SOURCE: Century Aluminum Company

Century Aluminum Company

February 23, 2012 16:00 ET

Century Reports 2011 Financial Results

MONTEREY, CA--(Marketwire - Feb 23, 2012) - Century Aluminum Company (NASDAQ: CENX) reported a net loss of $31.1 million ($0.35 per basic and diluted common share) for the fourth quarter of 2011. Financial results were positively impacted by an unrealized gain on forward contracts of $2.4 million primarily related to the mark to market of aluminum price protection options. Cost of sales for the quarter included a $6.3 million charge for lower of cost or market inventory adjustments.

For the fourth quarter of 2010, the company reported net income of $65.3 million ($0.65 per basic and $0.64 per diluted common share). Financial results were negatively impacted by an unrealized loss on forward contracts of $5.6 million primarily related to the mark to market of aluminum price protection options and by a contractual termination pension benefit charge of $4.6 million due to the continued curtailment of the Ravenswood facility. Changes to the Century of West Virginia retiree medical benefits program increased quarterly results by $56.7 million with an associated discrete tax benefit of $2.0 million. Cost of sales for the quarter included a $15.9 million net after-tax charge for the portion of power costs at Hawesville paid by the previous power supplier per the terms of the power agreements.

For 2011, the company reported net income of $11.3 million ($0.11 per basic and diluted common share). Financial results were negatively impacted by a $7.7 million charge in the second quarter related to the contractual impact of changes in the company's Board of Directors and the executive management team, a charge of $2.9 million related to an insurance receivable, 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 results by $18.3 million with an associated discrete tax benefit of $4.2 million. An unrealized gain on forward contracts, primarily related to the mark to market of aluminum price protection options, positively impacted results by $0.8 million. Cost of sales included an $8.6 million charge related to the restart of a curtailed potline at the Hawesville, KY smelter, and a $19.8 million charge for lower of cost or market inventory adjustments.

For 2010, the company reported net income of $60.0 million ($0.59 per basic and diluted common share). Financial results were negatively impacted by an unrealized loss on forward contracts of $10.0 million primarily related to the mark to market of aluminum price protection options and by a contractual termination pension benefit charge of $4.6 million due to the continued curtailment of the Ravenswood facility. Changes to the Century of West Virginia retiree medical benefits program increased results by $56.7 million with an associated discrete tax benefit of $2.0 million. Tax benefits related to the release of tax reserves no longer required positively impacted results by $2.1 million. Cost of sales included a $63.2 million net after-tax charge for the portion of power costs at Hawesville paid by the previous power supplier per the terms of the power agreements.

Sales for the fourth quarter of 2011 were $318.2 million compared with $316.9 million for the fourth quarter of 2010. Shipments of primary aluminum for the 2011 fourth quarter were 155,649 tonnes compared with 148,923 tonnes shipped in the year-ago quarter. Sales for 2011 were $1,356 million compared with $1,169 million for 2010, and total 2011 primary aluminum shipments of 602,142 tonnes compared with 585,395 tonnes shipped in 2010.

"We continue to see generally favorable conditions in our markets," commented Michael Bless, President and Chief Executive Officer. "Trends in end customer demand remain good across a range of key segments. In the U.S., physical premiums remain supportive and interest in higher margin specialty products continues to be strong. The increase in large-user power costs, pervasive across developed economies, is a serious ongoing challenge which is threatening the long-term competitiveness of what would otherwise be very good businesses. We are spending considerable effort to address this challenge to our U.S. smelters. Broader market conditions remain volatile, and will continue to be sensitive to, amongst other developments, the environment in the Eurozone and in the Chinese economy. With this background, we plan to invest in 2012 in growing and improving our businesses, while continuing to prepare for reasonable contingencies.

"We are pleased with the Company's recent performance," continued Bless. "Though we always expect continuing improvement, safety trends have been gratifying these last few months; the Board and I would like to acknowledge the efforts of all employees toward this, our first priority. As forecast, Hawesville returned to near full production by year-end. Key performance indicators have continued to improve, conversion costs have fallen, metal quality has improved and fourth quarter production was up 12 percent versus the third quarter. Across our businesses, we have begun to see some abatement in the recent significant increases in raw material costs. In Iceland, Grundartangi had an excellent quarter, and has fully recovered from the temporary instability caused by the power interruption in early January. In late December, we received the ruling related to the arbitration with one of the power suppliers for the new plant at Helguvik. The ruling was generally favorable to Nordural and we are now in discussions with both power suppliers aimed at reaching, over the next several months, final agreements which will allow us to recommence major project activity."

Century Aluminum Company owns primary aluminum capacity in the United States and Iceland. Century's corporate offices are located in Monterey, Calif. 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, 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 and comments made by Century management on the quarterly conference call contain "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 or local financial and economic conditions; additional delays in the completion of our Helguvik, Iceland smelter, including our ability to secure a reliable power supply and our ability to successfully manage and/or improve performance at each of our operating smelters. Forward-looking statements in this press release include, without limitation, statements regarding future market and economic conditions, including the continuance of demand, pricing and cost trends in the aluminum market; our plans to invest in and grow our business in 2012; and our ability reach final agreements with the power suppliers to our Helguvik, Iceland smelter and recommence major project activity. 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.

Century Aluminum Company
Consolidated Statements of Operations
(in Thousands, Except Per Share Amounts)
(Unaudited)
Three months ended Year ended
December 31, December 31,
2011 2010 2011 2010
NET SALES:
Third-party customers $ 193,992 $ 205,547 $ 791,993 $ 755,863
Related parties 124,172 111,304 564,431 413,408
318,164 316,851 1,356,424 1,169,271
COST OF GOODS SOLD 331,796 275,716 1,266,902 1,056,875
GROSS PROFIT (LOSS) (13,632 ) 41,135 89,522 112,396
OTHER OPERATING EXPENSES (INCOME) - NET 4,624 (49,591 ) (3,806 ) (37,386 )
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 8,916 11,101 46,032 46,802
OPERATING INCOME (LOSS) (27,172 ) 79,625 47,296 102,980
INTEREST EXPENSE - THIRD PARTY - NET (5,934 ) (6,171 ) (24,791 ) (25,010 )
INTEREST INCOME - RELATED PARTY 61 115 303 448
NET GAIN (LOSS) ON FORWARD CONTRACTS 3,067 (5,681 ) 804 (10,495 )
OTHER INCOME (EXPENSE) - NET 225 (598 ) (1,373 ) (377 )
INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY
IN EARNINGS OF JOINT VENTURES (29,753 ) 67,290 22,239 67,546
INCOME TAX EXPENSE (2,213 ) (2,803 ) (14,359 ) (11,133 )
INCOME (LOSS) BEFORE EQUITY IN EARNINGS OF JOINT VENTURES (31,966 ) 64,487 7,880 56,413
EQUITY IN EARNINGS OF JOINT VENTURES 859 793 3,445 3,558
NET INCOME (LOSS) $ (31,107 ) $ 65,280 $ 11,325 $ 59,971
Net Income (Loss) Allocated to Common Shareholders $ (31,107 ) $ 59,939 $ 10,404 $ 55,046
EARNINGS (LOSS) PER COMMON SHARE
Basic $ (0.35 ) $ 0.65 $ 0.11 $ 0.59
Diluted $ (0.35 ) $ 0.64 $ 0.11 $ 0.59
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic 89,352 92,742 91,854 92,676
Diluted 89,352 93,414 92,257 92,302

Century Aluminum Company
Consolidated Balance Sheets
(Dollars in Thousands)
(Unaudited)
December 31, December 31,
ASSETS 2011 2010
Current Assets:
Cash and cash equivalents $ 183,401 $ 304,296
Restricted cash - 3,673
Accounts receivable - net 47,647 43,903
Due from affiliates 44,665 51,006
Inventories 171,961 155,908
Prepaid and other current assets 40,646 18,292
Total current assets 488,320 577,078
Property, plant and equipment - net 1,218,225 1,256,970
Due from affiliates - less current portion - 6,054
Other assets 104,549 82,954
Total $ 1,811,094 $ 1,923,056
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable, trade $ 86,172 $ 88,004
Due to affiliates 41,904 45,381
Accrued and other current liabilities 40,776 41,495
Accrued employee benefits costs - current portion 16,698 26,682
Convertible senior notes - 45,483
Industrial revenue bonds 7,815 7,815
Total current liabilities 193,365 254,860
Senior notes payable 249,512 248,530
Accrued pension benefits costs - less current portion 70,899 37,795
Accrued postretirement benefits costs - less current portion 128,078 103,744
Other liabilities 40,005 37,612
Deferred taxes 90,958 85,999
Total noncurrent liabilities 579,452 513,680
Shareholders' Equity:
Series A preferred stock (one cent par value, 5,000,000 shares authorized; 80,718 and 82,515 shares issued and outstanding at December 31, 2011 and December 31, 2010, respectively) 1 1
Common stock (one cent par value, 195,000,000 shares authorized; 93,230,848 issued and 88,844,327 outstanding as of December 31, 2011; 92,771,864 shares issued and outstanding as of December 31, 2010) 932 928
Additional paid-in capital 2,506,842 2,503,907
Treasury stock, at cost (45,891 ) -
Accumulated other comprehensive loss (134,588 ) (49,976 )
Accumulated deficit (1,289,019 ) (1,300,344 )
Total shareholders' equity 1,038,277 1,154,516
Total $ 1,811,094 $ 1,923,056

Century Aluminum Company
Consolidated Statements of Cash Flows
(Dollars in Thousands)
(Unaudited)
Year ended
December 31,
2011 2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 11,325 $ 59,971
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Unrealized net (gain) loss on forward contracts (750 ) 10,030
Realized benefit of contractual receivable - 55,703
Accrued and other plant curtailment costs - net (13,928 ) (56,010 )
Lower of cost or market inventory adjustment 19,766 (426 )
Depreciation and amortization 62,194 63,550
Debt discount amortization 1,857 3,150
Deferred income taxes 2,494 15,552
Pension and other postretirement benefits (28,757 ) 14,578
Stock-based compensation 2,856 1,905
Non-cash loss on early extinguishment of debt 763 -
Non-cash contingent obligation - 13,091
Undistributed earnings of joint ventures (3,445 ) (3,558 )
Change in operating assets and liabilities:
Accounts receivable - net (3,744 ) (6,197 )
Due from affiliates 10,694 (38,191 )
Inventories (35,819 ) (24,009 )
Prepaid and other current assets (20,791 ) 13,412
Accounts payable, trade (904 ) 11,674
Due to affiliates (3,477 ) 12,685
Accrued and other current liabilities 425 (1,758 )
Other - net (3,695 ) (13,642 )
Net cash provided by (used in) operating activities (2,936 ) 131,510
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (20,100 ) (12,241 )
Nordural expansion (12,882 ) (19,227 )
Investments in and advances to joint ventures (113 ) (32 )
Payment received on advances from joint ventures 3,056 -
Proceeds from sale of property, plant and equipment 1,471 823
Restricted and other cash deposits 3,673 5,206
Net cash used in investing activities (24,895 ) (25,471 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of debt (47,067 ) -
Repayment of contingent obligation (189 ) -
Borrowing under revolving credit facility 15,900 -
Repayment under revolving credit facility (15,900 ) -
Repurchase of common stock (45,891 ) -
Issuance of common stock - net 83 23
Net cash provided by (used in) financing activities (93,064 ) 23
CHANGE IN CASH AND CASH EQUIVALENTS (120,895 ) 106,062
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 304,296 198,234
CASH AND CASH EQUIVALENTS, END OF YEAR $ 183,401 $ 304,296
Century Aluminum Company
Selected Operating Data
(Unaudited)
SHIPMENTS - PRIMARY ALUMINUM
Direct (1) Toll
Metric Tons (000) Pounds $/Pound Metric Tons (000) Pounds (000) Revenue
2011
4th Quarter 87,665 193,269 $ 1.06 67,984 149,877 $ 112,411
3rd Quarter 82,236 181,299 1.19 68,596 151,229 129,369
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
Total 334,889 738,304 $ 1.17 267,253 589,190 $ 491,551
2010
4th Quarter 83,073 183,145 $ 1.10 65,850 145,172 $ 114,513
3rd Quarter 81,693 180,102 0.99 65,523 144,454 100,231
2nd Quarter 76,521 168,700 1.04 68,058 150,043 112,523
1st Quarter 76,653 168,990 1.04 68,024 149,968 109,659
Total 317,940 700,937 $ 1.04 267,455 589,637 $ 436,926

(1) Does not include Toll shipments from Nordural Grundartangi

Contact Information

  • Contacts:
    Lindsey Berryhill (media)
    831-642-9364

    Shelly Harrison (investors)
    831-642-9357