SOURCE: Century Aluminum Company

Century Aluminum Company

July 28, 2016 16:05 ET

Century Reports Second Quarter 2016 Financial Results

CHICAGO, IL--(Marketwired - Jul 28, 2016) - Century Aluminum Company (NASDAQ: CENX) reported a net loss of $9.5 million ($0.11 per share) for the second quarter of 2016. This result included the negative impact of a $4.9 million ($0.05 per share) lower of cost or market inventory adjustment. The second quarter adjusted net loss was $4.6 million ($0.05 per share).

For the second quarter of 2015, Century reported a net loss of $33.9 million ($0.39 per share). Results included a $30.9 million impairment charge ($0.35 per share) related to the permanent closure of our Ravenswood smelter and a $25.7 million charge ($0.30 per share) for lower of cost or market inventory adjustments. Results were also negatively impacted by $11.7 million ($0.13 per share) in costs related to the labor disruption at our Hawesville smelter. Results were favorably impacted by a $10.3 million ($0.12 per share) unrealized gain on the fair value of contingent consideration related to the Mt. Holly acquisition.

Sales for the second quarter of 2016 were $326.8 million compared with $523.5 million for the second quarter of 2015. Shipments of primary aluminum for the second quarter of 2016 were 185,567 tonnes compared with 233,950 tonnes shipped in the second quarter of 2015. The decrease in sales and shipment volume was directly attributable to curtailment actions taken in the second half of 2015.

Net cash provided by operating activities in the second quarter of 2016 was $8.7 million. Our cash position at quarter end was $129 million and we had $89 million of revolver availability.

For the first half of 2016, Century reported a net loss of $25.7 million ($0.29 per share). Results included a favorable impact of $0.9 million for lower of cost or market inventory adjustments.

For the first half of 2015, Century reported net income of $39.9 million ($0.42 per share). Results included a $30.9 million impairment charge related to the permanent closure of our Ravenswood smelter and a $25.7 million charge for lower of cost or market inventory adjustments. Results were also negatively impacted by $11.7 million in costs related to the labor disruption at our Hawesville smelter, $1.6 million for signing bonuses related to a new labor agreement in Iceland and $1.0 million related to the separation of a former senior executive. Results were favorably impacted by a $16.8 million unrealized gain on the fair value of contingent consideration related to the Mt. Holly acquisition.

Sales for the first half of 2016 were $645.6 million compared with $1,111.4 million for the first half of 2015. Shipments of primary aluminum for the first half of 2016 were 368,186 tonnes compared with 479,208 tonnes shipped for the first half of 2015. The decrease in sales and shipment volume was directly attributable to curtailment actions taken in the second half of 2015.

"Geopolitical uncertainty and volatility have persisted throughout 2016," commented Michael Bless, President and Chief Executive Officer. "Recent events have caused additional distortions in the currency markets and in interest rates, further pressuring commodities prices. The aluminum price has performed relatively well in these difficult market conditions. Demand in our end markets remains robust and, barring a significant exogenous shock, should remain so. The supply picture has been largely static over the last few months. That said, forecasters predict significant production increases in China during the second half of the year; this incremental supply is expected to come from new capacity as well as from the restart of curtailed plants. The primary aluminum industry in China continues to be bolstered, in myriad ways, by state support which is clearly illegal under global trade rules. We strongly believe it is now high time that action is taken to confront this critical issue, which poses a clear and present danger to the remaining U.S. aluminum industry."

"Within this challenging environment, we continue to manage the company with an emphasis on the integrity of our operations," added Mr. Bless. "Safety performance has been encouraging; we insist on continuous improvement in this most important area. During the second half of 2015, we took aggressive actions to protect the competitiveness of our operations. In the recently completed quarter, we again exceeded our product mix and cost structure targets. This strict focus on our operations will preserve Century's ability to capitalize when the market environment becomes more favorable."

Mr. Bless concluded, "We reached a new agreement with a third-party supplier to purchase the majority of electric power required for our Mt. Holly smelter. Regrettably, we continue to be required to purchase twenty-five percent of the plant's power consumption from the state-owned provider; the high cost of this power puts Mt. Holly's average power cost well above the global median. We thus continue to require a structural change to our electric power arrangements in South Carolina; achievement of this objective would also allow us to restart the half of the plant that is presently idled."

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.

Non-GAAP Financial Measures
Adjusted net income (loss) and adjusted earnings (loss) per share are non-GAAP financial measures that management believes provide additional meaningful information regarding Century's financial performance as these measures generally highlight trends in our business that may not otherwise be apparent when relying solely on GAAP measures and because they eliminate items that have less bearing on our operating performance and ability to generate cash. 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, Century's reported results prepared in accordance with GAAP. In addition, because not all companies use identical calculations, adjusted net income (loss) and adjusted earnings (loss) 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); the potential outcome or occurrence of any trade claims to address excess capacity or unfair trade practices; our assessment of power pricing and our ability to successfully obtain and/or implement long-term competitive power arrangements for our operations and projects; 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; the future operation or potential curtailment of our U.S. assets; the future financial and operating performance of Century, 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 June 30,     Six months ended June 30,  
    2016     2015     2016     2015  
NET SALES:                                
  Related parties   $ 290,283     $ 513,681     $ 570,660     $ 1,089,410  
  Third-party customers     36,471       9,810       74,948       21,992  
Total net sales     326,754       523,491       645,608       1,111,402  
  Cost of goods sold     321,172       515,149       643,078       1,008,965  
Gross profit     5,582       8,342       2,530       102,437  
  Selling, general and administrative expenses     9,945       10,012       19,570       21,983  
  Ravenswood impairment     -       30,850       -       30,850  
  Other operating expense - net     578       2,601       1,459       4,680  
Operating income (loss)     (4,941 )     (35,121 )     (18,499 )     44,924  
  Interest expense     (5,497 )     (5,573 )     (10,990 )     (11,124 )
  Interest income     171       61       285       203  
  Net gain on forward and derivative contracts     353       566       706       919  
  Unrealized gain on fair value of contingent consideration     -       10,287       -       16,814  
  Other income (expense) - net     (299 )     93       (305 )     1,147  
Income (loss) before income taxes and equity in earnings of joint ventures     (10,213 )     (29,687 )     (28,803 )     52,883  
  Income tax benefit (expense)     319       (5,065 )     2,389       (14,366 )
Income (loss) before equity in earnings of joint ventures     (9,894 )     (34,752 )     (26,414 )     38,517  
  Equity in earnings of joint ventures     379       855       736       1,365  
Net income (loss)   $ (9,515 )   $ (33,897 )   $ (25,678 )   $ 39,882  
                                 
Net income (loss) allocated to common stockholders   $ (9,515 )   $ (33,897 )   $ (25,678 )   $ 36,628  
EARNINGS (LOSS) PER COMMON SHARE:                                
  Basic   $ (0.11 )   $ (0.39 )   $ (0.29 )   $ 0.42  
  Diluted     (0.11 )     (0.39 )     (0.29 )     0.41  
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:                                
  Basic     87,060       86,873       87,050       87,838  
  Diluted     87,060       86,873       87,050       88,495  
                                 
                                 
   
CENTURY ALUMINUM COMPANY  
CONSOLIDATED BALANCE SHEETS  
(in thousands, except share amounts)  
(Unaudited)  
   
    June 30, 2016     December 31, 2015  
ASSETS                
Cash and cash equivalents   $ 129,384     $ 115,393  
Restricted cash     2,669       791  
Accounts receivable - net     14,304       9,475  
Due from affiliates     14,511       17,417  
Inventories     231,832       231,872  
Prepaid and other current assets     27,953       42,412  
Assets held for sale     29,695       30,697  
  Total current assets     450,348       448,057  
Property, plant and equipment - net     1,197,604       1,232,256  
Other assets     71,636       72,155  
  TOTAL   $ 1,719,588     $ 1,752,468  
LIABILITIES AND SHAREHOLDERS' EQUITY                
LIABILITIES:                
Accounts payable, trade   $ 89,303     $ 90,489  
Due to affiliates     9,662       10,045  
Accrued and other current liabilities     48,479       48,822  
Accrued employee benefits costs     10,006       10,148  
Industrial revenue bonds     7,815       7,815  
  Total current liabilities     165,265       167,319  
Senior notes payable     247,484       247,278  
Accrued pension benefits costs - less current portion     42,935       43,999  
Accrued postretirement benefits costs - less current portion     125,903       125,999  
Other liabilities     53,102       53,009  
Deferred taxes     90,464       96,994  
  Total noncurrent liabilities     559,888       567,279  
                 
SHAREHOLDERS' EQUITY:                
Series A Preferred stock (one cent par value, 5,000,000 shares authorized; 160,000 issued and 76,378 outstanding at June 30, 2016; 160,000 issued and 76,539 outstanding at December 31, 2015)     1       1  
Common stock (one cent par value, 195,000,000 authorized; 94,262,108 issued and 87,075,587 outstanding at June 30, 2016; 94,224,571 issued and 87,038,050 outstanding at December 31, 2015)     942       942  
Additional paid-in capital     2,514,227       2,513,631  
Treasury stock, at cost     (86,276 )     (86,276 )
Accumulated other comprehensive loss     (111,003 )     (112,650 )
Accumulated deficit     (1,323,456 )     (1,297,778 )
  Total shareholders' equity     994,435       1,017,870  
  TOTAL   $ 1,719,588     $ 1,752,468  
                 
                 
   
CENTURY ALUMINUM COMPANY  
CONSOLIDATED STATEMENTS OF CASH FLOWS  
(in thousands)  
(Unaudited)  
   
    Six months ended June 30,  
    2016     2015  
CASH FLOWS FROM OPERATING ACTIVITIES:                
  Net income (loss)   $ (25,678 )   $ 39,882  
  Adjustments to reconcile net income (loss) to net cash provided by operating activities:                
    Unrealized gain on fair value of contingent consideration     -       (16,814 )
    Unrealized gain on E.ON contingent obligation     (706 )     (706 )
    Lower of cost or market inventory adjustment     (871 )     25,689  
    Depreciation and amortization     42,504       36,409  
    Ravenswood impairment     -       30,850  
    Pension and other postretirement benefits     1,345       (262 )
    Deferred income taxes     (6,513 )     4,984  
    Stock-based compensation     596       894  
    Equity in earnings of joint ventures     (736 )     (1,365 )
    Change in operating assets and liabilities:                
      Accounts receivable - net     (4,829 )     66,359  
      Due from affiliates     2,906       (20,807 )
      Inventories     2,471       (60,631 )
      Prepaid and other current assets     12,516       3,819  
      Accounts payable, trade     (1,019 )     (34,087 )
      Due to affiliates     1,560       41,406  
      Accrued and other current liabilities     (485 )     (13,592 )
      Pension contribution - Mt. Holly     -       (34,595 )
      Other - net     542       (6,592 )
Net cash provided by operating activities     23,603       60,841  
CASH FLOWS FROM INVESTING ACTIVITIES:                
  Purchase of property, plant and equipment     (7,734 )     (31,368 )
  Purchase of remaining interest in Mt. Holly smelter     -       11,313  
  Proceeds from sale of property, plant and equipment     -       14  
  Restricted and other cash deposits     (1,878 )     (282 )
Net cash used in investing activities     (9,612 )     (20,323 )
CASH FLOWS FROM FINANCING ACTIVITIES:                
  Borrowings under revolving credit facilities     595       1,010  
  Repayments under revolving credit facilities     (595 )     (1,010 )
  Repurchase of common stock     -       (36,352 )
Net cash used in financing activities     -       (36,352 )
CHANGE IN CASH AND CASH EQUIVALENTS     13,991       4,166  
Cash and cash equivalents, beginning of period     115,393       163,242  
Cash and cash equivalents, end of period   $ 129,384     $ 167,408  
                 
                 
 
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)
2016                              
2nd Quarter   106,974   $ 204,173   54,968   $ 92,707   23,625   $ 27,944
1st Quarter   105,089     194,826   55,030     92,151   22,500     26,115
Total   212,063   $ 398,999   109,998   $ 184,858   46,125   $ 54,059
                               
                               
2015                              
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   326,679   $ 793,039   96,023   $ 222,745   56,506   $ 84,475
                               
(1)    Excludes scrap aluminum sales.
     
     
   
CENTURY ALUMINUM COMPANY  
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES  
(in millions, except per share amounts)  
(Unaudited)  
   
    Three months ended  
    June 30, 2016  
    $MM     EPS  
Net loss as reported   $ (9.5 )   $ (0.11 )
                 
Lower of cost or market inventory adjustment     4.9       0.05  
Impact of preferred shares     -       0.01  
Adjusted net loss   $ (4.6 )   $ (0.05 )
                 

Contact Information

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