Melinda C. Elsworth – Vice President and Treasurer Jack A.

Hockema – President and Chief Executive Officer Daniel J. Rinkenberger – Executive Vice President and Chief Financial Officer

Tony B. Rizzuto – Cowen & Co.

LLC Sal Tharani – Goldman Sachs & Co Timna B. Tanners – Bank of America Merrill Lynch Edward Marshall – Sidoti & Co.

LLC Josh W. Sullivan – Sterne, Agee & Leach, Inc.

Brian P. Ossenbeck – JP Morgan Securities LLC Stephen E.

Levenson – Stifel, Nicolaus & Co., Inc Philip N. Gibbs – KeyBanc Capital Markets, Inc.

Thank you. Good afternoon everyone and welcome to Kaiser Aluminum’s second quarter 2014 earnings conference call.

If you’ve not seen a copy of our 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 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 would 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 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 earnings presentation and our most recent 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, 2013. 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 also provided reconciliation from 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.

With strong second quarter EBITDA of $46 million and 24% margin driven by another record quarter of shipments for both heat treat plate and automotive extrusions and improving manufacturing efficiency up 10% compared to the run rate of the prior three quarters. Even though, we’re in the early stages of implementing the Phase 5 expansion at Trentwood, the throughput and efficiency gains from this investment are exceeding our expectations and were an important contributor to the second quarter results.

With the disruption from Trentwood’s construction activities behind us following completion and start-up of the new casting complex in June and with additional potential for gains from investments made across our platform in recent years. We expect to realize continued improvement in manufacturing efficiencies throughout the remainder of 2014 and beyond.

Looking forward, we continue to anticipate full year results similar to 2012 and 2013 as improved manufacturing efficiencies and increased shipments are expected to offset the impact from lower heat treat plate prices compared to prior years. On that note, I’ll turn the call over to Dan for further discussion of the second quarter results and then I’ll provide additional comments regarding our near-term outlook.

Dan.

Thanks, Jack. Turning to Slide 6, total value added revenue in the second quarter grew 3% compared to the second quarter of 2013, as we continue to ramp up automotive extrusion programs to record levels and shipped record pounds of heat treat plate.

Automotive extrusion value added revenue in the second quarter was up 59% over the prior year quarter. Aerospace value added revenue in the second quarter also improved slightly over the prior year, as lower pricing for most products was more than offset by higher volume of aerospace shipment volumes.

With our manufacturing efficiency in the second quarter running at phase favorable to the second quarter of last year. EBITDA increased $2 million year-over-year and our second quarter EBITDA margin improved to 24.4%.

On a sequential basis, second quarter value added revenue and value added per pound both increased 2% compared to the first quarter due to a slight shift in mix. As increased aerospace and automotive shipments offset reduction in general engineering shipments.

More dramatically second quarter EBITDA improved $10 million to $46 million and EBITDA margin improved from 19.7% to 24.4%, primarily due to improved cost. As expected the $5 million of weather related energy costs and benefits accruals highlighted in the first quarter earnings call were not repeated in the second quarter.

More importantly as Jack previously noted, we began to realize throughput and efficiency gains from our investments particularly from the Phase 5 plate expansion at Trentwood. These efficiency gains contributed approximately $5 million in the second quarter compared to the first quarter.

And with our casting complex at Trentwood ramping up, we expected Trentwood will further throughput in efficiency gains as we move into the second half of this year. On Slide 7, we review our first half 2014 performance.

Our total value-added revenue in the first half of 2014 was $375 million, which was a slight improvement over the prior year. Underline this improvement however was 55% increase in automotive extruded value-added revenue, which more than offset year-over-year decline in aerospace value-added revenue.

As anticipate EBITDA in the first half of 2014 of $83 million was comparable to the last half of 2013, however was a decline of $9 million from the first half of 2013. This year-over-year decline was driven by several factors.

The prior year period benefited from a $4.5 million aerospace customer contract payment. Additionally, planned to major maintenance expenses was $3 million higher in the first half of this year compared to last year.

And as you may recall from last quarter’s earnings call we incurred approximately $2 million of incremental whether related energy costs in the first quarter which also contributed to the lower EBITDA in the first half of this year. These factors also accounted for the decline of EBITDA margin to 22% in the first half of 2014.

However as demonstrated by the sequential improvement in the second quarter, we expect our EBITDA margin to improve in the second half of this year as additional throughput and efficiency gains from our recent investments at Trentwood are realized. On Slide 8, we show key consolidated financial metrics.

Consolidated operating income as reported was $46 million in the second quarter, which included $8 billion of non-run rate gains. Adjusting for non-run rate items, consolidated operating income was $39 million in the second quarter up $2 million from the prior year quarter and $10 million from the first quarter of this year.

By earlier discussion of quarterly EBITDA comparisons also applies to adjusted operating income. For the first half of 2014, consolidated operating income as reported of $79 million included $11 million of non-run rate gains.

Adjusted for these non-run rate gains, first half consolidated operating income was $68 million, which was down $10 million from the first half of 2013. In addition to the items that are previously discussed with respect to EBITDA the decline in adjusted operating income reflected $1 million of additional depreciation expense in the 2014 period.

Reported net income for the second quarter was $25 million or $1.33 per diluted share. For the first six months of 2014, reported net income was $40 million or earning per diluted share of $2.18.

Adjusting for non-run rate items net income was $19 million for the second quarter and $33 million for the first six months or adjusted earnings per diluted share of $1.05 for the quarter and $1.76 for the first six months. While our effective tax rate was 37% for both the second quarter and the first half of 2014 we continue to apply our net operating loss carry forwards resulting in the cash tax rate in the low single-digit percentages.

Capital spending in the first half of 2014 totaled $30 million and we continue to expect capital spending for the year will be between $50 million and $60 million. During the first six months of 2014 we repurchased nearly 350,000 shares of our common stock for $24 million and we paid $13 million in quarterly dividends.

Liquidity, remain strong as of June 30, with cash and short-term investments exceeding $300 million and revolving credit availability up over $250 million. And now, Jack will discuss current industry trends in the business outlook.

Jack?

Thanks, Dan. Turning to Slide 9, and discussion of our aerospace and high-strength products, despite strong underlying demand and a robust long-term outlook actually demand continues to reflect destocking related to excess supply chain inventory.

For aerospace plate and extrusions, we expect that the inventory overhang will extend into 2015. For other aerospace products we are continuing to experience modestly improving demand and the supply chain is slowly coming into balance.

Overall for these applications we anticipate slowly improving demand as the inventory overhang continues to restrain actual demand below real demand level. Turning to Slide 10, on the automotive outlook we expect that second half value added revenue for these products will be similar to the record first half Phase as we anticipate that lower seasonal build rates will be offset by growing content from new product launches of crash management systems and structural applications.

Beyond 2014, we expect these positive trends to continue with steady long-term growth in content per vehicle as we launched new programs already booked for 2015 and further capitalize on a strong and growing pipeline of opportunities for new automotive extrusion programs. Slide 11, addresses the outlook for general engineering applications consistent with prior years, we anticipate normal seasonal demand weakness for general engineering and industrial applications in the second half.

Slide 12, Summarizes the short-term outlook, we have strong momentum headed into the second half with three consecutive quarters of record heat treat plate shipments, record automotive extrusion shipments in each of the first two quarters of 2014 and record dollar per vehicle content up 30% in the first half compared to the record 2013 level, the Phase 5 Trentwood expansion project already exceeding our throughput inefficiency expectations and our new casting complex at Trentwood ramping up production. Overall, we expected second half value added revenue, EBITDA and margin will be favorable to the prior year second half and then full year results will be similar to 2012 and 2013.

Summarizing our remarks today, our strong second quarter results were driven by record heat treat plate and automotive extrusion shipments along with improving manufacturing efficiencies as we begin to realize the benefits of our most recent Trentwood investments. We anticipate further improvement in manufacturing efficiencies in the second half and we continue to expect that the full year results will be similar to 2012 and 2013.

Looking beyond this year, we remain bullish regarding Kaiser’s long-term prospects and our ability to continue to drive shareholder value, as we realize the full benefits from strong secular demand fundamentals, for aerospace and automotive applications and improving manufacturing efficiencies as result of the capital investments made to support profitable growth. In addition, our priorities for capital deployment will continue to be balanced among a combination of investments driving organic and inorganic growth increasing quarterly dividends and returning excess cash to shareholders in the form of share repurchases.

We’ll now open the call for questions.

Hi, everyone.

Hi Tony.

How you doing Jack, Dan and Melinda and Neil. I’ve got – first question is now with your manufacturing inefficiencies moving behind the company and all the fine work your team has been doing in terms of the investments.

And now it’s certainly a brightening outlook for your platforms wins and your programs wins. I’m wondering are we setting stage for a meaningful move above the kind of $740 million to $750 million run rate that you have been doing on VAR heading into 2015.

Well, we’re really just beginning put together the plans for 2015, so its really premature for me to comment on that but we continue to be very confident that our longer term potential is the high 800s in terms of value added revenue and we fully expect we’ll get there as these inventory overhangs abate and as we continue to see strong growth in automotive demand.

All right Jack and you still feel confident in your ability to be able on the adjusted EBITDA margins to see further improvement up to that upper kind of 20% range, is that still possible?

Absolutely Tony, I mean we saw the initial stages of the benefits in terms of manufacturing efficiencies, we had really been stuck in the mud here for the last nine months primarily because of the construction at Trentwood as well as some other distractions that we had, but that’s a nice break out, but if you compare it we were 10% as I said compared to where we ran in the prior three quarters, but we’re actually up 6% compared to where we were in 2012, in terms of our manufacturing cost efficiency. So we’ve moved to a whole new level of efficacy and we continue to see efficiency gains as we go forward we are nowhere near the full potential of this platform.

We have a lot of runway left in terms of that, and we will also get additional margin boost as we go forward as from higher volume which gives us more leverage on the fixed cost component of the equation. So we remain very optimistic that we can push that EBITDA margin in the high-20s over time.

Sounds very encouraging Jack, appreciate your insight on that. And my other question is just – I have to ask about the departure of Peter Bunin and I’ve always regarded the consistency and abilities of your entire management team, obviously the one of the core strengths of Kaiser.

I was wondering if could just comment on his recent departure after I think not long before that he was promoted to more senior role within the organization?

Sure Tony, Pete obviously has been a key person in our accomplishment here over the past 10 years or so and a major contributor. Unfortunately he is left for personal reasons we would put him in newly defined and a very critical role, a role so critical that with him departing I’m going to assume that responsibility of leading the development of our vision looking out long-term to 2025.

Keith Harvey has the operations folks focused on the next two years or three years and they are really driving toward what we think are some great things we can accomplish over that time period. So we got a very strong and deep management team here will miss him, but we have got a very talented people stepping up and I can tell you there energize, we are all energize, but what we see is tremendous opportunities here.

Thanks very much Jack, appreciate that.

Good morning.

Good morning Sal.

Couple of things on the automotive has been doing phenomenally well for last few quarters and I was wondering at one point I remember it was last quarter or quarter before you mentioned that the selling price always selling pricing you will getting or pound may not be sustainable in it we will go back to its sort of run rate of mid-90s cents. I just was wondering if that still the case or because you are being doing very well even after that those comments?

Yeah, that is still the case Sal. This thing it bounces all around based on whatever the particular sales mix was within a particular quarter, but over the long-term as more and more new programs come on we expect drive shaft to being which is the highest price propound product that we have in that automotive mix we don’t expect that volume to decline but that will be come in smaller and smaller percent over the overall volume.

So we will, we expect that are gravitate downward.

Got you and also on the last expansion you did that, the extension number 5 what utilization rate are you running at overall or at least on that volume?

We are not utilizing all of it but we are utilizing a good portion of our capacity at Trentwood right now although as DC0 or DC0 or that’s what we call it our new casting complex as it comes online and as we continued to gain the efficiency that we expect we are still not fully utilizing everything we expect to get from Phase 5 we’ll continue to add capacity there.

But Dan is more expansion opportunities in Trentwood?

Yes, because we would while we are doing better than we thought we would do at this point in time there are still is additional capacity to come from these investments that we have installed as we captured the full potential of these investments. No we are near the end of the run way here in terms of the cost or throughput.

And the cast house benefit wasn’t there in the second quarter you are going to see it actually in third quarter the new cast house?

Well there actually there was a little bit of benefit there are two benefits from the cast house one is its going to be a very efficient casting unit, but the other benefit is that it replaces, rolling and get their we were purchasing on the outside, we actually cut off most of those purchases in the second quarter. So we had some benefit from lower what we call purchase price variances, the cost of outside ingot versus producing in house but we don’t have any benefits of the very efficient cost that we expect when get this thing ramped up to full speed.

Okay. And one more if I may.

You have moved your destocking of aluminum plate horizon into first quarter I believe 2015 from how is your expectation of late year or had something change or from your customers that you expecting that now?

If you go back through the chronology here on our fourth quarter call, which was in February and we said we actually had chart that we still have in our business update on the website that show destocking extending into 2015. On the last call we said we were a little bit more optimistic that it might ramp up sooner, but since then we’ve gotten further information from the marketplace that we’re still going to see it extending into 2015.

So it really its nuance to the changes we've had from what we said in February then in April and what we are now saying in July.

Okay, great. Thank you very much.

Yes, hey good afternoon I guess good morning for guys.

Hey, Timna.

Hi, Timna.

Hello. So you are kind enough to give us some thoughts on uses of cash, I was just interested in your appetite for acquisitions given that you have these NOLs still and interest rates are of course pervasively low.

How do you think about build versus buy as you go forward and how are you leaning in terms of the different options that you mentioned.

We’re exactly at the same place that we’ve been for several years in terms of acquisitions; we’re very bullish in terms of our organic growth opportunities, in terms of both more efficiencies and in terms of sales growth. So we’ve got a very strong platform and can have a very successful company without acquisitions that said, we certainly continue to look for complementary acquisitions, but we have a very fine screen, we’re very disciplined in terms of what we’re going for, looking for things that are a good complementary fit to our strategy and ones where we get at price that create shareholder.

And at this point, we’ve been close on a few, but haven’t had the brass ring, but we continue to look and if the right one comes along at the right price we’ll pull the trigger.

Okay, that’s great. I’m just still trying to grapple with this quote of the stronger margin than we anticipated.

How much can be tribute to cost controls that you talked about and how much do you think would be attributed to at the better demand environment roughly?

It’s a small component of leverage from the high value added revenue and the predominant impact was the improved cost.

Okay, that’s helpful. And then last one from me if I could.

Just you know Reliance has commented on import pressure and difficulty in heat treat element and general engineering plate. How do you see that market going forward and is that something you can continue to offset you think?

Well we pretty have offset it, if you saw our margin it was over 24% here in the second quarter, in the last two years we’ve been averaging 23.6, 23.7 something like that. So our margin here in the second quarter despite a couple of points of margin erosion due to lower heat treat plate prices, we’ve more than offset with volume and with our improved cost efficiencies here in the second quarter.

So going forward, we’re going to continue to see competitive price pressure, we don’t think its going to get much worse than what it is, hopefully we've hit a bottom here. Although with the rise in aluminum prices, we may get some short-term impact, but over the long-term we think it’s pretty much bottomed out in terms of a pressure that import pressure has been there for two or three years.

So we’ll see the import pressure, we’ll deal with it and we’ll keep running the business to capture the volumes and continue driving our cost down. We see that not only with the investments that we've made, but I go back to the answer to Tony’s question the role we had described for Pete, we see this as critical over the next ten years and it’s a big part of our vision.

We see it as a key drive over the next ten years to drive our cost down, because we’re going to have a competitive environment with more and more imports coming on here.

Gotcha. Thank you.

Good morning, to you.

Hi, Ed.

Hi, Ed.

Nice. So I’m just curious, if we can maybe define destocking in the way you’re using it.

Because as I normally see it, I would assume that inventories would slide along with it. Now, I’m looking at your inventory especially as it relates to the aerospace volumes up roughly 10.5% to your own document on Page 9, it looks like you’re saying aerospace is 12%.

Are you assuming that’s about 2% of destocking that’s going on in the channel or I’m looking at that number incorrectly. Is it potentially portion of mix, how do I think about your volumes overall in the context of destocking?

Well, what is slight down the aerospace slide?

Yes, not aerospace in high-strength?

Yes, the aerospace in high-strength slide on the left hand slide – or on the right hand side of that slide, we’re showing our average quarterly value-added revenue. So that’s a combination of our shipment volume, our product mix and our pricing.

And when you said 12% I think the numbers are align is showing our value-added revenue per pound and that’s a function of pricing end of mix. And so if you look at the second half 2013 going to the first half of 2014, it’s down a $0.11 a pound and that’s two factors.

One factor is lower prices on heat treat plate. The second factor is a higher percentage of the shipment mix is heat treat plate and heat treat plate is the lowest price product among our portfolio of aerospace products.

So those – the only impact for destocking you can see there is the impact that would have on volume and our volumes are actually up this year, year-over-year and the impact on price. We do have in our business update and I don’t have that slide number of the top of my head, but if you look at our business update on the website.

We have a chart that we showed in the February earnings call, where we actually do show our estimate of the impact of restocking and destocking on the aerospace plate supply chain. And order magnitude, and I’m just recalling for memory, but I believe we show in 2012, and this is measuring mill shipments versus our calculation of what real demand is for what’s required to build the plans that their building.

2012 actually was an 8% to 10% restocking compared to real demand, 2013 was a order magnitude the same level of destocking, I am sorry 2014, yes, 2013 was neutral.

Yes.

This year is pretty much equal in that 8% to 10% destocking that we saw as restocking in 2012. And then that slide still shows then we’ve added in there since February.

It’s still shows roughly 2% or 3% destocking as we look out into 2015. So, we continue to believe those are that the case we think that the destocking may not be a severe in 2015 as it is here in 2014, but we think we still see some.

Did that get to your question Ed?

Well, that is more than what I was looking for. But I was pointing to the global commercial airframe builds that you have the chart on airline monitor.

Okay.

And if I look to 2015 over 2014 shipments it’s 10%. If I look at 2014 over 2013 its 12% and then I see your volumes up roughly 10% in the quarter.

So, I am just trying to put in generally I would have assume that he would under produce the production rates assuming there is destocking, but you continue to buck that trend. I’m just kind of a trying to put that definition to the destocking as you mean it?

Got it.

Is it mix that’s driving that number higher? Sorry.

Yes, if you go back to our comments as probably even in October last year, but certainly in February last year. We said that this destocking, the primary impact on us would be competitive price pressure with our competitors trying to buy business, but we didn’t think it would have a dramatic impact on our volumes.

And that in fact has been the case, our volumes have held up maybe not on par with billed rates. But we’ve had good steady growth in our volumes despite the destocking, which would suggest that our competitors believe what we say which is we have a superior portfolio of products and they preferred by our products.

I see, now when I think the way you price your products especially in aerospace is generally on an year-to-year basis. Is there a way that I can look at maybe in average blend of your – obviously 182 seems high and 187 seems kind of right, is there a way that I kind of look it in average prices based on the contracts that you kind of – you already know what’s in kind of your order book for the year that we kind of think about for pricing.

And because most of your business it was 10% to 15% spot in aero on an annual on any given year?

Yes, maybe a little higher than that and again on that same page where we show the destocking trends in our business updated shows the mix I think it’s more like a 20-year 25% of our heat treat plate is spot business.

Aerospace plate.

But aerospace plate. I am sorry aerospace plate, but in 2014, the prices are relatively stable the changes that the prices buy product the changes that you see quarter-to-quarter are primarily a function of product mix changes within that portfolio of aerospace and high-strength products.

Because remember is there was heat treat plate there is aerospace sheet, aerospace extrusions, aerospace cold finished bar, aerospace small diameter rod and wire and drawn too and the value-added revenue on those ranges all the way from $1.50 or so up to sometime $9 or $10 a pound. So it really becomes of function of the mix of pounds that we are shipping rather than dramatic changes in price.

Okay. If I can ask may be extrapolate on some question earlier the efficiencies and the contribution I think it was said that you received roughly $5 million of benefit in the cost savings from the execution on the efficiency side.

and I also think it you said it was going to improve into the second half of the year and I am just curious if you can kind of quantify both me that short and the long-term kind of benefit that you anticipate you receive offer that businesses as we move forward and in short-term I guess we can qualify – talk about maybe this year?

No, we don’t want to quantify that right now, we got a positive surprise in the second quarter that Phase 5 came up as rapidly and as well as it did we are optimistic, but we are still ramping up our new casting complex and then the other part of this that will take time to realize our new casting complex enable us to cast and good sizes that we can build into new manufacturing practices that capitalize on improvements we’ve made downstream in the hot-rolling and heat treat processing and that will give us further cost efficiency benefits and it will take time as we slowly modify and upgrade those practices. So this is something that has a lot of run rate to it.

All I will say is basically what we set on our outlook we are very confident that our second half comparison year-over-year is going to be favorable or we going to perform at the second quarter level was seasonality not likely in the margins likely to be somewhere between that 22 that we had on the first half average and the 24.5 or so 24.6 to 24.4 that we ran into the second quarter here. So somewhere in that 23%, 24% range probably, but it’s hard to predict that these stages are a lot of variables in there.

Fair enough. Thanks guys, appreciate it.

Good Afternoon. Jack and Melinda.

Hi, Josh.

Good morning.

So just another question I mean the plate overhang maybe phrase a little differently, you know in the past you could have talked about the plate overhang being platforms specific and I mean is that that related in anyway to A380 or 747-A coming under price or coming down in rate. And then as well as the record shipments that you are also reporting I mean are those more related to the growth programs like the 787 and A350 ramping up here.

Can we slice it in that way?

Well first of all we don’t talk about specific customer issues here and I don’t think we said it was platform, we said it was more customer specific in terms of what’s going on with the over hang, but that’s gets back as you’re alluding to really to platform specific issues within their mix of products. The records that we’re seeing some of that’s coming from aerospace plate, but a big portion of that is actually coming from general engineering plate.

We had actually lost a lot of our share in general engineering plate with major service center customers that wanted to buy more from us and we were landlocked so to speak with insufficient capacity and now that we've brought Phase 5 on, it’s opened up our capacity and we can fill their requirements to buy from us. So a lot of record volume that we’re seeing in heat treat plate frankly its related to general engineering plate although we’re seeing modest growth in aerospace plate as well.

Okay, great thanks.

Hey Jack so let me just, because you would ask about platform specific. The other thing is that most of the product that we sell to aerospace in terms of plate is not platform specific, they’re pretty much SIC codes or skews I mean that they order – that they can apply to a variety of applications on various platforms through the system.

Okay, thanks. And then with yourself taking over the long-term outlook role, maybe you could give us a little preview into what you’re seeing on to that 2025 timeframe, if you have something to add.

We actually started into this a year ago when Keith Harvey who was VP sales and marketing at the time said canary in the coal mine things are started to get a little bit tougher out here, precursor of what was happening to some of the price pressure that we’re seeing now and we had concerns what this look like for the long-term. So we undertook an analysis really we do five year, year-by-year projections every year.

But in this case we said lets also take a look at 2025 our best guess of what Kaiser world will look like in 2025 and we modeled it with the plans that we had for the first five years and then just took what we called business as usual for the next seven or eight years and said what’s this look like in terms of shareholder return and what we concluded with what we think is going to be a much more competitive long-term environment, we concluded that we have a platform as it stands today that can deliver good shareholder returns based on how we see things developing over the next 10-years or 12-years. But as we did that exercise we also took a step back and it caused us to see how tremendous some of those opportunities are as we look out to 2025 and then we concluded what we really should be doing here because we have lot of investment planned over the next five years, but we need to create a vision of what we really could look like in 2025, it could be a very different mix of facilities and plants with the kind of sales growth that we think we’ll achieve over the 10-years and so the mission we are on here is to think through what should that platform, what should that footprint look like and beyond that what kind of major efficiency gains can we make as we make these investments how can we breakthroughs in terms of our conversion cost and our processing as we go forward.

So that’s really the long-term piece of this. Keith and his guys they’ve got it tattooed on their eye lids what we expect to accomplish here between now and 2017, but then as a separate activity we’re looking at 2025 and how can we really make this a robust platform and then how do we integrate that back into what we do over the next few years with the investments that we make if that makes sense.

I appreciate that. Thank you.

Hi good morning thanks for taking my call.

Hey Brian.

Hey Brian.

I just want to shift gears to automotive for here clearly you have talked about the capacity build out at Trentwood and made some comments on that earlier. So when you look at autos obviously not just the one plant you have London, Ontario which is a biggest one.

So how do you feel about utilizations in that end market right now and at what in point time would you think you would have to add some new capacities to meet that the light weight in trends that seem to be getting some pretty good traction recently?

Well the short answer to adding capacity is now, in capital letters. Going back to the answer that I just gave to Josh in terms of this 2025 vision, we have several extrusion presses of capacity that we need to add over the next couple of years and over the next five years just to meet what we think the demand will be for products that Kaiser supplies, but as we look at to 2025, it’s really significant.

So that’s a big part of what we are looking and what should our automotive footprint look like. But in terms of the short-term execution, we’ve modified a press in our Sherman, Texas plant that is going into automotive and is ramping up right now on some new programs for the first time.

Our Bellwood, our Richmond Virginia plant mid supplied drive shafts for a long period of time, they are ramping up some other presses on other programs that major new structural programs coming through. Our London plant, which has been our bellwether all along is running close to capacity with a big part of their product mix dedicated to analog brake systems on ABS blocks, we’re in the process of moving, starting late this year and then heavily in 2015 moving our ABS production to our Kalamazoo plant, which will give a significant efficiencies.

London is a world-class low cost plant, but the equipment we have at Kalamazoo is especially suited to running ABS. And so we will move that and that will create capacity at London, and it will also create significant cost efficiencies for us, because Kalamazoo will be extremely efficient running these products.

So, we have a lot of levers that we are pulling right now. And we announced probably six months to nine months ago, we were going to be spending $15 million on automotive expansions, some of that’s underway now.

We’ve got another press that will probably get approval from our board for here within the next two months or three months going into probably the London facility and we’re looking at more presses beyond that. So, we see a lot of investment in automotive extrusion presses basically, but then also evaluating what that long-term footprint should look like and whether should those presses go.

Not necessarily, what’s the very best for 2015, but what’s the best where we think we’ll be in 2020 and 2025.

Okay, so it sounds like...

You guys have seen the Interlog brake systems, so I think you used those initials for a different product, just want to make sure you just said that.

Yes, thank you. It’s sound like the spending as Trentwood ramps down and finishes up you probably would still be maybe in the $50 million to $60 million range as automotive cycle starts to kick in, in terms of CapEx per year?

Yes, we expect to be spending at this level for several years and we are not done at Trentwood, I mean we don’t see immediate needs for capacity at Trentwood, but we still have a lot of runway. Trentwood is we believe is probably the most efficient plate mill in the world right now, but its not nearly as efficient as we think it can be.

So we are looking lots of investment there to improve our quality and reduced our cost with additional buy products of capacity as we go.

Okay. And then you mentioned Kalamazoo, can you just review that as kind of the standalone and to the – I think at one point in time you’re still working on some efficiency improvements, obviously you will benefit from the mix shift, but it also certified for other types of automotive products?

Yes, Kalamazoo has by far the best quality of any of our plants and all of our plants to typically have the best quality in the industry. So it has superlative quality, we continue to make progress there, we’re still not at our full potential that Kalamazoo, but it was frankly we haven’t talked about it, it was part of the past story in the second quarter as well.

They are continuing to make step changes in terms of their efficiency improvements and we expect a lot more efficiency there and when the automotive goes in there, the analog brake system blocks that will give them another big boost. So, we are extremely optimistic about Kalamazoo contributing bottom line and cost efficiency to the system as we go forward, in fact part of the whole story we are running at record levels of efficiency in our business and we are nowhere near the end of the run way, we’ve got lots of opportunities left.

Okay and I ask one more broader question on just the components here is falling into other day you mentioned that the train Jeff earlier, these applications for the coming up model years or these already once that they are pretty well accepted and you are just applying higher volumes as they created press towards lighter vehicles and maybe if you can comment just on the timing of these launches you mention this year and next year, are these to be accepted in – one year timeframe or is it take a little bit longer to see the impact on your shipments on your bottom line?

Our content per vehicle in the first half of this year is $1 per vehicle – value-added revenue dollars for vehicle is up 30% compared to last year and last year was a record phase and it was $4.10 a vehicle. Last year and we are in the $5.30 range right now and we have new captured programs coming on stream here in the second half of the year.

So in the comments we said we expect seasonal reductions in billed rate overall, but we expect similar value-added revenue out of automotive because we have new programs coming on stream as we speak we’ve been pep happen them pre-production approval process here in the first six months and they are going into production now and we have several others in the pipeline. So we have captured business being [Indiscernible] and develop that run through the second half of this year and into next year and we have a very robust pipeline beyond that, I mean we are our biggest issue right now is making sure we are get our platform in position to efficiently and effectively capitalize on all the opportunities out are there, I mean it’s pretty much as picking and choosing how much we can handle at this time.

Okay thanks very much.

Thanks good morning everybody.

Hi Steve.

Just the question we hear a lot of commentary now that people worried about the aerospace cycle and I know growth in backlog is likely going to moderate, but you are selling into production where rates are going up. Could you just comment on how you see it and you feel it’s becoming less cyclical.

It sure seems less cyclical although the cycles in aerospace as you know better than I but those cycles have been pretty long in the past, but we are in a long up cycle here I mean we have to go really back to their early 90s the last time we had a real major aerospace downturn. All the projection we see push that out into the well into the 20:20s probably early to mid-20:20.

So we think there is a lot of run way here and there is a lot of time between here and when anyone anticipates a downturn so will there be downturn at some point? Probably.

Sure

Yeah Probably, but we should all see it in the near term.

Okay thanks and in term of your positive outlook on both aerospace and automotive do you see it mostly coming from unit growth or combine that with share gains or is it a better mix of the end products as you get further along?

No for us its content growth. So it’s really its steel and iron parts converted into aluminum part for light weighting so there are new opportunities bumpers and the structural components I mean the F150 has been announced that they are going to – the aluminum truck Ford F-150 and there is a lot of news out there everyone else looking at aluminum trucks, same things happening in cars, certainly in bumper, but all what’s driving the body in white also drives a lot of excursion demand as well a body in white sheet but it’s also extrusion so there are lot of structural components that go into that.

So it’s really the whole light weighting that is a current through the industry and just creating a opportunities for us.

Okay thanks last one. With Airbus announcing A330 Neo and likely extending the life of that airframe for few years I know you said some of the stuff you ship isn’t platform specific your shipping is queue, but do you have a comment on that?

Yes, we love it because it all aluminum.

That’s what I was hoping to hear.

Yes, we think it’s a great plate.

I guess as long as they are selling more, its okay for you. I appreciate the answer.

Thanks a lot.

Exactly.

Hey, thanks for taking my question, I appreciate it.

Yes, Phil.

Did you comment much on the market dynamics in the non-plate and sheet aerospace markets?

Yes, in aerospace in general I had a short comment in the script there we said that plate an extrusions we expect that the over hang is going to last into 2015, but on the other products we said that we’re continuing to see over hang slowly abating so we it hasn’t been the step change where ah ha its over, but as we continue to do sequentially and year-over-year comparisons we can see demand improving in all of those other products very slowly, but improving.

So that’s plate and bar essentially, rod and bar, Excuse me sheet, rod and bar.

It sheet, cold finished bar to being small diameter rod and wire and I think that’s it.

Okay, well congratulations on the operational progress.

Thanks. Phil.

Really exciting. Thanks.

Thanks.

Thank you. I have one question, I don’t know if we have discussed this previous conference call or not.

How does that aluminum premium, the Midwest premiums impact you and have you been seeing this impact over the last couple of quarters since they have moved up and what is your outlook for the next few quarters of that?

Yes well on the premiums we pass through the LME plus the premium. So we pass through the Midwest price.

So it really doesn’t have an impact on us with one exception and that exception is some of the higher value added products, we don’t have the result on a spot basis, they sometimes don’t move in direct proportion like the lower value added products. So we can see temporary squeezes on those products.

So we’re pushing hard to get those spot prices boosted, so that we can capture the total price and its really the total price that’s the issues here, I mean this morning the Midwest prices was up to $1.11 when it was in the low 90s, six to nine months ago. So we are seeing a lot of price increase, cost increase and we’re passing that through in most cases.

And I’m I correct when you are saying that your contracts or the products you are selling and the premium is automatically in the equation and you are just putting it and then pass to.

That’s correct its in the contracts and in most products for example, soft alloy, rod and bar products its an industry practice to adjust the prices every month based on the per month Midwest metal price. So even spot prices there are lot of industry practices where it gets passed through directly.

Okay and the next thing is there has been drive particularly with one of the very larger aluminum [ph] producer to get more and more scrap based aluminum rather than buying good and that has compressed the margins. I’m just wondering how that is impacting you and have you – are you using more raw aluminum or ingot instead of scrap?

Well we are, but most of ours are not related to that one big producer that you talked about we use different alloys and so our scrap utilization is better this year than it was last year and our spreads are a little bit better. Frankly its helping us a little bit offset some of the price erosion that we've seen on selling prices, our raw material, net raw material cost actually is a little bit better this year than it was last year because of scrap purchases.

Do you have a close look at lot of your customers in terms of talking the scrap back from them?

In some cases, but not generally.

Okay. All right, thank you very much.

Thanks for taking my follow-up. Jack, I understand there has been a recent price increase on general engineering plate and question number one is it sticking, number two have you guys followed and how do I square that with comments earlier about the continued destock and imports and price erosion?

Well, the question would be whether we followed or whether we laid?

Yes, maybe you laid and I’m not aware of that.

Yes, but generally we are seeing the improvement there, we haven’t seen significant erosion at this point, but is always a wild card this things moving so rapidly, it’s hard to keep pace with it. But right now, I mean it’s an issue that we are dealing with, but we don’t see a big impact right now, a big negative impact from these raising prices costs.

Okay, great. And I really enjoy the conversion today, because you’re talking about the long-term strategic vision and quite frankly it sounds like the VIR goal that you’ve been talking about in recent years this upper 800s.

It sounds like it could be quite conservative given the types of things that they were brought out during this call today and I my off my rocker you’re thinking about that or it’s sound like a lot of exciting things that you’re talking about in terms of further expansion and capability?

Sure, if you’re talking about the 2025, 2025 we expect to be well beyond that. Yeah within a reasonable timeframe, we expect to be high 800s and high 20s in terms of margin.

Right.

And probably after I retire they make at the margin up to 50%.

They will do that just despite you?

Exactly, exactly.

All right. If that’s conversation for another day I appreciate the ability that’s follow up.

Thank you.

Hi, thank you to soon quick one here. Just to clarify the $5 million of increased efficiency is quarter-over-quarter into the second quarter here.

If I heard you correctly that was all basically from improvements in Trentwood?

Yes, most ever was Trentwood, although Kalamazoo certainly contributed to that.

Okay.

Most of was Trentwood and then there was some throughout the rest of our operations, we were going through some rust parts in lot of parts of the portfolio, but it’s predominately Trentwood.

Okay. Then order of magnitude between Trentwood and Kalamazoo just trying to figure out which one was the bigger driver of this quarter?

It’s predominately Trentwood. Yes, I mean Trentwood is a big course, yes.

Right.

Everything else fails in comparison to Trentwood.

Okay, thank you.

Okay, thanks everybody a lot of good questions today. We look forward to updating you again on our third quarter call in October.

Thank you.