SOURCE: Century Aluminum Company

Century Aluminum Company

August 04, 2011 16:00 ET

Century Aluminum Reports Second Quarter 2011 Earnings

MONTEREY, CA--(Marketwire - Aug 4, 2011) - Century Aluminum Company (NASDAQ: CENX) today reported net income of $24.0 million ($0.24 per basic and diluted share) for the second quarter of 2011. Financial results were negatively impacted by a $7.7 million charge related to the contractual impact of the recent changes in the Company's Board of Directors and the executive management team; a charge of $2.9 million related to an insurance receivable, reflecting the fact that the matter is now in litigation, despite the Company's continuing view that it will ultimately receive such proceeds; a loss on forward contracts of $1.6 million, primarily related to the marking to market of aluminum put options; and a charge of $0.8 million related to the early retirement of debt. Changes to the Century of West Virginia retiree medical benefits program increased quarterly results by $8.9 million with an associated discrete tax benefit of $2.1 million.

In the second quarter of 2010, the company reported net earnings of $5.1 million ($0.05 per basic and diluted share). Results were positively impacted by a gain on forward contracts of $9.3 million primarily related to the marking to market of aluminum put options. Cost of sales for the prior year quarter included a $16.0 million charge for the portion of power costs at Hawesville payable by the previous power supplier per the terms of the power agreements and a $7.0 million charge for lower of cost or market inventory adjustments.

Sales in the second quarter of 2011 were $366.3 million, compared with $287.9 million in the second quarter of 2010. Shipments of primary aluminum for the quarter totaled 151,483 tonnes compared with 144,580 tonnes in the year-ago quarter.

For the first half of 2011, the company reported net income of $49.0 million ($0.48 per basic and diluted share). First half results were negatively impacted by a $7.7 million charge related to the contractual impact of the recent changes in the Company's Board of Directors and the executive management team; a charge of $2.9 million related to an insurance receivable; a loss on forward contracts of $6.4 million, primarily related to the marking to market of aluminum put options; and a charge of $0.8 million related to the early retirement of debt. Changes to the Century of West Virginia retiree medical benefits program increased first half results by $18.3 million with an associated discrete tax benefit of $4.2 million. Cost of sales for the first half includes an $8.6 million charge related to the restart of a curtailed potline at the Hawesville, KY smelter. This result compares to net income of $11.5 million ($0.11 per basic and diluted share) for the first half of 2010. Results for the prior six-month period were positively impacted by a gain on forward contracts of $7.3 million, primarily related to the marking to market of aluminum put options. Cost of sales for the first six months of 2010 included a $31.5 million charge for the portion of power costs at Hawesville payable by the previous power supplier per the terms of the power agreements and a $6.9 million charge for lower of cost or market inventory adjustments.

Sales in the first six months of 2011 were $692.6 million compared with $573.2 million in the same period of 2010. Shipments of primary aluminum for the first six months of 2011 were 295,661 tonnes compared with 289,257 tonnes for the comparable 2010 period.

"Aluminum market conditions have remained generally stable during the last few months," commented Logan W. Kruger, Century's President and Chief Executive Officer. "In the developed economies, we continue to see demand reasonably in balance with supply. In China, Brazil and other developing markets, the pace of growth continues at robust levels. The long-term trends of constrained supply and escalating costs continue to be reinforced. More broadly, the well-published macro-economic issues, in both developed and developing markets, constitute risks that are difficult to quantify. Short of any of these concerns manifesting themselves in the form of real crises, we remain constructive on the aluminum market over the medium term."

Mr. Kruger continued, "We are focused on returning Hawesville to the trajectory we anticipated earlier this year. The issues facing the plant can all be remedied with qualified and determined leadership. Over the last thirty days, we have brought on board an able and experienced plant manager and have filled almost all of the previously vacant key operating and technical positions. The team has stabilized the operations and has now turned the corner toward reinstituting the plan to achieve full operating capacity for five lines, which we believe we will reach by the end of the year.

"We have made good progress across the rest of the company," concluded Mr. Kruger. "Grundartangi had an excellent quarter, with annualized shipment volume of 278,000 metric tons and controllable costs in check. Mt. Holly's performance was also very good; the plant is performing near its historically best-in-class levels. Lastly, we advanced the discussions with Helguvik's power suppliers in Iceland, as we continue to move toward a restart of major construction activity."

Century Aluminum Company owns primary aluminum capacity in the United States and Iceland. Century's corporate offices are located in Monterey, California.

Century Aluminum's quarterly conference call is scheduled for 5:00 p.m. Eastern time today. To listen to the conference call and to view related presentation materials, go to www.centuryaluminum.com and click on the conference call link on the homepage.

Certified Advisors for the First North market of the OMX Nordic Exchange Iceland hf. for Global Depositary Receipts in Iceland:
Atli B. Gudmundsson, Senior Manager -- Corporate Finance, NBI hf.
Steingrimur Helgason, Director -- Corporate Finance, NBI hf.

Cautionary Statement
This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements about future, not past, events and involve certain important risks and uncertainties, any of which could cause our actual results to differ materially from those expressed in our forward-looking statements, including, without limitation, declines in aluminum prices or increases in our operating costs; deterioration of global financial and economic conditions; increases in global aluminum inventories and the addition of additional global aluminum production capacity; additional delays in the completion of our Helguvik, Iceland smelter; and our ability to successfully implement measures to return our Hawesville facility to full production. Forward-looking statements in this press release include statements regarding future market conditions, including the pace of future macro-economic growth and the continuance of supply and cost trends in the aluminum market, our ability to successfully remedy production issues at our Hawesville facility; the ultimate outcome of certain insurance litigation; and our ability to successfully restart construction activity at our Helguvik facility. More information about the risks, uncertainties and assumptions affecting the Company can be found in the risk factors and forward-looking statements cautionary language contained in our Annual Report on Form 10-K and in other filings made with the Securities and Exchange Commission. We do not undertake, and specifically disclaim, any obligation to revise any forward-looking statements to reflect the occurrence of future events or circumstances.

Century Aluminum Company
Consolidated Statements of Operations
(in Thousands, Except Per Share Amounts)
(Unaudited)
Three months ended Six months ended
June 30, June 30,
2011 2010 2011 2010
NET SALES:
Third-party customers $ 207,091 $ 183,045 $ 395,403 $ 375,977
Related parties 159,186 104,808 297,211 197,265
366,277 287,853 692,614 573,242
COST OF GOODS SOLD 316,763 266,337 600,784 517,750
GROSS PROFIT 49,514 21,516 91,830 55,492
OTHER OPERATING EXPENSES (INCOME) - NET (5,205 ) 4,644 (11,089 ) 9,109
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 18,557 10,964 29,166 23,215
OPERATING INCOME 36,162 5,908 73,753 23,168
INTEREST EXPENSE - THIRD PARTY - NET (6,321 ) (6,255 ) (12,943 ) (12,552 )
INTEREST INCOME - RELATED PARTY 70 111 183 220
NET GAIN (LOSS) ON FORWARD CONTRACTS (1,617 ) 9,294 (6,426 ) 7,322
OTHER INCOME (EXPENSE) - NET (1,132 ) 230 (455 ) 638
INCOME BEFORE INCOME TAXES AND EQUITY
IN EARNINGS OF JOINT VENTURES 27,162 9,288 54,112 18,796
INCOME TAX EXPENSE (3,636 ) (4,619 ) (6,759 ) (8,900 )
INCOME BEFORE EQUITY IN EARNINGS
OF JOINT VENTURES 23,526 4,669 47,353 9,896
EQUITY IN EARNINGS OF JOINT VENTURES 460 477 1,679 1,582
NET INCOME $ 23,986 $ 5,146 $ 49,032 $ 11,478
NET INCOME ALLOCATED TO COMMON SHAREHOLDERS $ 22,061 $ 4,723 $ 45,066 $ 10,532
EARNINGS PER COMMON SHARE
Basic and Diluted $ 0.24 $ 0.05 $ 0.48 $ 0.11
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic 93,105 92,672 93,036 92,611
Diluted 93,567 93,332 93,432 93,218
Century Aluminum Company
Consolidated Balance Sheets
(Dollars in Thousands)
(Unaudited)
June 30, December 31,
ASSETS 2011 2010
Current Assets:
Cash and cash equivalents $ 232,401 $ 304,296
Restricted cash - 3,673
Accounts receivable - net 54,838 43,903
Due from affiliates 37,264 51,006
Inventories 187,388 155,908
Prepaid and other current assets 46,151 18,292
Total current assets 558,042 577,078
Property, plant and equipment - net 1,238,651 1,256,970
Due from affiliates - less current portion 3,094 6,054
Other assets 100,055 82,954
Total $ 1,899,842 $ 1,923,056
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable, trade $ 87,595 $ 88,004
Due to affiliates 39,548 45,381
Accrued and other current liabilities 49,225 41,495
Accrued employee benefits costs - current portion 15,909 26,682
Convertible senior notes - 45,483
Industrial revenue bonds 7,815 7,815
Total current liabilities 200,092 254,860
Senior notes payable 249,011 248,530
Accrued pension benefits costs - less current portion 38,518 37,795
Accrued postretirement benefits costs - less current portion 106,718 103,744
Other liabilities 41,662 37,612
Deferred taxes 86,019 85,999
Total noncurrent liabilities 521,928 513,680
Shareholders' Equity:
Series A Preferred stock (one cent par value, 5,000,000 shares authorized; 80,785 and 82,515 shares issued and outstanding at June 30, 2011 and December 31, 2010, respectively)

1


1
Common stock (one cent par value, 195,000,000 shares authorized; 93,214,667 and 92,771,864 shares issued and outstanding at June 30, 2011 and December 31, 2010, respectively)

932


928
Additional paid-in capital 2,506,435 2,503,907
Accumulated other comprehensive loss (78,234 ) (49,976 )
Accumulated deficit (1,251,312 ) (1,300,344 )
Total shareholders' equity 1,177,822 1,154,516
Total $ 1,899,842 $ 1,923,056
Century Aluminum Company
Consolidated Statements of Cash Flows
(Dollars in Thousands)
(Unaudited)
Six months ended
June 30,
2011 2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 49,032 $ 11,478
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Unrealized net loss (gain) on forward contracts 6,170 (7,568 )
Realized benefit of contractual receivable - 32,193
Accrued and other plant curtailment costs - net (16,592 ) (2,576 )
Lower of cost or market inventory adjustment (16 ) 6,999
Depreciation and amortization 31,064 31,505
Debt discount amortization 1,355 1,548
Deferred income taxes - 9,217
Pension and other postretirement benefits (28,608 ) 8,218
Stock-based compensation 2,501 2,163
Non-cash loss on early extinguishment of debt 763 -
Undistributed earnings of joint ventures (1,679 ) (1,582 )
Change in operating assets and liabilities:
Accounts receivable - net (10,935 ) 1,013
Due from affiliates 11,265 (16,671 )
Inventories (31,464 ) (11,162 )
Prepaid and other current assets (28,991 ) 20,423
Accounts payable, trade (1,202 ) (6,725 )
Due to affiliates (5,834 ) 621
Accrued and other current liabilities 7,575 (2,189 )
Other - net (539 ) (4,773 )
Net cash provided by (used in) operating activities (16,135 ) 72,132
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (7,353 ) (3,012 )
Nordural expansion (7,968 ) (10,113 )
Investments in and advances to joint ventures - (17 )
Payment received on advances from joint ventures 3,056 -
Proceeds from sale of property, plant and equipment 56 -
Restricted and other cash deposits 3,673 (983 )
Net cash used in investing activities (8,536 ) (14,125 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of debt (47,067 ) -
Repayment of contingent obligation (189 ) -
Issuance of common stock - net 32 23
Net cash provided by (used in) financing activities (47,224 ) 23
CHANGE IN CASH AND CASH EQUIVALENTS (71,895 ) 58,030
CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD 304,296 198,234
CASH AND CASH EQUIVALENTS, END OF THE PERIOD $ 232,401 $ 256,264
Century Aluminum Company
Selected Operating Data
(Unaudited)
SHIPMENTS - PRIMARY ALUMINUM
Direct (1) Toll
(000) (000) (000)
Metric Tons Pounds $/Pound Metric Tons Pounds Revenue
2011
2nd Quarter 84,509 186,310 $ 1.26 66,974 147,652 $ 132,113
1st Quarter 80,479 177,426 1.17 63,699 140,432 117,658
Year to Date 164,988 363,736 $ 1.22 130,673 288,084 $ 249,771
2010
2nd Quarter 76,521 168,700 $ 1.04 68,059 150,043 $ 112,523
1st Quarter 76,653 168,990 1.04 68,024 149,968 109,659
Year to Date 153,174 337,690 $ 1.04 136,083 300,011 $ 222,182
(1) Does not include Toll shipments from Nordural Grundartangi

Contact Information

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