Century Aluminum Company (NASDAQ: CENX) today announced its first
quarter 2019 results.
First Quarter 2019 Financial Results
- Shipments of 206,451 tonnes, a 4% increase over prior quarter
driven by the restart at Hawesville
- Net sales of $490.0 million, a 1% increase over prior quarter
despite lower LME prices and regional premiums
- Net loss of $34.6 million, or $0.39 per share
- Adjusted net loss1 of $66.6 million, or $0.70 per share
- Adjusted EBITDA1 of $(44.1) million driven by the unprecedented
alumina price relative to the metal price
|
|
|
|
|
|
$MM (except shipments and per share
data) |
|
|
|
|
Q4 2018 |
|
|
Q1 2019 |
|
|
|
|
Shipments (tonnes) |
199,466 |
|
|
206,451 |
|
|
|
|
Net sales |
$ |
486.9 |
|
|
$ |
490.0 |
|
|
|
|
Net income (loss) |
(65.0 |
) |
|
(34.6 |
) |
|
|
|
Diluted earnings (loss)
per share |
(0.74 |
) |
|
(0.39 |
) |
|
|
|
Adjusted net income
(loss)1 |
(40.7 |
) |
|
(66.6 |
) |
|
|
|
Adjusted earnings
(loss) per share1 |
(0.43 |
) |
|
(0.70 |
) |
|
|
|
Adjusted
EBITDA1 |
(18.1 |
) |
|
(44.1 |
) |
|
|
|
|
|
|
|
|
|
|
Notes: |
|
|
|
|
|
|
1 -
Non-GAAP measure; see reconciliations of GAAP to non-GAAP financial
measures |
|
In the first quarter of 2019, shipments of primary aluminum were
206,451 tonnes compared with 199,466 tonnes shipped in the fourth
quarter of 2018, reflecting the continued incremental production
from the Hawesville restart. Net sales for the first quarter
of 2019 were $490.0 million compared with $486.9 million for the
fourth quarter of 2018, a 1% increase over prior quarter despite
lower LME prices and regional premiums.
Century reported a net loss of $34.6 million for the first
quarter of 2019. This result compares to a net loss of $65.0
million for the fourth quarter of 2018. First quarter results
were positively impacted by $32.0 million of exceptional items,
including a $35.0 million lower of cost or net realizable value
inventory adjustment.
The adjusted net loss for the first quarter of 2019 was $66.6
million compared to an adjusted net loss of $40.7 million for the
fourth quarter of 2018.
Adjusted EBITDA for the first quarter of 2019 was $(44.1)
million driven by the unprecedented alumina price relative to the
metal price. This result was down $26.0 million from the
fourth quarter of 2018 primarily due to lower LME prices and
regional premiums.
Century's cash position at quarter end was $22.2 million and
revolver availability was $152.0 million.
"We continue to manage through a dynamic environment," commented
Michael A. Bless, President and Chief Executive Officer.
"Actual trading conditions have remained for the most part
favorable. Demand growth has continued to be generally
strong. The metal price has been rangebound, perhaps pending
development on several significant geopolitical fronts.
Importantly, the alumina price has, as we expected, fallen
significantly from its highs, but still has a ways to go to reach
historical levels. Our analysis indicates the market is very
well supplied at present; new production expected to come online in
2019 as well as potential restarts in the Atlantic basin should put
significant further downward pressure on the index price."
Bless concluded, "We have continued to execute our plan of
growth and cost structure improvement. As planned, all three
curtailed potlines at Hawesville were in full operation during the
first quarter; the project also remains on budget. The team
are now turning their attention to rebuilding and installing the
new technology on the two lines that have been continuously
producing; the first of these lines was taken out of service last
month and is currently being rebuilt. The new technology
continues to perform above our expectations in efficiency and
process stability. All operations are stable and safety
performance has been excellent. We believe the company is
well positioned to capitalize on a return to a normal pricing
environment, specifically the relationship of the alumina price to
the metal price."
Dissemination of Company Information
Century intends to make future announcements regarding Company
developments and financial performance through its website,
www.centuryaluminum.com.
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.
Non-GAAP Financial Measures
Adjusted net income, adjusted earnings 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 adjusting for 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
"Reconciliations 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, adjusted earnings 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 reconciliations in
conjunction with the presentation of these non-GAAP financial
measures.
Cautionary Statement
This press release and statements made by Century Aluminum
Company management on the quarterly conference call contain
"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); 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 impact of any Section 232 relief, including tariffs or
other trade remedies, to Century, on aluminum prices or more
generally, the extent to which any such remedies may be changed,
including through exclusions or exemptions, and the duration of any
trade remedy; the future impact of any new or changed law,
regulation or other action affecting our business, including,
without limitation, the impact of any trade actions, sanctions or
other similar remedies or restrictions implemented by the U.S. or
foreign governments; 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 successfully manage transmission issues and market power
price risk and to control or reduce power costs; our plans and
expectations with respect to the future operation of our smelters
and our other operations, including any plans and expectations to
curtail or restart production at any of our operations; our plans
and ability to bring our Hawesville smelter back to full production
and any plans, expectations, costs or assumptions with respect
thereto; future investments in new technology or other production
improvements; any future impact of the May 2018 equipment failure
at Sebree and related events on our financial and operating
performance, including our expectations with respect to our
insurance coverage relating thereto; our ability to hire and retain
qualified employees for our operations; the future financial and
operating performance of Century, its subsidiaries and its
projects, including EBITDA projections or estimates from the
restart of curtailed production, as a result of future raw material
costs or otherwise; future inventory, production, sales, cash costs
and capital expenditures; future impairment charges or
restructuring costs; our anticipated tax liabilities, benefits or
refunds including the realization of U.S. and certain foreign
deferred tax assets and liabilities and the impact of recent tax
reform in the U.S. and foreign jurisdictions; the anticipated
impact of recent accounting pronouncements or changes in accounting
principles; our assessment of the ultimate outcome of our
outstanding litigation; our plans and expectations with respect to
the sale or other disposition of our 40% interest in BHH; our
ability to access existing or future financing arrangements and the
terms of any such future financing arrangements; our ability to
repay or refinance debt in the future; future construction,
investment and development; and our future business objectives,
strategies and initiatives, including our competitive position and
prospects.
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, investors are
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 millions, except per share
amounts) |
(Unaudited) |
|
Three months
ended |
|
March 31, |
|
December 31, |
|
March 31, |
|
2018 |
|
2018 |
|
2019 |
NET SALES: |
|
|
|
|
|
Related parties |
$ |
296.2 |
|
|
$ |
320.3 |
|
|
$ |
311.3 |
|
Other customers |
158.3 |
|
|
166.6 |
|
|
178.7 |
|
Total net sales |
454.5 |
|
|
486.9 |
|
|
490.0 |
|
Cost of goods sold |
440.0 |
|
|
546.2 |
|
|
502.8 |
|
Gross profit (loss) |
14.5 |
|
|
(59.3 |
) |
|
(12.8 |
) |
Selling, general and administrative expenses |
10.7 |
|
|
8.7 |
|
|
14.7 |
|
Other operating (income) expense - net |
0.3 |
|
|
0.4 |
|
|
0.3 |
|
Operating income (loss) |
3.5 |
|
|
(68.4 |
) |
|
(27.8 |
) |
Interest expense |
(5.5 |
) |
|
(5.7 |
) |
|
(5.8 |
) |
Interest income |
0.5 |
|
|
0.2 |
|
|
0.2 |
|
Net gain (loss) on forward and derivative
contracts |
0.7 |
|
|
3.6 |
|
|
(5.7 |
) |
Other income (expense) - net |
(1.1 |
) |
|
1.1 |
|
|
1.1 |
|
Income (loss) before income taxes and equity in earnings of joint
ventures |
(1.9 |
) |
|
(69.2 |
) |
|
(38.0 |
) |
Income tax benefit (expense) |
1.0 |
|
|
3.2 |
|
|
2.9 |
|
Income (loss) before equity in earnings of joint ventures |
(0.9 |
) |
|
(66.0 |
) |
|
(35.1 |
) |
Equity in earnings of joint ventures |
0.6 |
|
|
1.0 |
|
|
0.5 |
|
Net income (loss) |
$ |
(0.3 |
) |
|
$ |
(65.0 |
) |
|
$ |
(34.6 |
) |
|
|
|
|
|
|
Net income (loss) allocated to common stockholders |
$ |
(0.3 |
) |
|
$ |
(65.0 |
) |
|
$ |
(34.6 |
) |
EARNINGS (LOSS) PER COMMON SHARE: |
|
|
|
|
|
Basic and diluted |
$ |
0.00 |
|
|
$ |
(0.74 |
) |
|
$ |
(0.39 |
) |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: |
|
|
|
|
|
Basic and diluted |
87.6 |
|
|
87.6 |
|
|
88.1 |
|
CENTURY ALUMINUM
COMPANY |
CONSOLIDATED BALANCE
SHEETS |
(in millions, except share
amounts) |
(Unaudited) |
|
December 31,
2018 |
|
March 31, 2019 |
ASSETS |
|
|
|
Cash and cash equivalents |
$ |
38.9 |
|
|
$ |
22.2 |
|
Restricted cash |
0.8 |
|
|
0.8 |
|
Accounts receivable - net |
82.5 |
|
|
90.9 |
|
Due from affiliates |
22.7 |
|
|
23.8 |
|
Inventories |
343.8 |
|
|
327.4 |
|
Prepaid and other current assets |
18.0 |
|
|
18.2 |
|
Total current assets |
506.7 |
|
|
483.3 |
|
Property, plant and equipment - net |
967.3 |
|
|
960.1 |
|
Leases - right of use assets |
— |
|
|
24.6 |
|
Other assets |
63.5 |
|
|
62.4 |
|
TOTAL |
$ |
1,537.5 |
|
|
$ |
1,530.4 |
|
LIABILITIES AND SHAREHOLDERS’
EQUITY |
|
|
|
LIABILITIES: |
|
|
|
Accounts payable, trade |
$ |
119.4 |
|
|
$ |
113.2 |
|
Due to affiliates |
10.3 |
|
|
3.1 |
|
Accrued and other current liabilities |
52.5 |
|
|
59.2 |
|
Accrued employee benefits costs |
11.0 |
|
|
11.0 |
|
Revolving credit facility |
23.3 |
|
|
35.3 |
|
Industrial revenue bonds |
7.8 |
|
|
7.8 |
|
Total current
liabilities |
224.3 |
|
|
229.6 |
|
Senior notes payable |
248.6 |
|
|
248.8 |
|
Accrued pension benefits costs - less current portion |
50.9 |
|
|
49.9 |
|
Accrued postretirement benefits costs - less current portion |
101.2 |
|
|
100.7 |
|
Other liabilities |
46.0 |
|
|
48.4 |
|
Leases - right of use liabilities |
— |
|
|
22.8 |
|
Deferred taxes |
104.3 |
|
|
102.1 |
|
Total noncurrent liabilities |
551.0 |
|
|
572.7 |
|
|
|
|
|
SHAREHOLDERS’ EQUITY: |
|
|
|
Series A Preferred stock (one cent par value, 5,000,000 shares
authorized; 160,000 issued and 71,967 outstanding at December 31,
2018; 160,000 issued and 68,944 outstanding at March 31, 2019) |
0.0 |
|
|
0.0 |
|
Common stock (one cent par value, 195,000,000 authorized;
95,289,961 issued and 88,103,440 outstanding at December 31, 2018;
95,994,278 issued and 88,807,757 outstanding at March 31,
2019) |
1.0 |
|
|
1.0 |
|
Additional paid-in capital |
2,523.0 |
|
|
2,523.3 |
|
Treasury stock, at cost |
(86.3 |
) |
|
(86.3 |
) |
Accumulated other comprehensive loss |
(98.7 |
) |
|
(99.7 |
) |
Accumulated deficit |
(1,576.8 |
) |
|
(1,610.2 |
) |
Total shareholders’ equity |
762.2 |
|
|
728.1 |
|
TOTAL |
$ |
1,537.5 |
|
|
$ |
1,530.4 |
|
CENTURY ALUMINUM
COMPANY |
CONSOLIDATED STATEMENTS OF CASH
FLOWS |
(in millions) |
(Unaudited) |
|
Three months ended March
31, |
|
2018 |
|
2019 |
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
Net income (loss) |
$ |
(0.3 |
) |
|
$ |
(34.6 |
) |
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities: |
|
|
|
Unrealized (gain) loss on derivative
instruments |
(0.4 |
) |
|
5.6 |
|
Lower of cost or NRV inventory adjustment |
(3.2 |
) |
|
— |
|
Depreciation and amortization |
21.5 |
|
|
24.3 |
|
Other non-cash items - net |
(4.6 |
) |
|
(4.5 |
) |
Change in operating assets and liabilities: |
|
|
|
Accounts receivable - net |
(40.3 |
) |
|
(8.4 |
) |
Due from affiliates |
1.7 |
|
|
(1.1 |
) |
Inventories |
(10.0 |
) |
|
16.4 |
|
Prepaid and other current assets |
0.8 |
|
|
2.6 |
|
Accounts payable, trade |
5.4 |
|
|
(10.2 |
) |
Due to affiliates |
(6.0 |
) |
|
(7.2 |
) |
Accrued and other current liabilities |
6.2 |
|
|
(3.8 |
) |
Other - net |
(3.8 |
) |
|
(0.6 |
) |
Net cash provided by (used in) operating
activities |
(33.0 |
) |
|
(21.5 |
) |
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
Purchase of property, plant and equipment |
(3.5 |
) |
|
(10.6 |
) |
Net cash provided by (used in) investing
activities |
(3.5 |
) |
|
(10.6 |
) |
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
Borrowings under revolving credit facilities |
0.3 |
|
|
169.6 |
|
Repayments under revolving credit facilities |
(0.3 |
) |
|
(157.6 |
) |
Other short term borrowings |
— |
|
|
3.4 |
|
Issuance of common stock |
0.1 |
|
|
— |
|
Net cash provided by (used in) financing
activities |
0.1 |
|
|
15.4 |
|
CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED
CASH |
(36.4 |
) |
|
(16.7 |
) |
Cash, cash equivalents and restricted cash,
beginning of period |
168.0 |
|
|
39.7 |
|
Cash, cash equivalents and restricted cash, end
of period |
$ |
131.6 |
|
|
$ |
23.0 |
|
|
|
|
|
Supplemental Cash Flow Information: |
|
|
|
Cash paid for: |
|
|
|
Interest |
$ |
0.2 |
|
|
$ |
0.4 |
|
Taxes |
0.5 |
|
|
0.1 |
|
Non-cash investing activities: |
|
|
|
Capital expenditures |
— |
|
|
4.0 |
|
CENTURY ALUMINUM
COMPANYSELECTED OPERATING
DATA(Unaudited)
SHIPMENTS - PRIMARY
ALUMINUM(1) |
|
|
|
|
|
|
|
|
|
|
|
United
States |
|
Iceland |
|
Total |
|
Tonnes |
|
Net
Sales(in millions) |
|
Tonnes |
|
Net
Sales(in millions) |
|
Tonnes |
|
Net
Sales(in millions) |
2019 |
|
|
|
|
|
|
|
|
|
|
|
1st Quarter |
130,043 |
|
|
$ |
313.3 |
|
|
76,408 |
|
|
$ |
159.3 |
|
|
206,451 |
|
|
$ |
472.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
2018 |
|
|
|
|
|
|
|
|
|
|
|
4th Quarter |
117,683 |
|
|
$ |
301.8 |
|
|
81,782 |
|
|
$ |
183.1 |
|
|
199,466 |
|
|
$ |
484.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
1st Quarter |
107,145 |
|
|
$ |
266.4 |
|
|
80,093 |
|
|
$ |
185.6 |
|
|
187,238 |
|
|
$ |
451.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Excludes scrap aluminum sales and alumina
sales. |
CENTURY ALUMINUM
COMPANYRECONCILIATIONS OF NON-GAAP FINANCIAL
MEASURES(in millions, except per share
amounts)(Unaudited)
|
|
Three months
ended |
|
|
December 31,
2018 |
|
March 31, 2019 |
|
|
$MM |
|
EPS |
|
$MM |
|
EPS |
Net income (loss) as
reported |
|
$ |
(65.0 |
) |
|
$ |
(0.74 |
) |
|
$ |
(34.6 |
) |
|
$ |
(0.39 |
) |
Lower of cost or NRV inventory adjustment, net of
tax |
|
29.1 |
|
|
0.33 |
|
|
(35.0 |
) |
|
(0.40 |
) |
Unrealized (gain) loss on derivative
instruments |
|
(3.2 |
) |
|
(0.04 |
) |
|
5.6 |
|
|
0.06 |
|
Sebree equipment failure |
|
(4.3 |
) |
|
(0.05 |
) |
|
(4.3 |
) |
|
(0.05 |
) |
Hawesville restart project |
|
2.7 |
|
|
0.03 |
|
|
1.7 |
|
|
0.02 |
|
Impact of preferred shares |
|
— |
|
|
0.04 |
|
|
— |
|
|
0.06 |
|
Adjusted net income (loss) |
|
$ |
(40.7 |
) |
|
$ |
(0.43 |
) |
|
$ |
(66.6 |
) |
|
$ |
(0.70 |
) |
|
|
Three months
ended |
|
|
December 31,
2018 |
|
March 31, 2019 |
Net income (loss) as
reported |
|
$ |
(65.0 |
) |
|
$ |
(34.6 |
) |
Interest expense |
|
5.7 |
|
|
5.8 |
|
Interest income |
|
(0.2 |
) |
|
(0.2 |
) |
Net (gain) loss on forward and derivative
contracts |
|
(3.6 |
) |
|
5.7 |
|
Other (income) expense - net |
|
(1.1 |
) |
|
(1.1 |
) |
Income tax (benefit) expense |
|
(3.2 |
) |
|
(2.9 |
) |
Equity in earnings of joint ventures |
|
(1.0 |
) |
|
(0.5 |
) |
Operating income (loss) |
|
$ |
(68.4 |
) |
|
$ |
(27.8 |
) |
Lower of cost or NRV inventory
adjustment |
|
30.6 |
|
|
(36.3 |
) |
Sebree equipment failure |
|
(4.3 |
) |
|
(4.3 |
) |
Hawesville restart project |
|
0.6 |
|
|
— |
|
Depreciation and amortization |
|
23.4 |
|
|
24.3 |
|
Adjusted EBITDA |
|
$ |
(18.1 |
) |
|
$ |
(44.1 |
) |
ContactPeter Trpkovski(Investors and
media)312-696-3112
Source: Century Aluminum Company
Century Aluminum (NASDAQ:CENX)
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