SOURCE: Century Aluminum Company

Century Aluminum Company

July 24, 2012 16:00 ET

Century Reports Second Quarter 2012 Results

MONTEREY, CA--(Marketwire - Jul 24, 2012) - Century Aluminum Company (NASDAQ: CENX) reported a net loss of $12.3 million ($0.14 per basic and diluted common share) for the second quarter of 2012. Financial results were positively impacted by an unrealized net gain on forward contracts of $1.8 million primarily related to the mark to market of aluminum price protection options. Cost of sales for the quarter included a $5.4 million charge for lower of cost or market inventory adjustments.

For the second quarter of 2011, Century reported net income of $24.0 million ($0.24 per basic and diluted common share). Financial results were negatively impacted by a $7.7 million charge related to the contractual impact of certain changes in the company's Board of Directors and the executive management team; a charge of $2.9 million related to an insurance receivable, reflecting the fact that the matter had entered litigation; an unrealized net loss on forward contracts of $1.5 million, primarily related to the mark to market of aluminum price protection options; 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 quarterly results by $8.9 million with an associated discrete tax benefit of $2.1 million.

Sales for the second quarter of 2012 were $323.6 million, compared with $366.3 million for the second quarter of 2011. Shipments of primary aluminum for the 2012 second quarter were 160,828 tonnes, compared with 151,483 tonnes shipped in the year-ago quarter.

For the first half of 2012, the company reported a net loss of $16.7 million ($0.19 per basic and diluted share). First half results were negatively impacted by an unrealized net loss on forward contracts of $3.2 million primarily related to the mark to market of aluminum price protection options. Cost of sales for the first half included an $11.6 million benefit for lower of cost or market inventory adjustments.

This result compares to net income of $49.0 million ($0.48 per basic and diluted share) for the first half of 2011. Results for the prior six-month period were negatively impacted by a $7.7 million charge related to the contractual impact of the changes in the company's Board of Directors and the executive management team; a charge of $2.9 million related to an insurance receivable; an unrealized net loss on forward contracts of $6.2 million, primarily related to the marking to market of aluminum price protection options; 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 first half results by $18.3 million with an associated discrete tax benefit of $4.2 million. Cost of sales for the first six months of 2011 included an $8.6 million charge related to the restart of a curtailed potline at the Hawesville, Ky. smelter.

Sales in the first six months of 2012 were $649.8 million compared with $692.6 million in the same period of 2011. Shipments of primary aluminum for the first six months of 2012 were 320,795 tonnes compared with 295,661 tonnes for the comparable 2011 period.

"We have witnessed a weakening of global economic conditions and sentiment during the past several months," commented Michael Bless, President and Chief Executive Officer. "The sovereign and banking crisis in the Eurozone, coupled with a deceleration of growth in China and other emerging economies, has weighed on prices of commodities and similar assets. Though we have yet to see any meaningful deterioration in our U.S. customer markets, we are closely watching the situation. Within this present weak environment, we continue to believe the fundamentals of the aluminum sector foreshadow more favorable conditions over the longer term."

"At Century we are planning for the longer term, while continuing to manage the business carefully during these uncertain times," continued Mr. Bless. "Our acquisition of the carbon anode production facility in Vlissingen, the Netherlands is based upon an objective of long-term security of quality supply of this strategic raw material; in addition, the investment carries a favorable financial return. That said, we will carefully manage the capital improvement program, and easily can defer this process should global conditions warrant. We had a strong quarter at our existing operations. Safety performance was generally very good across the company. Cost reduction activities continue to show tangible results; cash operating costs have fallen meaningfully since the third quarter of 2011. We are continuing in our aggressive efforts to secure electric power arrangements which will provide for the long-term competitiveness of our U.S. plants. This process has yielded good results at Mt. Holly and continues in earnest at Hawesville. We have maintained our determined efforts to restart our Ravenswood plant, and are now in detailed discussions with the Public Service Commission and other key constituencies regarding an enabling power contract. We believe restarting the plant will be an attractive investment for our shareholders."

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 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; our ability to successfully obtain long-term competitive power arrangements for our U.S. plants; and our ability to successfully progress the potential restart of our Ravenswood smelter and our Vlissingen carbon anode production facility. Forward-looking statements in this press release include, without limitation, statements regarding future aluminum sector conditions, including future industry production capacity; our ability to successfully progress the potential restart of our Ravenswood smelter; and our ability to successfully progress the potential restart of our Vlissingen carbon anode production facility and the anticipated financial return of the project. 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     Six months ended  
    June 30,     June 30,  
    2012     2011     2012     2011  
NET SALES:                                
  Third-party customers   $ 184,022     $ 207,091     $ 372,861     $ 395,403  
  Related parties     139,597       159,186       276,948       297,211  
      323,619       366,277       649,809       692,614  
                                 
COST OF GOODS SOLD     317,662       316,763       623,260       600,784  
                                 
GROSS PROFIT     5,957       49,514       26,549       91,830  
                                 
OTHER OPERATING EXPENSES (INCOME) - NET     3,817       (5,205 )     7,538       (11,089 )
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES     7,151       18,557       15,610       29,166  
                                 
OPERATING INCOME (LOSS)     (5,011 )     36,162       3,401       73,753  
                                 
INTEREST EXPENSE - THIRD PARTY - NET     (5,833 )     (6,321 )     (11,673 )     (12,943 )
INTEREST INCOME - RELATED PARTY     2       70       62       183  
NET GAIN (LOSS) ON FORWARD CONTRACTS     1,450       (1,617 )     (3,709 )     (6,426 )
OTHER INCOME (EXPENSE) - NET     161       (1,132 )     467       (455 )
                                 
INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY IN EARNINGS OF JOINT VENTURES     (9,231 )     27,162       (11,452 )     54,112  
                                 
INCOME TAX EXPENSE     (3,395 )     (3,636 )     (6,216 )     (6,759 )
                                 
INCOME (LOSS) BEFORE EQUITY IN EARNINGS OF JOINT VENTURES     (12,626 )     23,526       (17,668 )     47,353  
                                 
EQUITY IN EARNINGS OF JOINT VENTURES     349       460       990       1,679  
                                 
NET INCOME (LOSS)   $ (12,277 )   $ 23,986     $ (16,678 )   $ 49,032  
                                 
Net Income (Loss) Allocated to Common Shareholders   $ (12,277 )   $ 22,061     $ (16,678 )   $ 45,066  
                                 
EARNINGS (LOSS) PER COMMON SHARE                                
  Basic and Diluted   $ (0.14 )   $ 0.24     $ (0.19 )   $ 0.48  
                                 
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING                                
  Basic     88,452       93,105       88,589       93,036  
  Diluted     88,452       93,567       88,589       93,432  
                                   
                                   
                                   
Century Aluminum Company  
Consolidated Balance Sheets  
(Dollars in Thousands)  
(Unaudited)  
             
             
    June 30,     December 31,  
ASSETS   2012     2011  
Current Assets:                
  Cash and cash equivalents   $ 156,512     $ 183,401  
  Accounts receivable - net     71,936       47,647  
  Due from affiliates     34,671       44,665  
  Inventories     158,538       171,961  
  Prepaid and other current assets     43,131       40,646  
    Total current assets     464,788       488,320  
Property, plant and equipment - net     1,208,029       1,218,225  
Other assets     106,284       104,549  
    Total   $ 1,779,101     $ 1,811,094  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY                
Current Liabilities:                
  Accounts payable, trade   $ 70,360     $ 86,172  
  Due to affiliates     43,055       41,904  
  Accrued and other current liabilities     44,716       40,776  
  Accrued employee benefits costs - current portion     16,107       16,698  
  Industrial revenue bonds     7,815       7,815  
    Total current liabilities     182,053       193,365  
                 
Senior notes payable     250,036       249,512  
Accrued pension benefits costs - less current portion     67,762       70,899  
Accrued postretirement benefits costs - less current portion     128,429       128,078  
Other liabilities     39,690       40,005  
Deferred taxes     90,832       90,958  
    Total noncurrent liabilities     576,749       579,452  
                 
Shareholders' Equity:                
  Series A preferred stock (one cent par value, 5,000,000 shares authorized; 80,623 and 80,718 issued and outstanding at June 30, 2012 and December 31, 2011, respectively)     1       1  
  Common stock (one cent par value, 195,000,000 shares authorized; 93,253,570 issued and 88,467,049 outstanding as of June 30, 2012; 93,230,848 issued and 88,844,327 outstanding as of December 31, 2011)     933       932  
  Additional paid-in capital     2,507,053       2,506,842  
  Treasury stock, at cost     (49,924 )     (45,891 )
  Accumulated other comprehensive loss     (132,067 )     (134,588 )
  Accumulated deficit     (1,305,697 )     (1,289,019 )
    Total shareholders' equity     1,020,299       1,038,277  
    Total   $ 1,779,101     $ 1,811,094  
                 
                 
                 
Century Aluminum Company  
Consolidated Statements of Cash Flows  
(Dollars in Thousands)  
(Unaudited)  
             
             
    Six months ended  
    June 30,  
    2012     2011  
CASH FLOWS FROM OPERATING ACTIVITIES:                
  Net income (loss)   $ (16,678 )   $ 49,032  
  Adjustments to reconcile net income (loss) to net cash used in operating activities:                
    Unrealized net loss on forward contracts     3,177       6,170  
    Accrued and other plant curtailment costs - net     2,781       (16,592 )
    Lower of cost or market inventory adjustment     (11,617 )     (16 )
    Depreciation and amortization     31,288       31,064  
    Debt discount amortization     523       1,355  
    Pension and other postretirement benefits     (260 )     (28,608 )
    Stock-based compensation     212       2,501  
    Non-cash loss on early extinguishment of debt     -       763  
    Undistributed earnings of joint ventures     (990 )     (1,679 )
    Change in operating assets and liabilities:                
      Accounts receivable - net     (24,289 )     (10,935 )
      Due from affiliates     5,401       11,265  
      Inventories     25,040       (31,464 )
      Prepaid and other current assets     (3,877 )     (28,991 )
      Accounts payable, trade     (15,931 )     (1,202 )
      Due to affiliates     1,151       (5,834 )
      Accrued and other current liabilities     1,750       7,575  
      Other - net     704       (539 )
  Net cash used in operating activities     (1,615 )     (16,135 )
                 
CASH FLOWS FROM INVESTING ACTIVITIES:                
  Purchase of property, plant and equipment     (6,165 )     (7,353 )
  Nordural expansion     (3,586 )     (7,968 )
  Purchase of carbon anode assets     (14,524 )     -  
  Investments in and advances to joint ventures     (200 )     -  
  Payments received on advances from joint ventures     3,166       3,056  
  Proceeds from sale of property, plant and equipment     68       56  
  Restricted and other cash deposits     -       3,673  
    Net cash used in investing activities     (21,241 )     (8,536 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES:                
  Repayment of debt     -       (47,067 )
  Repayment of contingent obligation     -       (189 )
  Borrowing under revolving credit facility     18,076       -  
  Repayment under revolving credit facility     (18,076 )     -  
  Repurchase of common stock     (4,033 )     -  
  Issuance of common stock - net     -       32  
    Net cash used in financing activities     (4,033 )     (47,224 )
                 
CHANGE IN CASH AND CASH EQUIVALENTS     (26,889 )     (71,895 )
                 
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD     183,401       304,296  
                 
CASH AND CASH EQUIVALENTS, END OF PERIOD   $ 156,512     $ 232,401  
                 
                 
                 
Century Aluminum Company
Selected Operating Data
(Unaudited)
                         
SHIPMENTS - PRIMARY ALUMINUM
                         
    Direct (1)   Toll
    Metric Tons   (000)
Pounds
  $/Pound   Metric Tons   (000)
Pounds
  (000)
Revenue
2012                            
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
Year to Date   187,918   414,288   $ 1.05   132,877   292,944   $ 212,172
                             
2011                            
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
Year to Date   164,988   363,736   $ 1.22   130,673   288,084   $ 249,771
                             
(1) Does not include Toll shipments from Nordural Grundartangi       
 

Contact Information

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

    Shelly Harrison
    (investors)
    831-642-9357