Edited Transcript of KALU earnings conference call or presentation 20-Apr-20 5:00pm GMT

Turning to Slide 6. Adherence to our long-standing business cycle strategy has prepared us well for unexpected economic adversity. Execution of this strategy depends upon a strong preferred supplier position, ability to quickly flex our variable costs, strong liquidity and conservative leverage. Liquidity and leverage are the most critical features of the business cycle strategy. We focus on maintaining sufficient liquidity to fund our tactical and strategic needs through a severe economic downturn.

In every Board meeting, we review our 5-year contingency liquidity plan, assuming a deep recession to ensure that as we make strategic investments, we have sufficient liquidity to remain strong through the economic cycles. Our guidelines for leverage are designed to provide financial flexibility and access to diverse sources of capital.

Turning to Slide 8. In the current situation, the health and safety of our employees is and continues to be our first priority. We are classified as an essential business, enabling all of our facilities to continue operations as they comply with social distancing and CDC guidelines. We’ve implemented steps to protect our employees and visitors to our sites, and where possible, our employees are working remotely. Keith will provide additional color regarding our operations and our procedures to maintain a safe and healthy operating environment in our facilities.

With nearly $700 million of liquidity and a 0.7x net debt leverage, we are well positioned to navigate a recession without resorting to survival cost-cutting measures that could compromise our ability to promptly respond to our customers’ needs when the economic recovery begins.

Turning to Slide 9. We’ve taken immediate actions to preserve liquidity. Our first action was to suspend share repurchases in mid-March. We’re flexing our variable cost consistent with changing business activity. Within our cost of goods sold, metal costs are 100% variable, and more than 2/3 of nonmetal costs are variable.

Also in April, we began again limiting capital spending to sustaining projects, which under normal circumstances would average approximately $35 million per year. However, with reduced activity level, there is less wear on equipment, and the level of sustaining CapEx will decline in line with the reduced activity level.

Any investments beyond sustaining projects must meet our standards for preserving a liquidity safety net and conservative leverage. In February, we announced a $375 million multiyear project at Trentwood and indicated that the timing would be subject to market conditions. We will continue to monitor market conditions to decide the timing, including the initial $145 million investment in a new plate stretcher.

During a recession, there may be potential acquisitions to consider. We will adhere to the same disciplined approach as in the past, employing the same filters we apply in evaluating prior potential acquisitions: must be a business that we understand and be compatible with our existing business, must have a winning strategy and be capable of achieving a defensible competitive position, must have a transaction price consistent with creating long-term shareholder value and importantly, must meet our liquidity safety net and leverage guidelines.

Turning to Slide 10 and demonstrating the underlying strength and potential of the business, we had record EBITDA and EBITDA margin in the first quarter following our record results in 2019. While Keith will provide a 2020 outlook on our commercial aerospace and military applications, until there is more clarity surrounding the COVID-19 economy, we will suspend providing a full year 2020 outlook.

Now Keith and Neal will update you on the current situation and review the first quarter 2020 results. Keith?

——————————————————————————–

Keith A. Harvey, Kaiser Aluminum Corporation – President & COO [4]

——————————————————————————–

Thanks, Jack. The health and safety of our employees always is our top priority. However, our focus has been amplified with the onset of the COVID-19 virus.

Our businesses are included in the critical manufacturing sector, defined by the U.S. Department of Homeland Security, and recognized as essential businesses by local and state authorities. We have continued to operate all of our facilities and have initiated a number of actions to best protect our employees and maintain a safe and healthy environment.

We have implemented local, state and federal recommendations to reduce the spread of the virus at all of our facilities and continue to monitor recommendations for further actions. We are also working closely with our employees and local unions to stress the importance of following CDC guidelines to mitigate the risk of exposure to COVID-19.

In addition, where possible, our employees are working remotely until we return to normal operations. And we have implemented additional health and safety protocols for all outside contractors and service providers required to enter our facilities. A number of our employees have displayed symptoms and have been tested, and others have been quarantined or self-isolated since the pandemic began. To date, we have had no employees test positive for COVID-19.

Our employees and their families are concerned for their health, jobs and financial security. As we flex operations in response to changes in business conditions, we have also taken initiatives to support our furloughed employees. We have revised our policies to provide any employee experiencing a job interruption 60 days of continued benefits with the company waiving the premiums for the continued coverage. Combined with the enhanced unemployment benefits provided by the CARES Act, we expect our furloughed employees to receive unemployment compensation similar to their regular pay.

Moving to our markets and operations. As Jack stated in his opening comments, we have long, deep relationships with our blue-chip customer base. And we are working closely with all of them as we deal with the COVID-19 virus and its impact on our markets and the economy.

Let me speak to our key markets and current conditions as we see them presently. Our large commercial aerospace segment represents approximately 1/3 or more of our total value-added revenue under normal circumstances. Our large commercial airframe customers and their customers, the airlines, have been significantly impacted by COVID-19 since late February as the airline travel has slowed dramatically. While many of our commercial customers have curtailed operations on a temporary basis, we are working with them closely to meet their raw material needs now and as their operations ramp up.

At this time, we anticipate our value-added revenue for commercial aerospace could be approximately 20% to 25% lower this year compared to 2019, reflecting the impact of mutually agreed upon modifications to existing contract declarations. We continue to work in partnership with our customers to address all their needs. We have solid multiyear contracts with these customers. And longer term, we expect the full commitments reflected in the original contract declarations will be met in their entirety.

As we’ve seen through the history of commercial aerospace, we expect that over time, passenger traffic will recover and the subsequent growth in aircraft builds will continue.

Defense has been and continues to be an important part of our business, representing approximately 10% to 15% of our total value-added revenue. We enjoy a strong position on many legacy fighter programs in this market and most notably, our significant supplier to the F-35 fighter program. We experienced strong shipments for these programs in Q1, and we expect demand to remain strong for the remainder of the year.

Moving to automotive. Many of our customers have temporarily suspended operations due to COVID-19, and we are adjusting our automotive operations consistent with these reduced activity levels. We are in close communication with these customers, and we’ll have more information on our new product launches once our customers resume operations and redefine their needs for the remainder of the year.

While our general engineering shipments were steady through March, recent state- and federal-mandated shutdowns of all nonessential businesses served by this end market has begun to have a negative impact on our current order rates. Until these mandates are lifted and order rates improve, we will continue to flush cost proportionately while continuing to support our service center customer relationships.

Just as important to our strategy and value system of being a preferred supplier to our customers, we are committed to being a preferred customer to our suppliers. We maintain strong working relationships and remain current on all our payments to our suppliers. We’ve had no supply issues at any of our facilities, and our suppliers continue to meet all our needs.

Finally, I’d like to thank all of our managers, union leaders and employees who are working together with dedication and loyalty to provide essential services to our customers in a way that reflects the proud history of Kaiser Aluminum.

I’ll now turn it over to Neal to provide an update on our financial condition and a recap of our record first quarter results. Neal?

——————————————————————————–

Neal E. West, Kaiser Aluminum Corporation – Senior VP & CFO [5]

——————————————————————————–

Thanks, Keith. Turning to Slide 15. As Jack discussed, our business cycle strategy and planning process always includes a severe recession stress test of our liquidity under a variety of scenarios to focus on sufficient liquidity to fund our operations, interest, taxes, record dividends and both sustaining and strategic capital investments.

As of March 31, our balance sheet remains strong with a current net debt leverage of 0.7 with approximately $346 million of cash and short-term securities. In addition, our $375 million revolving credit facility had approximately $342 million of borrowing availability for our total liquidity of $688 million as of quarter end.

As of March 31, our revolving credit facility was undrawn and currently remains undrawn. As a reminder, in November 2019, we replaced the previously existing revolving credit facility with a new $375 million senior secured revolving credit facility with the maturity date of October 2024.

In addition, we issued $500 million of unsecured 4 5/8 senior notes with a maturity date of March 2028. Both our revolving credit facility and unsecured notes have covenants that allow us to operate our business with limited restrictions and significant flexibility. We currently do not anticipate any material change in our working capital requirements, and our accounts receivables are supported by our strong customer base. In addition, we have ample credit lines with highly rated hedge counterparties. With financial strength and flexibility, we continue to address pandemic economy while also positioning for an economic rebound and potential opportunities that enhance our strong competitive position.

Turning to Slide 16. Value-added revenue for the first quarter of 2020 was approximately $217 million, down approximately 1% compared to the first quarter of 2019 on a 4% decline in shipments driven primarily by a planned exit of other nonstrategic applications and lower automotive shipments as customers began suspending operations late in the quarter.

Looking at our end markets, value-added revenue for our aerospace applications increased approximately 4% or $5 million from the first quarter of 2019 on a 1% decrease in shipments, reflecting favorable pricing and a strong aerospace mix. Value-added revenue for our automotive extrusions declined approximately 7% or $2 million from the prior year quarter on a 5% decrease in shipments. The decline in shipments and related VAR reflect the impact of automotive customers temporarily suspending operations due to the COVID-19 pandemic.

Value-added revenue and shipments for our general engineering applications was essentially flat with the first quarter of 2019. Value-added revenue for our other applications decreased approximately 71% or $5 million compared to the prior year quarter on a 64% decrease in shipments, reflecting our planned exit from these nonstrategic applications.

EBITDA for the first quarter of 2020 was a record $59 million, an increase of approximately $3 million or 6% compared to the prior year first quarter. EBITDA margin in the first quarter of 2020 was also a record of 27.4% compared to 25.7% in the prior year quarter. The 170 basis point improvement was driven by 160 basis points due to favorable price and mix and 10 basis points achieved from lower net costs.

Now turning to Slide 17. Consolidated operating income as reported for the first quarter 2020 was $46 million. Net income was $29 million, and earnings per diluted share was $1.81. These results compare favorably to the reported operating income of $43 million, net income of $28 million and earnings per diluted share of $1.71 in the prior year quarter.

Adjusted for noncash, nonrun rate items, first quarter adjusted operating income increased to $46 million compared to $44 million in the prior year quarter, reflecting the items previously noted that drove the year-over-year improvement in EBITDA, in addition to approximately $1 million of additional depreciation expense.

Adjusted net income for the first quarter was $30 million, and adjusted earnings per diluted share was $1.90, which is comparable to the adjusted net income of $30 million and adjusted earnings per diluted share of $1.85 in the prior year quarter.

Our effective tax rate for the quarter was approximately 25% compared to an effective tax rate of 26% in the prior year quarter. We anticipate our 2020 full year blended federal and state effective tax rate will be in the mid-20% range.

In addition, as we continue to review the full impact of the CARES Act, we anticipate we will be able to monetize our remaining AMT credits for a cash tax credit in 2020.

Capital investments in the first quarter was approximately $21 million. As we focus on preserving liquidity at this time, our capital spending will be limited to critical sustaining projects until we gain more clarity on a post-pandemic economy.

During the first quarter, we returned approximately $24 million of cash to shareholders through dividends and share repurchases. As noted previously by Jack, in response to the current economic environment, we have suspended our share repurchase program.

I’ll now turn the call back to Jack. Jack?

——————————————————————————–

Jack A. Hockema, Kaiser Aluminum Corporation – Chairman & CEO [6]

——————————————————————————–

Thanks, Neal. As Keith mentioned, commercial aerospace applications represent 1/3 of our — approximately 1/3 of our total value-added revenue, and demand is ultimately driven by air passenger travel.

Turning to Slide 19. In the history of airline travel, the current crisis is one of many over the past 60 years. In previous cases, despite the thought that maybe it’s different this time, travel returned to the long-term growth trend within a short time after the crisis.

While this is a challenging time for the airlines, we expect that, once again, air travel will be restored to the long-term growth trend after a period of adjustment.

Turning to Slide 20 and the commercial airframe order backlog. The industry has enjoyed a large and growing backlog since 2005. What we don’t often reference is that for decades prior to 2005, a much smaller backlog was normal.

While it’s difficult to predict what orders and build rates will be during and after the pandemic, the current 8-year backlog could decline more than 50% and still be in line with the long history prior to 2005. We’re often asked for perspective to be gained from the Great Recession.

Turning to Slide 21. The graph illustrates annual shipments from 2005 to 2019 for each of our major market segments. In 2009, our total shipments declined 23% from 2008, and it took 2 more years until 2011 to return to the prior peak. Kaiser’s aerospace and high-strength shipments declined only 8% in 2009 from the prior year. While commercial airframe builds actually increased in 2009, the lower shipments were a result of supply chain destocking.

Kaiser’s general engineering shipments declined 27% year-over-year in 2009 driven by weakening industrial demand and by reduced orders for armor plate as the Iraq war was winding down. Industry demand was further impacted by destocking in the long supply chain.

Our automotive extrusion shipments in 2009 declined 28% from prior year driven by a 32% decline in build rates. And our shipments of highly cyclic nonstrategic applications declined 37% in 2009. During that period of time, our nonstrategic applications represented approximately 17% of our mix and have since declined to less than 1% of our current mix.

Another frequently asked question is how Kaiser is prepared today compared to 2009. Turning to Slide 22. While our mix of strategic applications is similar, as I just mentioned, the highly cyclic nonstrategic applications have essentially been eliminated from the current mix.

When the 2009 recession began, Kaiser was only 2.5 years removed from a long 4.5-year corporate restructuring process. Today, Kaiser has greater liquidity and access to diverse sources of capital. Our customer partnerships are also much stronger based on our long track record of excellent customer satisfaction and development of our highly differentiated Kaiser select products, which provide industry-leading performance attributes.

While we were well prepared to navigate the Great Recession in 2009, we are even better positioned today. Back then, we successfully flexed our variable cost, continued the regular dividend and proceeded with building our new Kalamazoo extrusion facility, a major strategic investment at the time that upon completion, significantly enhanced our competitive strength.

As I noted earlier, we are taking similar initiatives today, aggressively preserving liquidity to navigate the downturn while positioning to be ready to address the challenges and opportunities of an economic recovery.

Turning to Slide 23 and a summary of our remarks today. The health and safety of our employees is and continues to be our top priority as we confront the challenges presented by COVID-19.

In the first quarter, we achieved record results, continuing the momentum from our record 2019 results. We have suspended our overall outlook for 2020, pending more clarity on COVID-19.

We are well prepared to address this economic adversity with a strong liquidity safety net, low debt leverage and access to capital. And we are taking actions to navigate the recession and to be well positioned for the opportunities and challenges of an economic recovery.

We expect to have attractive investment opportunities beyond the sustaining projects. And as always, we will adhere to our guidelines for liquidity and leverage as we continue to evaluate all value-creating investments.

We will now open the call for questions.

================================================================================

Questions and Answers

——————————————————————————–

Operator [1]

——————————————————————————–

(Operator Instructions) Our first question comes from Curt Woodworth with Crédit Suisse.

——————————————————————————–

Curtis Rogers Woodworth, Crédit Suisse AG, Research Division – Director & Senior Analyst [2]

——————————————————————————–

Happy to hear that no one tested positive for COVID. On the aerospace outlook, could you just frame some of the parameters around the VAR potential being down 20% to 25%, given the start to the year, that would imply potentially down 30% to 40% in the back half of the year? And just kind of want to get a sense for what are you assuming for build rates? Are you assuming any destocking into that number as well? That’s my first question.

——————————————————————————–

Jack A. Hockema, Kaiser Aluminum Corporation – Chairman & CEO [3]

——————————————————————————–

Well, let me say first, you didn’t get 30% or 40% from us. You got that somewhere else because the only outlook we gave was that our total aerospace and high-strength would be down single digits, I believe, for the year. So that was the only outlook that we gave.

And Keith is talking specifically to just the commercial aerospace portion of the aerospace and high strength. And I’ll let Keith elaborate on the outlook.

——————————————————————————–

Keith A. Harvey, Kaiser Aluminum Corporation – President & COO [4]

——————————————————————————–

Yes. Normally, Curt, we — the large commercial aerospace is the largest component of our total aero and high-strength total VAR, value-added revenue. The other components, which we also look at, are in the regional jets, business jets, military applications. And we also have a subset of the — which is included in industrial. And those are generally in high-strength structural components for auto and GE.

So we have a lot of these products that go into other than the large commercial airframe. That’s why we pulled out large commercial. It was because it’s such a large segment, and it’s heavily identified with Boeing and Airbus.

——————————————————————————–

Curtis Rogers Woodworth, Crédit Suisse AG, Research Division – Director & Senior Analyst [5]

——————————————————————————–

Right. Sorry. I should have been more clear. Within the commercial piece of that, can you provide any color in terms of the assumptions on build rates that underlie just the commercial OE aspect of the guide?

——————————————————————————–

Jack A. Hockema, Kaiser Aluminum Corporation – Chairman & CEO [6]

——————————————————————————–

We — Keith and his team are heavily engaged with our major strategic customers on it. In this case, on a day-by-day basis, we’re always heavily engaged, but things are changing dramatically. So this is based on conversations with our major customers. And as he just said, that’s roughly 1/3, actually a little slightly higher than 1/3 of our total value-added revenue. And we expect based on extensive discussions with our customers that, that value-added revenue year-over-year will be down roughly 20% to 25%.

——————————————————————————–

Curtis Rogers Woodworth, Crédit Suisse AG, Research Division – Director & Senior Analyst [7]

——————————————————————————–

Right. Okay. And then in terms of the inventory situation, can you talk to how you feel about that? I mean, I recall from, I think early ’17 to mid- to late ’18, we went through this sort of lengthy destocking process, which I think at that time is very functional around the wide-body build rate cuts. And now this is obviously much more pronounced. Do you have a — any sense of how the supply chain is sort of handling this? Would you expect significant destocking in the medium term?

——————————————————————————–

Jack A. Hockema, Kaiser Aluminum Corporation – Chairman & CEO [8]

——————————————————————————–

Well, let me just restate what we have said in the past, and I’ll let Keith give additional color because again, he’s really close to all this. We did say that there was destocking in ’17 and ’18. We said at the time that we felt it was overdone. And in fact, it was, and that created [2] really, really strong orders in the second half of the year because the supply chain got stretched way too thin. So we felt we were pretty close to equilibrium or maybe even still thin coming into this year. But then I’ll turn it over to Keith here.

——————————————————————————–

Keith A. Harvey, Kaiser Aluminum Corporation – President & COO [9]

——————————————————————————–

Yes. And so as Jack stated, we’re speaking daily and have been speaking daily with our customers in this area really since the beginning of the year. Some of our customers have experienced other things that they’re working on, Boeing, for instance, on the 737 MAX as they’re looking and remain focused to bring that platform back online. But we’ve generally looked at this, and we have included with them. We’ve got mutual declarations that we’ve discussed. And our outlook includes those discussions, which also include what their needs may be, their inventory situation and all. So that’s inclusive of our comments on our outlook.

——————————————————————————–

Curtis Rogers Woodworth, Crédit Suisse AG, Research Division – Director & Senior Analyst [10]

——————————————————————————–

Okay. And then just one last one on capital spending and free cash flow. Could you quantify what the AMT credit could be? And then how quickly can you flex capital spending down? And any update on maybe what a good estimate for this year for CapEx would be?

——————————————————————————–

Jack A. Hockema, Kaiser Aluminum Corporation – Chairman & CEO [11]

——————————————————————————–

Yes. So Neal, in his comments, said we spent $21 million CapEx in the first quarter. I said in my comments, and we’ve said this for a long time that sustaining CapEx is roughly 75% on the average of depreciation, which would be roughly $35 million a year or in this case, starting April 1, roughly $9 million per quarter. And I double underscore average on that basis. So — and we could flex that capital spending quickly. Keith has moved aggressively to put a cap on capital spending.

The way I’ve characterized it when we’re talking to investors is, right now, this is a battlefield. We’re in a fox hole, and this — the battlefield is covered with smoke. So right now, we’re hunkering down in our fox hole, and we’re waiting for the smoke to clear, then we’ll decide where we go.

But you can assume going forward, although there may be some carryover from the first quarter, we should be operating at a $9 million — let’s say, for the rest of the year, $27 million or less as we go forward for the rest of the year.

——————————————————————————–

Neal E. West, Kaiser Aluminum Corporation – Senior VP & CFO [12]

——————————————————————————–

And then in regards to your question on the AMT credit, as we go through the CARES Act, we’re now looking at that to be in the area of $5 million to $10 million for this year.

——————————————————————————–

Operator [13]

——————————————————————————–

Our next question comes from Josh Sullivan with The Benchmark Company.

——————————————————————————–

Joshua Ward Sullivan, The Benchmark Company, LLC, Research Division – Senior Equity Research Analyst [14]

——————————————————————————–

Just expanding on the variable cost there. Can you talk a little bit about just what you’re flexing there outside of CapEx? Any way to help us understand the fixed cost or maybe utilization piece of that equation versus how much variable cost or flex you’re able to execute in the model?

——————————————————————————–

Jack A. Hockema, Kaiser Aluminum Corporation – Chairman & CEO [15]

——————————————————————————–

Well, for the first time, you can mark this down as a historic day because we’ve been asked several thousand times over the past few years about our variable cost, but we’re going to put some clarity on that today. So what I said in the prepared remarks is that when you look at COGS, the metal portion of COGS, as everyone knows, is 100% variable for us. The nonmetal portion of COGS, roughly — actually more than 2/3 of the nonmetal portion of COGS is variable. And we can flex that pretty quickly.

There’s always a tail when you start to flex. You’re chasing the — chasing volume down, and then there’s a tail of things like benefits and other costs, materials on order, those kinds of things. But it should stabilize relatively quickly after a month or 2 as soon as volume stabilizes.

So we did it during 2009. We chased it down. And then we get the opposite effect when we start to get to the economic recovery. We start flexing back up. Again, there will be a tail. So we’ll actually get the benefit back when the economic recovery comes.

——————————————————————————–

Joshua Ward Sullivan, The Benchmark Company, LLC, Research Division – Senior Equity Research Analyst [16]

——————————————————————————–

Got it. I really appreciate that. And then just as far as the defense business, are you seeing defense customers step into the void? Is there any pickup in ordering either to take advantage of the supply or just to support the industrial base?

——————————————————————————–

Keith A. Harvey, Kaiser Aluminum Corporation – President & COO [17]

——————————————————————————–

Well, Josh, this is Keith. We are seeing a rise in defense orders. The programs that I mentioned earlier continue unabated, and good strong outlook in front of those. Multiyear continued growth is still being anticipated.

There’s also a segment in ours with munitions and other things that we cover. But we are seeing that order rate pick up, quite frankly, since the beginning of the year. I will say it’s not since the COVID-19, but at the beginning of the year, we are seeing a large pickup, yes.

——————————————————————————–

Joshua Ward Sullivan, The Benchmark Company, LLC, Research Division – Senior Equity Research Analyst [18]

——————————————————————————–

(inaudible) the whole market (inaudible), and then it includes the last year…

——————————————————————————–

Melinda C. Ellsworth, Kaiser Aluminum Corporation – VP of IR & Corporate Communications [19]

——————————————————————————–

Josh, you’re breaking up. Excuse me, Josh, you’re breaking up. Can you try to ask the question again? We didn’t hear it.

——————————————————————————–

Joshua Ward Sullivan, The Benchmark Company, LLC, Research Division – Senior Equity Research Analyst [20]

——————————————————————————–

Sorry about that (inaudible) is a preferred supplier. (inaudible) verticals do you have to walk away from. Now that (inaudible) where you’re putting new products there in the (inaudible).

——————————————————————————–

Melinda C. Ellsworth, Kaiser Aluminum Corporation – VP of IR & Corporate Communications [21]

——————————————————————————–

Sorry. All I heard was preferred supplier.

——————————————————————————–

Jack A. Hockema, Kaiser Aluminum Corporation – Chairman & CEO [22]

——————————————————————————–

You need to lean out the window there, Josh, so we — and get a stronger signal, so we can hear the question. Are you there?

——————————————————————————–

Operator [23]

——————————————————————————–

It looks like his line got disconnected.

——————————————————————————–

Jack A. Hockema, Kaiser Aluminum Corporation – Chairman & CEO [24]

——————————————————————————–

Okay. We lost Josh. Keith, he was asking him about preferred supplier, you want to elaborate on that a little bit?

——————————————————————————–

Keith A. Harvey, Kaiser Aluminum Corporation – President & COO [25]

——————————————————————————–

Yes. This has been a time — we’ve spent decades with our large customers, these close relationships. We’ve talked often about our performance metrics, our supply position, our — the performance of our products. We’re really seeing a good, strong dialogue with these customers on our outlook. We’re considered strategic with all of our major customers, and the dialogue has been continued even though a lot of that dialogue has been what Josh just tried to work with is vis-à-vis working from home.

So I would say that we’re as close to these customers as they are. They’re seeing a lot of smoke on the battlefield as well. And I think we’re all working towards just as soon as we have clarity to being able to give a little better picture going forward.

——————————————————————————–

Operator [26]

——————————————————————————–

And I’m not showing any further questions on the phone lines at this time.

——————————————————————————–

Jack A. Hockema, Kaiser Aluminum Corporation – Chairman & CEO [27]

——————————————————————————–

Okay. Well, let me wrap up with one final comment here. Just for those of you who didn’t follow all this, I’ll do a little bit of the algebra for you. We didn’t give an outlook here. But if you put together Keith’s 2 outlooks, he commented on the commercial aerospace and the military applications, which combined represent about 45% to 50% of our value-added revenue. And if you do the algebra on those, that turns out to be roughly a 15% to 20% downturn in value-added revenue year-over-year on roughly half of our business, with the remaining half automotive and general industrial yet to be determined. But that’s the best outlook that we have now. We think we’re very well prepared for this, but you never know. This could be a black swan event or a severe black swan. So we’re just hunkered down, as we said, and waiting for the smoke to clear, and we’re ready to move as soon as the smoke clears. Thanks for joining us on the call today, and we look forward to updating everyone on our second quarter call in July. Thank you.

——————————————————————————–

Operator [28]

——————————————————————————–

Ladies and gentlemen, this does conclude today’s presentation. You may now disconnect. And have a wonderful day.