Century Aluminum Company (NASDAQ: CENX) reported net income of
$65.3 million ($0.65 per basic and $0.64 per diluted common share)
for the fourth quarter of 2010. Financial results were negatively
impacted by a mark-to-market loss on forward contracts of $5.7
million primarily related to LME price protection options and by a
contractual termination pension benefit charge of $4.6 million due
to the continued curtailment of the Ravenswood facility. Changes to
the Century of West Virginia retiree medical benefits program
increased current quarter results by $56.7 million with an
associated discrete tax benefit of $2.0 million. Cost of sales for
the quarter includes a $15.9 million net after-tax charge for the
portion of power costs at Hawesville payable by the previous power
supplier per the terms of the power agreements.
For the fourth quarter of 2009, Century reported a net loss of
$24.4 million ($0.28 per basic and diluted common share). Financial
results were negatively impacted by net after-tax expense of $11.5
million related to the purchase of downside aluminum price
protection for a portion of Century's U.S. production through 2010,
and a net after-tax charge of $5.3 million for losses on early
extinguishment and modification of debt. Financial results were
positively impacted by a $6.6 million benefit related to discrete
income tax adjustments. Cost of sales for the fourth quarter of
2009 included a $17.2 million net after-tax charge for the portion
of power costs at Hawesville payable by the previous power supplier
per the terms of the power agreements.
For 2010, the company reported net income of $60.0 million
($0.59 per basic and diluted common share). These results were
negatively impacted by a mark-to-market loss on forward contracts
of $10.5 million primarily related to LME price protection options
and by a contractual termination pension benefit charge of $4.6
million due to the continued curtailment of the Ravenswood
facility. Changes to the Century of West Virginia retiree medical
benefits program increased results by $56.7 million with an
associated discrete tax benefit of $2.0 million. Tax benefits
related to the release of tax reserves no longer required
positively impacted results by $2.1 million for the year. Cost of
sales for the year includes a $63.2 million net after-tax charge
for the portion of power costs at Hawesville payable by the
previous power supplier per the terms of the power agreements.
For 2009, the company reported a net loss of $206.0 million
($2.73 per basic and diluted common share). These results were
negatively impacted by several items, including: a net after-tax
charge of $41.7 million for costs associated with production
curtailments at U.S. smelters; a $73.2 million net after-tax
impairment charge associated with the divestiture of our alumina
and bauxite investments; a net after-tax charge of $11.0 million
related to the purchase of downside aluminum price protection for a
portion of our U.S. production through 2010; and a net after-tax
charge of $4.7 million for losses on early extinguishment and
modification of debt. 2009 results were positively impacted by a
net after-tax benefit of $57.8 million, primarily from realized and
unrealized gains related to the termination of the existing power
contract and its replacement with a new power contract at
Hawesville and a $14.3 million benefit related to discrete income
tax adjustments. Net after-tax inventory lower of cost or market
adjustments of $33.6 million favorably impacted the yearly results.
Cost of sales for 2009 included a $31.6 million net after-tax
charge for the portion of power costs at Hawesville payable by the
previous power supplier per the terms of the power agreements.
Sales for the fourth quarter of 2010 were $316.9 million
compared with $256.8 million for the fourth quarter of 2009.
Shipments of primary aluminum for the 2010 fourth quarter were
148,923 tonnes, compared with 147,700 tonnes shipped in the
year-ago quarter. Sales for 2010 were $1,169 million compared with
$899 million for 2009, and total 2010 primary aluminum shipments of
585,395 tonnes compared with 605,126 tonnes shipped in 2009.
"Global economic growth has improved over the last several
quarters, with business increasing across most end-markets,"
commented Logan W. Kruger, President and Chief Executive Officer.
"In China, consumer activity and industrial production have
reaccelerated since last spring despite a variety of government
actions to control inflationary pressures. Other developing regions
also remain buoyant, although inflation is a developing trend in
these regions as well. On the other hand, certain large markets,
such as construction, remain historically weak in the U.S. and
Europe. Aluminum inventories continue to be high, a situation that
may be exacerbated by new and restarted capacity expected to come
on-line over the next several months. In summary, we believe the
risks of the current market environment are reasonably balanced; it
is in this context that we are managing the company."
"We are pleased with Century's progress during the closing
months of 2010 and the beginning of 2011," continued Mr. Kruger.
"At Hawesville, we have concluded a new five-year labor agreement
and are ahead of plans to restart the potline that was curtailed
during the financial crisis. We are continuing to advance the
complex process required for a potential restart of the Ravenswood
smelter. We have built strong liquidity and reduced structural
costs as well as long-term obligations. These accomplishments
should help to protect the company during periods of volatility
that inevitably occur in commodities markets and provide the
underpinnings to grow the company in a deliberate manner. Toward
this end, we are working on high-return, low-risk growth programs
at Grundartangi and Hawesville and we continue to make progress
toward what we cautiously expect will be a restart of major
construction activity at Helguvik this year."
Century Aluminum Company owns primary aluminum capacity in the
United States and Iceland. Century's corporate offices are located
in Monterey, California.
Century Aluminum's quarterly conference call is scheduled for
5:00 p.m. Eastern time today. To listen to the conference call and
to view related presentation materials, go to
www.centuryaluminum.com and click on the conference call link on
the homepage.
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, NBI
hf.
Steingrimur Helgason, Director - Corporate Finance, NBI hf.
Cautionary Statement
This press release and comments made by Century management on
the quarterly conference call contain "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act
of 1995. Forward-looking statements are statements about future,
not past, events and involve certain important risks and
uncertainties, any of which could cause our actual results to
differ materially from those expressed in our forward-looking
statements. Such risks and uncertainties may include, without
limitation, declines in aluminum prices or increases in our
operating costs; increasing inflation or other worsening of global
financial and economic conditions; increases in global aluminum
inventories and the addition of new or restarted global aluminum
production capacity; additional delays in the completion of our
Helguvik, Iceland smelter; our ability to successfully progress the
potential restart of our Ravenswood smelter and implement growth
programs at Grundartangi and Hawesville; and our ability to
successfully implement measures to protect Century during economic
down cycles. More information about these risks, uncertainties and
assumptions can be found in the risk factors and forward-looking
statements cautionary language contained in our Annual Report on
Form 10-K and in other filings made with the Securities and
Exchange Commission. We do not undertake, and specifically
disclaim, any obligation to revise any forward-looking statements
to reflect the occurrence of future events or circumstances.
Century Aluminum Company
Consolidated Statements of Operations
(in Thousands, Except Per Share Amounts)
(Unaudited)
Three months ended Year ended
December 31, December 31,
---------------------- ----------------------
2010 2009 2010 2009
---------- ---------- ---------- ----------
NET SALES:
Third-party customers $ 205,547 $ 187,906 $ 755,863 $ 668,344
Related parties 111,304 68,908 413,408 230,909
---------- ---------- ---------- ----------
316,851 256,814 1,169,271 899,253
COST OF GOODS SOLD 275,716 242,539 1,056,875 964,918
---------- ---------- ---------- ----------
GROSS PROFIT (LOSS) 41,135 14,275 112,396 (65,665)
OTHER OPERATING EXPENSES
(INCOME) - NET (49,591) 6,013 (37,386) (16,088)
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 11,101 15,093 46,802 47,879
---------- ---------- ---------- ----------
OPERATING INCOME (LOSS) 79,625 (6,831) 102,980 (97,456)
INTEREST EXPENSE - THIRD
PARTY - NET (6,171) (6,305) (25,010) (29,093)
INTEREST INCOME - RELATED
PARTY 115 141 448 572
NET LOSS ON FORWARD
CONTRACTS (5,681) (11,631) (10,495) (19,415)
OTHER EXPENSE - NET (598) (4,852) (377) (4,751)
---------- ---------- ---------- ----------
INCOME (LOSS) BEFORE INCOME
TAXES AND EQUITY
IN EARNINGS (LOSSES) OF
JOINT VENTURES 67,290 (29,478) 67,546 (150,143)
INCOME TAX (EXPENSE)
BENEFIT (2,803) 4,257 (11,133) 12,357
---------- ---------- ---------- ----------
INCOME (LOSS) BEFORE EQUITY
IN EARNINGS (LOSSES)
OF JOINT VENTURES 64,487 (25,221) 56,413 (137,786)
EQUITY IN EARNINGS (LOSSES)
OF JOINT VENTURES 793 867 3,558 (68,196)
---------- ---------- ---------- ----------
NET INCOME (LOSS) $ 65,280 $ (24,354) $ 59,971 $ (205,982)
========== ========== ========== ==========
NET INCOME (LOSS) ALLOCATED
TO COMMON SHAREHOLDERS $ 59,939 $ (24,354) $ 55,046 $ (205,982)
EARNINGS (LOSS) PER COMMON
SHARE
Basic $ 0.65 $ (0.28) $ 0.59 $ (2.73)
Diluted $ 0.64 $ (0.28) $ 0.59 $ (2.73)
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING
Basic 92,742 88,160 92,676 75,343
Diluted 93,414 88,160 93,302 75,343
Century Aluminum Company
Consolidated Balance Sheets
(Dollars in Thousands)
(Unaudited)
December 31, December 31,
ASSETS 2010 2009
-------------- --------------
Current Assets:
Cash and cash equivalents $ 304,296 $ 198,234
Restricted cash 3,673 8,879
Accounts receivable - net 43,903 37,706
Due from affiliates 51,006 19,255
Inventories 155,908 131,473
Prepaid and other current assets 18,292 93,921
-------------- --------------
Total current assets 577,078 489,468
Property, plant and equipment - net 1,256,970 1,298,288
Due from affiliates - less current portion 6,054 5,859
Other assets 82,954 68,135
-------------- --------------
Total $ 1,923,056 $ 1,861,750
============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable, trade $ 88,004 $ 77,301
Due to affiliates 45,381 32,708
Accrued and other current liabilities 41,495 38,598
Accrued employee benefits costs -
current portion 26,682 12,997
Convertible senior notes 45,483 43,239
Industrial revenue bonds 7,815 7,815
-------------- --------------
Total current liabilities 254,860 212,658
-------------- --------------
Senior notes payable 248,530 247,624
Accrued pension benefits costs - less
current portion 37,795 43,281
Accrued postretirements benefits costs -
less current portion 103,744 177,231
Other liabilities 37,612 31,604
Deferred taxes 85,999 81,622
-------------- --------------
Total noncurrent liabilities 513,680 581,362
-------------- --------------
Shareholders' Equity:
Series A Preferred stock (one cent par
value, 5,000,000 shares authorized;
82,515 and 83,452 shares issued and
outstanding at December 31, 2010 and
2009, respectively) 1 1
Common stock (one cent par value,
195,000,000 shares authorized;
92,771,864 and 92,530,068 shares
issued and outstanding at
December 31, 2010 and 2009,
respectively) 928 925
Additional paid-in capital 2,503,907 2,501,389
Accumulated other comprehensive loss (49,976) (74,270)
Accumulated deficit (1,300,344) (1,360,315)
-------------- --------------
Total shareholders' equity 1,154,516 1,067,730
-------------- --------------
Total $ 1,923,056 $ 1,861,750
============== ==============
Century Aluminum Company
Consolidated Statements of Cash Flows
(Dollars in Thousands)
(Unaudited)
Year ended
December 31,
2010 2009
-------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 59,971 $ (205,982)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Unrealized net loss on forward
contracts 10,030 11,956
Unrealized gain on contractual
receivable - (81,557)
Realized benefit of contractual
receivable 55,703 26,025
Write-off of intangible asset - 23,759
Accrued and other plant curtailment
costs - net (56,010) 9,940
Lower of cost or market inventory
adjustment (426) (47,152)
Depreciation and amortization 63,550 72,624
Debt discount amortization 3,150 7,022
Deferred income taxes 15,552 44,952
Pension and other postretirement
benefits 14,578 12,952
Stock-based compensation 1,905 3,338
Non-cash loss on early extinguishment
and modification of debt - 2,325
Non-cash loss from disposition of
equity investments - 73,234
Non-cash contingent obligation 13,091 -
Undistributed earnings of joint
ventures (3,558) (5,038)
Change in operating assets and
liabilities:
Accounts receivable - net (6,197) 23,154
Sale of short-term trading
securities - 13,686
Due from affiliates (38,191) 21,625
Inventories (24,009) 35,766
Prepaid and other current assets 13,412 44,847
Accounts payable, trade 11,674 (17,596)
Due to affiliates 12,685 (11,961)
Accrued and other current
liabilities (1,758) (15,448)
Other - net (13,642) (3,072)
-------------- --------------
Net cash provided by operating
activities 131,510 39,399
-------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and
equipment (12,241) (16,935)
Nordural expansion (19,227) (21,981)
Investments in and advances to joint
ventures (32) (1,044)
Payment received on advances from joint
ventures - 1,761
Proceeds from sale of property, plant
and equipment 823 -
Restricted and other cash deposits 5,206 (8,014)
-------------- --------------
Net cash used in investing activities (25,471) (46,213)
-------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment under revolving credit
facility - (25,000)
Financing fees - (2,429)
Issuance of common stock - net 23 103,077
-------------- --------------
Net cash provided by financing
activities 23 75,648
-------------- --------------
CHANGE IN CASH AND CASH EQUIVALENTS 106,062 68,834
CASH AND CASH EQUIVALENTS, BEGINNING OF
YEAR 198,234 129,400
-------------- --------------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 304,296 $ 198,234
============== ==============
Century Aluminum Company
Selected Operating Data
(Unaudited)
SHIPMENTS - PRIMARY ALUMINUM
Direct (1) Toll
----------------------------- -----------------------------
Metric (000) Metric (000) (000)
Tons Pounds $/Pound Tons Pounds Revenue
--------- --------- --------- --------- --------- ---------
2010
4th Quarter 83,073 183,145 $ 1.10 65,850 145,172 $ 114,513
3rd Quarter 81,693 180,102 0.99 65,523 144,454 100,231
2nd Quarter 76,521 168,700 1.04 68,058 150,043 112,523
1st Quarter 76,653 168,990 1.04 68,024 149,968 109,659
--------- --------- --------- --------- --------- ---------
Total 317,940 700,937 $ 1.04 267,455 589,637 $ 436,926
--------- --------- --------- --------- --------- ---------
2009
4th Quarter 78,095 172,168 $ 0.92 69,605 153,450 $ 98,331
3rd Quarter 77,023 169,807 0.82 69,222 152,609 88,780
2nd Quarter 76,817 169,353 0.69 68,876 151,846 72,136
1st Quarter 97,392 214,712 0.72 68,096 150,126 71,048
--------- --------- --------- --------- --------- ---------
Total 329,327 726,040 $ 0.78 275,799 608,031 $ 330,295
--------- --------- --------- --------- --------- ---------
(1) Does not include Toll shipments from Nordural Grundartangi
Contacts: Mike Dildine (media) 831-642-9364 Shelly Lair
(investors) 831-642-9357
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