Century Aluminum (CENX) 4 Nov 242024 Q3 Earnings call transcript

For attending today's Century Aluminum Company Third Quarter 2024 Earnings Conference Call. My name is Sierra, and I'll be your moderator for today. [operator instructions] I would now like to pass the conference over to Ryan Crawford.

Thank you, operator. Good afternoon, everyone, and welcome to the conference call. Vice by Bialek, Century's Chief Executive and Trpkovski, today Executive and Financial here and Peter Jerry Finance Officer; Vice Senior joined Jesse President Gary, Chief Officer; Treasurer. I'm of President President and After our questions. prepared will your we comments, take

today's about available on reminder, FD. for with the We company at our of means is as Regulation website and our a presentation disclosing a website www.centuryaluminum.com. As use material information complying

shown here to in review statements Turning that, X. the and call statements a Please today's the Jerry. to with contained respect to moment with non-GAAP Slide take And I'll measures forward-looking hand to cautionary financial discussion.

for Thanks, Ryan, everyone joining. to and thanks

Before member Century, and safety collective on smelter. all Mt. we to Holly commitment at we resulted is sad of loss focus us at very report incident a of given devastating our get The a painful our and to team started in today, it are that a especially is safety. fatality

in prayers. personal ourselves It and from family dedication making to we from each require conduct will us. and Our need of leadership reinforces improvements one organization part without operate our needed critically every every examine thoughts and us This our remain commit a late for of the will event how colleagues firmly and condition. and and to commitment

Okay.

and XXx in generating will the performance. premium the results of will financial fourth to open up XXx we level falling through profitability in the benefit I'll EBITDA includes turning million, benefits continue you prices third excellent Overall, the prices, our then also realized carbon results. quarter call guidance start the the and questions. Century market call for the before I'll wrap aluminum today performance. updated additional by improving reviewing quarter the LME $XXX increased to at quarter the adjusted both the takes our impact excellent drove alumina conditions third under strong regional which current before the detailed quarter, new of and guidance. produced and Jerry discuss aluminum I'll receive and Section

As on our results a X-month reminder, LME prices lagged roll basis. through a

above next the will impact of from per $X,XXX year. QX our spot So positively results financial recent until benefit not prices ton

X. average Western Global third drove late a September, Bank Chinese range-bound stimulus per actions ton Turning largely In in both announced improvement during and in and to higher. programs rose to global the prices $X,XXX that of quarter aluminum regional aluminum were number immediate fiscal stimulus prices, Central Slide drove October. monetary the LME before premiums China an and which

Page continue to light to stimulus projects the programs We will already by levels to are Turning as in the cap Overall, for announced production outpace in approaching continues aluminum as its Global China market growth has of towards million aluminum limited to come, X. demand outside and been weighting. ton growth supply Central electrification trends on dispersed. demand deficit. believe remains and accelerate to begin backs markets Western driven global improve accelerate XXXX that action and of global XXXX demand estimate record demand in X% Bank will we Chinese at further with strong XXXX, and Meanwhile, new XXXX moving China. back challenged of XX supply into and years growth funds

in to With the a create aluminum lows, supply coming should inventories near multiyear continue years. already deficits these favorable environment price

of very have QX and in stands this The of operational created both levels number alumina ton, price Kwinana march continued bauxite prices tight majeure refinery Atlantic $XXX spot inventory other a and market the curtailment We've Turning disruptions as to regulatory Alumina with Australian and of a today year issues all-time number QX refineries. have seen by There challenges. events driven refinery at an in disruptions India, force into in permitting alumina their in from markets. paired market. supply regulatory number been disruptions a alumina to low and Australia also at the upward per globally bauxite a record.

alumina become in side, the markets recently reliant the domestic by given market has supply and ore seaborne of further the our shipments Chinese geopolitics, roughly bauxite impacted Both and announced sensitive On this and on around our imports. how a and out bauxite To increased alone of in a following following global exporters of have month Chinese safety remain XX% the XX% where XX% year-to-date permitting Guinea, disruptions this increasingly and quality one of halt Guinea inspections knowledge, issue been declines to bauxite and with bauxite environmental issues. highlights export bauxite regulators. China earlier bauxite the continued production bauxite from for alumina decrease markets unresolved largest to remains accounting production

alumina asset prices no Needless alumina the interest of smelters LME-linked spot Century Remember, has to longer long-term our say, requirements to portfolio are in under or from directly Jamalco our supply very this. in markets all like sourced have following exposure Jamalco our we acquisition Jamalco, with contracts. in to of controlling happy

Turning to Page X.

winter below the major above levels winter year raw the months. continue and with You gas material near leaving inputs year. the next Natural into prices and be $X to can inventories highs, Jamaica, well well coming see significantly into curve heading price The throughout Hub well storage situated our remain forward that season energy constructive. last the X-year U.S. in

We across the strong third our quarter. smelters operations. in to saw performance Turning

site. its respect inquiries potential Hawesville potential energy summer stable its is received for attributes, a to Operations have third-party that to it site make others, in number months. development. very the remained data operating attractive for these we regarding has including infrastructure at our testament and The including, Mt. redevelopment of several a acquirers, among end significant AI teams during facility, of Sebree center QX, Holly our With which unique potential hot of

process advisers alternatives and aluminum higher have environments, evaluation to for site. financial and believe we the to restart help we formal value strategic significant value an overall our price still engaged as While evaluate a potential the us in launched site has of option and

rainfall has included Iceland, quarter. snowmill led reduce expect summer below May suppliers financial Page full this Grundartangi on in outlook low Grundartangi curtailments Hurricane flat these including the keep in were year through currently have power here. QX in should XX, will megawatts of our consumption curtailment about of presentation. be will is power and the Volume The impact volume on the refinery curtailments recovered progress curtailments, reservoirs and of from We the Jamalco, levels We At XXXX. to left and QX. in normal in Barrel our our announce XX versus QX you In over in of updated guidance implemented by months as July. these appendix impact is the third fully early updated at the

team required and an I'd an excellent quickly, in repairs their quite really without to returned quickly The Jamalco hurricane restoring aftermath. did like the through congratulate injury is mid-September. plant the for completing Completing port achievement. which facilities, normal and job its production and to safely the exceptional normal management on levels to service repairs the team the port

of certain Act, Late implementing Section which Department X. Page regulations eligibility a XX% our of of Reduction production published of for on final the to Inflation costs XXX provided the the credit. last additional the clarity Treasury month, Turning tax

others for rules as as eligible our comments. requested and direct the production materials the and final We are added credit tax we that costs in have pleased indirect

in and For benefit most The coke, XXXX moment. are that significant to are time. whether of an regulations aluminum categories, newly million be cost, updated in supplies. now details operating production further production, the other Jerry published $XX costs left these $XX a alumina be as pitch the through additional a walk eligible the consideration in eligible From realized and year-to-date reserving to question at an guidance open XXXX. final million we for question you this with later will eligible to will

Treasury will eligible alumina Department continue with the the for XXX credit. strong for tax inclusion is to of ultimately justification We should alumina eligible cost be regarding as an that there as work

you million XXX, the If our quarter will would you, by XXX through alumina is on $XX details our that QX about Jerry the included, now increase annually. Jesse. walk credit outlook. Thank and

million third XXX,XXX shipments quarter the basis, Let's for Net quarter at were than quarter. Jamalco, This repairs last a turn the results. third was of higher sales Slide partially by sequentially. quarter On approximately higher driven $XX million, lower $XXX due global X metal offset to port to slightly decrease prices by realized delivery third-party review sales premiums. alumina to regional were tons, a consolidated and

million. EBITDA to attributable adjusted $XXX was Century operating at Looking QX results,

for Hurricane $X $XXX main million The for $XX that million and last was unrealized end was for higher million call, net per in credits, $XX the realized forward $XXX available costs share. by Jamalco adjusted cash $XX we add-backs of share-based at sequential Adjusted adjusting and $X told facilities. impact about material million million Liquidity our EBITDA This you were on derivative additional driven raw income $X.XX XXX quarter. and million The contracts. compensation was million credit consisted third of costs. prices $X tax the of items lower or increase million Barrel-related in to

timing were being Our build due and liquidity port to position Jamalco shipments primarily repairs the at remains within inventory completed. decreased of but our target last range, alumina quarter, while

levels, of We to normal expect increasing quarter return a target port out Jamalco those of to as will the QX shipments reverse in full inventories liquidity.

metal for sequential to per third in improvement $XXX EBITDA. X prior regional incremental of was the quarter. ton Realized U.S. total, of $XXX quarter Turning premiums compared was EBITDA quarter with versus LME ton and prior realized to Midwest the $X,XXX higher Slide million European adjusted explain while delivery premium million. contributed adjusted Together, per quarter, $XXX third up was per In and of $XXX up prices $X an premium was $XX $XX. up ton

We favorable a also and prices, market partially of power EBITDA. prices of material slightly $X The material million. adding realized offset costs, were costs raw $X raw headwind with favorable higher million

turn was for credit for by quarter million has $XXX totaled our These the original guidance amounts repairs million. million. other supplies each that The In Department additional Capital $XX brought for which and Treasury the QX addressing tax released million the an XX expenditures the credit let's already outlays $XXX to for port year-to-date. tax total, full an credit Jamalco are since the result XXXX from that, cash XXXX. Barrel. been the recorded new Slide following million, Hurricane in to XXX this additional December XXX $XX driven carbon With largely XXXX completed $XX credit and EBITDA was to operating year adjusted in additive rules

also Hurricane from quarter. Barrel quarter, in fourth Jamalco impacted during the the causing will shipments correct alumina our refinery a delay in working capital that

X, quarter cash until U.S. million total received. payments $XXX XXx end receivable a have tax we we million cash. government. $XX are the XX, from had credit Finally, At the the September XXX of the of payment direct Through awaiting in

Let's our Slide expectations XX into for turn fourth for to the insights quarter.

lagged the at QX, up ton is ton $XX per The For down Midwest versus The lagged forecast $XXX QX expected QX is delivery $X. $X ton expected or European LME is third to $XXX quarter. of ton, U.S. to the per be premium realized per be up per about $X,XXX prices. premium versus about

Taken have levels. together, expected a premium QX $X $X QX to LME with EBITDA to are lagged the and to delivery changes decrease compared million

raw We flat. between to constructive costs be other million and be expect for similar expect be to factors about power administrative outlook million to $X in considered, $X last QX to expected in operating Volume, million. range our prices expenses quarter. have QX. All materials increase EBITDA Collectively, adjusted key EBITDA to $XX to a other and is $XX we a remain our to will

QX to Jesse. As And I'll impact turn the begin not ton Jesse XXXX. spot above financial mentioned per over call now prices back until to before, positively results our aluminum $X,XXX will current

Thanks, Jerry.

Before the want with we power. which, has to businesses XXX the time acquisition, our the operational over to and Section and a turn bit our years, to little team the improvements serve questions, stability earnings spend driven on over more Jamalco I increase call several past Century's together in

increase XXX be XXXX $XX carbon benefit eligible an by to year for benefit of If $XX we basis. $XXX and ultimately we total XXXX so tax $XX to full million inclusion other alumina million as expect total is included each million production our credit, supplies total over expect full the eligible, now benefit in the around or our of year annualized amounts to be on estimate million. another to and is operating XXX With those

the U.S. minerals quality as have credits some that of critical positions would these The Please time increase world-class note, out of significantly of undersupplied these alumina pro EU phase that quite our globally be of for working production the businesses. for with the credits over increased tax privileged and Century's rata to as is Jamalco, see from do been captive paired we workforce, bring any by can effect When online additional business markets not supply competitiveness may power the in and U.S. the production very you quality competitive a well time and now. earnings our towards in of we

and now are team that proud the to a and really the Century here look through is at believe perform we'll now We business of can operator. the turn has what the very questions created to your forward call over today, this cycles. We well

[Operator from Lucas first question Our instructions] Riley Pipes comes B. Securities. today with

you you that first, did started of could would you it? questions. a to off you long fairly process? Jesse, expect Hawesville? when try I list to short. for have a them little kick When bit And process I'll But the that speak have keep complete to

Lucas. Yes. Sure,

call, mentioned of receive process. site. I inquiries the we interest a now. this a with it to interest We at that sense the the number we've in been made a little decided we for start looking on saw, while And level As inbound did given

of an repurposing the industrial you've transactions to be bit number other a some different and than items need course, of valued. by diligent market. There's in seen is the of will the that Now buyers asset a

have now the determine that just and significant there help so to say make how right process see And the long can what we'll us we is decision. takes. and and ultimately watch interest will value But is for

could I And from of supply touch expire? they the to you on that. I for Jesse, have what have the remind really there, might for market agreements tuned want stay we'll follow-ups. alumina supply And LME-linked Well, you right. us quickly. then a today, in All when few kind agreements

agreements, we renegotiate Jamalco supply all creditworthy we'll don't said, them. details over I on supply, disclose to either of there's agreements. we as left long-term from with generally Sure. very supply of, before from but counterparties. contracts source years X our And these I or are those the Yes, The think need they

include So be this X? or between both the there would might Concorde difference Glencore and -- not a

nature together, down won't with API collective you we don't is our cathode results, individual see have the the contracts. -- as from to supply, them it, you guess, along our can We the any exposure. break I when internal say But way put own

true should that And hold also for XXXX?

as XXXX Yes, well. in

aluminum on stability. now? Why helpful. Very right. price the forward with pricing move alumina stability All capacity In side, that here strong not supply context, restarts and

Well, that's a good question, Lucas.

now, when the So for that ready as market want we've look we sure said is to make for make it. do decision a capacity the we bring while to online, and back

strong one, we for So see LME. do

the to positive, well with So into respect But prices source rising incremental seen to that's out go premium a we as quarter. we've this Midwest would have and volume, market alumina. and over

we're bringing to So there, we volume that exposed be for would new on. spot that alumina

if and on And prices, we additional, in we alumina hurdle. bit a So that -- to current spot out at But just find to our to a marketplace. the were that go spot operations be have clear, obviously, of at existing exposure no levels. that's for bring

Our BMO Janet next question Patrick with comes from Capital.

to back the going just alumina agreements. supply Maybe

Or I think what's of that little look agreement a end that? just valid for does you filings, this you that is just when that? the XXX,XXX your roll about have over? year to supposed Is that with tons through talk at I -- the situation an alumina. Can of bit be

has [indiscernible]. extended contract now, That Yes. been

for from So that here. extends of couple out a years

any changes the that is was past in terms as there? same And it the or

been Yes, there the past. similar what's in terms as

value-added premiums. And maybe the moving to

you're next next year? year. how side, I the it's on when is for update for Any looking that think negotiating now time

No.

for than extends mating couple ago. seen call we've of into the season bit years the what X used the years, we a As longer maybe past fall it to

now out we're So expect right update negotiating contracts still there and the market call. on in an to those have QX the

And may. one I last one, if

assets? than it's are repurposing you about little assets. that? some Like a some mentioned potential a more You with -- comes an types bit that in industrial different the of other the of of asset these talk challenges repurposing what Can

power as center some turning made been something over for work imagine you need with racks, you've hyperscaler an the as a the where I transactions the server and for aluminum electrical purpose. be like you you're equipment one have it's have other industrial are for infrastructure. Well, type industrial used the racks, used et modified of There simple site application to cetera. maybe can that I just so market data Whereas think seen the would data if AI or in we an asset, order other you in building center think purpose, one data to center such areas to of obviously, that, it just its like of

so evaluated transaction. the diligencing area that as need sort And I and think the in forward a with of that's of one buyers process, are move will due to timing we be to terms

So be, the I'm understanding this a potentially? of whole if in sale asset a way, correctly, would

have settled we potential process. [indiscernible] would transaction settled the We structure but haven't any that nor on any on be one of outcome certainly yet,

from Our Tumazos very next Research. comes question John with today Independent

costs When supplier? expire? new tell us does world could your companies in is say, publish? resemble alumina what if Alcoa other you like the this averages LME-linked or you if Who, Jamaica can And contract

John. Sure,

me. try to those If Let order. take redirect me I in one, miss just

our as said the think So said we it long but them, second are in at a structure of them already we're market contracts asset, in year Jamalco And With underway. structure, ultimately globally getting will in past, the we've range implement cost the cost XXXX. excited quartile us some of LME-linked the asset. at of be And in We least today's now be They're to would been and cost which through looking that are place. put you it a what about this all We've its as very price term. do of There's right a environment. our variety certainly of we structure we mentioned. some respect we are down that and competitors CapEx think good can programs, competitive.

What Congratulations. alumina is you've superb. done absolutely with

Our next B. Pipes question with Riley is a follow-up Lucas from Securities.

more alumina one side. the on Just

it and of be next acquisition in it to could I on contracts given what year? wanted all up to adjustment comment, was but the any recent surge the this. the percentage be Would prices? alumina John's this of want roughly done, a of you've I Jamalco there Or follow year? As congratulations LME, echo the on structure stable

Sure, think I Lucas. before question the no, could whether to change. And Yes, are fixed relates your commercial the current contracts, those that entered those were percentages run-up. into

attractive they're to are And fixed. say contracts, was readjustment levels. compared quite I in No, so current those going to they just no

Maybe trying provided together. is still all to a put that environment. outlook you price an for QX Obviously, somewhat reflecting it weaker

you Looking in the current frame EBITDA the kind QX help and XXXX appreciate color. out the power might earnings could price of to what or like? would look environment, up the sensitivity I

to And items side appendix. revenue ahead and through side Lucas, so sensitivities the of want. cost whichever in go the Mark you or you walk it, you Mark, can Lucas. our all just just go to But

XX, on see So Page $X,XXX. an LME the around based as on you was outlook

has of is a levels. pennies it's of couple Midwest EBITDA per above about on that's in then the there. ton It's which from basis. these So a incremental per the million run premium ton. risen EBITDA, annualized about spot $X,XXX, as up incremental well $XXX from outlook, rate $XXX about $XX of And

So so. or that's another maybe $XX million

$XXX got in so at from EBITDA additional annualized or So spots, in what's the an guide. you've million

a that above quarter, run quarterly take million can rate which you million $XX puts $XXX So EBITDA. you

no There in are longer queue. questions

or conference closing back the for pass to management I'll the further team remarks. So any

call. as to really you, everyone the in We talking and Thank questions forward year. the look to for joining always, new appreciate and to you the thanks all operator, Thanks.

conference today's call. all Thank conclude will for participation. your you That

may You lines. now disconnect your