1. Kaiser Aluminum Corporation (KALU)
Anthony Sorrentino
Ryan seong
Presented April 27, 2017

2. Real Client Managed Portfolio
Agenda
 Introduction
 Company and its Business
 Macroeconomic Overview and Drivers
 Industry Overview and Analysis
 Financial Analysis
 Competitors 
 Valuations
 Technical Analysis
 Recommendation
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3. Current Portfolio - % Equity by Sector 5 Year Stock Performance
Introduction
Current Portfolio - % Equity by Sector
Equity Snapshot
P/E x
Market Cap $1.51B
52 Week Range $ $96.06
Dividend and Yield (2.58%)
Dividend Growth – 5 Year 14.8%
5 Year Stock Performance
Source: finance.yahoo.com
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4. Company and its Business
Overview
Financial Snapshot
Kaiser Aluminum, Corporation manufactures and sells semi-fabricated specialty aluminum mill products. The company serves the following end market applications
Aerospace and high strength
Automotive extrusions
General engineering products
Other products
The company aims to produce highly engineered mill products with differentiated characteristics that present opportunities for premium pricing and long-term profitable growth.
Revenue Breakdown
Source: 2016 Annual Report
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5. Company and its Business
Manufacturing Processes
Facilities
Flat-Rolling
Ingot as starter material processed through rolling operations (hot or cold)
Heat treatment, and stretch to desired characteristics
Range on tempers (hardness), gauges (thickness), and widths
Extrusion/Drawing
Cast billet heated and placed into extrusion press for two dimensional cross section
Extrusion straightened, cut to length, and aged in ovens
Drawing: reduce wall thickness and improve physical properties (multiple steps)
Metal Price Risk Management
Major Customers
Spot Price
Pass metal price risk through to customers
Higher value add products: Lag in the pass-through price
Index-Based Price
Incorporates a monthly index-based price for primary aluminum
Pass metal price risk through to customers
Firm-Price
Commitment to volumes and timing creates metal price risk
Limit the exposure using third party hedging instruments
Source: investors.kaiseraluminum.com/events.cfm
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6. Aircraft and Automotive Applications
Source: investors.kaiseraluminum.com/events.cfm
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7. Real Client Managed Portfolio
Focus on technically challenging applications - differentiated products - and use core competencies for premium pricing
Reduce cost structure and improve long-term competitive position
Increase capacity of manufacturing plants and effectively improve quality
Hedging programs to remain price neutral in aluminum prices
Retain long-standing relationships with customers (50% Manufacturers,50% Service Centers)
Strategy
Spokane, Washington; London, Ontario; Sherman, Texas
Source: 2016 Annual Report
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8. Macroeconomic Overview and Drivers
Source: ibisworld.com
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9. Macroeconomic Overview
Biggest drivers that we considered when making our forecasts
Source: investors.kaiseraluminum.com/events.cfm
Finance 418

10. Industry Overview (Porter's 5 Forces)
Entry Barriers
Barriers to Entry (High)
Capital intensity
Specialized workforce
Price volatility
Industry Rivalry (High)
International competition (Canada, China, and Russia)
Compete on price, quality, and operating efficiency 
Buyer Power (High)
Price competition
High volume orders and assumed price risk
Supplier’s Bargaining Power
Industry
Rivalry
Buyer’s Bargaining Power
Supplier Power (High)
Concentrated mining industry
Dependent on electric or hydro power for aluminum smelting
Threat of Substitute (Low)
Based on the industry of demand
Aerospace
Car manufacturing
Packaging
Threat of Substitute
Source: ibisworld.com
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11. Real Client Managed Portfolio
Financial Analysis
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12. Real Client Managed Portfolio
Financial Analysis
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13. Real Client Managed Portfolio
Valuations
Excel
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14. Technical Analysis – Stock Price
Source: finance.yahoo.com
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15. Technical Analysis – Bond Price
Senior Unsecured Semi-Annual Bond
Issue Date 8/23/2016
Maturity Date 5/15/2024
Original Offering *$375,000
Coupon Rate %
Current Yield 4.64%
Moody’s Rating Ba3
S&P Rating BB
*$ Thousands
Source: finra-markets.morningstar.com
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16. Real Client Managed Portfolio
Recommendation
Market leader in quality value added aluminum products
High gross margin and EBITDA margin 
Capital investments to protect core competencies
Strengths
Aluminum price/hedge risk
Reliance on a select number of customers
High industry and company risk
Weaknesses
Recommendation: Watch List
DCF Valuation: $78.22
Weight:70% 
Comparable Valuation: $89.96
Weight:30% 
Implied Price: $81.74
Real Client Managed Portfolio