SOURCE: Century Aluminum Company

Century Aluminum Company

November 04, 2013 16:00 ET

Century Aluminum Reports Third Quarter 2013 Results

CHICAGO, IL--(Marketwired - Nov 4, 2013) - Century Aluminum Company (NASDAQ: CENX) reported a net loss of $9.5 million ($0.11 per basic and diluted common share) for the third quarter of 2013. Cost of sales for the quarter included a $5.8 million benefit for lower of cost or market inventory adjustments and an $11.7 million benefit for deferred power contract liability amortization.

In the third quarter of 2012, Century reported a net loss of $12.0 million ($0.14 per basic and diluted share). Financial results were positively impacted by a net benefit of $4.1 million related to certain litigation items. Cost of sales for the quarter included an $8.2 million benefit for lower of cost or market inventory adjustments.

Sales for the third quarter of 2013 were $399.9 million, compared with $304.6 million for the third quarter of 2012. Shipments of primary aluminum for the 2013 third quarter were 212,797 tonnes, compared with 163,431 tonnes shipped in the year-ago quarter. Sales and shipments of primary aluminum for the third quarter of 2013 both benefited from the June 2013 acquisition of the Sebree, KY aluminum smelter. During the quarter, the Sebree acquisition added $101.5 million in sales and 45,843 tonnes in primary aluminum shipments.

For the first nine months of 2013, Century reported a net loss of $30.6 million ($0.35 per basic and diluted share). These results were positively impacted by an unrealized gain of $16.2 million primarily related to a LME-based contingent obligation, a gain on bargain purchase of $5.3 million and deferred power contract liability amortization of $14.5 million. Results were negatively impacted by a non-cash charge of $3.3 million for the early extinguishment of our 8.0% Senior Notes and a charge of $4.7 million for severance and other expenses related to our corporate headquarters relocation. Cost of sales in the first nine months of 2013 included a $10.3 million charge for lower of cost or market inventory adjustments.

This result compares to a net loss of $28.7 million ($0.32 per basic and diluted share) for the first nine months of 2012. These results were negatively impacted by an unrealized net loss on forward contracts of $3.2 million primarily related to the mark to market of aluminum price protection options. Results were positively impacted by a net benefit of $4.1 million related to certain litigation items. Cost of sales in the first nine months of 2012 included a $19.8 million benefit for lower of cost or market inventory adjustments.

Sales in the first nine months of 2013 were $1,053.1 million compared with $954.4 million in the same period of 2012. Shipments of primary aluminum for the first nine months of 2013 were 547,843 tonnes compared with 484,226 tonnes for the comparable 2012 period. Sales and shipments of primary aluminum for the first nine months were higher by $140.3 million and 63,522 tonnes, respectively, as a result of the Sebree smelter acquisition.

"We continue to operate in an uncertain global environment," commented Michael A. Bless, President and Chief Executive Officer. "Widespread and consistent recovery in developed and developing economies has been elusive. China has not developed momentum in driving more robust consumer activity, and potential problems in the financial system remain a concern. In the U.S. and Europe, political instability has led to predictable uncertainty on the part of people making investment decisions. In our sector, we have seen some hopeful signs. Demand continues to be relatively strong in most markets. Supply closures, though each individually small in the context of the broader market, have continued to build. Volatility caused by the potential for changes in the LME's warehousing rules has diminished. On balance, however, we will continue to manage the company with a bias toward downside risk in broad market conditions.

"We believe we have made good progress managing those items under our control," continued Mr. Bless. "Safety performance improved throughout the quarter, after a rough start at Sebree. Key performance indicators have been uniformly good; recent high purity production at Hawesville and billet production at Sebree have been at record levels. Most importantly, production costs have improved. As previously announced, we received approval from the Kentucky Public Service Commission for Hawesville's new power contract, and have been successfully purchasing market-based power since late August. Grundartangi's investment projects continue on track; we expect to produce finished anodes at our new plant in the Netherlands in December.

"We are focused on the important next steps for our power arrangements in Kentucky. For Hawesville, we are working with the regulators toward finalizing the procedures necessary for future grid stability and energy import capability; we expect to complete this process in late 2013 or early 2014. Century and Big Rivers plan to file the market-based power contract for Sebree soon, allowing for approval by the PSC before the termination of the current contract on January 31, 2014. We continue to work toward creating the conditions necessary for a restart of Ravenswood and of the Helguvik project; while there is not a solution at hand on either matter, discussions with the various parties remain active and we are committed to finding a solution."

Century Aluminum Company owns primary aluminum capacity in the United States and Iceland. Century's corporate offices are located in Chicago, Illinois. More information can be found at www.centuryaluminum.com.

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, visit www.centuryaluminum.com and click on the conference call link on the homepage. The webcast will be archived on our website and available for replay approximately two hours following the live call.

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. Such risks and uncertainties may include, without limitation, declines in aluminum prices or increases in our operating costs; worsening of global financial and economic conditions; increases in global aluminum inventories and the addition of new or restarted global aluminum production capacity; weakening of the company's U.S. customer markets; and our ability to successfully obtain long-term competitive power arrangements for our U.S. plants. Forward-looking statements in this press release include, without limitation, statements regarding our ability to successfully restart operations at our Vlissingen plant; our ability to finalize the wholesale power arrangement for our Hawesville smelter and achieve a similar arrangement at our Sebree smelter; and our ability to successfully progress the potential restart of our Ravenswood smelter and Helguvik project. More information about these risks, uncertainties and assumptions 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.

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, Landsbankinn hf.
Steingrimur Helgason, Director -- Corporate Finance, Landsbankinn hf.

   
CENTURY ALUMINUM COMPANY  
CONSOLIDATED STATEMENTS OF OPERATIONS  
(In thousands, except per share amounts)  
(Unaudited)  
                         
    Three months ended
September 30,
    Nine months ended
September 30,
 
    2013     2012     2013     2012  
NET SALES:                                
  Third-party customers   $ 271,016     $ 170,023     $ 680,480     $ 542,884  
  Related parties     128,912       134,612       372,659       411,560  
      399,928       304,635       1,053,139       954,444  
                                 
  Cost of goods sold     387,574       301,385       1,028,901       924,645  
                                 
Gross profit     12,354       3,250       24,238       29,799  
                                 
  Other operating expenses - net     2,174       7,388       6,288       14,926  
  Selling, general and administrative expenses     14,422       9,182       45,875       24,792  
                                 
Operating loss     (4,242 )     (13,320 )     (27,925 )     (9,919 )
                                 
  Interest expense - third party - net     (5,265 )     (5,969 )     (17,248 )     (17,642 )
  Interest income - related parties     -       -       -       62  
  Net gain (loss) on forward and derivative contracts     440       (340 )     16,151       (4,049 )
  Gain on bargain purchase     -       -       5,253       -  
  Loss on early extinguishment of debt     -       -       (3,272 )     -  
  Other income (expense) - net     213       7,648       (1,001 )     8,115  
                                 
Loss before income taxes and equity in earnings of joint ventures     (8,854 )     (11,981 )     (28,042 )     (23,433 )
                                 
  Income tax expense     (1,384 )     (1,168 )     (4,714 )     (7,384 )
                                 
Loss before equity in earnings of joint ventures     (10,238 )     (13,149 )     (32,756 )     (30,817 )
                                 
  Equity in earnings of joint ventures     731       1,126       2,118       2,116  
                                 
Net loss   $ (9,507 )   $ (12,023 )   $ (30,638 )   $ (28,701 )
                                 
Net loss allocated to common shareholders   $ (9,507 )   $ (12,023 )   $ (30,638 )   $ (28,701 )
                                 
LOSS PER COMMON SHARE                                
  Basic and Diluted   $ (0.11 )   $ (0.14 )   $ (0.35 )   $ (0.32 )
                                 
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING                                
  Basic and Diluted     88,611       88,468       88,588       88,549  
                                   
                                   
   
CENTURY ALUMINUM COMPANY  
CONSOLIDATED BALANCE SHEETS  
(In thousands, except share data)  
(Unaudited)  
             
    September 30,     December 31,  
ASSETS   2013     2012  
Cash and cash equivalents   $ 140,801     $ 183,976  
Restricted cash     3,273       258  
Accounts receivable - net     51,247       50,667  
Due from affiliates     24,955       37,870  
Inventories     231,505       159,925  
Prepaid and other current assets     40,708       34,975  
Deferred taxes - current portion     19,720       19,726  
  Total current assets     512,209       487,397  
Property, plant and equipment - net     1,239,201       1,188,214  
Other assets     108,221       100,715  
  TOTAL   $ 1,859,631     $ 1,776,326  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY                
LIABILITIES:                
Accounts payable, trade   $ 105,950     $ 75,370  
Due to affiliates     71,739       39,737  
Accrued and other current liabilities     72,921       40,099  
Accrued employee benefits costs     17,060       18,683  
Industrial revenue bonds     7,815       7,815  
Current portion of long-term debt     2,603       -  
  Total current liabilities     278,088       181,704  
                 
Senior notes payable     246,442       250,582  
Revolving credit facility     16,725       -  
Accrued pension benefits costs - less current portion     59,724       67,878  
Accrued postretirement benefits costs - less current portion     144,025       143,105  
Other liabilities     37,184       40,162  
Deferred taxes     111,922       110,252  
  Total noncurrent liabilities     616,022       611,979  
                 
SHAREHOLDERS' EQUITY:                
Series A Preferred stock (one cent par value, 5,000,000 shares authorized; 79,734 and 80,283 issued and outstanding at September 30, 2013 and December 31, 2012, respectively)     1       1  
Common stock (one cent par value, 195,000,000 shares authorized; 93,469,452 issued and 88,682,931 outstanding at September 30, 2013; 93,335,158 issued and 88,548,637 outstanding at December 31, 2012)     935       933  
Additional paid-in capital     2,508,456       2,507,454  
Treasury stock, at cost     (49,924 )     (49,924 )
Accumulated other comprehensive loss     (138,680 )     (151,192 )
Accumulated deficit     (1,355,267 )     (1,324,629 )
  Total shareholders' equity     965,521       982,643  
  TOTAL   $ 1,859,631     $ 1,776,326  
                 
                 
   
CENTURY ALUMINUM COMPANY  
CONSOLIDATED STATEMENTS OF CASH FLOWS  
(In thousands)  
(Unaudited)  
             
    Nine months ended  
    September 30,  
    2013     2012  
CASH FLOWS FROM OPERATING ACTIVITIES:                
  Net loss   $ (30,638 )   $ (28,701 )
  Adjustments to reconcile net loss to net cash provided by operating activities:                
    Unrealized net (gain) loss on forward contracts     (762 )     3,196  
    Gain on bargain purchase     (5,253 )     -  
    Unrealized gain on E.ON contingent obligation     (16,428 )     -  
    Accrued and other plant curtailment costs - net     3,380       4,025  
    Lower of cost or market inventory adjustment     10,286       (19,818 )
    Depreciation     49,082       46,925  
    Sebree power contract amortization     (14,461 )     -  
    Debt discount amortization     586       791  
    Pension and other postretirement benefits     (2,674 )     673  
    Stock-based compensation     961       412  
    Loss on early extinguishment of debt     3,272       -  
    Undistributed earnings of joint ventures     (2,118 )     (2,116 )
                 
    Change in operating assets and liabilities:                
      Accounts receivable - net     (1,063 )     3,320  
      Due from affiliates     12,915       317  
      Inventories     (22,848 )     31,810  
      Prepaid and other current assets     (4,892 )     (8,254 )
      Accounts payable, trade     26,547       (8,823 )
      Due to affiliates     32,002       761  
      Accrued and other current liabilities     2,209       8,743  
      Other - net     2,355       (12,176 )
Net cash provided by operating activities     42,458       21,085  
                 
CASH FLOWS FROM INVESTING ACTIVITIES:                
  Purchase of property, plant and equipment     (31,994 )     (10,399 )
  Nordural expansion - Helguvik     (2,855 )     (5,474 )
  Purchase of carbon anode assets and improvements     (8,519 )     (14,185 )
  Purchase of Sebree smelter     (48,058 )     -  
  Investments in and advances to joint ventures     -       (275 )
  Dividends and payments received on advances from joint ventures     -       3,166  
  Proceeds from sale of property, plant and equipment     515       89  
  Restricted and other cash deposits     (3,015 )     -  
Net cash used in investing activities     (93,926 )     (27,078 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES:                
  Repayment of debt     (249,604 )     -  
  Proceeds from issuance of debt     246,330       -  
  Borrowings under revolving credit facility     16,725       18,076  
  Repayments under revolving credit facility     -       (18,076 )
  Debt issuance costs     (3,994 )     -  
  Debt retirement costs     (1,208 )     -  
  Repurchase of common stock     -       (4,033 )
  Issuance of common stock - net     44       -  
Net cash provided by (used in) financing activities     8,293       (4,033 )
                 
CHANGE IN CASH AND CASH EQUIVALENTS     (43,175 )     (10,026 )
                 
Cash and cash equivalents, beginning of period     183,976       183,401  
                 
Cash and cash equivalents, end of period   $ 140,801     $ 173,375  
                 
                 
 
Century Aluminum Company
Selected Operating Data
(Unaudited)
                         
SHIPMENTS - PRIMARY ALUMINUM
                         
    Direct (1)   Toll
   
Tonnes
  (000)
Pounds
 
$/Pound
 
Tonnes
  (000)
Pounds
  $ (000)
Revenue
2013                            
3rd Quarter   140,120   308,911   $ 0.96   72,677   160,225   $ 101,381
2nd Quarter   106,284   234,316     0.98   69,986   154,293     101,290
1st Quarter   93,472   206,070     1.06   65,304   143,971     103,973
Total   339,876   749,297   $ 0.99   207,967   458,489   $ 306,644
                             
2012                            
3rd Quarter   95,747   211,086   $ 0.98   67,684   149,217   $ 97,939
2nd Quarter   93,831   206,862     1.05   66,997   147,704     105,756
1st Quarter   94,087   207,426     1.06   65,880   145,240     106,416
Total   283,665   625,374   $ 1.03   200,561   442,161   $ 310,111
                             
(1) Does not include Toll shipments from Nordural Grundartangi       
                             
                             

Contact Information

  • Century Aluminum Contacts:
    Mike Dildine
    (media)
    312-696-3142

    Shelly Harrison
    (investors)
    312-696-3140