Century Aluminum(CENX)2024-08-08 20:15Financial Performance - Century Aluminum Company reported net sales of $560.8 million for the three months ended June 30, 2024, an increase of $71.3 million compared to the previous quarter, primarily driven by favorable realized LME and regional price premiums of $21.8 million and alumina sales of $65.8 million [144]. - For the six months ended June 30, 2024, net sales decreased by $77.6 million compared to the same period in 2023, primarily due to unfavorable realized LME and regional price premiums of $78.3 million [144]. - The net income attributable to Century stockholders for the three months ended June 30, 2024, was a loss of $2.5 million, compared to a profit of $246.8 million in the previous quarter [141]. - Gross profit for the three months ended June 30, 2024, increased by $3.9 million to $20.4 million compared to $16.5 million for the three months ended March 31, 2024, primarily due to favorable realized LME and regional price premiums of $21.8 million [145]. - Gross profit for the six months ended June 30, 2024, decreased by $27.1 million to $36.9 million compared to $64.0 million for the six months ended June 30, 2023, driven by unfavorable realized LME and regional price premiums of $78.3 million [145]. - For the six months ended June 30, 2024, net sales were $831.3 million, with a gross profit of $50.5 million and income before income taxes of $26.1 million [171]. Costs and Expenses - The company incurred curtailment charges of approximately $1.7 million and $2.4 million for the three and six months ended June 30, 2024, respectively, related to the Hawesville facility [129]. - Selling, general and administrative expenses decreased by $1.8 million to $12.3 million for the three months ended June 30, 2024, compared to $14.1 million for the three months ended March 31, 2024 [146]. - Net loss on forward and derivative contracts was $4.0 million for the three months ended June 30, 2024, a difference of $11.4 million compared to a gain of $7.4 million for the three months ended March 31, 2024 [147]. - Income tax expense for the six months ended June 30, 2024, was $1.0 million, compared to a benefit of $10.2 million for the six months ended June 30, 2023 [152]. Assets and Liabilities - As of June 30, 2024, the company had cash and cash equivalents of approximately $41.3 million and unused availability under revolving credit facilities of $301.3 million [154]. - The company had outstanding borrowings of $130.0 million under the Casthouse Facility as of June 30, 2024 [163]. - The U.S. revolving credit facility had a borrowing availability of $162.1 million as of June 30, 2024, with no outstanding borrowings [159]. - As of June 30, 2024, the company's current assets were $393.2 million, an increase from $361.5 million on December 31, 2023, while non-current assets decreased to $634.7 million from $648.6 million [171]. - Current liabilities decreased to $224.9 million from $253.6 million, and non-current liabilities increased slightly to $503.4 million from $485.7 million [171]. Investments and Acquisitions - The acquisition of a 55% interest in Jamalco resulted in a bargain purchase gain of $245.9 million recognized in the Consolidated Statements of Operations for the six months ended June 30, 2024 [132]. - Bargain purchase gain of $245.9 million was recognized for the six months ended June 30, 2024, related to the acquisition of General Alumina Holdings Limited [150]. - The company completed the acquisition of General Alumina Holdings Limited, gaining a 55% interest in Jamalco, enhancing its operational capabilities in bauxite mining and alumina production [204]. - The company completed the acquisition of General Alumina Holdings Limited, gaining a 55% interest in the Jamalco joint venture for bauxite mining and alumina production in Jamaica [204]. Capital Expenditures and Projects - Capital expenditures for the six months ended June 30, 2024, were $17.7 million, excluding $27.8 million associated with the Grundartangi casthouse project, with total capital spending estimated to be $20 to $30 million for 2024 [185]. - The Grundartangi casthouse project was completed in Q2 2024 and is expected to begin shipping billets in the second half of 2024 [179]. - As of June 30, 2024, the company had $43.7 million remaining under its stock repurchase program, which allows for repurchases of up to $130.0 million [181]. Market Conditions and Risks - The average price for primary aluminum per tonne increased to $2,520 in June 2024 from $2,199 in March 2024, reflecting continued demand and limited supply growth [137]. - The average MWP (Midwest premium) for aluminum was $431 in June 2024, compared to $402 in March 2024, indicating a rise in regional premiums [137]. - The U.S. implemented a 10% tariff on imported primary aluminum products, which is expected to remain unchanged in the near future, according to the International Trade Commission's findings [176]. - The company is exposed to price risk for alumina, a significant component of its cost of goods sold, with costs tied to a published alumina index, affecting its cost structure due to market fluctuations [188]. - The company faces foreign currency risk due to fluctuations in the U.S. dollar against currencies such as the Icelandic krona, Euro, and Jamaican dollar, affecting operating margins [195]. Risk Management - The company manages foreign currency exposure through forward contracts and option contracts for forecasted transactions [196]. - Certain alumina contracts and a substantial portion of Grundartangi's electrical power requirements are indexed to the LME price for primary aluminum, providing a natural hedge against commodity price fluctuations [197]. - Risk management activities related to metals, power, natural gas, and foreign currency are controlled by senior management and reported to the Board of Directors [198]. - As of June 30, 2024, the fair value of commodity contracts includes an asset fair value of $5.5 million and a liability fair value of $6.7 million, with a potential adverse change of 10% impacting these values [200]. - The fair value of commodity contracts is reported at $6.7 million, with an adverse fair value of $15.5 million under a 10% price change scenario [201]. Internal Controls and Legal Matters - As of June 30, 2024, the company's management concluded that its disclosure controls and procedures were effective [203]. - There were no material changes in the company's internal control over financial reporting, except for the integration of controls specific to Jamalco [204]. - The company is involved in various legal actions, but management believes these will not materially affect its financial position or operations [206].