Century Aluminum Company Reports Second Quarter 2017 Results
August 02 2017 - 4:05PM
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
Century Aluminum (NASDAQ:CENX)
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Century Aluminum (NASDAQ:CENX)
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