sales
Less:
Cost of products sold, excluding depreciation and amortization
Hedged cost of alloyed metal 2
Manufacturing costs 3
Plant overhead 4
Freight costs
Other cost of products sold 5
Depreciation and amortization
Selling, general, administrative, research and development
Research and development costs
Employee costs 6
Other selling, general and administrative costs 7
Restructuring costs
Other operating charges, net
Interest expense
Other income, net – Note 13
Income tax provision
Net income
Adjusted to reflect the retrospective change in inventory valuation methodology from LIFO to WAC. See Note 18 for further discussion.
Hedged cost of alloyed metal includes cost of aluminum at the MWTP and the cost of alloying elements used in the production process. This metric also includes metal price exposure on shipments that we hedged with realized gains (losses) upon settlement of $ 27.0 million , ($ 0.2 ) million , and ($ 21.4 ) million in 2025, 2024, and 2023 , respectively.
Manufacturing costs primarily includes labor, utilities, supplies, metal valuation impacts, metal profits, and other materials, excluding alloys, incurred at our various production facilities.
Plant overhead includes salaried employee costs, property taxes, and insurance associated with our various production facilities.
Other cost of products sold primarily includes accretion expense related to CAROs, gains and losses on operating asset disposals, and major maintenance costs.
Employee costs include indirect labor salaries, benefits, and incentive compensation.
Other selling, general and administrative costs primarily includes professional services, computer hardware and software costs, office rent, and utilities.
Notes Index
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The CODM does not review asset and capital expenditure information by reportable operating segment as such information is presented to the CODM on a consolidated basis.
The following table presents Net sales by end market applications and by timing of control transfer (in millions of dollars):
Year Ended December 31,
Net sales:
Aero/HS Products
Packaging
GE Products
Automotive Extrusions
Other Products 1
Total net sales
Timing of revenue recognition:
Products transferred at a point in time
Products transferred over time
Total net sales
Beginning January 1, 2025, Other Products is combined with GE Products.
The following table presents geographic information for net sales based on country of origin and Property, plant and equipment, net (in millions of dollars):
Year Ended December 31,
Net sales to unaffiliated customers:
Domestic
Foreign 1
Total net sales
As of December 31,
Property, plant and equipment, net:
Domestic
Foreign 1
Total Property, plant and equipment, net
Foreign reflects our London, Ontario production facility.
The aggregate foreign currency transac tion gain (loss) included in determining Net income was $ 0.1 million and ($ 0.3 ) mil lion for 2025 and 2024, respectively. The aggregate foreign currency transaction gain included in determining Net income was immaterial for 2023.
Concentrations. For the years ended December 31, 2025, December 31, 2024, and December 31, 2023 , one customer represent ed 16 %, 16 %, and 18 %, respectively, of Net sales, and a second customer represented 15 %, 15 %, and 16 %, re spectively, of Net sales.
One customer accounted for 21 % and a second customer acco unted for 15 % of the accounts receivable balance at December 31, 2025 . One customer accounted for 17 %, a second customer accounted for 17 %, and a third customer accounted for 15 % of the accounts receivable balance at December 31, 2024.
Notes Index
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table presents information about export sales and primary aluminum supply from our major suppliers:
Year Ended December 31,
Percentage of Net sales:
Export sales
Percentage of total annual primary aluminum supply (lbs):
Supply from our top five major suppliers
Supply from our largest supplier
Supply from our second and third largest suppliers combined
At December 31, 2025 , approximately 65 % of our employees were covered by collective bargaining agreements and 26 % of those employees were covered by collective bargaining agreements with expiration dates occurring within one year from December 31, 2025 .
18. Change in Accounting Principle
Effective January 1, 2025, we changed our inventory valuation methodology for finished products, work-in-process, and raw material inventories from LIFO to WAC. All prior periods presented have been adjusted to apply the new method retrospectively.
Certain financial statement line items in our Statements of Consolidated Income and our Statements of Consolidated Cash Flows for the years ended December 31, 2024 and December 31, 2023, and our Consolidated Balance Sheets and Consolidated Stockholders’ Equity as of December 31, 2024 and December 31, 2023, were retrospectively adjusted as follows (in millions of dollars, except per share amounts):
Notes Index
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As Previously Reported
Effect of WAC Change
As Adjusted
Statements of Consolidated Income (Loss) for the year ended December 31, 2024
Cost of products sold, excluding depreciation and amortization
Operating income
Income tax provision
Net income
Net income per common share:
Basic
Diluted
Statements of Consolidated Income (Loss) for the year ended December 31, 2023
Cost of products sold, excluding depreciation and amortization
Operating income
Income tax provision
Net income
Net income per common share:
Basic
Diluted
Statements of Consolidated Cash Flows for the year ended December 31, 2024
Net income
Deferred income taxes
LIFO valuation inventory expense
Trade and other receivables
Inventories
Accrued liabilities
Net cash provided by operating activities
Statements of Consolidated Cash Flows for the year ended December 31, 2023
Net income
Deferred income taxes
LIFO valuation inventory expense
Inventories
Net cash provided by operating activities
Consolidated Balance Sheet as of December 31, 2024
Receivables, other
Inventories
Deferred tax assets, net
Other accrued liabilities
Deferred tax liabilities
Retained earnings
Consolidated Balance Sheet as of December 31, 2023
Receivables, other
Inventories
Deferred tax assets, net
Deferred tax liabilities
Retained earnings
Notes Index
KAISER ALUMINUM CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table compares the amounts that would have been reported under LIFO with amounts reported under WAC in the Consolidated Financial Statements for the year ended December 31, 2025 (in millions of dollars, except per share amounts):
As Computed (using LIFO)
Effect of Change
As Reported
(using WAC)
Statements of Consolidated Income (Loss) for the year ended December 31, 2025
Cost of products sold, excluding depreciation and amortization
Operating income
Income tax benefit (provision)
Net (loss) income
Net (loss) income per common share:
Basic
Diluted
Statements of Consolidated Cash Flows for the year ended December 31, 2025
Net (loss) income
Deferred income taxes
Trade and other receivables
Inventories
Net cash provided by operating activities
Consolidated Balance Sheet as of December 31, 2025
Receivables, other
Inventories
Deferred tax assets, net
Other accrued liabilities
Deferred tax liabilities
Retained (deficit) earnings
19. Subseq uent Events
Dividend Declaration . On January 13, 2026 , we announced that our Board of Directors declared a quarterly cash dividend of $ 0.77 per common share. As such, we paid approximately $ 12.8 million (including dividend equivalents) on February 13, 2026 to stockholders of record and the holders of certain restricted stock units at the close of business on January 23, 2026 .
