SOURCE: Century Aluminum Company

Century Aluminum Company

April 24, 2014 16:00 ET

Century Reports First Quarter 2014 Financial Results

CHICAGO, IL--(Marketwired - Apr 24, 2014) - Century Aluminum Company (NASDAQ: CENX) reported a net loss of $20.1 million ($0.23 per basic and diluted common share) for the first quarter of 2014. Cost of sales for the quarter included a benefit of $5.5 million related to deferred power contract liability amortization. Results were negatively impacted by a $3.1 million charge for increased legal reserves.

 For the first quarter of 2013, the company reported net income of $8.3 million ($0.09 per basic and diluted common share). Financial results were positively impacted by a litigation reserve adjustment of $2.2 million and an unrealized gain of $15.7 million related to a LME-based contingent obligation. Results were negatively impacted by severance and other expenses of $2.2 million related to our corporate headquarters relocation. Cost of sales for the quarter included a $5.8 million charge related to lower of cost or market inventory adjustments.

Sales for the first quarter of 2014 were $420.8 million compared with $321.3 million for the first quarter of 2013. Shipments of primary aluminum for the first quarter of 2014 were 206,785 tonnes (which includes 50,631 tonnes from the Sebree operation acquired June 1, 2013), compared with 158,776 tonnes shipped in the first quarter of 2013.

"We have seen continuing progress in fundamental industry conditions," commented Michael Bless, President and Chief Executive Officer. "Demand development in key end markets in the U.S. and in Europe is supportive of premiums for our value-added products. These conditions are backstopped by reasonable economic growth and job creation in these regions. However, risks remain in the form of geopolitical tensions in Central Europe and the uncertain trajectory of China's economy and capital and credit markets. While on balance we see an improving environment, we will continue to manage the company, with a measure of caution until we develop higher confidence."

"We are moving forward with our critical initiatives," continued Mr. Bless. "Safety performance was good during the quarter; more importantly, we are seeing positive developments in terms of the significant forward-looking safety indicators. After a very difficult first quarter due to the historic cold weather in the midwestern and eastern U.S., power prices are now exhibiting a more rational reference to underlying fundamentals. We believe that this improved power price outlook, coupled with the other improvements we have made in the Kentucky plants, including continuing non-power cost structure reductions and enrichments in the product mix, should produce attractive returns going forward. In South Carolina, we continue to search for a competitive post-2015 power arrangement for Mt. Holly; we are committed to finding a solution to support the long-term operation of this excellent plant."

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 events and are based on our current expectations. These forward-looking statements may be identified by the words "believe," "expect," "target," "anticipate," "intend," "plan," "seek," "estimate," "potential," "project," "scheduled," "forecast" or words of similar meaning, or future or conditional verbs such as "will," "would," "should," "could," "might," or "may." Actual results and events in future periods may differ materially from those expressed or implied by these forward-looking statements because of a number of risks, uncertainties or other factors, including, without limitation: declines in aluminum prices or increases in our operating costs; worsening of global financial and economic conditions; weakening of the company's U.S. and European customer markets; increases in market power prices in the U.S. and our ability to successfully obtain and/or implement long-term competitive power arrangements for Mt. Holly. 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 assessment of the aluminum market and aluminum prices (including premiums); our assessment of power pricing; and our ability to successfully obtain a long-term competitive power arrangement for Mt. Holly. More information about these risks and uncertainties can be found in the risk factors and forward-looking statements cautionary language contained in our Annual Report on Form 10-K, quarterly reports on Form 10-Q and in other filings made with the Securities and Exchange Commission. Although we have attempted to identify those material factors that could cause actual results or events to differ from those described in such forward-looking statements, there may be other factors, currently unknown to us or deemed immaterial at the present time, that could cause results or events to differ from those anticipated, estimated or intended. Many of these factors are beyond our ability to control or predict. Given these uncertainties, the reader is cautioned not to place undue reliance on our forward-looking statements. We do not undertake, and specifically disclaim, any obligation to revise any forward-looking statements, whether as a result of new information, actual events, future events or otherwise.

   
CENTURY ALUMINUM COMPANY  
CONSOLIDATED STATEMENTS OF OPERATIONS  
(in thousands, except per share amounts)  
(Unaudited)  
    Three months ended March 31,  
    2014     2013  
NET SALES:                
  Third-party customers   $ 135,264     $ 188,514  
  Related parties     285,583       132,760  
      420,847       321,274  
  Cost of goods sold     422,605       303,692  
Gross profit (loss)     (1,758 )     17,582  
  Other operating expenses     2,414       1,096  
  Selling, general and administrative expenses     10,062       16,299  
Operating income (loss)     (14,234 )     187  
  Interest expense - third party - net     (5,337 )     (5,945 )
  Net gain (loss) on forward and derivative contracts     (879 )     15,507  
  Other income (expense) - net     (253 )     70  
Income (loss) before income taxes and equity in earnings (losses) of joint ventures     (20,703 )     9,819  
  Income tax benefit (expense)     1,094       (2,517 )
Income (loss) before equity in earnings (losses) of joint ventures     (19,609 )     7,302  
  Equity in earnings (losses) of joint ventures     (495 )     951  
Net income (loss)   $ (20,104 )   $ 8,253  
                 
Net income (loss) allocated to common shareholders   $ (20,104 )   $ 7,567  
EARNINGS (LOSS) PER COMMON SHARE:                
  Basic and Diluted   $ (0.23 )   $ 0.09  
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:                
  Basic     88,717       88,555  
  Diluted     88,717       89,020  
                   
                   
   
CENTURY ALUMINUM COMPANY  
CONSOLIDATED BALANCE SHEETS  
(in thousands, except share amounts)  
(Unaudited)  
    March 31, 2014     December 31, 2013  
ASSETS                
Cash and cash equivalents   $ 52,498     $ 84,088  
Restricted cash     1,032       1,697  
Accounts receivable -- net     45,619       56,184  
Due from affiliates     56,131       43,587  
Inventories     252,099       239,615  
Prepaid and other current assets     35,201       32,276  
Deferred taxes     13,614       13,614  
  Total current assets     456,194       471,061  
Property, plant and equipment -- net     1,239,893       1,247,661  
Other assets     90,768       91,474  
  TOTAL   $ 1,786,855     $ 1,810,196  
LIABILITIES AND SHAREHOLDERS' EQUITY                
LIABILITIES:                
Accounts payable, trade   $ 99,975     $ 108,490  
Due to affiliates     74,379       53,582  
Accrued and other current liabilities     51,644       69,466  
Accrued employee benefits costs     8,429       8,410  
Industrial revenue bonds     7,815       7,815  
  Total current liabilities     242,242       247,763  
Senior notes payable     246,615       246,528  
Accrued pension benefits costs -- less current portion     39,981       39,848  
Accrued postretirement benefits costs -- less current portion     131,196       129,284  
Other liabilities     36,984       37,743  
Deferred taxes     106,721       106,218  
  Total noncurrent liabilities     561,497       559,621  
                 
SHAREHOLDERS' EQUITY:                
Series A Preferred stock (one cent par value, 5,000,000 shares authorized; 160,000 issued and 79,365 outstanding at March 31, 2014; 160,000 issued and 79,620 outstanding at December 31, 2013)     1       1  
Common stock (one cent par value, 195,000,000 shares authorized; 93,557,964 issued and 88,771,443 outstanding at March 31, 2014; 93,496,798 issued and 88,710,277 outstanding at December 31, 2013)     936       935  
Additional paid-in capital     2,508,882       2,508,574  
Treasury stock, at cost     (49,924 )     (49,924 )
Accumulated other comprehensive loss     (91,733 )     (91,832 )
Accumulated deficit     (1,385,046 )     (1,364,942 )
  Total shareholders' equity     983,116       1,002,812  
  TOTAL   $ 1,786,855     $ 1,810,196  
                   
                   
   
CENTURY ALUMINUM COMPANY  
CONSOLIDATED STATEMENTS OF CASH FLOWS  
(in thousands)  
(Unaudited)  
    Three months ended March 31,  
    2014     2013  
CASH FLOWS FROM OPERATING ACTIVITIES:                
  Net income (loss)   $ (20,104 )   $ 8,253  
  Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:                
    Unrealized gain on E.ON contingent obligation     (353 )     (15,722 )
    Accrued and other plant curtailment costs -- net     1,092       1,154  
    Lower of cost or market inventory adjustment     (1,107 )     5,838  
    Depreciation     17,768       15,688  
    Sebree power contract amortization     (5,534 )     --  
    Debt discount amortization     88       279  
    Pension and other postretirement benefits     2,613       1,443  
    Stock-based compensation     198       217  
    Equity in (earnings) losses of joint ventures, net of dividends     495       (951 )
    Change in operating assets and liabilities:                
      Accounts receivable -- net     10,566       (1,998 )
      Due from affiliates     (12,545 )     (5,691 )
      Inventories     (11,377 )     (2,728 )
      Prepaid and other current assets     (2,958 )     (6,072 )
      Accounts payable, trade     (3,825 )     2,264  
      Due to affiliates     20,798       10,472  
      Accrued and other current liabilities     (6,620 )     7,538  
      Other -- net     64       2,417  
Net cash provided by (used in) operating activities     (10,741 )     22,401  
CASH FLOWS FROM INVESTING ACTIVITIES:                
  Purchase of property, plant and equipment     (9,700 )     (9,364 )
  Nordural expansion -- Helguvik     (93 )     (1,745 )
  Purchase of carbon anode assets and improvements     (5,724 )     (150 )
  Proceeds from sale of property, plant and equipment     --       353  
  Restricted and other cash deposits     665       --  
Net cash used in investing activities     (14,852 )     (10,906 )
CASH FLOWS FROM FINANCING ACTIVITIES:                
  Borrowings under revolving credit facilities     18,870       --  
  Repayments under revolving credit facilities     (24,870 )     --  
  Issuance of common stock     3       --  
Net cash used in financing activities     (5,997 )     --  
CHANGE IN CASH AND CASH EQUIVALENTS     (31,590 )     11,495  
 Cash and cash equivalents, beginning of period     84,088       183,976  
 Cash and cash equivalents, end of period   $ 52,498     $ 195,471  
                   
                   
 
CENTURY ALUMINUM COMPANY
SELECTED OPERATING DATA
(Unaudited)
 
 
    SHIPMENTS - PRIMARY ALUMINUM
    Direct (1)   Toll
    Tonnes   (000)
Pounds
   $/Pound   Tonnes   (000)
Pounds
  $ (000)
Revenue
2014                            
1st Quarter   173,296   382,053    $ 0.98   33,489   73,830    $ 47,185
                             
2013                            
1st Quarter   93,472   206,070    $ 1.06   65,304   143,971    $ 103,973
                             
(1) Does not include toll shipments from Nordural Grundartangi

Contact Information

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