SOURCE: Century Aluminum Company

Century Aluminum Company

February 20, 2014 16:00 ET

Century Reports 2013 Financial Results

CHICAGO, IL--(Marketwired - Feb 20, 2014) -  Century Aluminum Company (NASDAQ: CENX) reported a net loss of $9.7 million ($0.11 per basic and diluted common share) for the fourth quarter of 2013. Cost of sales for the quarter included a benefit of $16.6 million related to deferred power contract liability amortization and a $9.0 million benefit related to lower of cost or market inventory adjustments. The financial results also included an $8.4 million charge relating to the separation of our former chief executive officer. For the fourth quarter of 2012, the company reported a net loss of $6.9 million ($0.08 per basic and diluted common share).

For 2013, the company reported a net loss of $40.3 million ($0.45 per basic and diluted common share). Financial results were positively impacted by a $31.0 million benefit for deferred power contract liability amortization and an unrealized gain of $16.8 million, primarily related to an LME-based contingent obligation. In addition, the company recorded a gain on bargain purchase of $5.3 million related to the Sebree acquisition. The company also incurred office relocation costs of $5.8 million, a loss on early extinguishment of debt of $3.3 million and an $8.4 million charge relating to the separation of our former chief executive officer. 

In 2012, the company reported a net loss of $35.6 million ($0.40 per basic and diluted common share). Financial results were negatively impacted by an unrealized net loss on forward contracts of $3.0 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 included a $19.8 million benefit for lower of cost or market inventory adjustments.

Sales for the fourth quarter of 2013 were $401.2 million compared with $317.7 million for the fourth quarter of 2012. Shipments of primary aluminum for the 2013 fourth quarter were 216,755 tonnes (which includes 50,395 tonnes from the Sebree operation acquired June 1, 2013), compared with 162,303 tonnes shipped in the year-ago quarter. Sales for 2013 were $1,454.3 million compared with $1,272.1 million for 2012, and total 2013 primary aluminum shipments of 764,598 tonnes (including 113,948 tonnes from the Sebree operation), compared with 646,529 tonnes shipped in 2012.

"The last several months closed out what we believe was a successful and forward-looking year for Century," commented Michael Bless, President and Chief Executive Officer. "Most recently, the approval by the Kentucky Public Service Commission of the market-based power contract for Sebree will allow long-term investment in this excellent plant. This action follows the favorable outcome for Hawesville in August. Employees at both smelters worked safely and productively through uncertain times, and their perseverance and dedication produced these gratifying results. Each plant is presently operating at high levels of efficiency and is producing a record amount of value-added products, for which we continue to see strong U.S. market demand. The Grundartangi team had another safe and productive year, as they restarted the anode plant in Vlissingen and continued on pace with the hot metal capacity expansion program; both projects are on time and under budget. We have aggressive plans for the future development of this world class smelter, which we believe is in an excellent position to capitalize on strong demand and shrinking supply in key European markets.

"We expect 2014 to be a dynamic year for the company," continued Mr. Bless. "Markets are presently exhibiting significant uncertainty due to a variety of well publicized factors. Our industry is highly susceptible to these trends in the short-term. However, our confidence in more attractive future market conditions has only increased, due to a continuation of plant closures in our geographic markets and a favorable demand scenario in which our plants are well positioned to participate. In this context, we will focus on several priorities. In Kentucky, we must find a solution to risks associated with reliable power transmission created by the de-energizing of lines during periods of grid maintenance. At Mt. Holly, we are working with our partner and with the state of South Carolina to create an acceptable post-2015 power arrangement. We remain absolutely and resolutely committed to reopening our smelter at Ravenswood, West Virginia, and are working hard on a number of processes to this end. Likewise, in Iceland, we continue to work with numerous constituencies to seek a way forward for the Helguvik project; we are more convinced than ever that, due to the development of European markets, this plant will be an attractive investment for our shareholders and a favorable development for Iceland's economy."

Fourth Quarter 2013 Earnings Conference Call
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.

About Century Aluminum
Century Aluminum Company owns primary aluminum capacity in the United States and Iceland. Century's corporate offices are located in Chicago, IL. Visit www.centuryaluminum.com for more information.

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.

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 and/or implement long-term competitive power arrangements for our U.S. plants. Forward-looking statements in this press release include, without limitation, statements regarding future global and local financial and economic conditions, including with respect to U.S. and European markets; our ability to successfully execute our key investment projects at our Grundartangi, Iceland smelter; our ability to successfully obtain a long-term competitive power arrangement for Mt. Holly; our ability to restart operations at our Ravenswood, West Virginia smelter; and our ability to complete and successfully execute our Helguvik, Iceland smelter. 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,  
    2013     2012     2013     2012  
NET SALES:                        
  Third-party customers   $ 262,782     $ 176,928     $ 943,262     $ 719,812  
  Related parties     138,392       140,739       511,051       552,299  
      401,174       317,667       1,454,313       1,272,111  
                                 
  Cost of goods sold     385,889       301,124       1,414,790       1,225,769  
                                 
Gross profit     15,285       16,543       39,523       46,342  
                                 
  Other operating expenses     2,314       3,327       8,602       18,253  
  Selling, general and administrative expenses     21,602       10,571       67,477       35,363  
                                 
Operating income (loss)     (8,631 )     2,645       (36,556 )     (7,274 )
                                 
  Interest expense - third party - net     (5,115 )     (5,895 )     (22,363 )     (23,537 )
  Interest income - related parties     -       -       -       62  
  Net gain (loss) on forward and derivative contracts     447       (101 )     16,598       (4,150 )
  Gain on bargain purchase     -       -       5,253       -  
  Loss on early extinguishment of debt     -       -       (3,272 )     -  
  Other income (expense) - net     1,497       (2,539 )     496       5,576  
                                 
                                 
Loss before income taxes and equity in earnings of joint ventures     (11,802 )     (5,890 )     (39,844 )     (29,323 )
                                 
  Income tax benefit (expense)     1,583       (1,526 )     (3,131 )     (8,910 )
                                 
Loss before equity in earnings of joint ventures     (10,219 )     (7,416 )     (42,975 )     (38,233 )
                                 
  Equity in earnings of joint ventures     544       507       2,662       2,623  
                                 
Net loss   $ (9,675 )   $ (6,909 )   $ (40,313 )   $ (35,610 )
                                 
Net loss allocated to common shareholders   $ (9,675 )   $ (6,909 )   $ (40,313 )   $ (35,610 )
                                 
LOSS PER COMMON SHARE                                
  Basic and Diluted   $ (0.11 )   $ (0.08 )   $ (0.45 )   $ (0.40 )
                                 
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING                          
  Basic and Diluted     88,684       88,492       88,612       88,534  
                                   
                                   
                                   
CENTURY ALUMINUM COMPANY  
CONSOLIDATED BALANCE SHEETS  
(In thousands, except share amounts)  
(Unaudited)  
             
    December 31,     December 31,  
ASSETS   2013     2012  
Cash and cash equivalents   $ 84,088     $ 183,976  
Restricted cash     1,697       258  
Accounts receivable - net     56,184       50,667  
Due from affiliates     43,587       37,870  
Inventories     239,615       159,925  
Prepaid and other current assets     32,276       34,975  
Deferred taxes - current portion     13,614       19,726  
    Total current assets     471,061       487,397  
Property, plant and equipment - net     1,247,661       1,188,214  
Other assets     91,474       100,715  
    TOTAL   $ 1,810,196     $ 1,776,326  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY                
LIABILITIES:                
Accounts payable, trade   $ 108,490     $ 75,370  
Due to affiliates     53,582       39,737  
Accrued and other current liabilities     69,466       40,099  
Accrued employee benefits costs     8,410       18,683  
Industrial revenue bonds     7,815       7,815  
    Total current liabilities     247,763       181,704  
                 
Senior notes payable     246,528       250,582  
Accrued pension benefits costs - less current portion     39,848       67,878  
Accrued postretirement benefits costs - less current portion     129,284       143,105  
Other liabilities     37,743       40,162  
Deferred taxes     106,218       110,252  
    Total noncurrent liabilities     559,621       611,979  
                 
SHAREHOLDERS' EQUITY:                
Series A Preferred stock (one cent par value, 5,000,000 shares authorized; 160,000 issued and 79,620 outstanding at December 31, 2013 and 160,000 issued and 80,283 outstanding at December 31, 2012)     1       1  
Common stock (one cent par value, 195,000,000 shares authorized; 93,496,798 issued and 88,710,277 outstanding at December 31, 2013; 93,335,158 issued and 88,548,637 outstanding at December 31, 2012)     935       933  
Additional paid-in capital     2,508,574       2,507,454  
Treasury stock, at cost     (49,924 )     (49,924 )
Accumulated other comprehensive loss     (91,832 )     (151,192 )
Accumulated deficit     (1,364,942 )     (1,324,629 )
    Total shareholders' equity     1,002,812       982,643  
    TOTAL   $ 1,810,196     $ 1,776,326  
                 
                 
                 
CENTURY ALUMINUM COMPANY  
CONSOLIDATED STATEMENTS OF CASH FLOWS  
(In thousands)  
(Unaudited)  
             
    Year ended  
    December 31,  
    2013     2012  
CASH FLOWS FROM OPERATING ACTIVITIES:            
  Net loss   $ (40,313 )   $ (35,610 )
  Adjustments to reconcile net loss to net cash provided by operating activities:                
    Unrealized net loss (gain) on forward contracts     (1,170 )     2,987  
    Gain on bargain purchase     (5,253 )     -  
    Unrealized gain on E.ON contingent obligation     (16,781 )     -  
    Accrued and other plant curtailment costs - net     4,452       5,251  
    Lower of cost or market inventory adjustment     1,247       (19,818 )
    Depreciation     66,570       62,570  
    Sebree power contract amortization     (31,031 )     -  
    Debt discount amortization     672       1,069  
    Pension and other postretirement benefits     1,740       3,129  
    Stock-based compensation     1,078       613  
    Loss on early extinguishment of debt     3,272       -  
    Equity in earnings of joint ventures, net of dividends     871       (2,623 )
                     
    Change in operating assets and liabilities:                
      Accounts receivable - net     (6,001 )     (2,537 )
      Due from affiliates     (5,717 )     2,202  
      Inventories     (21,920 )     31,854  
      Prepaid and other current assets     5,318       4,946  
      Accounts payable, trade     25,224       (12,114 )
      Due to affiliates     13,845       (2,167 )
      Accrued and other current liabilities     5,834       (5,746 )
      Other - net     16,665       3,133  
Net cash provided by operating activities     18,602       37,139  
                 
CASH FLOWS FROM INVESTING ACTIVITIES:                
  Purchase of property, plant and equipment     (45,417 )     (17,677 )
  Nordural expansion - Helguvik     (3,331 )     (7,317 )
  Purchase of carbon anode assets and improvements     (18,213 )     (13,814 )
  Purchase of Sebree smelter     (48,058 )     -  
  Investments in and advances to joint ventures     (125 )     (275 )
  Payments received from joint ventures     -       6,622  
  Proceeds from sale of property, plant and equipment     525       188  
  Restricted and other cash deposits     (1,439 )     (258 )
Net cash used in investing activities     (116,058 )     (32,531 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES:                
  Repayment of debt     (249,604 )     -  
  Proceeds from issuance of debt     246,330       -  
  Borrowings under revolving credit facility     22,725       18,076  
  Repayments under revolving credit facility     (16,725 )     (18,076 )
  Debt issuance costs     (3,994 )     -  
  Debt retirement costs     (1,208 )     -  
  Repurchase of common stock     -       (4,033 )
  Issuance of common stock     44       -  
Net cash used in financing activities     (2,432 )     (4,033 )
                 
CHANGE IN CASH AND CASH EQUIVALENTS     (99,888 )     575  
                 
Cash and cash equivalents, beginning of year     183,976       183,401  
                 
Cash and cash equivalents, end of year   $ 84,088     $ 183,976  
                 
                 
                 
Century Aluminum Company
Selected Operating Data
(Unaudited)
                         
SHIPMENTS - PRIMARY ALUMINUM
                         
    Direct (1)   Toll
        (000)           (000)   $ (000)
    Tonnes   Pounds   $/Pound   Tonnes   Pounds   Revenue
2013                            
4th Quarter   145,814   321,464   $ 0.94   70,941   156,398   $ 97,291
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   485,690   1,070,761   $ 0.99   278,908   614,887   $ 403,935
                             
2012                            
4th Quarter   93,649   206,461   $ 1.03   68,654   151,355   $ 105,668
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   377,314   831,835   $ 1.03   269,215   593,516   $ 415,779
                             
(1) Does not include Toll shipments from Nordural Grundartangi

Contact Information

  • Contacts
    Kenny Barkley (media)
    270-577-2070

    Shelly Harrison (investors)
    312-696-3140