Century Reports Second Quarter 2015 Financial Results
CHICAGO, IL -- (Marketwired) -- 08/06/15 -- Century Aluminum Company (NASDAQ: CENX) reported a net loss of $33.9 million ($0.39 per common share) for the second quarter of 2015. Results include a $30.9 million impairment charge ($0.35 per common share) related to the permanent closure of our Ravenswood smelter and a $25.7 million charge ($0.30 per common share) for lower of cost or market inventory adjustments. Results were also negatively impacted by $11.7 million ($0.13 per common share) in costs related to the labor disruption at our Hawesville smelter. Lastly, results include a $10.3 million ($0.12 per common share) unrealized gain on the fair value of contingent consideration related to the acquisition of the remaining 50.3% interest of Mt. Holly. After consideration of these items, the company reported adjusted net income of $24.1 million and adjusted earnings per share of $0.25.
For the second quarter of 2014, Century reported net income of $20.3 million ($0.21 per common share). Results were negatively impacted by a charge of $0.5 million ($0.01 per common share) for the finalization of a legal settlement.
Sales for the second quarter of 2015 were $523.5 million compared with $458.3 million for the second quarter of 2014. Shipments of primary aluminum for the second quarter of 2015 were 233,950 tonnes compared with 216,044 tonnes shipped in the second quarter of 2014.
Net cash used by operating activities in the second quarter of 2015 was $6.0 million compared to net cash provided of $19.3 million in the second quarter of 2014. Cash and cash equivalents decreased $59.0 million during the second quarter of 2015 compared to an increase in cash and cash equivalents of $8.9 million in the second quarter of 2014. During the second quarter of 2015, Century acquired 1.2 million shares of common stock for a total cost of $16.9 million and paid $38.2 million related to the Mt. Holly acquisition, primarily for pension funding obligations per the terms of the acquisition agreement.
For the first half of 2015, Century reported net income of $39.9 million ($0.42 per common share). Results include a $30.9 million impairment charge related to the permanent closure of our Ravenswood smelter and a $25.7 million charge for lower of cost or market inventory adjustments. Results were also negatively impacted by $11.7 million in costs related to the labor disruption at our Hawesville smelter, $1.6 million for signing bonuses related to a new labor agreement in Iceland and $1.0 million related to the separation of a former senior executive. Lastly, results include a $16.8 million unrealized gain on the fair value of contingent consideration related to the acquisition of the remaining 50.3% interest of Mt. Holly.
For the first half of 2014, Century reported net income of $0.2 million ($0.00 per common share). Cost of sales for the first half included a benefit of $5.5 million related to power contract amortization and $1.2 million for lower of cost or market inventory adjustments. Results were negatively impacted by a reserve of $3.6 million for a legal settlement.
Sales for the first half of 2015 were $1,111.4 million compared with $879.2 million for the first half of 2014. Shipments of primary aluminum for the first half of 2015 were 479,208 tonnes compared with 422,829 tonnes shipped for the first half of 2014.
Net cash provided by operating activities in the first half of 2015 was $110.3 million compared to $8.6 million in the first half of 2014. Cash and cash equivalents increased $4.2 million during the first half of 2015 compared to a decrease in cash and cash equivalents of $22.7 million in the first half of 2014. During the first half of 2015, Century acquired 2.4 million shares of common stock for a total cost of $36.3 million and paid $38.2 million related to the Mt. Holly acquisition, primarily for pension funding obligations per the terms of the acquisition agreement.
"We have witnessed a significant weakening in the commodity price environment during the last several months," commented Michael Bless, President and CEO. "In the primary aluminum sector, demand development remains strong in the U.S. and is improving in Western Europe and certain other key developed markets. However, there has been a meaningful deterioration in supply side conditions, principally in the form of exports from China. This subsidized material, much of which circumvents laws and regulations implemented by the Chinese authorities, is flooding markets in the U.S. and Europe. Aggressive and timely action is required to ensure fairness and an equal footing for all participants in these markets."
Mr. Bless continued, "We are taking regrettable but necessary actions to preserve the competitiveness of our businesses. We have announced layoffs that will impact a significant number of our colleagues. We have deferred or cancelled a substantial number of programs, while maintaining adequate investment in safety, operational reliability, product quality and customer support. We have implemented a variety of other actions aimed at improving cash flow and preserving liquidity. We will continue to analyze and implement additional actions as appropriate."
"With real regret, we announced last week our intent to work toward a permanent closure of our Ravenswood, West Virginia plant," continued Mr. Bless. "We are grateful for the efforts of state officials and West Virginia's congressional representatives, all of whom we are convinced did everything in their power to facilitate a restart of the smelter. The depth of our collective efforts renders this decision all the more difficult. In the final analysis, however, market conditions made the likelihood of a restart simply unrealistic within any reasonable time frame. We will now move to dispose of the plant and the site consistent with the best interests of our shareholders, the local community and the economic development objectives of the state."
Mr. Bless concluded, "We will move forward aggressively to preserve the value of the company during this difficult market environment. We have strong liquidity, low financial leverage and few fixed contractual obligations. We will continue to fund high return and low risk projects aimed at growing our businesses and improving their competitiveness. We are nearing the end of the process to finalize a post-2015 power arrangement for Mt. Holly, and must reach a conclusion within the coming months. We are confident that Century will emerge from this difficult industry environment stronger and more competitive."
About Century Aluminum
Century Aluminum Company owns primary aluminum capacity in the United States and Iceland. Century's corporate offices are located in Chicago, IL. Visit www.centuryaluminum.com for more information.
Certified Advisors for the First North market of the OMX Nordic Exchange Iceland hf. for Global Depositary Receipts in Iceland:
Atli B. Gudmundsson, Senior Manager -- Corporate Finance, Landsbankinn hf.
Steingrimur Helgason, Director -- Corporate Finance, Landsbankinn hf.
Non-GAAP Financial Measures
Adjusted net income and adjusted earnings per share are non-GAAP financial measures that management believes provide additional meaningful information regarding Century's financial performance as these measures generally exclude the effects of items that are considered non-recurring, are difficult to predict or to measure in advance or that are not directly related to the Company's ongoing operations. The table below, under the heading "Reconciliation of Non-GAAP Financial Measures," provides a reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company's reported results prepared in accordance with GAAP. In addition, because not all companies use identical calculations, adjusted net income and adjusted earnings per share included in this press release may not be comparable to similarly titled measures of other companies. Investors are encouraged to review the reconciliation in conjunction with the presentation of these non-GAAP financial measures.
Cautionary Statement
This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are statements about future events and are based on our current expectations. These forward-looking statements may be identified by the words "believe," "expect," "hope," "target," "anticipate," "intend," "plan," "seek," "estimate," "potential," "project," "scheduled," "forecast" or words of similar meaning, or future or conditional verbs such as "will," "would," "should," "could," "might," or "may." Our forward-looking statements include, without limitation, statements with respect to: future global and local financial and economic conditions; our assessment of the aluminum market and aluminum prices (including premiums); our assessment of power pricing and our ability to successfully obtain and/or implement long-term competitive power arrangements for our operations and projects, including at Mt. Holly; our relationship with our employees and labor unions; our plans with respect to the closure of our Ravenswood smelter and the potential curtailment of other domestic assets; the future financial and operating performance of the Company, its subsidiaries and its projects; future earnings, operating results and liquidity; future inventory, production, sales, cash costs and capital expenditures; future impairment charges or restructuring costs; our business objectives, strategies and initiatives, including our ability to achieve productivity improvements or cost reductions.
Where we express an expectation or belief as to future events or results, such expectation or belief is expressed in good faith and believed to have a reasonable basis. However, our forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from future results expressed, projected or implied by those forward-looking statements. Important factors that could cause actual results and events to differ from those described in such forward-looking statements can be found in the risk factors and forward-looking statements cautionary language contained in our Annual Report on Form 10-K, quarterly reports on Form 10-Q and in other filings made with the Securities and Exchange Commission. Although we have attempted to identify those material factors that could cause actual results or events to differ from those described in such forward-looking statements, there may be other factors that could cause results or events to differ from those anticipated, estimated or intended. Many of these factors are beyond our ability to control or predict. Given these uncertainties, the reader is cautioned not to place undue reliance on our forward-looking statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.
CENTURY ALUMINUM COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(Unaudited)
Three months ended Six months ended June
June 30, 30,
2015 2014 2015 2014
--------- --------- ---------- ---------
NET SALES:
Related parties $ 513,681 $ 288,573 $1,089,410 $ 574,156
Third-party customers 9,810 169,751 21,992 305,015
--------- --------- ---------- ---------
Total net sales 523,491 458,324 1,111,402 879,171
Cost of goods sold 515,149 419,820 1,008,965 842,425
--------- --------- ---------- ---------
Gross profit 8,342 38,504 102,437 36,746
Selling, general and
administrative expenses 10,012 10,618 21,983 20,680
Ravenswood impairment 30,850 - 30,850 -
Other operating expense - net 2,601 1,874 4,680 4,288
--------- --------- ---------- ---------
Operating income (loss) (35,121) 26,012 44,924 11,778
Interest expense (5,573) (5,571) (11,124) (11,048)
Interest income 61 34 203 174
Net gain (loss) on forward
and derivative contracts 566 352 919 (527)
Unrealized gain on fair value
of contingent consideration 10,287 - 16,814 -
Other income - net 93 300 1,147 47
--------- --------- ---------- ---------
Income (loss) before income
taxes and equity in earnings
of joint ventures (29,687) 21,127 52,883 424
Income tax expense (5,065) (1,654) (14,366) (560)
--------- --------- ---------- ---------
Income (loss) before equity in
earnings of joint ventures (34,752) 19,473 38,517 (136)
Equity in earnings of joint
ventures 855 871 1,365 376
--------- --------- ---------- ---------
Net income (loss) $ (33,897) $ 20,344 $ 39,882 $ 240
========= ========= ========== =========
Net income (loss) allocated to
common stockholders $ (33,897) $ 18,675 $ 36,628 $ 220
EARNINGS (LOSS) PER COMMON
SHARE:
Basic $ (0.39) $ 0.21 $ 0.42 $ 0.00
Diluted (0.39) 0.21 0.41 0.00
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING:
Basic 86,873 88,787 87,838 88,752
Diluted 86,873 89,352 88,495 89,292
CENTURY ALUMINUM COMPANY
CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
(Unaudited)
June 30, December 31,
2015 2014
------------ --------------
ASSETS
Cash and cash equivalents $ 167,408 $ 163,242
Restricted cash 1,083 801
Accounts receivable - net 9,807 76,165
Due from affiliates 52,310 31,503
Inventories 318,422 283,480
Prepaid and other current assets 36,236 29,768
Deferred taxes 14,281 14,281
------------ --------------
Total current assets 599,547 599,240
Property, plant and equipment - net 1,263,861 1,291,218
Other assets 125,830 123,577
------------ --------------
TOTAL $ 1,989,238 $ 2,014,035
============ ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Accounts payable, trade $ 119,334 $ 151,443
Due to affiliates 63,667 22,261
Accrued and other current liabilities 67,162 104,646
Accrued employee benefits costs 9,742 10,159
Industrial revenue bonds 7,815 7,815
------------ --------------
Total current liabilities 267,720 296,324
------------ --------------
Senior notes payable 247,079 246,888
Accrued pension benefits costs - less current
portion 56,711 59,906
Accrued postretirement benefits costs - less
current portion 136,020 152,894
Other liabilities 46,596 53,272
Deferred taxes 118,572 113,604
------------ --------------
Total noncurrent liabilities 604,978 626,564
------------ --------------
SHAREHOLDERS' EQUITY:
Series A Preferred stock (one cent par value,
5,000,000 shares authorized; 160,000 issued
and 77,127 outstanding at June 30, 2015;
160,000 issued and 78,141 outstanding at
December 31, 2014) 1 1
Common stock (one cent par value, 195,000,000
shares authorized; 94,087,473 issued and
86,900,952 outstanding at June 30, 2015;
93,851,103 issued and 89,064,582 outstanding
at December 31, 2014) 941 939
Additional paid-in capital 2,512,682 2,510,261
Treasury stock, at cost (86,276) (49,924)
Accumulated other comprehensive loss (98,242) (117,682)
Accumulated deficit (1,212,566) (1,252,448)
------------ --------------
Total shareholders' equity 1,116,540 1,091,147
------------ --------------
TOTAL $ 1,989,238 $ 2,014,035
============ ==============
CENTURY ALUMINUM COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
Six months ended June 30,
2015 2014
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 39,882 $ 240
Adjustments to reconcile net income to net cash
provided by operating activities:
Unrealized gain on fair value of contingent
consideration (16,814) -
Unrealized gain on E.ON contingent obligation (706) (706)
Accrued and other plant curtailment costs -
net 2,149 2,181
Lower of cost or market inventory adjustment 25,689 (1,247)
Depreciation 36,409 35,143
Ravenswood impairment 30,850 -
Sebree power contract amortization - (5,534)
Debt discount amortization 191 177
Pension and other postretirement benefits (262) 2,368
Deferred income taxes 4,984 2,731
Stock-based compensation 894 533
Equity in earnings of joint ventures, net of
dividends (1,365) (376)
Change in operating assets and liabilities:
Accounts receivable - net 66,359 3,931
Due from affiliates (20,807) (10,508)
Inventories (60,631) (2,786)
Prepaid and other current assets 3,819 6,816
Accounts payable, trade (34,087) (8,413)
Due to affiliates 41,406 (1,226)
Accrued and other current liabilities 1,288 (12,200)
Other - net (8,932) (2,496)
----------- -----------
Net cash provided by operating activities 110,316 8,628
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (26,587) (16,758)
Nordural expansion - Helguvik (175) (186)
Purchase of carbon anode assets and
improvements (4,606) (7,226)
Purchase of remaining interest in Mt. Holly
smelter (38,162) -
Proceeds from sale of property, plant and
equipment 14 46
Restricted and other cash deposits (282) (1,334)
----------- -----------
Net cash used in investing activities (69,798) (25,458)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under revolving credit facilities 1,010 86,646
Repayments under revolving credit facilities (1,010) (92,646)
Repurchase of common stock (36,352) -
Issuance of common stock - 126
----------- -----------
Net cash used in financing activities (36,352) (5,874)
----------- -----------
CHANGE IN CASH AND CASH EQUIVALENTS 4,166 (22,704)
Cash and cash equivalents, beginning of period 163,242 84,088
----------- -----------
Cash and cash equivalents, end of period $ 167,408 $ 61,384
=========== ===========
CENTURY ALUMINUM COMPANY
SELECTED OPERATING DATA
(Unaudited)
SHIPMENTS - PRIMARY ALUMINUM
Direct (1) Toll
----------------------------------------- --------------------
United States Iceland Iceland
-------------------- -------------------- --------------------
Sales $ Sales $ Sales $
Tonnes (000) Tonnes (000) Tonnes (000)
--------- ---------- --------- ---------- --------- ----------
2015
-------------
2nd Quarter 157,373 $ 371,898 50,056 $ 110,083 26,521 $ 37,858
1st Quarter 169,306 421,141 45,967 112,662 29,985 46,617
--------- ---------- --------- ---------- --------- ----------
Total 326,679 $ 793,039 96,023 $ 222,745 56,506 $ 84,475
========= ========== ========= ========== ========= ==========
2014
-------------
2nd Quarter 143,439 $ 325,650 39,593 $ 82,328 33,012 $ 48,441
1st Quarter 136,532 296,889 36,764 74,370 33,489 47,185
--------- ---------- --------- ---------- --------- ----------
Total 279,971 $ 622,539 76,357 $ 156,698 66,501 $ 95,626
========= ========== ========= ========== ========= ==========
(1) Excludes scrap aluminum sales.
CENTURY ALUMINUM COMPANY
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in millions, except per share amounts)
(Unaudited)
Q215 EPS
----------- -----------
Net income (loss) as reported $ (33.9) $ (0.39)
Ravenswood impairment 30.9 0.35
Hawesville labor disruption 11.7 0.13
Mt. Holly purchase accounting (10.3) (0.12)
LCM inventory adjustment 25.7 0.30
Impact of preferred shares - (0.02)
----------- -----------
Adjusted net income $ 24.1 $ 0.25
----------- -----------
Contacts Kenny Barkley (media) 270-577-2070 Peter Trpkovski (investors) 312-696-3112
Source: Century Aluminum Company