SOURCE: Century Aluminum Company

Century Aluminum Company

February 18, 2016 16:05 ET

Century Reports Fourth Quarter 2015 Financial Results

CHICAGO, IL--(Marketwired - Feb 18, 2016) - Century Aluminum Company (NASDAQ: CENX) reported a net loss of $43.1 million ($0.50 per share) for the fourth quarter of 2015. Results were favorably impacted by a $23.5 million ($0.25 per share) lower of cost or market inventory adjustment and $3.4 million ($0.04 per share) related to non-cash, non-recurring post-retirement benefits. Results were negatively impacted by a $3.5 million charge ($0.04 per share) related to the partial curtailment of operations at Hawesville and Mt. Holly, a $5.0 million charge ($0.05 per share) for depreciation related to Mt. Holly purchase accounting and an $11.6 million impairment charge ($0.12 per share) at BHH. After consideration of these items, the company reported an adjusted net loss of $49.9 million and an adjusted loss per share of $0.53 for the fourth quarter.

For the fourth quarter of 2014, Century reported net income of $75.8 million ($0.78 per share). Results were positively impacted by $21.5 million ($0.22 per share) for purchase accounting related to the Mt. Holly acquisition and negatively impacted by $5.0 million ($0.05 per share) in non-cash, non-recurring pension charges and by $2.6 million ($0.03 per share) related to the separation of former senior executives.

Sales for the fourth quarter of 2015 were $383.9 million compared with $551.2 million for the fourth quarter of 2014. Shipments of primary aluminum for the fourth quarter of 2015 were 211,710 tonnes compared with 226,082 tonnes shipped in the fourth quarter of 2014.

Net cash used by operating activities in the fourth quarter of 2015 was $0.6 million compared to net cash provided of $110.0 million in the fourth quarter of 2014. Cash and cash equivalents decreased $7.6 million during the fourth quarter of 2015 compared to an increase in cash and cash equivalents of $29.8 million in the fourth quarter of 2014.

Our total liquidity position at the end of the fourth quarter of 2015 was $200 million, which is composed of $115 million in cash and $85 million of revolver availability.

For the full year 2015, Century reported a net loss of $59.3 million ($0.68 per share). Results were favorably impacted by $12.6 million related to purchase accounting for the Mt. Holly acquisition and $3.4 million related to non-cash, non-recurring post-retirement benefits. Results were negatively impacted by a $31.2 million charge related to the permanent closure of Ravenswood, $13.1 million in costs related to the labor disruption at Hawesville, $7.6 million due to partial curtailments of operations at Hawesville and Mt. Holly, $11.6 million related to the impairment at BHH, $1.6 million for signing bonuses related to a new labor agreement in Iceland, $1.0 million related to the separation of a former senior executive and a $7.5 million lower of cost or market inventory adjustment.

For full year 2014, the company reported net income of $126.5 million ($1.31 per share). Results were positively impacted by $21.5 million for purchase accounting related to the Mt. Holly acquisition, $5.5 million related to power contract amortization and a $1.2 million lower of cost or market inventory adjustment. 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, 2015 were $1,949.9 million compared with $1,931.0 million for 2014. Shipments of primary aluminum for 2015 were 921,958 tonnes compared with 867,125 tonnes shipped for 2014.

Net cash provided by operating activities in 2015 was $31.9 million compared to $207.7 million in 2014. Cash and cash equivalents decreased $47.8 million in 2015 compared to an increase in cash and cash equivalents of $79.2 million in 2014. During 2015, Century acquired 2.4 million shares of common stock for a total cost of $36.4 million and paid $34.6 million related to the Mt. Holly acquisition for pension funding obligations per the terms of the acquisition agreement.

"The fundamental demand picture in our sector has remained reasonably stable outside China," commented Michael Bless, President and Chief Executive Officer. "True demand growth in China has continued to deteriorate. Despite decreasing demand growth, the uneconomic supply expansion of the Chinese aluminum industry has continued through government intervention and manipulation. Evidence continues to mount that the illegal government subsidies and other practices underlying this supply growth are in violation of China's WTO obligations and have materially injured the industry around the globe. As direct evidence, this most recent quarter witnessed actions and announcements that will bring U.S. primary production down to an annualized rate of just over five hundred thousand metric tons. We continue to work with industry participants, including our labor partners, to encourage government action before it is simply too late."

"Inside Century, we have taken aggressive actions to bolster our businesses' competitive position and preserve the ability for our shareholders to participate in the improvement in industry conditions that will occur at some point," concluded Mr. Bless. "Our safety performance across the company was quite good during 2015. This result was especially notable given the significant uncertainty under which all our plants have been operating. We have optimized product portfolios, reduced cost structures and, where necessary, rationalized production; the result of this effort has been the achievement of our stated goal of making each of our plants cash flow positive in the present environment. We were pleased to have preserved Sebree at full production; this excellent plant is operating very well. We were disappointed to have been faced with the necessity of curtailing half of Mt. Holly's production. We are working intently to produce a power supply arrangement that makes this world class plant competitive for the long-term."

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.

Non-GAAP Financial Measures

Adjusted net income and adjusted earnings per share are non-GAAP financial measures that management believes provide additional meaningful information regarding Century's financial performance as these measures generally exclude the effects of items that are considered non-recurring, are difficult to predict or to measure in advance or that are not directly related to the Company's ongoing operations. The table below, under the heading "Reconciliation of Non-GAAP Financial Measures," provides a reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company's reported results prepared in accordance with GAAP. In addition, because not all companies use identical calculations, adjusted net income and adjusted earnings per share included in this press release may not be comparable to similarly titled measures of other companies. Investors are encouraged to review the reconciliation in conjunction with the presentation of these non-GAAP financial measures.

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); 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; our ability to procure alumina, carbon products and other raw materials and our assessment of pricing and costs and other terms relating thereto; our relationship with our employees and labor unions; our plans and expectations with respect to the disposal of our Ravenswood, West Virginia smelter, and the future operation or potential curtailment of our other U.S. assets, including our Hawesville, Mt. Holly and Sebree smelters; 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; future impairment charges or restructuring costs; our business objectives, strategies and initiatives, including our ability to achieve productivity improvements or cost reductions.

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,  
    2015     2014     2015     2014  
NET SALES:                                
  Related parties   $ 350,283     $ 363,170     $ 1,867,711     $ 1,262,101  
  Third-party customers     33,632       188,069       82,146       668,941  
Total net sales     383,915       551,239       1,949,857       1,931,042  
  Cost of goods sold     402,616       461,900       1,908,544       1,729,243  
Gross profit (loss)     (18,701 )     89,339       41,313       201,799  
  Selling, general and administrative expenses     8,566       16,369       42,115       49,195  
  Ravenswood impairment     --       --       30,850       --  
  Other operating expense - net     1,219       6,776       7,436       12,481  
Operating income (loss)     (28,486 )     66,194       (39,088 )     140,123  
  Interest expense     (5,412 )     (5,474 )     (21,954 )     (22,015 )
  Interest income     91       104       339       301  
  Net gain on forward and derivative contracts     396       353       1,600       179  
  Unrealized gain on fair value of contingent consideration     --       7,943       18,337       7,943  
  Gain on remeasurement of equity investment     --       15,955       --       15,955  
  Other income (expense) - net     (1,617 )     1,414       (356 )     991  
Income (loss) before income taxes and equity in earnings of joint ventures     (35,028 )     86,489       (41,122 )     143,477  
  Income tax benefit (expense)     2,929       (11,304 )     (9,276 )     (18,308 )
Income (loss) before equity in earnings of joint ventures     (32,099 )     75,185       (50,398 )     125,169  
  BHH Impairment     (11,584 )     --       (11,584 )     --  
  Equity in earnings of joint ventures     603       644       2,672       1,305  
Net income (loss)   $ (43,080 )   $ 75,829     $ (59,310 )   $ 126,474  
                                 
Net income (loss) allocated to common stockholders   $ (43,080 )   $ 69,669     $ (59,310 )   $ 116,118  
EARNINGS (LOSS) PER COMMON SHARE:                                
  Basic   $ (0.50 )   $ 0.78     $ (0.68 )   $ 1.31  
  Diluted     (0.50 )     0.78       (0.68 )     1.30  
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:                                
  Basic     86,933       88,959       87,375       88,823  
  Diluted     86,933       89,595       87,375       89,428  
                                 
   
CENTURY ALUMINUM COMPANY  
CONSOLIDATED BALANCE SHEETS  
(in thousands, except share amounts)  
(Unaudited)  
   
    December 31,
2015
    December 31,
2014
 
ASSETS                
Cash and cash equivalents   $ 115,393     $ 163,242  
Restricted cash     791       801  
Accounts receivable -- net     9,475       77,667  
Due from affiliates     17,417       31,503  
Inventories     231,872       283,480  
Prepaid and other current assets     42,412       29,768  
Assets held for sale     30,697       --  
Deferred taxes     --       14,281  
    Total current assets     448,057       600,742  
Property, plant and equipment -- net     1,232,256       1,305,543  
Other assets     72,155       118,773  
    TOTAL   $ 1,752,468     $ 2,025,058  
LIABILITIES AND SHAREHOLDERS' EQUITY                
LIABILITIES:                
Accounts payable, trade   $ 90,489     $ 151,443  
Due to affiliates     10,045       22,261  
Accrued and other current liabilities     48,822       103,807  
Accrued employee benefits costs     10,148       10,159  
Industrial revenue bonds     7,815       7,815  
    Total current liabilities     167,319       295,485  
Senior notes payable     247,278       246,888  
Accrued pension benefits costs -- less current portion     43,999       59,906  
Accrued postretirement benefits costs -- less current portion     125,999       152,894  
Other liabilities     53,009       53,272  
Deferred taxes     96,994       111,486  
    Total noncurrent liabilities     567,279       624,446  
                 
SHAREHOLDERS' EQUITY:                
Series A Preferred stock (one cent par value, 5,000,000 shares authorized; 160,000 issued and 76,539 outstanding at December 31, 2015; 160,000 issued and 78,141 outstanding at December 31, 2014)     1       1  
Common stock (one cent par value, 195,000,000 authorized; 94,224,571 issued and 87,038,050 outstanding at December 31, 2015; 93,851,103 issued and 89,064,582 outstanding at December 31, 2014)     942       939  
Additional paid-in capital     2,513,631       2,510,261  
Treasury stock, at cost     (86,276 )     (49,924 )
Accumulated other comprehensive loss     (112,650 )     (117,682 )
Accumulated deficit     (1,297,778 )     (1,238,468 )
    Total shareholders' equity     1,017,870       1,105,127  
    TOTAL   $ 1,752,468     $ 2,025,058  
                 
   
CENTURY ALUMINUM COMPANY  
CONSOLIDATED STATEMENTS OF CASH FLOWS  
(in thousands)  
(Unaudited)  
   
    Twelve months ended December 31,  
    2015     2014  
CASH FLOWS FROM OPERATING ACTIVITIES:                
  Net income (loss)   $ (59,310 )   $ 126,474  
  Adjustments to reconcile net income (loss) to net cash provided by operating activities:                
    Unrealized gain on fair value of contingent consideration     (18,337 )     (7,943 )
    Gain on remeasurement of equity investment     --       (15,955 )
    Unrealized gain on E.ON contingent obligation     (1,411 )     (1,412 )
    Lower of cost or market inventory adjustment     7,539       (1,247 )
    Depreciation     80,117       70,827  
    Ravenswood impairment     30,850       --  
    BHH impairment     11,584       --  
    Sebree power contract amortization     --       (5,534 )
    Pension and other postretirement benefits     (4,991 )     6,939  
    Deferred income taxes     (178 )     2,633  
    Stock-based compensation     1,844       1,334  
    Equity in earnings of joint ventures, net of dividends     (806 )     425  
    Change in operating assets and liabilities:                
      Accounts receivable -- net     68,192       (8,712 )
      Due from affiliates     14,086       12,084  
      Inventories     44,896       (16,513 )
      Prepaid and other current assets     (144 )     3,392  
      Accounts payable, trade     (60,583 )     11,797  
      Due to affiliates     (12,216 )     3,058  
      Accrued and other current liabilities     (31,540 )     18,071  
      Pension contribution - Mt. Holly     (34,595 )     --  
      Other -- net     (3,131 )     7,962  
Net cash provided by operating activities     31,866       207,680  
CASH FLOWS FROM INVESTING ACTIVITIES:                
  Purchase of property, plant and equipment     (54,700 )     (55,126 )
  Purchase of Sebree smelter     --       (1,042 )
  Purchase of remaining interest in Mt. Holly smelter     11,313       (65,100 )
  Proceeds from sale of property, plant and equipment     14       46  
  Restricted and other cash deposits     10       896  
Net cash used in investing activities     (43,363 )     (120,326 )
CASH FLOWS FROM FINANCING ACTIVITIES:                
  Repayment of debt     --       (2,603 )
  Borrowings under revolving credit facilities     1,737       92,423  
  Repayments under revolving credit facilities     (1,737 )     (98,423 )
  Repurchase of common stock     (36,352 )     --  
  Issuance of common stock     --       403  
Net cash used in financing activities     (36,352 )     (8,200 )
CHANGE IN CASH AND CASH EQUIVALENTS     (47,849 )     79,154  
Cash and cash equivalents, beginning of period     163,242       84,088  
Cash and cash equivalents, end of period   $ 115,393     $ 163,242  
                 
 
CENTURY ALUMINUM COMPANY
SELECTED OPERATING DATA
(Unaudited)
 
SHIPMENTS - PRIMARY ALUMINUM        
             
    Direct (1)   Toll
    United States   Iceland   Iceland
    Tonnes   Sales $ (000)   Tonnes   Sales $ (000)   Tonnes   Sales $ (000)
2015                              
4th Quarter   131,849   $ 247,895   59,074   $ 101,497   20,787   $ 24,281
3rd Quarter   149,187     304,948   60,939     116,919   20,914     26,226
2nd Quarter   157,373     371,898   50,056     110,083   26,521     37,858
1st Quarter   169,306     421,141   45,967     112,662   29,985     46,617
Total   607,715   $ 1,345,882   216,036   $ 441,161   98,207   $ 134,982
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
                               
(1) Excludes scrap aluminum sales.
   
   
CENTURY ALUMINUM COMPANY  
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES  
(in millions, except per share amounts)  
(Unaudited)  
   
  Three months ended  
  December 31, 2015  
  $MM   EPS  
Net loss as reported $ (43.1 ) $ (0.50 )
             
Partial curtailment of operations   3.5     0.04  
Non-cash/non-recurring post-retirement benefits   (3.4 )   (0.04 )
Mt. Holly purchase accounting   5.0     0.05  
BHH impairment   11.6     0.12  
Lower of cost or market inventory adjustment   (23.5 )   (0.25 )
Impact of preferred shares   --     0.05  
             
Adjusted net loss $ (49.9 ) $ (0.53 )
             

Contact Information

  • Contacts
    Peter Trpkovski
    (investors and media)
    312-696-3112