Good day, and welcome to the Kaiser Aluminum First Quarter 2012 Earnings Conference Call. Just a reminder, today’s conference is being recorded. I would now like to turn the conference over to your host, Ms. Melinda Ellsworth. Please go ahead.

Thank you. Good afternoon, everyone, and welcome to Kaiser Aluminum’s first quarter 2012 earnings conference call. If you have not seen a copy of today’s earnings release, please visit the Investor Relations page on our website at kaiseraluminum.com. We have also posted a PDF version of the slide presentation for this call. Joining me on the today are Chairman, President, Chief Executive Officer, Jack Hockema; Senior Vice President and Chief Financial Officer, Dan Rinkenberger; and Vice President, Chief Accounting Officer, Neal West. Before we begin, I’d like to refer you to the first 2 slides of our presentation and remind you that the statements made by management and the information contained in this presentation that constitute forward-looking statements are based on management’s current expectations. For a summary of specific risk factors that could cause results to differ materially from those expressed in the forward-looking statements. Please refer to the company’s earnings release and reports filed with the Securities and Exchange Commission; including the company’s Form 10-K for the full year ended December 31, 2011. The Company undertakes no duty to update any forward-looking statements to conform the statement to actual results or changes in the company’s expectations. In addition, we’ve included non-GAAP financial information in our discussion, reconciliations to the most comparable GAAP financial measures are included in the earnings release and in the appendix of this presentation. At the conclusion of the company’s presentation, we will open the call for questions. I’d now like to turn the call over to Jack Hockema. Jack?

Thanks, Melinda. Welcome to everyone joining us on the call today. We were very pleased with our first quarter financial results in which we saw records for value- added revenue, adjusted EBITDA and EBITDA margin driven by higher volume and improved pricing. The higher volume was enabled by a number of factors including strong aerospace demand, improving automotive, and industrial demand, service center restocking, seasonal demand strength and good throughput execution in our plants. We also benefited from a better pricing environment compared to bottom of the cycle prices experienced in 2011 and lower contained metal costs provided an additional boost for our high value-added products. The first quarter results were a step change and reinforce the growth potential for our platform to achieve annual value-added revenue and EBITDA margins well beyond $800 million and 20% respectively under normal market conditions. In addition to this growth potential, our platform is well positioned for further expansion to meet future demand growth and we are currently in the process of expanding our capacity to 2 of our aerospace facilities. we will begin ramping up additional capacity in the second quarter for aerospace extrusions at our Alexco plant in Chandler, Arizona and should the need rise for more aerospace extrusion capacity, we can respond with additional capital efficient expansion. At Trentwood, we are installing Phase 4 of the expansion of heat treat plate capacity that will begin ramping up in 2013. Beyond Phase 4, we have defined a Phase 5 expansion and we will be ready to initiate that phase when additional capacity is required to meet the needs of our customers. In addition, we envision Trentwood expansions beyond phases 4 and 5 consistent with our expectation for a significant long-term heat treat plate demand growth. While aerospace is an important driver and…

Good morning. Slide 6 shows the quarterly and annual trends in value-added revenue which represents our net sales minus the hedged cost of alloyed metal. The first quarter 2012 showed a step change in our total value-added revenue, setting a new quarterly record for the company and establishing new records of value-added revenue for both aerospace and high strength applications and our automotive extrusions. Reviewing each of our end market applications, aerospace and the high-strength value-added revenue in the first quarter increased 15% on a sequential basis and 35% compared to the first quarter of 2011. Strong demand, coupled with strong execution in our facilities drove higher shipments across virtually all aerospace products. In addition, we benefited from a more favorable pricing environment in the first quarter of 2012. Value-added revenue for automotive extrusions increased 37% sequentially and 22% compared to the first quarter of 2011, reflecting higher light vehicle build rates, further increases in Kaiser contents per vehicle as we supply additional automotive aluminum extrusion programs and a normal seasonal up tick from the fourth quarter. A stronger mix in the fourth quarter, as well as improved pricing on certain products led to higher average value-added revenue per pound for automotive extrusions. Value-added revenue for general engineering products reflected normal seasonal strength, service that are restocking and the slow, but steady growth in underlying industrial demand. As a result, first quarter value-added revenue improved 20% sequentially and 9% compared to the first quarter of 2011. Further detail in value-added revenue by sales application can be found in the appendix on slides 20 and 21. Slide 7 shows adjusted consolidated EBITDA, which for the first quarter was also a step change compared to prior periods. At $44 million, first quarter adjusted consolidated EBITDA was a 45% sequential improvement and nearly…

Thanks, Dan. Turning to Slide 10, we continue to experience and to expect robust long-term aerospace demand growth for our products driven by a very large order backlog for commercial airframe manufacturers steadily increasing build rates, larger airframes and continued conversion to monolithic design. While we expect the very strong demand to continue in the second quarter, we do not expect our value-added revenue to keep pace with the first quarter level, as Trentwood's throughput will be inhibited by planned outages on key equipment related to the Phase IV capacity expansion project. Most of the production eruptions related to the Trentwood expansion should be completed by the end of the second quarter and we expect the new capacity to begin ramping up in 2013. Turning to Slide 11, our value-added revenue for custom automotive extrusions was at a record level in the first quarter as a result of growing build rates and increasing aluminum extrusion content per vehicle. We expect this record pace to continue with industry analysts becoming increasingly optimistic regarding the short and intermediate term automotive build rate forecast. The most recent consensus forecast has the 2012 build rate at 14.2 million vehicles, up approximately 12% from last year and the longer-term forecast has build rates returning to more than 16 million vehicles in the middle of the decade. In addition, the need for improved fuel economy continues to drive increasing aluminum extrusion content on vehicles. As a result of these positive trends we remain very bullish about our automotive growth potential over the next several years. Turning our attention to general engineering applications, wheel demand continues to reflect a very slow, but steady recovery in the general industrial economy. While our first quarter demand included benefit from service center restocking to replenish inventories following several quarters of…

[Operator Instructions] And the first question comes from Timna Tanners with Bank of America.

Just wanted to ask so, strong quarter, and I guess you touched on this already that sustainability of it. You’ve hinted that may not be sustainable throughout the year and you talked about the restocking that may not continuing to Q2 and Trentwood. But is there anything else that you can tell us about trends in the industry that can help us get a sense of how sustainable the very strong first quarter was?

Sure, I’d be glad to Timna. Let me just take it sector-by-sector. From an aerospace standpoint, we expect very strong demand throughout the full-year and frankly we think that the second quarter would be very similar to the first quarter. Were it not for a little bit of destocking that will affect, but primarily the equipment outages that we’ll experience at Trentwood. Then we’ll see a little bit of seasonality in the second half that’s typical is more pronounced in automotive and GE, but we do get some seasonality especially in some of the long products in aerospace. But in summary, we think aerospace is going to be a very, very strong throughout the year and continuing into future years. Similarly with automotive, demand is very strong if these build rate forecast hold-up, which we expect that they will 147 build rate. We’ll see very strong shipments throughout the year with again expecting normal seasonality in the second half of the year. And then general engineering did have impact from restocking in the first quarter. We think we’ll see a little bit of destocking and are seeing some already in the second quarter, but - and then we expect that we’ll see normal seasonality in the second half of the year. So we’re really expecting with normal seasonality and then the aberration of a little dip, because of their Trentwood equipment outage in the second quarter. We expect very strong results through the year.

Okay. And then I didn’t understand you talked about Trentwood ramping up in 2013. If the second half is slower, why not take Trentwood down in H2 or is it starting to ramp up already in the second half as well?

Trentwood will be strong throughout the year. I said the only thing that will happen in H2 from a demand standpoint there is an aerospace, there is some seasonality impact most of that is related to long products rather than flat-rolled products.

Okay, what I meant with your outage you talked about how the ramp up for 2013 with the ramp up in the new capacity wouldn’t be until 2013?

Yes.

So, will there be any evidence of the new capacity in the second half?

A little bit of a good start coming on late in the second half, but the biggest impact will be at 2013.

Okay. And then if I could have a final question. I didn’t hear you mentioned of Kalamazoo. So I just wondered if there was any updates perhaps on the progress of that facility or how it’s doing?

Sure, Kalamazoo continues to make good solid, steady progress and I’d say we’re maybe 6 to 9 months behind the schedule we originally anticipated going back a year and a half or so. But we’re making good progress there. They had a lot of benefit in the first quarter from heavy restocking in their applications. We’re seeing some of the destocking there. So really at Kalamazoo, the biggest factor at this point is the very anemic recovery that we’ve seen in the general industrial economy. I mean we’re seeing slow and steady growth, but we’re barely at 2004 level in terms of the cycle. We’re 15% or 20% where we should be in terms of normal demand, below normal demand.

And next question comes from Steve Levenson with Stifel, Nicolaus.

We’ve seen a pretty steady climb in the value-added revenue per pound for aerospace material as well as others. But is there a limit on it you think, as it tried to capacity and utilization or is it more just related to general demand and the type of product you’re delivering?

Some of what you see that’s for aerospace and high strength products, there is a lot of mix involved there. So there are going to bee can be mix changes that influence that; but that being said, we have seen a steady improvement in our pricing on aerospace products really since the prices bottomed out in the first quarter of last year. So there’s been good steady improvement. We think they’re continues to be good pricing power in those in products and we think there is still room to grow. We don’t think we’ll get anywhere near where we were in the very abnormal favorable conditions we had in ‘07 and ’08, but we think there still is plenty of upside for pricing growth as we go through the full aerospace cycle here.

And I know you said you’ve got expansions beyond Phase V planned. Is that pretty much all to meet demand or is any of that being built just speculatively?

Yes, well, let me take a step back. We are installing Phase IV now and I know I went through it fairly quickly in our prepared remarks here. But what I said in remarks is that we already envision Phase V. So when the customer needs are such that we see the need to implement that next expansion we will do so and we anticipate with the long-term growth that we see in aerospace that will need to expand beyond the current Phase IV and the envisioned Phase V and we already have Phase VI and VII being developed looking out to 2, 3, 4, 5 years whenever that occurs that our customers need us to install more capacity. So it may be somewhat speculative, but we will only pull the trigger when we see a very clearly need in the marketplace for that capacity.

And in relation to autos, are you seeing the increases coming from more content from domestic builders? Would you see foreign automakers who now have U.S. or North American plants showing up to buy materials too?

Both, but the biggest change in behavior is in the domestic manufacturers. The foreign manufacturers both Japan and Europe have been far advanced over the U.S. in converting steel and iron applications to aluminum applications. And it’s really the domestic industry that’s catching up. So we’re seeing a lot more content growth in the domestic manufacturers, and a lot has already been there in the foreign manufacturers.

And moving on to our next question from Lloyd O’Carroll with Davenport.

Within value-added revenue for aerospace and high strength, are some products up more than others or are they essentially throughout the same?

No, there are a million stories in the Naked City there. The biggest change that we’ve seen in the last 3 to 6 months frankly has been in our sheet products. We’ve seen a lot of price growth there. And in most of the rest of the sectors over the last 3 or 4 quarters, it’s been relatively steady growth a few cents at a time, but we’ve really seen the step change in the sheet portion.

I was thinking volume growth?

Oh, volume, I thought you said price.

Yes, yes, I meant to say volume, but I’ll take price too.

Volume is across the board as well. We’re running strong in virtually all the categories. I’m just thinking of the top of my head without looking at the numbers here, but virtually every product line is doing better and is up substantially.

Okay, within zero engineering some feel for extrusions versus general engineering [price], any other sort of deconstruction? Again volume and/or price?

Well, when we look at the real service center demand on rod and bar, how much the service centers are shipping. As I’ve said an answer to one of the other questions there, the service centers are basically at a 2004 pace. Right now, we got a boost in the first half in fact the restocking in rod and bar in the first quarter I mean. Restocking in rod and bar actually was the second highest quarter that we’ve seen since 2001. So there was a lot of rod and bar destocking. Some of that was cold finish, but most of it was extruded rod and bar. So we saw significant restocking there and some improvement in real demand. Sheet and plate has been pretty steady, it’s growing slowly, but not as markedly as the restocking impact that we saw on rod and bar.

Okay. Are you seeing much in the way of imports into the markets of general engineering plates?

Well, I wouldn’t say that there is more than what we’ve seen, but there is a lot there from an import standpoint in general engineering. So yes, that is a factor in that market and while we’ve seen some improvement in prices and their reasonable I guess at this stage of the cycle we think that there should be more price potential in those products, but there is a lot of import pressure.

Yes. You’re speaking or worrying a little bit about European mills and the ever present South Africa?

Yes, exactly. South Africa is a big presence and we’ve seen more presence from Europe here in the past few months.

And the next question will come from Phil Gibbs with KeyBanc Capital Markets.

Jack, can you describe the commentary around lower contained metal costs. It’s always tough for us to differentiate between that, because there's -- I know you try to lock in that value-added revenue on a per pound basis, but any sense of how much that may have benefited you in the quarter?

Yes, well it depends what you compared to. But if you compare to where we were in the fourth quarter, the metal prices were similar. They’re lower than where they were when we got hammered. If you remember, a year ago first quarter we were complaining about how much we got squeezed. Part of the pricing improvement that we’ve seen over the past 4 quarters really has been that there’s been some regression in the contained metal cost and on our high - many of our high value-added products; we don’t move prices directly with metal as we do on some of the lower value-added. So there is some impact in there, but it’s hard to measure how much that would have been. It’s been a steady improvement over the last 4 quarters.

So in that view, you call it strong end demand for you and relatively subdued. Your LME is a good environment as far as that relationship?

Slow, steady declines in the LME are good for us.

Okay. That's what I was getting that. As the volatility in the service center order entry over the last 3, 4 months surprised you and at all?

To some extent, the restock, we expected some restocking in the first quarter, but it was greater than what we anticipated in the first quarter. And so, the destocking that we’re seeing isn’t a surprise, but the reports I’m getting from the field really all around the country, and virtually all service centers that our people are talking to, indicate they’ve seen a decline in their orders over the last 3 or 4 weeks, and then we're seeing - we know that some of the service centers are also destocking. So we're getting a little bit of the reverse effect here early in the second quarter, but it's still very early, it's difficult to determine how it will turn out in the second quarter.

Okay. And I'd just add a couple more if I could.

Sure.

The more favorable pricing environment you talked about in the release, I know it's already been discussed on the call in the aerospace side. It looks like GE pricing still relatively weak. Automotive, have you seen a pickup in contract pricing there with your customers giving the demand?

Well, let me go back to the GE plate pricing, I wouldn't characterize it as weak. What I think I said in answer to that question earlier is that it’s about where it should be maybe a little bit less than what we would expect at this phase of the economic cycle, there is the business cycle. And we think there’s room for improvement there, but it could be better, but it's not really weak, it's not terrible substantially from where we were first quarter a year ago.

Okay.

Automotive, most of those contracts are 3-year contracts, and we haven't seen substantial changes in terms of our longer-term contracts there.

Okay. And in your equipment plannned now at Trentwood in the second quarter, anyway to quantify that impact on a linked quarter basis. I mean are we be talking $3 million, $4 million something like that as far as an impact on the business?

In terms of the value added revenue, it’s probably in the 3% to 5% in terms of the total for the company. it probably has an impact of 3% to 5% versus the first quarter.

Okay. I was just thinking more along the lines of your overhead absorption and the cost of you may be running through, not absorbing.

Yes.

Because of the downtime, because you just characterized it in value-added revenue not cost impact.

Yes. It will have the incremental margin impact on that 3% to 5% decline in value-added revenue.

And the next question is from Edward Marshall with Sidoti & Company.

Hey, quick question. The outages that you're talking about hitting kind of as we move forward into the later quarters, do you think there is any pull forward from future demand as customers are kind of wanting to get the metal before you have outages or is it not outages to that point?

No. Our order book at Trentwood from an aerospace standpoint especially on plate is pretty clear with both our OEM customers as well as our service center customers. So we don't see any pull ahead there, and frankly, we've been running pretty much as much throughput as we can get through there in the last 3 or 4 months. So there hasn't been a lot of pull forward in the aerospace plate. we'll have this outage and frankly, we had some of the interference from the capacity expansion in the first quarter. So have we not been expanding, we probably could have had a little more throughput even in the first quarter than we did. So we'll have a dip here in the second quarter related to the outage, but then we think it will be pretty much clear sailing with the existing capacity through the second half of the year and then begin ramping up in 2013 with the incremental capacity expansion, if that clarifies it.

Sure. When I look at Kalamazoo, and you gave some good commentary on it already, but I was wondering, if we can quantify the EBITDA margin contribution there, incremental I guess, change due to Kalamazoo either, and I imagine it's going to be larger year-over-year. But I was thinking more sequentially from the fourth quarter to the first quarter, and how much of that improvement that we actually saw show up on the EBITDA line.

I'm not going to get that granular in terms of the EBITDA. We're making steady improvement at Kalamazoo. Fourth quarter is a very weak quarter in terms of seasonal demand for -- because virtually everything that Kalamazoo produces goes to service centers. So that fourth quarter is always a really weak quarter and then we see stronger demand in the first quarter, and then that got further exacerbated by the restocking. So there was a fairly significant swing in value-added revenue and I go back to the same answer that we've given many times. It doesn't matter that much what product it is in terms of value-added revenue dollars are incremental contributions virtually the same throughout our mix of products. So it's really just a function of the change in volume quarter-to-quarter and that will fluctuate up and down.

One of the things that really sticks out as I look through, I guess it’s page 20 of the appendix, the automotive extrusion value-added revenue per pound, is that mix, I don’t know if we address that yet. It's $0.94 versus $0.80 in the sequential...

Yes. I commented in my comments that it was both mix and also some price improvement in a few of the products.

Okay. And I mean that's the highest we've seen in, I don’t know and maybe even ever, but is that a sustainable level?

It’s probably not at that level, because the mix would probably change a little adversely as we continue through the year. But it will probably be higher than where it had been historically.

Trending higher, good. And remind me you grow faster than the automotive build rate. What is that rate?

What is the build rate?

I know what the built rate is, but you grow faster than the build rate, there's a little bit of additional, let’s say the standards moving in your favor. So you're going to grow faster than the overall build rate as you, let's call it take share, so to speak from other heavier components. What is that rate, I mean did you go 1.2X, 1.3X a build rate something like that?

Over the last 10 or 11 years, our compound annual growth rate in terms of dollar content per vehicle has been growing at roughly an 8% rate.

Okay.

So it'll be the 1.08 if we continue that pace in terms of our content. Industry content has been growing 4% order magnitude, we’ve been growing 8% order magnitude.

Perfect, thanks guys.

Hey, let me correct one other comment, somebody asked me the question about automotive contracts. Generally, we've seen no change in pricing there. We did have one contract on a specific application where we did have some price improvement that did take affect in the first quarter. So that did have a little bit of impact on our results.

And the next question comes from Tony Rizutto with Dahlman Rose.

I got a couple of questions here. First, I wanted to make sure with regard to the outage at Trentwood. Are there any other planned outages overall in the company for the remainder of the year outside of the Phase IV?

Well, there are always major maintenance items going on those kinds of things. But there is nothing that I know that will have a material impact like this struck with outage well.

All right. And even with that, Jack, it sounds like you're not really looking for any substantial operational disruption or anything of that magnitude.

No, no. This is actually a furnace would just be down; we’re extending one of the furnaces, adding a couple of zones. So it will be down for a few weeks while we put those new zones in service on that furnace.

All right, great. And I'm also trying to get a better handle. You made the comments, I think you made the comment that you are also looking for the second quarter to be a step change although you indicated because of what's going on would likely be lower. But you also said that step change in the first quarter versus year-ago and that was up 91%. So how are we just to try to not read too much into it, but to get a better sense in looking at 2Q with the step change and looking at a year ago?

Yes. That's a good question. What I was trying to communicate with those comments is that second quarter is not going to be as strong as the first quarter in part; because of the Trentwood outage, which is a planned outage.

Right.

So that’s explained, it has nothing to do with the marketplace. And then we don't think we're going to have in fact, we're pretty certain we’re not going to have the restocking benefit, service center restocking benefit that we had in the first quarter, have that in the second quarter. So it will be a little bit of a decline, second quarter compared to first quarter, but if you look at the second quarter of ‘12 versus the second quarter of ’11, that's going to be a step change. So really, we see a very, very strong second quarter and if we didn’t have the outage at Trentwood frankly, we’d be talking about a minor change in value-added revenue quarter- to-quarter and probably be looking at similar results, maybe a little bit weaker in the second quarter than the first, but very similar results in the second quarter.

That's very helpful. I appreciate that, and then one further question if I may. I felt that comments you made about general engineering, the second strongest quarter since 2001 and granted some of that was restocking. but that’s a pretty powerful statement, and I'm wondering which end markets are -- do you think that are really driving that strengthening trend there. And then the question about, yes, and then further on that just imports, just a rough idea of how much imports we’re taking of end market at present.

Okay, good. I’m glad you asked, because apparently my answer on rod and bar wasn’t clear. When I said the second best quarter is since 2001 that was the amount of inventory restocking. So it was the heaviest restocking by service centers of rod and bar, second heaviest, there is only one other quarter since 2001 that had more restocking than that. But the real demand what service center shift, what they’re shipping at right now is around the 2004 pace. So the general industrial economy continues to be very anemic. But as far as I'm concerned, we’re a couple of years or a year and a half behind where we should be in this economic recovery or more demand should be 10% or 15% higher in rod and bar than it is right now if we were having anything close to a normal recovery.

Okay. And just generally on the imports?

Yes. From an import standpoint, I don't have the share numbers at my fingertips, but we are the largest domestic supplier by a significant amount in terms of general engineering. The imports have become a significant portion of that share, most of the domestic mills going back even 6 or 7 years since the aerospace plate impact took over. There has been very little domestic supply other than Kaiser in terms of general engineering. So the imports have a significant portion of the share there and have had for going back to the ‘04, ‘05, ‘06 timeframe when we got into the global plate shortage.

And the next question comes from Phil Gibbs with KeyBanc Capital Markets.

Hi, Jack, just had a quick question about the other shipments meeting the billet or maybe some of the other lower value products that you sell. Should we expect you to continue to be moving away from that as automotive gets more visible and stronger going forward?

We are not just automotive, but in general although automotive has an impact there. But yes, as the general industrial economy picks up more rod and bar and more automotive, you’ll see those continue to decline.

Okay. And then just real quick natural gas obviously is in the tank, which is good for this country as producers, at this point, but I know you had some of that locked up in hedges. When -- is there a point where we will see an appreciable kind of incremental benefit from lower costs here on the natural gas side?

It will take a while, because we do have the - probably 70 or greater percent of our 2012 requirements already in locked-in positions that were put in place, probably unbalanced a year ago. And probably about half of our 2013 is also locked up. So we’re going to be lagging improvement that you would see in the spot market just because of the practice that we had in making sure that we’ve insured our reasonable price on gas.

And that does conclude the question-and-answer session; I will now turn the conference back over to Mr. Hockema for any additional or closing remarks.

Okay, thanks everyone for joining us on the call today and we look forward to updating you again on our second quarter call in July. Thank you.

Thank you. And that does conclude today’s conference you can find the webcast archive at Kaiser Aluminum’s investor relations website. The website address is investors.kaiseraluminum.com. Again thank you for your patience today and that does conclude the call.