Earnings call transcript: Kaiser Aluminum misses Q3 2026 profit view as shares sink

Kaiser Aluminum missed profit expectations in its Q3 2026 earnings report, while revenue aligned with forecasts. Adjusted earnings per share fell to $1.89 from the $2.37 estimate, a decline of $0.48, or roughly 20.3%. The company's shares dropped by 21.62%, closing at $120.67 compared to a previous closing price of $153.95. Despite revenue reaching $1.21 billion, as forecasted, the disparity lay in profitability.

Kaiser's conversion revenue surged to $439 million, marking a 25% year-over-year increase. Operating income grew to $55 million from $49 million a year earlier, while adjusted operating income reached $56 million, up $7 million. Free cash flow amounted to $72 million for the quarter, with the company anticipating more than $200 million for the full year. Adjusted EBITDA grew by $3 million to $84 million.

The earnings miss was attributed to factors like lower scrap utilization, startup costs related to Roll Coat 4, and planned outages at Bellwood and casting houses. However, the company emphasized that demand remained strong in aerospace, packaging, and general engineering sectors. Conversion revenue per pound improved by 12% year-over-year. Management attributed the profit shortfall to metal price lag and higher input costs.

Investors responded sharply to the earnings report, with shares experiencing a substantial decline. The company maintained a positive outlook, projecting record results for 2026 and raising its free cash flow expectation to exceed $200 million. Despite near-term challenges, Kaiser Aluminum's strong demand outlook and record conversion revenue position it as an investment opportunity, with a stock currently undervalued according to InvestingPro analysis.