Good day, everyone and welcome to the Kaiser Aluminum Second Quarter 2015 Earnings Conference Call. Today’s call is being recorded. At this time, I would like to turn the presentation over to Melinda Ellsworth, Vice President, Investor Relations and Corporate Communications. Please go ahead.

Thank you. Good afternoon everyone and welcome to Kaiser Aluminum second quarter 2015 earnings conference call. If you’ve not yet seen a copy of our release, please visit the Investor Relations page on our Web site at kaiseraluminum.com. We’ve also posted a PDF version of the slide presentation we are using for this call. Joining me on the call today are Chairman, President and Chief Executive Officer, Jack Hockema; Executive Vice President and Chief Financial Officer, Dan Rinkenberger; and Vice President and Chief Accounting Officer, Neal West. Before we begin, I’d like to refer you to the first two slides of our presentation and remind you that the statements made by management and the information contained in this presentation that constitutes 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 Annual Report on Form 10-K for the full year ended December 31, 2014. 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 have 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 the presentation. Any reference in our discussion today to EBITDA means adjusted EBITDA, which excludes non-run rate items for which we’ve provided reconciliations in the appendix. At the conclusion of the Company’s presentation, we will open the call for questions. I would now like to turn the call over to Jack Hockema. Jack?

Thanks Melinda, welcome to everyone joining us on the call today. Our results for shipments’ value-added revenue and EBITDA were all records for any previous three months, six month or 12 month period and were achieved despite Heat Treat Plate prices significantly below the 2012 and 2013 levels. Strong secular demand growth for our Aerospace and Automotive applications, plus continued improvement in manufacturing cost efficiency drove the record results. Our investments in prior years have focused on capacity quality and efficiency and have enabled us to continue increasing our output to meet growing demand, improve our market position and mitigate the impact of lower Heat Treat Plate prices compared to prior years. Looking more specifically at the major drivers of our results, Commercial Aerospace build rates are continuing at a record pace. In addition, the supply chain inventory overhang that has been slowly abating has now reached the equilibrium. Heat Treat Plate spot prices are slowly improving, while we expect modest improvements in Heat Treat Plate prices continuing into the second half, prices are expected to remain well below the 2012 and 2013 levels which included significant customer payments related to volume commitments. Our Automotive Extrusion content is continuing to expand as we capture and launch new programs for bumpers, chasse and structural components. In addition, as gasoline prices have declined we are benefiting from a shift in customer preference toward content-rich larger vehicles. With increasing content and solid North American build rates, we expect to sustain a strong growth trajectory for our automotive shipments. We also continue to achieve steady improvements in manufacturing cost efficiency and capacity driven by our strategic investments at Trentwood and across our automotive platform. While the quarterly results are noteworthy the six month and 12 month record results are a more meaningful evidence of our improving operating performance, our strong industry position and the positive long-term trend in market dynamics. We continue to envision a long runway for our business. I’ll now turn the call over to Dan for more insight into the results. Dan?

Thanks Jack. As Jack noted and as you can see on Slide 6, total value-added revenue for the second quarter and the first half of 2015 established new records for the Company, reflecting a 7% increase compared to each of the prior year periods. The increase in value-added revenue was largely attributable to a higher volume across our end-market applications and partly due to modest improvements in Heat Treat Plate prices coupled with lower contained metal costs on some higher margin products sold on a spot basis. Aerospace value-added revenue increased 4% in both second quarter and the first half of 2015 relative to the comparable 2014 periods. As Commercial Aircraft deliveries continued to grow and excess supply chain inventories came into balance. Value-added revenue for Automotive Extrusions grew 19% in the second quarter and 18% in the first half of 2015 relative to the comparable periods in 2014, as we launched new automotive programs and continued to ramp-up on existing programs. General and engineering value-added revenue 6% in the second quarter and 5% in the first half of 2015 compared to prior year periods. The increase primarily reflects a favorable product mix modest Heat Treat Plate price improvements and lower contained metal costs. You may recall the prices have decline significantly from the 2012 and 2013 price levels which included sizeable customer payments related to volume commitments. Comparing the first half of 2013 to the first half of this year, the adverse impacted us of lower Heat Treat Plate prices exceeded $15 million. While we expect some modest improvement in spot pricing, we don’t expect to return to those pricing levels of 2012 and 2013. Fortunately, the adverse Heat Treat Plate price impact was more than offset by Aerospace and Automotive volume growth to achieve record value-added revenue in…

Thank Dan. Just a quick comment for the record, the exercise price on the warrants is $60.44 and not 6.44, it is 60.44.

Thank you.

Turning to Slide 9 and our outlook for Aerospace and High Strength applications, the supply chain has reached equilibrium after an extended period with an inventory overhang. Our Heat Treat Plate order book is strong and our lead times for these products now extend into 2016. We continue to anticipate 2015 year-over-year shipments and value-added revenue growth for these applications in the range of 6% to 8% driven by higher commercial airframe build rates, plus the elimination of drag associated with the prior supply chain inventory overhang. In addition we expect modest benefit continuing in the second half for spot market sales of Heat Treat Plate reflecting the improved pricing environment and lower contained metal costs. Regarding Automotive Extrusions, we are raising our outlook for value-added revenue year-over-year growth to 20%, up from our prior estimate of 15%. A key factor driving the improved outlook is the shift in consumer demand toward larger vehicles which have more Kaiser-pounds per vehicle content than smaller models. In addition F-150 production is ramping up as expected. As a consequence, we continue on a strong growth trajectory for Automotive Extrusions with a healthy pipeline of new programs, a favorable mix of vehicles and North American builds projected to reach 17.5 million in 2015. Turning to Slide 10, on our outlook for general engineering applications. As a consequence of tepid first half demand that led the flat year-over-year shipments, we are reducing our expectation for shipments growth in 2015 for general engineering to 2% to 3%, a slight adjustment from the previous outlook for 3% to 4% improvement. In addition, we see evidence of increased import activity for general engineering plate that pertains increased competition for orders in 2016. Turning to Slide 11 and the summary of our outlook. We remain optimistic as we expect…

Thank you. [Operator Instructions] And we will go first to Edward Marshall with Sidoti & Company.

So I guess my question is look margins, EBITDA margins, operating margins whatever, whichever way you want to look at it were really strong, I mean this is what I guess your best quarter I have seen. Can you tell me what the progression here looks like on a go forward basis? I mean it does sound like there's a step down in the second half around some of the maintenance trends. But is this the new run rate as we kind of look into 2016 or was there something exceptional in the quarter. Can you kind of help me walk me through that a little bit?

Well we never put a lot of credence in any individual quarterly numbers the six month numbers are more revealing in terms of what trends are, there is just a lot of volatility in any quarter. As you know we are benefiting from operating leverage from the higher sales, we're getting improved cost efficiency. But as Dan mentioned in the first half we also had $3 million lower major maintenance expense compared to the prior year and typically the first half is lower than the second half of the year. So the margins were inflated. If you look at the full year margin they were inflated by lower major maintenance cost as well and the typical higher sales in the first half of the year than the second half of the year. So no, we are not at, we wouldn’t expect that the second half pace is the pace that we're on for 2015. However, we continue with our outlook that our margins should get into the high-20s as we move forward over the years with an increased operating leverage in sales and with operating efficiencies.

May be I haven’t asked for that definition before. I know you have given high-20s. But when you talk about the EBITDA margin, can we may be break that down as what percentage of that change is going to be relative to the sales volume and what percentage of that change is going to be relative to the operating efficiencies that you have put in -- some of the capacity upgrades you've done over the last couple of years?

We haven’t bifurcated the two that precisely but more of it would be from operating leverage than from cost efficiency but both are significant.

Okay. And then help me understand the boost in the value-added revenue per pound for Automotive? And I am curious is this sustainable at this unusually -- what I consider is an unusually high level for you or is this just some spot market rolling through that boosted that up as we saw higher volume in the larger vehicle?

It is -- whenever Automotive prices change in a short-term unless we signal it, it's because of product mix. And in this case, we are getting some impact as I mentioned it not only as the value-added revenue but also the mix is impacted by the shift toward larger vehicles as we've gotten lower gasoline prices we are -- the industry is selling a lot more trucks, the trucks are more content intensive and in particular in our Automotive product mix the highest value-added revenue per pound comes from drive shaft tubing which is extruded tubing, seamless tubing that's drawn and also it is fabricated and has some assembling to it. So it's a significantly higher price per pound. And with the big increase in truck volume and in particular GM trucks you've seen how much their share if you follow the automotive industry, how much GM trucks were up in the first half, that's driving a lot of that increase in value-added revenue per pound.

So, just to be clear, the drive shaft tubing is related to larger truck vehicles?

Yes.

And, and.

Yes.

Okay.

Yes.

And in particular GM, F-150 as well or no?

[Multiple Speakers] Yes, we are not on the F-150, I believe we are General Motors. For drive shaft yes for drive shafts, on the F-150 we have structural components.

And we will go next to Tony Rizzuto with Cowen & Company.

I've got several questions here. And I guess the first is on China. And how concerned are you about China making further in-roads into the U.S. market in general engineering plate, rod and bar and are you guys seeing what would be tantamount to a flood of Chinese material at this point, are you concerned about that? And if you could also address what the quality of that material might be from other sources, other origin? And just a little bit about how your Kaiser Select product is situated and how that might protect you going forward as well?

Gee, anything else Tony?

There are other questions, that was only part one with elements.

Let me try to speak to each of those, remind me if I miss something here.

No problem.

Let me start with rod and bar that’s the simplest answer. On rod and bar we’re seeing some impact from Chinese imports, but this is not significant. The value-added on those products is so low that it is difficult for them and they’re really dumping and it is not that they’re reverse to dumping, but unless they’re really dumping it is very-very difficult for them to get in-roads in the rod and bar business. So we’re not seeing a significant impact there. In plate we’re seeing a little bit more coming in from China, but frankly our comments were more related to what we’re seeing from South Africa and from Europe where we’ve seen a bigger impact or bigger uptick in imports leading into next year. So that’s really the overall concern. It seems that that actively had abated somewhat in the past year or so and now we see it picking up some. I think I missed another part of your question.

Quality.

Quality, well I won’t speak to others’ quality I would just that that we have demonstrated throughout our product line not only general engineering products but also Aerospace products that Kaiser Select does deliver value to our customers and that significant value that’s orders of magnitude greater than the price increases that we would charge for Kaiser Select. So Kaiser Select positions us well in terms of getting market share and defending our position in the market place.

Okay. That’s great. And I have a question two just a little bit further granularity if you could provide on the 10 day outage at Trentwood I am just trying to get a better feel for the margin impact in trying to think about -- you guys have given some good guidance which we appreciate on VAR growth, but just thinking about margins and partly to Ed’s question about trying to gauge that going forward, obviously you had a great level here and you are strong too back-to-back strong quarters together. Looking at the last half of ’14 a lot of moving parts and it was the relatively low margin, it would be fair to say that the margin in the third quarter should be maybe somewhere in between the first quarter and second quarter this year, or how could you guide us maybe a little bit on that with respect to that.

The only input I’ll give there is, you all have your own estimates of value-added revenue and the consistent presumably with our 7% to 9% outlook for the full year. But in terms of the major maintenance and the cost efficiency impact from that it’s difficult to precisely estimate how much impact we’re going to get from the disruption from a 10 day outage at Trentwood in terms of cost efficiency, but right now we ballpark it in the $7 million to $10 million compared to the first half the combination of inefficiencies around the outage, as well as the increased major maintenance cost second half versus first half.

Okay. That’s very helpful. And then also if I could ask are you expecting any further inefficiencies I know you had inefficiencies last year as you were ramping into new auto platforms and given the way these things come together, are you anticipate any further inefficiencies as we look at the third and fourth quarters this year with new platforms [Multiple Speakers]?

Yes, we got most of the inefficiencies that we experienced were actually in the first quarter. Our second quarter wasn’t quite back to normal but it was close enough to say that it was back to normal in our automotive operations in the second quarter. So, while we’re not through all of it we’re clearly through the worst of it just looking to the numbers here.

Okay. Then alternatively are you guys so you -- and you’ve already worked in I imagine you’ve already worked in that 7% to 9% VAR growth contribution from new platforms as well as you noted today?

Yes. In fact the vis-à-vis the real driver of going from basically the 1% increase in our total value-added revenue outlook is really the change in the mix of vehicles. We’re just getting because of the larger vehicles it’s actually our traditional products that are coming in with stronger sales analog brake systems, the bigger vehicles use larger blocks and so that gives more value-added revenue and they use as in my answer to Ed earlier it uses more drive shaft. So it’s got a big uptake in ABS, Analog Brake Systems and in drive shaft are mature stable products just because of the vehicle mix.

Okay. One more question if I may. We’ve been talking to quite a few people and some people are becoming more -- a lot of people have become more cautious on the economy, but some people have indicated that maybe there is some looseness in different parts of the U.S. economy I’m wondering are you seeing any areas in your book of business, in your end-markets that’s giving you any cause for concern at this point, any change on the margin or any deceleration in any of the end-markets that you’re serving anything to add from that standpoint?

Yes, I changed from cause to concern to is there any reason for optimism and the answer to that is no, we really don’t see anything very positive out there to speak of, even though our shipments were flat year-over-year basically in the first half in general engineering we are still sticking with an uptick in the year but it's not because we are expecting a robust second half, it's only because we are comparing to a really weak second half last year. So we are anticipating that it's still a pretty slow general industrial economy as it relates to our general engineering products.

And we will go next to Timna Tanners of Bank of America.

I feel like I ask this every time but as you keep pointing out you have a really strong balance sheet and I know that you are continuing to pursue buybacks and the dividend is a good level. But just can you update us on how you are seeing opportunities for uses of cash currently? And then I have one follow-up.

I think they are the same as we have been speaking to you for a quite a period of time as we are focusing on our growth through our organic growth. We are looking at opportunities for external growth acquisitions but there is nothing that is of significance, but I think it is considered actionable that we would pursue right now or be concerned of. And then we look at the liquidity of the Company in all aspects including a downward that could potentially happen. And back into what we think is excess cash and that’s what we have been using for share repurchases and dividend well share repurchases anyway. Dividends is kind of an ongoing obligation in our mind.

Okay, and so it sounds like we can, sorry?

There's really no change.

Okay. But with the announcement that you are pursuing Phase 6, I wondered if that was implicit acknowledgment that may be more organic opportunities are interesting. So along those lines in Trentwood, can you remind us, can you give us a little bit more information on what Phase 6 entails, the timing and then update us or remind us on other phases that you talked about, are they still viable and under what conditions do you continue to look at growing Trentwood?

Yes, we haven’t set timing for Phase 6, it just so happens that in this extended outage that we have for preventive maintenance here in the third quarter, we determined that was a good opportunity to do some work that will reduce downtime when we eventually pursue Phase 6. We continue to monitor the market and more importantly monitor what customer needs are from Kaiser to determine when we pull that trigger, we believe that we will pull that trigger at some point, we just haven’t decided when that is. And we also have Phase 7 identified beyond that. So we know the next tranches of capacity and when we do those is really a function of the market and Kaiser's situation with the market. At this point, we continue to stick with what we said earlier in the year that while we are looking at 50 million to 60 million of capital spending this year, over the next five years we are looking at 50 to 75 a year. And if we were to guess right now we will probably be closer to the higher end of that range than the lower end of that range. So we are optimistic that we still have a lot of really good organic growth opportunities, not just at Trentwood, the bulk of the spending this year frankly is in Automotive and we expect to continue to see significant spending capital investments in the Automotive sector as well over the next few years.

Okay. So then just finally on Trentwood, what are you, what are the utilization currently, and just what helps you pull the trigger on those further expansions, do they have to do with demands or they have to do with your margins, what do you expect to be watching for to make that decision? Thanks.

Well, we are well utilized right now with lead times already stretched out into next year and early indications are part of what gives us confidence that the inventory overhang has abated, is that the early indications are that we're looking at a pretty strong order book for Aerospace next year as well. So we continue to monitor those and in terms of what our order book is but also what the total industry situation is as well and what are the long-term prospects for us. And that ultimately is the determination I was really talking to our customers and getting our own view of the market to make a final decision on when we pull the trigger.

And we will go next to Phil Gibbs with KeyBanc Capital Markets.

I had a question for clarification purposes. As you say that the maintenance disruption at Trentwood would be a $7 million to $10 million headwind, second half versus first half and then I think you made some other comment after that as far as other efficiency impacts. I just want to make sure I got those numbers right because they were meaningful?

Yes, good. I am glad you asked a follow-up so I can be clear on what I intend to say here. What I intend to say is that we expect a significant increase in major maintenance spending compared to the first half and that plus whatever disruption that occurs as we do some of this major maintenance and we have some like a 10 day outage at Trentwood, that creates so many efficiencies. We think when we wrap all that together, the total impact second half versus first half is $7 million to $10 million with the bulk of that being just the raw major maintenance spending.

Raw major maintenance that you would had to do anyways or…

Yes.

…relative to, okay.

This is, yes, we had low -- we had unusually low spending in the first half. We're going to have higher spending in the second half. The full year is going to come out basically in line with where we have been for the last three or four years. So it's pretty consistent spending it's just lumpier in the second half, second half is almost always higher than the first half, this year it's even more so.

So $7 million to $10 million is typically what you would spend on major maintenance in a given year, is the way to think about it?

Yes it is, the $7 million to $10 million versus what we spend in the first half brings the full year to what we would typically spend.

Okay. And that's inclusive of some of the things that you are doing at Trentwood, do a debottleneck?

There is no debottlenecking. The major maintenance at Trentwood is all related to just basic mechanical and electrical preventive maintenance and on the stretcher. We have got major work that we are doing on both the large stretcher at Trentwood and on several big pieces of equipment on the hotline. But in addition to, that's not all the major maintenance as usual we have a number of furnish rebuilds in, melt shops around the system. In the second half of the year it's just typical as we get into the lower seasonal demand. In the second half of the year we have more opportunity to take equipment down and do preventive maintenance, that's why we generally spend more in the second half than the first half.

Okay. Because I know you had made some comments about phase making some room for Phase 6, I was curious if that was embedded to that or should we see some more of that spending hit the P&L later this year or early next year?

No the -- I am going to look at the accounting people when I say this to see if they frown. But the bulk of the work that we will do in preparation for Phase 6 would be capitalized rather than expensed. So the expense that we will incur is strictly related to preventive maintenance on equipment.

Okay. I appreciate that clarity. And then the second point, second question I don’t know if I get out of the first one just multi-part. But the 7% to 9% value-added sales growth this year, does that include pricing or is that all volume?

It's everything.

Okay. So pricing is embedded in a lot of it. Okay.

Yes.

And we will go next to Steve Levenson with Stifel.

You talked about the strong order book on Aerospace and I am just curious if that relates more to the increase in build rates coming up on single-aisle planes and a few of the wide bodies or if it's more to do with the unit content?

I think it's more just the build rates in general but the fact that the inventory overhang has abated because that was a major drag on demand for the past couple of years. So it's a, it's a…

I know…

Yes.

Sorry.

It's a combination of, it's a combination of the overhanging abating and then just the general build rates increasing.

Okay. Thanks. And I know you've said there's really never stability people either de-stocking or restocking.

Yes.

So I guess what would it take, is it that there is a lower price, and would that be an impetus for people to add stock or do you think they've sort of figured out where they ought to be and it's going to be a little bit more stable going forwards?

Well I have the concern that you just mentioned. And so I continue to ask the question have we switched? Have we gone from de-stocking to restocking here? At this point we don’t think we're restocking, not all of the mills have the same lead times that a couple of major mills do. So it looks like there is sufficient capacity out there that we shouldn’t have any kind of a panic on the buyers part because what typically creates the restocking is when you get into these longer lead times like we have and then people start saying oh we need to pile on inventory we're not sure we can get supply. We think there's enough industry supply out there to prevent restocking at this point. But these things grow like wild fire sometimes. So we are going to keep a close eye on that.

Okay. Thank you. Last one is I know you showed some products at the air show, and I believe some of them were aluminum lithium products. Can you give us a little detail about that product?

Sure. Our position there remains the same. We are capable on aluminum lithium. We are working on some applications for aluminum lithium with certain customers. So we can produce and supply customers. We continue to monitor the market and if does become a significant market at this point we don’t think it justifies additional investment on our part. But if and when it does, then we would make that move.

[Operator Instructions] It appears there are no further questions at this time. Mr. Hockema I'd like to turn the conference back over to you for any additional or closing remarks.

Okay. Thanks, everyone for joining us on the call today. We had a pretty good first half and look forward to updating you again on our third quarter call in October. Thank you.

That concludes today’s call. Thank you for your participation.