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Century Aluminum Company Reports Second Quarter 2017 Results

/EIN News/ -- CHICAGO, Aug. 02, 2017 (GLOBE NEWSWIRE) -- Century Aluminum Company (NASDAQ:CENX) today announced second quarter 2017 results.

Second Quarter 2017 Financial Results

  • Net income of $7.1 million, or $0.07 per diluted share 
  • Adjusted net income1 of $0.8 million, or $0.01 per diluted share
  • Adjusted EBITDA1 of $34.0 million, up $11.8 million sequentially on higher LME prices partially offset by higher raw material costs
  • Revenue of $388.8 million, a 6% increase over prior quarter
  • Cash position at quarter end of $130.7 million and revolver availability of $135.7 million
  $MM (except shipments and per share data)  
    Q1 2017   Q2 2017  
  Shipments (tonnes) 186,395     182,829    
  Revenue $ 365.8     $ 388.8    
  Net (Loss)/Income (15.1 )   7.1    
  Diluted EPS (0.17 )   0.07    
  Adjusted Net (Loss)/Income1 (5.0 )   0.8    
  Adjusted EPS1 (0.05 )   0.01    
  Adjusted EBITDA1 22.2     34.0    
           
  Notes:        
  1 - Non-GAAP measure; see reconciliation of GAAP to non-GAAP financial measures  

Century Aluminum Company reported net income of $7.1 million for the second quarter of 2017.  Results were favorably impacted by a $6.1 million unrealized gain relating to LME forward sales.  This result compares to a net loss of $15.1 million  for the first quarter of 2017, which included a $14.0 million unrealized loss relating to LME forward sales.

The second quarter of 2017 adjusted net income was $0.8 million compared to an adjusted net loss of $5.0 million for the first quarter of 2017.

For the second quarter of 2017, Century reported adjusted EBITDA of $34.0 million, up $11.8 million from the first quarter of 2017.  The increase was primarily attributable to higher aluminum prices, partially offset by higher alumina costs.

Sales for the second quarter of 2017 were $388.8 million compared with $365.8 million for the first quarter of 2017.  Shipments of primary aluminum for the second quarter of 2017 were 182,829 tonnes compared with 186,395 tonnes shipped in the first quarter of 2017.

Net cash provided by operating activities in the second quarter of 2017 was $14.4 million.  Our cash position at quarter end was $130.7 million and we had $135.7 million of revolver availability.

"Our operations remain stable and are performing at expected levels of operating efficiency," commented Michael Bless, President and Chief Executive Officer.  "Safety results generally improved, albeit not at the pace we demand.  Profit conversion on higher revenue was strong despite the predicted increase in alumina costs caused by our pricing mechanisms and inventory costing method; alumina unit costs will decrease in the third quarter.  In contrast, we are seeing an increase in the prices of other key raw materials, and we expect this trend to continue for some time."

Bless continued, "General manufacturing and construction activity remains relatively robust in our markets, as does demand for our products.  However, we continue to expect a global supply surplus in primary aluminum for the foreseeable future, produced by China's still surging and heavily subsidized uneconomic production.  While recent closure announcements, if implemented, could portend a more economically justified approach, the trade data continue to show record exports of aluminum products from that country.  Enforcement of global trade laws, in our strong opinion, is necessary to level the playing field and ensure that all producers live up to their international obligations. It is only through a market in which all parties compete according to the same rules, that fair conditions can be achieved.  We are confident our operations would thrive in such an environment, and are greatly encouraged by the leadership of the Trump administration in demanding this result."

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), adjusted earnings (loss) per share and adjusted EBITDA are non-GAAP financial measures that management uses to evaluate Century's financial performance.  These non-GAAP financial measures facilitate comparisons of this period’s results with prior periods on a consistent basis by excluding items that management does not believe are indicative of Century’s ongoing operating performance and ability to generate cash.  Management believes these non-GAAP financial measures enhance an overall understanding of Century’s performance and our investors’ ability to review Century’s business from the same perspective as management.  The tables below, under the heading "Reconciliation of Non-GAAP Financial Measures," provide 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), adjusted earnings (loss) per share and adjusted EBITDA 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 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; 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; our future business objectives, strategies and initiatives.

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,   March 31,   June 30,
  2016   2017   2017
NET SALES:          
Related parties $ 290,283     $ 280,573     $ 296,271  
Other customers 36,471     85,213     92,531  
Total net sales 326,754     365,786     388,802  
Cost of goods sold 321,172     348,935     366,342  
Gross profit 5,582     16,851     22,460  
Selling, general and administrative expenses 9,945     10,702     9,352  
Other operating expense - net 578     973     180  
Operating (loss)/income (4,941 )   5,176     12,928  
Interest expense (5,497 )   (5,571 )   (5,461 )
Interest income 171     230     283  
Net gain/(loss) on forward and derivative contracts 353     (16,137 )   2,957  
Other (expense)/income - net (299 )   384     (1,876 )
(Loss)/Income before income taxes and equity in earnings of joint ventures (10,213 )   (15,918 )   8,831  
Income tax benefit/(expense) 319     308     (1,452 )
(Loss)/Income before equity in earnings of joint ventures (9,894 )   (15,610 )   7,379  
Equity in earnings/(loss) of joint ventures 379     471     (248 )
Net (loss)/income $ (9,515 )   $ (15,139 )   $ 7,131  
           
Net (loss)/income allocated to common stockholders $ (9,515 )   $ (15,139 )   $ 6,563  
(LOSS)/INCOME PER COMMON SHARE:          
Basic $ (0.11 )   $ (0.17 )   $ 0.08  
Diluted $ (0.11 )   $ (0.17 )   $ 0.07  
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:          
Basic 87,060     87,254     87,272  
Diluted 87,060     87,254     88,057  


CENTURY ALUMINUM COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(Unaudited)
  Six months ended
  June 30,   June 30,
  2016   2017
NET SALES:      
Related parties $ 570,660     $ 576,844  
Other customers 74,948     177,744  
Total net sales 645,608     754,588  
Cost of goods sold 643,078     715,277  
Gross profit 2,530     39,311  
Selling, general and administrative expenses 19,570     20,054  
Other operating expense - net 1,459     1,153  
Operating (loss)/income (18,499 )   18,104  
Interest expense (10,990 )   (11,032 )
Interest income 285     513  
Net gain/(loss) on forward and derivative contracts 706     (13,180 )
Other income/(expense) - net (305 )   (1,492 )
(Loss)/Income before income taxes and equity in earnings of joint ventures (28,803 )   (7,087 )
Income tax benefit/(expense) 2,389     (1,144 )
Loss before equity in earnings of joint ventures (26,414 )   (8,231 )
Equity in earnings of joint ventures 736     223  
Net loss $ (25,678 )   $ (8,008 )
       
Net loss allocated to common stockholders $ (25,678 )   $ (8,008 )
LOSS PER COMMON SHARE:      
Basic $ (0.29 )   $ (0.09 )
Diluted $ (0.29 )   $ (0.09 )
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:      
Basic 87,050     87,263  
Diluted 87,050     87,263  


CENTURY ALUMINUM COMPANY
CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
(Unaudited)
  December 31, 2016   June 30, 2017
ASSETS      
Cash and cash equivalents $ 132,403     $ 130,673  
Restricted cash 1,050     855  
Accounts receivable - net 12,432     42,473  
Due from affiliates 16,651     10,495  
Inventories 233,563     254,611  
Prepaid and other current assets 22,210     18,624  
Assets held for sale 22,313      
  Total current assets 440,622     457,731  
Property, plant and equipment - net 1,026,285     1,000,503  
Other assets 73,420     67,395  
  TOTAL $ 1,540,327     $ 1,525,629  
LIABILITIES AND SHAREHOLDERS’ EQUITY      
LIABILITIES:      
Accounts payable, trade $ 94,960     $ 92,131  
Due to affiliates 15,368     19,092  
Accrued and other current liabilities 50,100     45,679  
Accrued employee benefits costs 10,917     10,767  
Industrial revenue bonds 7,815     7,815  
  Total current liabilities 179,160     175,484  
Senior notes payable 247,699     247,922  
Accrued pension benefits costs - less current portion 49,493     47,601  
Accrued postretirement benefits costs - less current portion 126,355     128,033  
Other liabilities 72,026     66,840  
Deferred taxes 108,939     108,988  
  Total noncurrent liabilities 604,512     599,384  
       
SHAREHOLDERS’ EQUITY:      
Series A Preferred stock (one cent par value, 5,000,000 shares authorized; 160,000 issued and 75,625 outstanding at December 31, 2016; 160,000 issued and 75,346 outstanding at June 30, 2017) 1     1  
Common stock (one cent par value, 195,000,000 authorized; 94,437,418 issued and 87,250,897 outstanding at December 31, 2016; 94,502,486 issued and 87,315,965 outstanding at June 30, 2017) 944     945  
Additional paid-in capital 2,515,131     2,516,363  
Treasury stock, at cost (86,276 )   (86,276 )
Accumulated other comprehensive loss (113,893 )   (113,012 )
Accumulated deficit (1,559,252 )   (1,567,260 )
  Total shareholders’ equity 756,655     750,761  
  TOTAL $ 1,540,327     $ 1,525,629  


CENTURY ALUMINUM COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
  Six months ended
  June 30,   June 30,
  2016   2017
CASH FLOWS FROM OPERATING ACTIVITIES:      
Net loss $ (25,678 )   $ (8,008 )
Adjustments to reconcile net loss to net cash provided by operating activities:      
Unrealized loss on forward and derivative contracts     7,857  
Unrealized gain on E.ON contingent obligation (706 )   (706 )
Lower of cost or NRV inventory adjustment (871 )   (4,102 )
Depreciation and amortization 42,504     42,222  
Pension and other postretirement benefits 1,345     1,524  
Deferred income taxes (6,513 )   (757 )
Equity in earnings of joint ventures, net of dividends (736 )   (145 )
Change in operating assets and liabilities:      
Accounts receivable - net (4,829 )   (30,040 )
Due from affiliates 2,906     6,156  
Inventories 2,471     (16,946 )
Prepaid and other current assets 12,516     3,834  
Accounts payable, trade (1,019 )   (947 )
Due to affiliates 1,560     3,604  
Accrued and other current liabilities (485 )   (4,447 )
Other - net 1,138     3,994  
Net cash provided by operating activities 23,603     3,093  
CASH FLOWS FROM INVESTING ACTIVITIES:      
Purchase of property, plant and equipment (7,734 )   (18,843 )
Proceeds from sale of Ravenswood     13,585  
Restricted and other cash deposits (1,878 )   195  
Net cash used in investing activities (9,612 )   (5,063 )
CASH FLOWS FROM FINANCING ACTIVITIES:      
Borrowings under revolving credit facilities 595     720  
Repayments under revolving credit facilities (595 )   (720 )
Issuance of common stock     240  
Net cash provided by financing activities     240  
CHANGE IN CASH AND CASH EQUIVALENTS 13,991     (1,730 )
Cash and cash equivalents, beginning of period 115,393     132,403  
Cash and cash equivalents, end of period $ 129,384     $ 130,673  




CENTURY ALUMINUM COMPANY
SELECTED OPERATING DATA
(Unaudited)
         
SHIPMENTS - PRIMARY ALUMINUM        
           
  Direct¹   Toll
  United States   Iceland   Iceland
  Tonnes   Sales $ (000)   Tonnes   Sales $ (000)   Tonnes   Sales $ (000)
2017                      
2nd Quarter 103,762     $ 225,552     79,067     $ 161,456         $  
                       
1st Quarter 106,961     $ 214,705     79,434     $ 149,535         $  
                       
2016                      
2nd Quarter 106,974     $ 204,173     54,968     $ 92,707     23,625     $ 27,944  

Notes:

1 - Excludes scrap aluminum sales.





CENTURY ALUMINUM COMPANY
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in millions, except per share amounts)
(Unaudited)
         
    Three months ended   Three months ended
    March 31, 2017   June 30, 2017
    $MM   EPS   $MM   EPS
Net (loss)/income as reported   $ (15.1 )   $ (0.17 )   $ 7.1     $ 0.07  
Unrealized loss/(gain) on forward and derivative contracts   14.0     0.16     (6.1 )   (0.06 )
Lower of cost or NRV inventory adjustment   (3.9 )   (0.04 )   (0.2 )     0.00  
Adjusted net (loss)/income   $ (5.0 )   $ (0.05 )   $ 0.8     $ 0.01  


  Three Months Ended   Three Months Ended
  March 31, 2017   June 30, 2017
Net (loss)/income $ (15.1 )   $ 7.1  
  Interest expense 5.6     5.5  
  Interest income (0.2 )   (0.3 )
  Net loss/(gain) on forward and derivative contracts 16.1     (3.0 )
  Other (income)/expense - net (0.4 )   1.9  
  Income tax (benefit)/expense (0.3 )   1.5  
  Equity in earnings of joint ventures (0.5 )   0.2  
Operating income $ 5.2     $ 12.9  
  Lower of cost or NRV inventory adjustment (3.9 )   (0.2 )
  Depreciation and amortization 20.9     21.3  
Adjusted EBITDA $ 22.2     $ 34.0  


 

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

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