SOURCE: Century Aluminum Company

Century Aluminum Company

July 30, 2014 16:00 ET

Century Reports Second Quarter 2014 Financial Results

CHICAGO, IL--(Marketwired - Jul 30, 2014) -  Century Aluminum Company (NASDAQ: CENX) reported net income of $20.3 million or $0.21 per common share for the second quarter of 2014 on higher aluminum prices and lower power prices in the Midwestern U.S. Results were negatively impacted by a charge of $0.5 million or $0.01 per common share for the finalization of a legal settlement. 

Sales for the second quarter of 2014 were $458.3 million compared with $331.9 million for the second quarter of 2013. Shipments of primary aluminum for the second quarter of 2014 were 216,044 tonnes, which includes 53,966 tonnes from the Sebree operation acquired June 1, 2013, compared with 176,270 tonnes shipped in the second quarter of 2013. 

For the second quarter of 2013, Century reported a net loss of $29.4 million or $0.33 per common share. Financial results for the year-ago quarter were positively impacted by a gain on bargain purchase of $5.3 million and power contract amortization of $2.7 million associated with the Sebree acquisition. Results were negatively impacted by a charge of $3.3 million for the early extinguishment of our 8.0% Senior Notes and a charge for severance and other expenses of $1.7 million related to our corporate headquarters relocation. Cost of sales for the quarter included a $10.2 million charge for lower of cost or market inventory adjustments.

For the first half of 2014, the company reported net income of $0.2 million or $0.00 per common share. Cost of sales for the first half included a benefit of $5.5 million related to power contract amortization and $1.2 million for lower of cost or market inventory adjustments. Results were negatively impacted by a reserve of $3.6 million for a legal settlement. 

Sales in the first half of 2014 were $879.2 million compared with $653.2 million in the same period of 2013. Shipments of primary aluminum for the first half of 2014 were 422,829 tonnes, including 104,597 tonnes from the Sebree operation, compared with 335,046 tonnes for the comparable 2013 period.

This result compares to a net loss of $21.1 million or $0.24 per common share for the first half of 2013. Results for the first half of 2013 were positively impacted by an unrealized gain of $16.1 million related to an LME-based contingent obligation, a gain on bargain purchase of $5.3 million and power contract amortization of $2.7 million. Results were negatively impacted by a charge of $3.3 million for the early extinguishment of our 8.0% Senior Notes and a charge of $4.0 million for severance and other expenses related to our corporate headquarters relocation. Cost of sales for the first half of 2013 included a $16.0 million charge for lower of cost or market inventory adjustments.

"Industry conditions appear to be headed in a positive direction," commented Michael Bless, President and Chief Executive Officer. "The data suggest the developed world demand picture is moving from stability to growth, with certain key end markets displaying particularly strong fundamentals. While structural problems persist in developing economies, including China, the potential for a 'hard landing' seems more remote. The geographic markets which Century serves look robust. We see these industry conditions continuing for a reasonable period of time, and in this context are preparing prudent investments to exploit what we deem to be attractive opportunities for the company."

"Our operations performed well during the quarter," continued Mr. Bless. "Safety results, while still better than industry averages, fell a bit after several years of excellent improvement; we are rededicating our efforts in this most important area. Conversion costs were generally in line with expectations. Production metrics were favorable, other than the inefficiencies caused by the weather-related power curtailments in Iceland, which were expected. In addition, in May, we experienced some localized transmission congestion in Kentucky which had a minor negative impact on power prices at our plants; these conditions have largely dissipated. Importantly, Midwest power prices have fallen as expected. We remain convinced that the power strategy we pursued in Kentucky, while difficult at times, was ultimately the correct one."

Mr. Bless concluded, "We are very focused on executing a longer-term power strategy in Kentucky, and are actively working on a range of alternatives. We are confident enough in the future of these two excellent plants to be evaluating a number of investments aimed at upgrading the value-added content of our product portfolio. In South Carolina, we regrettably deemed it necessary to provide the post-2015 termination notice of Mt. Holly's power contract. That said, we are committed to finding a long-term solution and are in active discussions with the power company. In West Virginia, in cooperation with the power company, we are continuing to work hard to develop a power agreement that will enable a restart of our Ravenswood plant; reaching this objective remains one of our key priorities."

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 and Ravenswood. 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; our ability to successfully obtain long-term competitive power arrangements for Mt. Holly and Ravenswood; and whether or not we are able to restart the Ravenswood plant. 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 June 30,   Six months ended June 30,
    2014   2013   2014     2013  
NET SALES:                        
  Third-party customers   $ 169,751     $ 220,950     $ 305,015     $ 409,464  
  Related parties     288,573       110,987       574,156       243,747  
        458,324       331,937       879,171       653,211  
  Cost of goods sold     419,820       337,635       842,425       641,327  
Gross profit (loss)     38,504       (5,698 )     36,746       11,884  
  Other operating expense - net     1,874       3,018       4,288       4,114  
  Selling, general and administrative expenses     10,618       15,154       20,680       31,453  
Operating income (loss)     26,012       (23,870 )     11,778       (23,683 )
  Interest expense - third party     (5,571 )     (6,224 )     (11,048 )     (12,300 )
  Interest income - third party     34       186       174       317  
  Net gain (loss) on forward and derivative contracts     352       204       (527 )     15,711  
  Gain on bargain purchase     --       5,253       --       5,253  
  Loss on early extinguishment of debt     --       (3,272 )     --       (3,272 )
  Other income (expense) - net     300       (1,284 )     47       (1,214 )
Income (loss) before income taxes and equity in earnings of joint ventures     21,127       (29,007 )     424       (19,188 )
  Income tax expense     (1,654 )     (813 )     (560 )     (3,330 )
Income (loss) before equity in earnings of joint ventures     19,473       (29,820 )     (136 )     (22,518 )
  Equity in earnings of joint ventures     871       436       376       1,387  
Net income (loss)   $ 20,344     $ (29,384 )   $ 240     $ (21,131 )
                                 
Net income (loss) allocated to common shareholders   $ 18,675     $ (29,384 )   $ 220     $ (21,131 )
EARNINGS (LOSS) PER COMMON SHARE:                                
  Basic and Diluted   $ 0.21     $ (0.33 )   $ --     $ (0.24 )
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:                                
  Basic     88,787       88,597       88,752       88,576  
  Diluted     89,352       88,597       89,292       88,576  
                                   
                                   
 
 
CENTURY ALUMINUM COMPANY
CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
(Unaudited)
 
    June 30, 2014   December 31, 2013
ASSETS            
Cash and cash equivalents   $ 61,384     $ 84,088  
Restricted cash     3,031       1,697  
Accounts receivable -- net     52,253       56,184  
Due from affiliates     54,094       43,587  
Inventories     243,648       239,615  
Prepaid and other current assets     25,320       32,276  
Deferred taxes     13,614       13,614  
  Total current assets     453,344       471,061  
Property, plant and equipment -- net     1,230,014       1,247,661  
Other assets     93,122       91,474  
  TOTAL   $ 1,776,480     $ 1,810,196  
LIABILITIES AND SHAREHOLDERS' EQUITY                
LIABILITIES:                
Accounts payable, trade   $ 95,897     $ 108,490  
Due to affiliates     52,356       53,582  
Accrued and other current liabilities     45,182       69,466  
Accrued employee benefits costs     8,533       8,410  
Industrial revenue bonds     7,815       7,815  
  Total current liabilities     209,783       247,763  
Senior notes payable     246,705       246,528  
Accrued pension benefits costs -- less current portion     41,724       39,848  
Accrued postretirement benefits costs -- less current portion     128,287       129,284  
Other liabilities     37,416       37,743  
Deferred taxes     108,932       106,218  
  Total noncurrent liabilities     563,064       559,621  
                 
SHAREHOLDERS' EQUITY:                
Series A Preferred stock (one cent par value, 5,000,000 shares authorized; 160,000 issued and 79,226 outstanding at June 30, 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; 93,591,282 issued and 88,804,761 outstanding at June 30, 2014; 93,496,798 issued and 88,710,277 outstanding at December 31, 2013)     936       935  
Additional paid-in capital     2,509,186       2,508,574  
Treasury stock, at cost     (49,924 )     (49,924 )
Accumulated other comprehensive loss     (91,864 )     (91,832 )
Accumulated deficit     (1,364,702 )     (1,364,942 )
  Total shareholders' equity     1,003,633       1,002,812  
  TOTAL   $ 1,776,480     $ 1,810,196  
                 
                 
 
 
CENTURY ALUMINUM COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
 
    Six months ended June 30,
    2014   2013
CASH FLOWS FROM OPERATING ACTIVITIES:            
  Net income (loss)   $ 240     $ (21,131 )
  Adjustments to reconcile net income (loss) to net cash provided by operating activities:                
    Unrealized net gain on forward contracts     --       (397 )
    Gain on bargain purchase     --       (5,253 )
    Unrealized gain on E.ON contingent obligation     (706 )     (16,075 )
    Accrued and other plant curtailment costs -- net     2,181       2,268  
    Lower of cost or market inventory adjustment     (1,247 )     16,049  
    Depreciation     35,143       31,898  
    Sebree power contract amortization     (5,534 )     (2,741 )
    Debt discount amortization     177       502  
    Pension and other postretirement benefits     2,368       (3,616 )
    Deferred income taxes     2,731       (2,038 )
    Stock-based compensation     533       499  
    Loss on early extinguishment of debt     --       3,272  
    Equity in earnings of joint ventures, net of dividends     (376 )     (1,387 )
    Change in operating assets and liabilities:                
      Accounts receivable -- net     3,931       (33,883 )
      Due from affiliates     (10,508 )     12,906  
      Inventories     (2,786 )     (22,334 )
      Prepaid and other current assets     6,816       (3,281 )
      Accounts payable, trade     (8,413 )     30,696  
      Due to affiliates     (1,226 )     27,607  
      Accrued and other current liabilities     (12,200 )     (3,827 )
      Other -- net     (2,496 )     13,242  
Net cash provided by operating activities     8,628       22,976  
CASH FLOWS FROM INVESTING ACTIVITIES:                
  Purchase of property, plant and equipment     (16,758 )     (16,565 )
  Nordural expansion -- Helguvik     (186 )     (2,559 )
  Purchase of carbon anode assets and improvements     (7,226 )     (3,670 )
  Purchase of Sebree smelter     --       (48,058 )
  Proceeds from sale of property, plant and equipment     46       515  
  Restricted and other cash deposits     (1,334 )     (720 )
Net cash used in investing activities     (25,458 )     (71,057 )
CASH FLOWS FROM FINANCING ACTIVITIES:                
  Repayment of debt     --       (249,604 )
  Proceeds from issuance of debt     --       246,330  
  Borrowings under revolving credit facilities     86,646       --  
  Repayments under revolving credit facilities     (92,646 )     --  
  Debt issuance costs     --       (3,926 )
  Debt retirement costs     --       (1,208 )
  Issuance of common stock     126       44  
Net cash used in financing activities     (5,874 )     (8,364 )
CHANGE IN CASH AND CASH EQUIVALENTS     (22,704 )     (56,445 )
Cash and cash equivalents, beginning of period     84,088       183,976  
Cash and cash equivalents, end of period   $ 61,384     $ 127,531  
                 
                 
 
 
CENTURY ALUMINUM COMPANY
SELECTED OPERATING DATA
(Unaudited)
 
    SHIPMENTS - PRIMARY ALUMINUM
    Direct (1)   Toll
    Tonnes   (000)
Pounds
  $/Pound   Tonnes   (000)
Pounds
  $ (000)
Revenue
2014                            
2nd Quarter   183,032   403,516   $ 1.02   33,012   72,780   $ 48,441
1st Quarter   173,296   382,053     0.98   33,489   73,830     47,185
Total   356,328   785,569   $ 1.00   66,501   146,610   $ 95,626
                             
2013                            
2nd Quarter   106,284   234,317   $ 0.98   69,986   154,291   $ 101,290
1st Quarter   93,472   206,070     1.06   65,304   143,971     103,973
Total   199,756   440,387   $ 1.02   135,290   298,262   $ 205,263
                             
(1) Does not include toll shipments from Nordural Grundartangi
 
 

Contact Information

  • Contacts

    Kenny Barkley (media)
    270-577-2070

    Shelly Harrison (investors)
    312-696-3140