Century Aluminum(US:CENX)2022-11-08 02:38Financial Data and Key Metrics Changes - In Q3 2022, the company reported an adjusted EBITDA loss of $36 million, a decrease of $123 million from the prior quarter [6][34] - Q3 shipments were down about 19% sequentially, primarily due to the curtailment of the Hawesville facility [30] - Realized prices decreased by 14% compared to the prior quarter, leading to a 26% decrease in sequential net sales [30][34] Business Line Data and Key Metrics Changes - The curtailment of the Hawesville facility significantly impacted overall shipments and financial performance [30] - The company expects to complete the first phase of its debottlenecking program by year-end, allowing for an additional 10,000 metric tons of billet to be sold in 2023 [8] Market Data and Key Metrics Changes - High energy prices have led to more than 50% of Europe's smelters curtailing operations, creating the largest aluminum deficit in European history [10][11] - Despite high energy costs reducing European demand, the contraction of Europe's aluminum supply base has kept global aluminum supply and demand roughly balanced [9] Company Strategy and Development Direction - The company is focused on lowering its cost structure and reducing exposure to spot energy prices while maintaining operational stability [7] - Long-term demand fundamentals for aluminum remain strong, with ongoing projects to expand value-added product lines [8] - The company aims to increase its renewable energy mix and reduce volatility in energy costs [76] Management's Comments on Operating Environment and Future Outlook - Management noted that the current macro environment is complex, with high energy prices and lower aluminum prices impacting results [6] - The company remains confident in its liquidity position and has taken measures to strengthen it, including a new $90 million credit facility [29][66] - Management anticipates that the energy crisis in Europe will persist for several years, affecting market conditions [16] Other Important Information - The company has implemented programs to reduce planned capital and operating expenditures by over $40 million in 2022 [26] - Workplace injuries have decreased by nearly 15% year-to-date, reflecting the company's focus on health and safety [27] Q&A Session Summary Question: Changes in hedges and revenue - The company confirmed an incremental 20,000 tons hedged at an average price, and it intends to continue hedging LME prices [49][51] Question: Further levers to pull in a challenging environment - Management expressed confidence in liquidity levels and mentioned various levers available for cost savings and cash generation [66][67] Question: Outlook on coke and pitch pricing - Management indicated that coke prices may have peaked, while pitch prices are expected to remain high for the near term [70] Question: Hawesville facility curtailment - The asset remains in good shape, and management will monitor market conditions before deciding on a restart [73] Question: Long-term renewable energy contracts - Management emphasized the importance of reducing energy cost volatility and increasing renewable energy in their supply mix [76] Question: Icelandic power arrangement - The company provided insights into the energy pricing structure but did not disclose specific fixed prices due to confidentiality [86][90]