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Century Aluminum(CENX) - 2024 Q4 - Earnings Call Transcript
CENXCentury Aluminum(CENX)2025-02-21 01:39
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Financial Data and Key Metrics Changes - Century Aluminum Company generated adjusted EBITDA of 245millionforthefullyear2024and245 million for the full year 2024 and 82 million for Q4 2024, driven by strong aluminum prices and low energy costs [7][21] - Net sales for Q4 were 631million,anincreaseof631 million, an increase of 92 million sequentially, attributed to higher aluminum sales volume and prices [22] - Adjusted net income for Q4 was 46millionor46 million or 0.49 per share, with liquidity at 245millionattheendofthequarter[23][24]BusinessLineDataandKeyMetricsChanges−GlobalshipmentsinQ4wereapproximately167,000tonnes,slightlylowerthanthepreviousquarterduetoyear−endshipmenttiming[21]−TheJamalcoacquisitionandLMElinkedcommercialcontractshelpedmitigatealuminapricevolatility,withaluminapricesreachingall−timehighsinlate2024[11][12]−Jamalcoachievedastrongstartin2025,withJanuaryproductionatthehighestmonthlylevelsinceacquisition[16]MarketDataandKeyMetricsChanges−Aluminumpricesaveraged245 million at the end of the quarter [23][24] Business Line Data and Key Metrics Changes - Global shipments in Q4 were approximately 167,000 tonnes, slightly lower than the previous quarter due to year-end shipment timing [21] - The Jamalco acquisition and LME linked commercial contracts helped mitigate alumina price volatility, with alumina prices reaching all-time highs in late 2024 [11][12] - Jamalco achieved a strong start in 2025, with January production at the highest monthly level since acquisition [16] Market Data and Key Metrics Changes - Aluminum prices averaged 2,575 per tonne in Q4, with spot LME trading above 2,700inearly2025[7]−Globalaluminumsupplyisexpectedtomoveintoadeficitofover600,000tonnesin2025duetostrongdemandandconstraintsonnewsupply[9][10]−Inventoriesareatmultiyearlowsof49days,supportinghigheraluminumpricesmovingforward[10]CompanyStrategyandDevelopmentDirection−ThecompanyisfocusedonincreasingproductioncapacityatJamalcoandhasimplementedamultiyearCapExprogram[17]−Anewsmelterprojectisunderway,expectedtodoublethesizeoftheU.S.aluminumindustryandcreateover1,000full−timejobs[43][44]−ThecompanyisevaluatingthepotentialrestartoftheMt.Hollysmelter,withapositiveoutlookduetorecenttariffannouncements[51][52]ManagementCommentsonOperatingEnvironmentandFutureOutlook−Managementexpressedconfidenceinthestrongmarketconditionsforaluminumin2025,withexpectationsforcontinueddemandgrowthoutpacingsupply[6][10]−TheimpactofrecentU.S.Section232tariffannouncementsisanticipatedtopositivelyaffecttheMidwestPremium,whichhasalreadyrisensignificantly[41][42]−Managementnotedthatthefinancialsettlementfromanaluminasupplierwillnotrepeatinfuturequarters,providingacleareroutlookforQ2[56]OtherImportantInformation−ThecompanyexpectsQ1adjustedEBITDAtobeintherangeof2,700 in early 2025 [7] - Global aluminum supply is expected to move into a deficit of over 600,000 tonnes in 2025 due to strong demand and constraints on new supply [9][10] - Inventories are at multiyear lows of 49 days, supporting higher aluminum prices moving forward [10] Company Strategy and Development Direction - The company is focused on increasing production capacity at Jamalco and has implemented a multiyear CapEx program [17] - A new smelter project is underway, expected to double the size of the U.S. aluminum industry and create over 1,000 full-time jobs [43][44] - The company is evaluating the potential restart of the Mt. Holly smelter, with a positive outlook due to recent tariff announcements [51][52] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong market conditions for aluminum in 2025, with expectations for continued demand growth outpacing supply [6][10] - The impact of recent U.S. Section 232 tariff announcements is anticipated to positively affect the Midwest Premium, which has already risen significantly [41][42] - Management noted that the financial settlement from an alumina supplier will not repeat in future quarters, providing a clearer outlook for Q2 [56] Other Important Information - The company expects Q1 adjusted EBITDA to be in the range of 75 million to 85million,influencedbylaggedLMEandregionalpremiums[36]−Capitalexpendituresforsustainingoperationsareprojectedat85 million, influenced by lagged LME and regional premiums [36] - Capital expenditures for sustaining operations are projected at 45 million to 50 million, with additional investments planned for operational efficiencies [39] Q&A Session Summary Question: Impact of Midwest Premiums on Earnings Power - Management confirmed that the increase in Midwest Premiums will not be fully reflected until Q2, with potential annual impacts around 100 million [48][50] Question: Update on Mt. Holly Restart - Management indicated that the tariff program is favorable for Mt. Holly, and they are moving towards a restart, with updates to follow [51][52] Question: Timeline and Investment for Mt. Holly Restart - A restart at Mt. Holly is estimated to take around nine months, with costs to be determined upon decision [59][60] Question: Progress on New Smelter Project - The new smelter project is progressing well, with a $500 million grant from the Department of Energy secured and energy contract negotiations ongoing [64] Question: Demand Growth and Inventory Concerns - Management believes that demand for aluminum will outpace supply growth, with no evidence of significant inventory stockpiling [81][82] Question: Chinese Output and Capacity Cap - Management maintains that China will respect the 45 million tonne production cap, despite recent output increases [84][85]