Century Aluminum(US:CENX)2022-04-29 02:58Financial Data and Key Metrics Changes - The company achieved record quarterly adjusted EBITDA of over $105 million in Q1 2022, a 30% increase over Q4 2021 [6] - Net sales increased by 14% for the quarter, reflecting strong operational performance [6][22] - Liquidity from available cash and credit facilities was $154 million at the end of Q1, a $54 million increase from the prior quarter [23] Business Line Data and Key Metrics Changes - Quarterly shipments increased by 5% from Q4 2021, marking the highest level since 2015, driven by expansion projects at Mt. Holly and Hawesville [7][22] - Adjusted EBITDA increased by $23 million sequentially, with realized LME prices up $158 per ton compared to the prior quarter [24][26] Market Data and Key Metrics Changes - The global aluminum market is forecasted to remain in a deficit of over 1 million tons in 2022, with a projected 4.3 million ton deficit in the US and a 3.7 million ton deficit in Europe [12] - The LME price of aluminum averaged $3,200 per ton in Q1, with strong demand expected to continue [15] - Regional premiums in the US and Europe reached record highs, with the European duty paid premium at $610 per metric ton and the Midwest premium at $870 per metric ton [14] Company Strategy and Development Direction - The company plans to move forward with several debottlenecking projects in Sebree and Mt. Holly, expecting to increase build capacity by over 10,000 metric tons in 2023 and beyond [17] - Capital allocation plans include approximately $10 million for investment CapEx projects, primarily related to the casthouse debottlenecking projects [34] Management's Comments on Operating Environment and Future Outlook - Management noted that power curtailments in Iceland have ended, and production is expected to return to full capacity by May [8] - The company anticipates higher US energy prices in Q2, which could impact EBITDA by approximately $45 million compared to Q1 [29] - Management remains optimistic about the market fundamentals, expecting continued strong demand and pricing dynamics [12][15] Other Important Information - The company reported a one-time increase in relining costs expected in Q2 due to the restart of curtailed pots [9] - The cash position remained relatively flat, with CapEx spending of $26 million in Q1 [27] Q&A Session Summary Question: Thoughts on the aluminum market and China's exports - Management indicated that restarts in China are progressing as expected, but no significant pressure from exports has been observed yet [37][38] Question: Deferred OpEx in Q1 and its impact on Q2 - Management explained that deferred maintenance projects and relining costs from Iceland will result in a spike in Q2 operating expenses [44][45] Question: Compensation structure and shareholder perspective - Management confirmed that compensation is heavily weighted to stock price performance, acknowledging the need for improved stock performance [48][49] Question: Understanding Icelandic power market link to European prices - Management clarified that Iceland's power costs are linked to LME and Nord Pool prices, with some exposure to European price trends [54][55] Question: Inventory levels and capital allocation for M&A - Management noted that tight inventory levels are reflected in regional premiums, and while M&A is a consideration, no specific targets are currently in mind [62][64]