Century Aluminum(CENX) - 2025 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Financial Statements Q2 saw a net loss, H1 net income was lower due to a prior-year gain, while total assets and operating cash flow improved Consolidated Statements of Operations Consolidated Statements of Operations Highlights (in millions, except per share data) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Total net sales | $628.1 | $560.8 | $1,262.0 | $1,050.3 | | Gross profit | $36.2 | $20.4 | $96.8 | $36.9 | | Operating income | $20.7 | $6.4 | $66.8 | $8.3 | | Net (loss) income | $(9.1) | $(6.7) | $16.6 | $238.0 | | Net (loss) income attributable to Century stockholders | $(4.6) | $(2.5) | $25.1 | $244.3 | | Diluted EPS | $(0.05) | $(0.03) | $0.25 | $2.24 | - The significant decrease in net income for the six months ended June 30, 2025, compared to 2024 is primarily due to a $245.9 million bargain purchase gain recognized in the 2024 period[7] Consolidated Balance Sheets Consolidated Balance Sheet Highlights (in millions) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | $790.3 | $802.8 | | Total assets | $1,949.0 | $1,939.4 | | Total current liabilities | $451.1 | $463.7 | | Total liabilities | $1,264.7 | $1,276.7 | | Total equity | $684.3 | $662.7 | Consolidated Statements of Cash Flows Consolidated Cash Flow Summary (in millions) | Cash Flow Activity | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $80.2 | $(3.3) | | Net cash used in investing activities | $(33.6) | $(44.3) | | Net cash (used in) provided by financing activities | $(38.8) | $0.1 | | Change in cash, cash equivalents and restricted cash | $7.8 | $(47.5) | Condensed Notes to the Consolidated Financial Statements Notes detail related-party transactions, tax credit benefits, a single segment, and a post-quarter debt refinancing - As of June 30, 2025, Glencore plc and its affiliates beneficially owned 42.9% of Century's outstanding common stock and all of its Series A Convertible Preferred Stock[31] - For the six months ended June 30, 2025, the company derived approximately 59.1% of its consolidated net sales from Glencore[32] - The Inflation Reduction Act (IRA) Section 45X production tax credit reduced Cost of goods sold by $41.8 million and Selling, general and administrative expenses by $1.3 million for the six months ended June 30, 2025[53] - Subsequent to the quarter end, on July 22, 2025, the company issued $400.0 million of 6.875% Senior Secured Notes due 2032 and used the proceeds to redeem its 2028 Notes[136][137] - Beginning in Q1 2025, the company determined it has only one operating and reportable segment, managed on a consolidated basis[123] Management's Discussion and Analysis of Financial Condition and Results of Operations Improved financial performance is attributed to higher aluminum prices and tariffs, with increased net sales and gross profit, supported by solid liquidity and debt refinancing - In May 2025, tariffs on primary aluminum were increased from 25% to 50%, effective June 4, 2025, which has increased the Midwest Premium and is expected to have a material positive impact on financial results[147] - The company entered into an agreement with the U.S. Department of Energy for up to $500 million in funding to build a new aluminum smelter, though disbursement of funds is currently paused pending an ongoing review[148] Average Aluminum Pricing ($ per tonne) | Metric | Q2 2025 | Q1 2025 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Average LME | $2,447 | $2,631 | $2,538 | $2,360 | | Average MWP | $993 | $729 | $855 | $417 | - Total liquidity as of June 30, 2025, was $362.5 million, comprising $40.7 million in cash and $321.8 million in unused availability under revolving credit facilities[179] - Estimated total capital spending for 2025 is approximately $70 to $80 million, including investments in the Jamalco facility[192] Quantitative and Qualitative Disclosures about Market Risk No material changes in market risk disclosures from the prior fiscal year's Annual Report on Form 10-K - As of June 30, 2025, there have been no material changes in the company's quantitative and qualitative disclosures about market risks since the fiscal year ended December 31, 2024[197] Controls and Procedures Disclosure controls were ineffective due to material weaknesses in IT and business process controls, with remediation ongoing - Management concluded that the company's disclosure controls and procedures were not effective as of June 30, 2025[198] - The ineffectiveness is due to material weaknesses in general information technology controls and business process controls that were previously reported for the fiscal year ended December 31, 2024[199] - Remediation efforts are ongoing but the material weaknesses were not fully remediated as of the end of the quarter[200][203] PART II - OTHER INFORMATION Legal Proceedings The company is party to various legal actions, but does not expect a material adverse effect on its financial condition or results - The company states that legal actions arising from the normal course of business are not expected to have a material adverse effect on its financial position, results of operations, or liquidity[206] Risk Factors No material changes to risk factors disclosed in the prior fiscal year's Annual Report on Form 10-K - No material changes have occurred to the risk factors disclosed in the Annual Report on Form 10-K for the fiscal year ended December 31, 2024[207] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period - There were no unregistered sales of equity securities or use of proceeds from such sales during the quarter[208] Other Information This section discloses related-party agricultural sales with Iranian entities and no Rule 10b5-1 trading plan changes - Under the Iran Threat Reduction and Syria Human Rights Act, the company disclosed that non-U.S. affiliates of its largest stockholder had sales contracts for agricultural products with Iranian government-controlled entities, with gross revenue not exceeding $137 million for the quarter ended June 30, 2025[210][211] - During the quarter ended June 30, 2025, no company directors or executive officers adopted or terminated any Rule 10b5-1 trading plans for company securities[215] Exhibits This section lists all exhibits filed with the Form 10-Q, including debt indentures, security agreements, and officer certifications - The report includes several exhibits, such as the Indenture for the 6.875% Senior Secured Notes due 2032, an amendment to the company's loan and security agreement, and certifications by the CEO and CFO[217]