SOURCE: Century Aluminum Company

Century Aluminum Company

October 29, 2014 16:01 ET

Century Reports Third Quarter 2014 Financial Results

CHICAGO, IL--(Marketwired - Oct 29, 2014) - Century Aluminum Company (NASDAQ: CENX) reported net income of $50.4 million or $0.52 per common share for the third quarter of 2014 on higher aluminum prices and lower power prices in the Midwestern U.S.

Sales for the third quarter of 2014 were $500.6 million compared with $399.9 million for the third quarter of 2013. Shipments of primary aluminum for the third quarter of 2014 were 218,214 tonnes compared with 212,797 tonnes shipped in the third quarter of 2013. 

For the third quarter of 2013, Century reported a net loss of $9.5 million or $0.11 per common share. Cost of sales for the year-ago quarter included a $5.8 million benefit for lower inventory costs and an $11.7 million benefit for deferred power contract liability amortization.

For the first nine months of 2014, the company reported net income of $50.6 million or $0.52 per common share. Cost of sales for the first nine months included a benefit of $5.5 million related to power contract amortization and $1.2 million for lower inventory costs. Results were negatively impacted by $3.6 million for a legal settlement. 

Sales for the first nine months of 2014 were $1,379.8 million compared with $1,053.1 million in the same period of 2013. Shipments of primary aluminum for the first nine months of 2014 were 641,043 tonnes compared with 547,843 tonnes for the comparable 2013 period.

For the first nine months of 2013, the company reported a net loss of $30.6 million or $0.35 per common share. Results for the first nine months of 2013 were positively impacted by an unrealized gain of $16.2 million primarily related to an LME-based contingent obligation, a gain on bargain purchase of $5.3 million and deferred power contract liability amortization of $14.5 million. Results were negatively impacted by a non-cash charge of $3.3 million for the early extinguishment of our 8.0% Senior Notes and a charge of $4.7 million for severance and other expenses related to our corporate headquarters relocation. Cost of sales for the first nine months of 2013 included a $10.3 million charge for lower of cost or market inventory adjustments.

"Global economic and capital market conditions remain volatile and somewhat uncertain," commented Michael Bless, President and Chief Executive Officer. "Markets have been buffeted by recent weakness in the euro zone economies and by continuing soft data from China; various geopolitical concerns also continue to weigh. In contrast, fundamental conditions in our markets appear robust. In primary metal, we see incremental demand outstripping planned new supply for the foreseeable future. The markets in which we participate are facing even more acute shortages in the value-added products required to serve sectors forecasting strong growth. It is in this context that we are targeting our efforts."

Mr. Bless continued, "Our operations generally performed well during the quarter. Safety performance continued to improve, though we are still running below the excellent levels reached during the last few years. Power prices in the U.S. Midwest continued their downward trend from the beginning of the year. Plant operating performance was generally good, although Hawesville continued to experience pot instability caused by the power modulations we experienced several months ago. Hawesville's performance has improved during recent weeks."

"We are excited about the pending acquisition of the remaining interest in Mt. Holly," concluded Mr. Bless. "This is an excellent plant with a superb group of employees, located in a great community. The challenge of a long-term electric power structure remains, and we will be hard at work on this critical issue over the coming months. Assuming an acceptable solution, we see Mt. Holly as being well positioned to compete in the growing market opportunities in North America. This acquisition will complement the developments at all of our operating facilities as well as the hoped for restart of our smelter in Ravenswood, WV."

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," "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; access to existing or future financing arrangements; our ability to successfully manage transmission issues and wholesale 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; future construction investment and development, including at the Helguvik Project, the Vlissingen project 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 successfully complete and derive benefit from the acquisition of Mt. Holly; and whether or not we are able to restart the Ravenswood plant.

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
September 30,
    Nine months ended
September 30,
 
    2014     2013     2014     2013  
NET SALES:                                
  Third-party customers   $ 175,857     $ 271,016     $ 480,872     $ 680,480  
  Related parties     324,775       128,912       898,931       372,659  
      500,632       399,928       1,379,803       1,053,139  
  Cost of goods sold     424,918       387,574       1,267,343       1,028,901  
Gross profit     75,714       12,354       112,460       24,238  
  Other operating expense - net     1,417       2,174       5,705       6,288  
  Selling, general and administrative expenses     12,146       14,422       32,826       45,875  
Operating income (loss)     62,151       (4,242 )     73,929       (27,925 )
  Interest expense     (5,493 )     (5,406 )     (16,541 )     (17,706 )
  Interest income     23       141       197       458  
  Net gain (loss) on forward and derivative contracts     353       440       (174 )     16,151  
  Gain on bargain purchase     --       --       --       5,253  
  Loss on early extinguishment of debt     --       --       --       (3,272 )
  Other income (expense) - net     (470 )     213       (423 )     (1,001 )
Income (loss) before income taxes and equity in earnings of joint ventures     56,564       (8,854 )     56,988       (28,042 )
  Income tax expense     (6,444 )     (1,384 )     (7,004 )     (4,714 )
Income (loss) before equity in earnings of joint ventures     50,120       (10,238 )     49,984       (32,756 )
  Equity in earnings of joint ventures     285       731       661       2,118  
Net income (loss)   $ 50,405     $ (9,507 )   $ 50,645     $ (30,638 )
                                 
Net income (loss) allocated to common stockholders   $ 46,277     $ (9,507 )   $ 46,487     $ (30,638 )
EARNINGS (LOSS) PER COMMON SHARE:                                
  Basic and Diluted   $ 0.52     $ (0.11 )   $ 0.52     $ (0.35 )
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:                                
  Basic     88,827       88,611       88,777       88,588  
  Diluted     89,532       88,611       89,372       88,588  
                                 
                                 
   
CENTURY ALUMINUM COMPANY  
CONSOLIDATED BALANCE SHEETS  
(in thousands, except share amounts)  
(Unaudited)  
   
    September 30, 2014     December 31, 2013  
ASSETS                
Cash and cash equivalents   $ 133,410     $ 84,088  
Restricted cash     1,217       1,697  
Accounts receivable -- net     50,576       56,184  
Due from affiliates     52,452       43,587  
Inventories     241,750       239,615  
Prepaid and other current assets     29,101       32,276  
Deferred taxes     13,614       13,614  
  Total current assets     522,120       471,061  
Property, plant and equipment -- net     1,221,705       1,247,661  
Other assets     95,656       91,474  
  TOTAL   $ 1,839,481     $ 1,810,196  
LIABILITIES AND SHAREHOLDERS' EQUITY                
LIABILITIES:                
Accounts payable, trade   $ 89,918     $ 108,490  
Due to affiliates     64,917       53,582  
Accrued and other current liabilities     46,007       69,466  
Accrued employee benefits costs     8,672       8,410  
Industrial revenue bonds     7,815       7,815  
  Total current liabilities     217,329       247,763  
Senior notes payable     246,796       246,528  
Accrued pension benefits costs -- less current portion     40,322       39,848  
Accrued postretirement benefits costs -- less current portion     129,130       129,284  
Other liabilities     38,879       37,743  
Deferred taxes     112,694       106,218  
  Total noncurrent liabilities     567,821       559,621  
                 
SHAREHOLDERS' EQUITY:                
Series A Preferred stock (one cent par value, 5,000,000 shares authorized; 160,000 issued and 78,670 outstanding at September 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; 93,724,391 issued and 88,937,870 outstanding at September 30, 2014; 93,496,798 issued and 88,710,277 outstanding at December 31, 2013)     937       935  
Additional paid-in capital     2,509,631       2,508,574  
Treasury stock, at cost     (49,924 )     (49,924 )
Accumulated other comprehensive loss     (92,017 )     (91,832 )
Accumulated deficit     (1,314,297 )     (1,364,942 )
  Total shareholders' equity     1,054,331       1,002,812  
  TOTAL   $ 1,839,481     $ 1,810,196  
                   
                   
   
CENTURY ALUMINUM COMPANY  
CONSOLIDATED STATEMENTS OF CASH FLOWS  
(in thousands)  
(Unaudited)  
   
    Nine months ended September 30,  
    2014     2013  
CASH FLOWS FROM OPERATING ACTIVITIES:                
  Net income (loss)   $ 50,645     $ (30,638 )
  Adjustments to reconcile net income (loss) to net cash provided by operating activities:                
    Unrealized net gain on forward contracts     --       (762 )
    Gain on bargain purchase     --       (5,253 )
    Unrealized gain on E.ON contingent obligation     (1,059 )     (16,428 )
    Accrued and other plant curtailment costs -- net     3,267       3,380  
    Lower of cost or market inventory adjustment     (1,247 )     10,286  
    Depreciation     52,784       49,082  
    Sebree power contract amortization     (5,534 )     (14,461 )
    Debt discount amortization     268       586  
    Pension and other postretirement benefits     1,432       (2,674 )
    Deferred income taxes     6,502       (1,532 )
    Stock-based compensation     957       961  
    Loss on early extinguishment of debt     --       3,272  
    Equity in earnings of joint ventures, net of dividends     (661 )     (2,118 )
    Change in operating assets and liabilities:                
      Accounts receivable -- net     5,608       (1,063 )
      Due from affiliates     (8,866 )     12,915  
      Inventories     (889 )     (22,848 )
      Prepaid and other current assets     3,035       (4,892 )
      Accounts payable, trade     (8,885 )     26,547  
      Due to affiliates     11,336       32,002  
      Accrued and other current liabilities     (7,566 )     2,209  
      Other -- net     (3,413 )     3,887  
Net cash provided by operating activities     97,714       42,458  
CASH FLOWS FROM INVESTING ACTIVITIES:                
  Purchase of property, plant and equipment     (26,865 )     (31,994 )
  Nordural expansion -- Helguvik     (277 )     (2,855 )
  Purchase of carbon anode assets and improvements     (12,280 )     (8,519 )
  Purchase of Sebree smelter     (1,042 )     (48,058 )
  Proceeds from sale of property, plant and equipment     46       515  
  Restricted and other cash deposits     480       (3,015 )
Net cash used in investing activities     (39,938 )     (93,926 )
CASH FLOWS FROM FINANCING ACTIVITIES:                
  Repayment of debt     (2,603 )     (249,604 )
  Proceeds from issuance of debt     --       246,330  
  Borrowings under revolving credit facilities     91,731       16,725  
  Repayments under revolving credit facilities     (97,731 )     --  
  Debt issuance costs     --       (3,994 )
  Debt retirement costs     --       (1,208 )
  Issuance of common stock     149       44  
Net cash provided by (used in) financing activities     (8,454 )     8,293  
CHANGE IN CASH AND CASH EQUIVALENTS     49,322       (43,175 )
Cash and cash equivalents, beginning of period     84,088       183,976  
Cash and cash equivalents, end of period   $ 133,410     $ 140,801  
                 
                 
 
CENTURY ALUMINUM COMPANY
SELECTED OPERATING DATA
(Unaudited)
 
SHIPMENTS - PRIMARY ALUMINUM        
             
    Direct   Toll
    United States   Iceland   Iceland
    Tonnes   Revenue $ (000)   Tonnes   Revenue $ (000)   Tonnes   Revenue $ (000)
2014                              
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   423,309   $ 975,785   114,413   $ 241,815   103,321   $ 155,658
2013                              
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   330,566   $ 725,334   9,310   $ 21,161   207,967   $ 306,644
                               
                               

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