SOURCE: Century Aluminum Company

Century Aluminum Company

February 24, 2015 16:00 ET

Century Reports Fourth Quarter 2014 Financial Results

CHICAGO, IL--(Marketwired - Feb 24, 2015) - Century Aluminum Company (NASDAQ: CENX) reported net income of $61.8 million ($0.64 per common share) for the fourth quarter of 2014. Results were positively impacted by $6.9 million ($0.07 per common share) for purchase accounting related to the acquisition of the remaining 50.3% interest of Mt. Holly and negatively impacted by $5.0 million ($0.05 per common share) in non-cash, non-recurring pension charges and by $2.6 million ($0.03 per common share) related to the separation of former senior executives.

Sales for the fourth quarter of 2014 were $551.2 million compared with $401.2 million for the fourth quarter of 2013. Shipments of primary aluminum for the fourth quarter of 2014 were 226,082 tonnes compared with 216,755 tonnes shipped in the fourth quarter of 2013. 

For the fourth quarter of 2013, Century reported a net loss of $9.7 million ($0.11 per common share). Cost of sales for the fourth quarter of 2013 included a benefit of $16.6 million related to deferred power contract liability amortization and $9.0 million for lower inventory costs. Results also included an $8.4 million charge related to the separation of our former chief executive officer.

For full year 2014, the company reported net income of $112.5 million ($1.16 per common share). Results were positively impacted by a benefit of $5.5 million related to power contract amortization, an unrealized gain of $1.4 million, primarily related to an LME-based contingent obligation and by $6.9 million for purchase accounting related to the acquisition of the remaining 50.3% interest of Mt. Holly. Results were negatively impacted by $5.0 million in non-cash, non-recurring pension charges, $3.6 million for litigation related items and by $2.6 million related to the separation of former senior executives. 

Sales for the year ended December 31, 2014 were $1,931.0 million compared with $1,454.3 million for 2013. Shipments of primary aluminum for 2014 were 867,125 tonnes compared with 764,598 tonnes for 2013 period.

For 2013, Century reported a net loss of $40.3 million ($0.45 per common share). Results were positively impacted by a $31.0 million benefit for deferred power contract liability amortization, $2.2 million in litigation items 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. Results for 2013 were negatively impacted by relocation costs of $5.8 million, a loss on early extinguishment of debt of $3.3 million and an $8.4 million charge related to the separation of our former chief executive officer.

"The global macro environment continues to be buffeted by volatile and unpredictable forces," commented Michael Bless, President and Chief Executive Officer. "Myriad geopolitical developments continue to weigh on the price of risk assets, including base metals. In addition, the rapid decline in the value of crude and other major fossil fuels, while producing a meaningful reduction in the price of electric power, has further weighed on sentiment toward industrial commodities. Lastly, the uncertain pace of near-term economic activity in China continues to provide an overhang. All this said, trading conditions in our markets remain reasonably attractive. The fundamentals that should drive market conditions over the long-term, most specifically an attractive demand growth profile, remain firmly in place. It is thus incumbent on us to continue to manage our business on a balanced basis through the present uncertainties."

"We've had a productive last few months at Century," continued Mr. Bless. "In early December we completed the acquisition of the remaining interest in the Mt. Holly smelter. Having now had a closer look, we have confirmed our long-held opinion of the high quality of the management team and employees, and the production and management processes they employ. We are now focused on the significant transition activities, largely in the area of ERP and other systems, which must be completed during the balance of this year. In addition, our recently started value-added product lines at Sebree and Grundartangi are now producing at full capacity."

Mr. Bless concluded, "We have a lot on our plates over the next few months. We are redoubling our efforts on our key safety initiatives; safety performance, while adequate, has been far from the continuous improvement we demand. At Mt. Holly, we are very focused on achieving a post-2015 power arrangement that will support the operation of and investment in this plant over the long term. We will be conducting in-depth negotiations over labor contracts at both Hawesville and Grundartangi. Last, we hope to be nearing a solution for a power contract that will enable us to restart the Ravenswood smelter."

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, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. 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," "hope," "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." Our forward-looking statements include, without limitation, statements with respect to: future global and local financial and economic conditions; our assessment of the aluminum market and aluminum prices (including premiums); the future financial and operating performance of the Company, its subsidiaries and its projects; future earnings, operating results and liquidity; future inventory, production, sales, cash costs and capital expenditures; our business objectives, strategies and initiatives, the growth of our business (including with respect to production and production capacity) and our competitive position and prospects; our ability to access existing or future financing arrangements; our ability to successfully manage transmission issues and market power price risk and to control or reduce power costs; our assessment of power pricing and our ability to successfully obtain and/or implement long-term competitive power arrangements for our operations and projects, including at Mt. Holly and Ravenswood; our ability to successfully produce value-added products at our smelters; future construction investment and development, including at the Helguvik Project, the restart of the second baking furnace at Vlissingen and our expansion project at Grundartangi, including our discussions regarding securing sufficient amounts of power, future capital expenditures, the costs of completion or cancellation, timing, production capacity and sources of funding; our ability to derive benefit from acquisitions, including the acquisitions of our Mt. Holly and Sebree smelters, and to successfully integrate these operations with the rest of our business; and tour plans with respect to restarting operations at our Ravenswood smelter.

Where we express an expectation or belief as to future events or results, such expectation or belief is expressed in good faith and believed to have a reasonable basis. However, our forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from future results expressed, projected or implied by those forward-looking statements. Important factors that could cause actual results and events to differ from those described in such forward-looking statements 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 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 undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.

 
 
CENTURY ALUMINUM COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(Unaudited)
 
    Three months ended December 31,   Twelve months ended December 31,
    2014   2013   2014     2013  
NET SALES:                                
  Third-party customers   $ 188,069     $ 262,782     $ 668,941     $ 943,262  
  Related parties     363,170       138,392       1,262,101       511,051  
      551,239       401,174       1,931,042       1,454,313  
  Cost of goods sold     461,243       385,889       1,728,586       1,414,790  
Gross profit     89,996       15,285       202,456       39,523  
  Other operating expense - net     6,776       2,314       12,481       8,602  
  Selling, general and administrative expenses     16,369       21,602       49,195       67,477  
Operating income (loss)     66,851       (8,631 )     140,780       (36,556 )
  Interest expense     (5,474 )     (5,386 )     (22,015 )     (23,091 )
  Interest income     104       271       301       728  
  Net gain on forward and derivative contracts     353       447       179       16,598  
  Gain on bargain purchase     -       -       -       5,253  
  Gain on fair value of contingent consideration     7,943       -       7,943       -  
  Gain on remeasurement of equity investment     1,318       -       1,318       -  
  Loss on early extinguishment of debt     -       -       -       (3,272 )
  Other income - net     1,414       1,497       991       496  
Income (loss) before income taxes and equity in earnings of joint ventures     72,509       (11,802 )     129,497       (39,844 )
  Income tax benefit (expense)     (11,304 )     1,583       (18,308 )     (3,131 )
Income (loss) before equity in earnings of joint ventures     61,205       (10,219 )     111,189       (42,975 )
  Equity in earnings of joint ventures     644       544       1,305       2,662  
Net income (loss)   $ 61,849     $ (9,675 )   $ 112,494     $ (40,313 )
                                 
Net income (loss) allocated to common stockholders   $ 56,824     $ (9,675 )   $ 103,283     $ (40,313 )
EARNINGS (LOSS) PER COMMON SHARE:                                
  Basic   $ 0.64     $ (0.11 )   $ 1.16     $ (0.45 )
  Diluted     0.63       (0.11 )     1.15       (0.45 )
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:                                
  Basic     88,959       88,684       88,823       88,612  
  Diluted     89,595       88,684       89,428       88,612  
                                 
                                 

 

   
   
CENTURY ALUMINUM COMPANY  
CONSOLIDATED BALANCE SHEETS  
(in thousands, except share amounts)  
(Unaudited)  
   
    December 31, 2014     December 31, 2013  
ASSETS            
Cash and cash equivalents   $ 163,242     $ 84,088  
Restricted cash     801       1,697  
Accounts receivable - net     76,165       56,184  
Due from affiliates     31,503       43,587  
Inventories     283,480       239,615  
Prepaid and other current assets     29,768       32,276  
Deferred taxes     14,281       13,614  
  Total current assets     599,240       471,061  
Property, plant and equipment - net     1,291,218       1,247,661  
Other assets     123,577       91,474  
  TOTAL   $ 2,014,035     $ 1,810,196  
LIABILITIES AND SHAREHOLDERS' EQUITY                
LIABILITIES:                
Accounts payable, trade   $ 151,443     $ 108,490  
Due to affiliates     22,261       53,582  
Accrued and other current liabilities     104,646       69,466  
Accrued employee benefits costs     10,159       8,410  
Industrial revenue bonds     7,815       7,815  
  Total current liabilities     296,324       247,763  
Senior notes payable     246,888       246,528  
Accrued pension benefits costs - less current portion     59,906       39,848  
Accrued postretirement benefits costs - less current portion     152,894       129,284  
Other liabilities     53,272       37,743  
Deferred taxes     113,604       106,218  
  Total noncurrent liabilities     626,564       559,621  
                 
SHAREHOLDERS' EQUITY:                
Series A Preferred stock (one cent par value, 5,000,000 shares authorized; 160,000 issued and 78,141 outstanding at December 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; 93,851,103 issued and 89,064,582 outstanding at December 31, 2014; 93,496,798 issued and 88,710,277 outstanding at December 31, 2013)     939       935  
Additional paid-in capital     2,510,261       2,508,574  
Treasury stock, at cost     (49,924 )     (49,924 )
Accumulated other comprehensive loss     (117,682 )     (91,832 )
Accumulated deficit     (1,252,448 )     (1,364,942 )
  Total shareholders' equity     1,091,147       1,002,812  
  TOTAL   $ 2,014,035     $ 1,810,196  
                   
                   
   
   
CENTURY ALUMINUM COMPANY  
CONSOLIDATED STATEMENTS OF CASH FLOWS  
(in thousands)  
(Unaudited)  
   
    Twelve months ended December 31,  
    2014     2013  
CASH FLOWS FROM OPERATING ACTIVITIES:                
Net income (loss)   $ 112,494     $ (40,313 )
Adjustments to reconcile net income (loss) to net cash provided by operating activities:                
  Unrealized net gain on forward contracts     -       (1,170 )
  Gain on bargain purchase     -       (5,253 )
  Gain on fair value of contingent consideration     (7,943 )     -  
  Gain on remeasurement of equity investment     (1,318 )     -  
  Unrealized gain on E.ON contingent obligation     (1,412 )     (16,781 )
  Accrued and other plant curtailment costs - net     4,350       4,452  
  Lower of cost or market inventory adjustment     (1,247 )     1,247  
  Depreciation     70,731       66,570  
  Sebree power contract amortization     (5,534 )     (31,031 )
  Debt discount amortization     361       672  
  Pension and other postretirement benefits     6,939       1,740  
  Deferred income taxes     2,633       (1,493 )
  Stock-based compensation     1,334       1,078  
  Loss on early extinguishment of debt     -       3,272  
  Equity in earnings of joint ventures, net of dividends     425       871  
  Change in operating assets and liabilities:                
    Accounts receivable - net     (19,981 )     (6,001 )
    Due from affiliates     12,084       (5,717 )
    Inventories     (16,513 )     (21,740 )
    Prepaid and other current assets     3,392       5,318  
    Accounts payable, trade     11,797       25,224  
    Due to affiliates     3,058       13,845  
    Accrued and other current liabilities     18,071       5,834  
    Other - net     2,690       19,094  
Net cash provided by operating activities     196,411       19,718  
CASH FLOWS FROM INVESTING ACTIVITIES:                
  Purchase of property, plant and equipment     (41,559 )     (46,533 )
  Nordural expansion - Helguvik     (337 )     (3,331 )
  Purchase of carbon anode assets and improvements     (13,230 )     (18,213 )
  Purchase of Sebree smelter     (1,042 )     (48,058 )
  Investments in and advances to joint ventures     -       (125 )
  Purchase of remaining interest in Mt. Holly smelter     (53,831 )     -  
  Proceeds from sale of property, plant and equipment     46       525  
  Restricted and other cash deposits     896       (1,439 )
Net cash used in investing activities     (109,057 )     (117,174 )
CASH FLOWS FROM FINANCING ACTIVITIES:                
  Repayment of debt     (2,603 )     (249,604 )
  Proceeds from issuance of debt     -       246,330  
  Borrowings under revolving credit facilities     92,423       22,725  
  Repayments under revolving credit facilities     (98,423 )     (16,725 )
  Debt issuance costs     -       (3,994 )
  Debt retirement costs     -       (1,208 )
  Issuance of common stock     403       44  
Net cash used in financing activities     (8,200 )     (2,432 )
CHANGE IN CASH AND CASH EQUIVALENTS     79,154       (99,888 )
Cash and cash equivalents, beginning of period     84,088       183,976  
Cash and cash equivalents, end of period   $ 163,242     $ 84,088  
 
 
 
CENTURY ALUMINUM COMPANY
SELECTED OPERATING DATA
(Unaudited)
 
SHIPMENTS - PRIMARY ALUMINUM          
               
    Direct (1)   Toll
    United States   Iceland   Iceland
    Tonnes     Revenue $ (000)   Tonnes     Revenue $ (000)   Tonnes     Revenue $ (000)
2014                              
4th Quarter   147,291   $ 377,606   43,364   $ 102,912   35,427   $ 60,001
3rd Quarter   143,338     353,246   38,056     85,117   36,820     60,032
2nd Quarter   143,439     325,650   39,593     82,328   33,012     48,441
1st Quarter   136,532     296,889   36,764     74,370   33,489     47,185
    Total   570,600   $ 1,353,391   157,777   $ 344,727   138,748   $ 215,659
    2013                              
4th Quarter   142,411   $ 296,747   3,403   $ 7,136   70,941   $ 97,291
3rd Quarter   138,916     295,969   1,204     2,578   72,677     101,381
2nd Quarter   104,008     225,638   2,276     5,010   69,986     101,290
1st Quarter   87,642     203,727   5,830     13,573   65,304     103,973
    Total   472,977   $ 1,022,081   12,713   $ 28,297   278,908   $ 403,935
(1) Excludes scrap aluminum sales.

Contact Information

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    Kenny Barkley (media)
    270-577-2070

    Shelly Harrison (investors)
    312-696-3140