CENX - Earnings call transcript Q4 2017 | Century Aluminum Company

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Operator

Ladies and gentlemen, thank you for standing by. And welcome to the Fourth Quarter 2017 Earnings Call. At this time all lines are in a listen-only mode, later we’ll conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] And as a reminder, today’s conference is being recorded. I’d now like to turn the conference over to your first speaker, excuse me, Peter Trpkovski. ahead. go Please

Peter Trpkovski

Vice Good call. Ryan. President and to we’ll our welcome Chief After and Thank prepared our joined afternoon, today conference comments, Senior Harrison, Shelly I’m Officer; your Century’s of by the Finance Executive Treasurer. questions. you, take and everyone, President Mike and Bless,

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

of please presentation X moment a shown the I’ll with review Mike. call Slide in and forward-looking hand to to Turning contained to that, today’s here take statement discussion. measures non-GAAP cautionary With financial the today’s respect statements to

Mike Bless

it’s week. a Thanks, busy us And Pete. everybody know for thanks joining We this afternoon.

right could over So please, high to Page X through we months. take of level overview it. of to If I’ll couple turn you at last let’s the get

in part was also company’s and the the quarter with the across quarter good XXXX. pleased of plans to board with quarter. performance We’re improving fourth most early Safety the into performance

into performance. operating again from pretty strong a and costs the hazards the reflected metrics stability on good Plant and And environment systems dividends the Grundartangi, up focus safety and the management of seen with plant. quarter At very this that and for of focus to events and injuries operations controllable culture identification the altering that us. prevention base of strong this of pay reinvigorated a back it we’ve entire and an financial significant safety Our at on of the throughout coupled life continues processes already their XXXX.

this purchase other million of quarter that. increased on other logistics talked beginning this of look, higher of River, chance much adjusted the way is problems you’ve quarter. the a prices last price remember EBITDA Ohio in cost raw increases and about fourth was quarter had as for $XX than some explain seen to during due the continuing flow the well at first material raw that you quarter. the go Cash will the if of impact impact as Shelley to the the includes we strong situation If materials will and year This

As seen we predicted in the meaningful October, over in material few prices a fall months. we’ve raw last

be we’re So detail environment. will to but just In now. back in perspective quite a as worst we discussed we’ll from some you given more statement income the realized give of times. the consider a prices see pricing QX still what on let we’ve these commodities, raw Shelly would not quick to lag impacts material you the an me summary with many you give normal

had then early trading most we rapid in a As the you to really increase been recall, saw the in XXXX. $XXX ton per alumina of shy And for low just fall, $XXX. of

to remains is see as coke a as still to return had favorable to give let environment mid it The the fundamental at in Pete some rational that. of The we believe $XXX’s as nearly some barring some of we’ve was a on we clear shy you price said world fact, in that go will outlook production you be nor demand of as way, China Again, in side in price level is price $XXX released favorable. in curtailed The other And global much that in looking comments. calcined most supply delivered At but believe give have principally up couple when consensus just continue. strong a quick mid we in non-fundamental story in $XXX’s. on will results was me alumina growth a you due we return up the time of in just petroleum now this Pete continues Like expected. high picture now the expect seen few the some around more $XXX as you’ll detail trading cuts world In remember. is we capacity with on the to $XXX. fall. Further environment some we’d macroeconomic rocketed China not coke to the shock, run more just around clear now the give the the clear capacity on industry Same building to is now to hard detail our imbalances, has price not way basis. parts market and that Asia. kind short-term Western the of view the the our October moments,

we the increased it’s Flows the adjustment. and have why made we market the clear record in this attempts that another markedly believe On to will exports picture We it’s China This is the is is that side to the coming we U.S. the before any from into also of U.S. to investigation see mid double-digits The digit China immediately. absolutely set the into final range over XXXX. believe troubled. in under be demand growth the single hard believe down this situation domestic get XXX metal demand order isn’t predict, somewhat XXXX. due the from critical year to Section last impact

In X.X now of the the matter addition, in there in U.S. be tons over on million loaded at foreign ports material weeks. this a well believe will we ships, being

many in U.S. harm Secretary’s security national fundamental the flowing also some restart. to times. with The U.S. U.S. report for We’re read subjected as we’ve described thinking, state available of proposal our The encouraged is you our the absolutely to is analysis so into with it report consistent to that President. report the Commerce the consistent market capacity – the remedies by subsidized adjust objective a interest the the the can aluminum had caused recently if – you it, by to national sent clear chance

and in Any starting view. finalizing still final remedies on on drag putting working We’re imported to of with the a report forward mountain reiterate remedies absolutely critical are material to in look administration is significant I the process. to Again, with recently going be speed studying strong the our need alternative market this a we conditions. proposed

imbalances of supplied, attractive corrected electric aluminum and Assuming the abuses U.S. we positioned. believe the attractive the we increasingly position primary market In environment market this is power. will and Obviously are believe downstream resulting in well under production. for vibrant really the these be growing is an terms wholesale hugely industries we cost have market company

continue further investments in products right make in the are making plants and value added right our we’re the places, Our we capabilities. products today to

have electric technical convinced talent that the we absolutely prices. its and maintain We’re in wholesale comfortable and in we’re the advantage power will best operations the industry U.S.

So we’ve we’re got. opportunities the excited about

lives. as on a issue a And Holly we about the believe remains competence some there. I’ll for second the long should plants this moment. power be Mt. dependent course that comments U.S. Hawesville, what the focus reminder the Given is restart potline of begin first to step have the curtailed make on we partially solving of the setting of our The just in up of at status

late three of plant now, been cash to discretionary Hawesville, you normal operations maximize after running Hawesville know spending, flow. smelters came fail of around precipitously. of price then cell of rebuilding they period. cells times as In So any their five those But you’ve usually last regularly normal about the obviously when years. XXXX in Since down as we at minimize as potlines, now the Hawesville to the those the three we’ve five potlines back curtailed been

that So is normal we the closed the year cells cost a in the in three a year lines year. about of been every be million been $XX available the about rebuilding three close we’ve this We since defer and a we’d annual fifth avoiding potlines, investment. activity that and best plant cells cannibalizing we

to As of nearly we’ve however producing XXXX. year. end this. maintain be probably think we’re end rebuilt that’s lines could need XXXX, you we the of a of ability XXX,XXX win Again now tons the just production – about through currently We to do to both told by current before, will our

of constraints more rebuilding balance the work over over required considering this lines those to lines in seriously that’s two the cells results in the we year pot evenly old do power one just two we’re Again, usage cell. the decision simply in this whether start or two initial current At the level. the got to production the to in We’re new pot to each the two plant That’s and very the technology. years, months several that physical new i.e., installation of investment metal plant. a make in a is spread installed years. one maintain same technology promising. the assessing in the been more likely time the when the given we’ve to now technology more And of cells. go lines of results rebuilding with the coming the the The operating are We’ve and were new technology one lower time,

preparing that rational confidence action environment. and also three the potential produce decision XXX be level at of decision to the market We’re Hawesville curtailed that the potlines on restart based for our will a will

We’re make it putting quickly. ourselves that implement in a position that to decision very

the EBITDA minutes. a marginal just confidence some the financial restart on remedy decision. in costs. in Assuming the re-pace both you EBITDA going to the be easy of And it’s on potline detail those the reasonably investment quickly couple I’ll The our in and incremental give and XXX the a restarted – costs

full Just promised potline, update two the South on the it’s an not as Again, of based one is there the restart one access based Carolina. on – I quickly, to market curtail potlines in situation decision power the metal on getting price. to access curtail

remaining One and the from pay issue and the Carolina charges. about market what several only the to payment. for could reminder of only XX% South itself it at forced the due buying likely forced quarters delivery two to to transmit The requirement differences supplier in power buy the that be about another border, higher power a three system to to local plant. As this Carolina utility, only the to with South double XX% transmission from power would the price with been If is The also the we consistent deal we’re we transmission Kentucky supplier. pay to in to of price the the we’ve the the we’ve power market years, market power the Kentucky. in than last transmit monopoly were XX% to been local power

in discussed solidly as monopoly many, Instead power, market XX% the times position. are power. the average XX% X curve On quartile of local excess the price in force in the modern second Mt. and that power global will it’s the power of yields current to Holly that’s price than excellent power market the in average price supplier due weighted cost technology. be median work of the worse power many weighted cost is However, the from local market we’ve times XXX%

at hard of again around the market power made engage that We’re Carolina. to potlines. our enable potline. course, would makers formal that from of entire both sources sufficient power work decision in offer trying buy us In we our restart written plant South XXX% that’s the to offer the a We’ve

We Mt. today. an we’re several at The economic billion incremental Holly power fixed-costs access power fee are to local today. and would as to and second transmission at future restored from We company that equal the paying they from that continue annual the benefits megawatt $X.X activity. the paying pay the made ensure jobs whole, in power pay the them toward state We’d the standard us this per their local logic to hour annual in we’re proposal. hundred support to also company restarting is the the firmly companies be of contribution receive rate potline an believe fact what

We’re it the everything forward with presently will expeditiously. able environment. over this to to doing I industry talk move turn And Pete we’re to that about

Peter Trpkovski

approximately take Slide X% per aluminum $X,XXX I’ll in and $X,XXX currently a two approximately price pound The averaged Since $X.XXX on onto per which level. quarter-over-quarter per the the market. per XXXX, increase basis aluminum If beginning of up prices current state quarter, averaged regional ton of was almost and fourth through a QX. reflects the $XXX The you Mike. In global move approximately can Europe. in cash ton ton that per around a right over U.S. average the aluminum averaged $X,XXX the month ton. Thanks XX%, premiums and we aluminum X price QX, please, that sitting in are

in year-ago almost significantly U.S. to quarter. are demand We up approximately growth growth XXXX, production growth year, China, was X% year-over-year in $X.XXX North premiums and the program. of currently, per In increased compared despite the growth as the last However, X% China, at Europe Global X% in almost increases per driven same X% year-over-year production spot and America. by in demand $XXX period in ton grew curtailment versus capacity in announced fourth entirely the rate are in Europe. saw global which X% QX pound a and quarter aluminum in X% the

full the action some trade As of market specific the U.S. from the a a we responses for year, last begun China. Since modest aluminum year investigation global launching XXXX, WTO to result, deficit XXX tons. the Section approximately supply case XX,XXX taken recorded and has see the initial positive have

curtail certain curtailment as announced provinces of response was winter heating case the first well heating shortly after is will XX% during program, alumina require petroleum winter WTO in to Under aluminum filed as and The production January, in the coke producers season the season. in China producers, their program. this

we million the season, any originally in tons of been winter during X cuts heating result and again whether this a be these than these XXXX yet confirmation will approximately curtailed As of season. that enforcement cuts is this winter were was expected implemented less as estimate to lax. be have There the XXXX action,

following announced curtailed provinces. licenses of XXX capacity, initiation several new licenses to will shortly the Section The un-permitted in purchase from curtailment producers investigation, production curtailed or obtain order the capacity. this second restart of the response to legal need In required illegal,

of million X As a been cut. this result approximately tons have action,

still China’s expanded in again of deficit will the a while XXXX, world tons, tons. XXXX, surplus will of were incrementally expansion and expand With they While in these the XXXX. in cuts in X.X million be be rest China helpful, of in will X.X a million

global a On then the of tons decide expect President we the on to Department recommendation of their to action XXrd submitted course Commerce of days this in deficit XXXX. XXX,XXX The result, has take. a U.S. nearly President. As what XX XXX year, January to

the outlined Rob Secretary proposed recommendation. week, last Just

the swift take As metal Mike its remedy. production aluminum finds throughout of we said, including, call needs Mike. XXX not their countries implementation way but China, world shores that, The get feet. industry over broad to allow to export Section subsidize any I’ll the turn that the must to U.S. problems to action in to and continue enterprises comprehensive before U.S. this address industry and home back to before to limited illegally the U.S. With and to relief issue its from the back State-owned on

Mike Bless

and take Pete. Sebree, we If quarter at the just can this those full had year as X had Grundartangi We at company’s quarters always, improvement recordable and levels satisfied XXXX. performance terrific downturn I two note, Slide a but obviously, Starting turn good I’d make plants. saw outstanding good said, incidents couple Thanks, and is safety, then as XXXX, we between to Hawesville year. into please, quarter-to-quarter at as let Holly and and safety operations still just a no very plant through a safety the about that with Shelly of slight see we’re an Mt. the the quick I’ll quarter. you with comments

to you begin to any quarters Turning last Hawesville quarter recently the performance, an that metrics. of improving nice well last make decision way restarting important has strong so operating on have couple we the performing there. saw production plans underpinning a been had is increase capacity operating quarter-to-quarter was and This

XXXX. year. to there us management in so take of good continues and we’re pleased QX a couple in that. of the costs, the operating the see are very and we manner, good So and in of significant costs, on as alumina stable of is I’ll plants, A comment forecast a on generally a moments, the good year in of really see gives Couple consistent tonnage control what go in consistent costs, forward. similarly, really of see, costs course, is really you metrics growth to during operate just It at conversion impact comments the we’re of alumina, looking conversion of across incremental a the Mt. the both Holly comments, favorable the quarter Shelly, to Sebree stable to can into costs in days increases. quarter through operations and increases couple in sense carbon these some and first offsetting and exclude you this on just expense for largely will you give Remember moment. our both they that Grundartangi,

the in a bit As the in XX% price or points. in price down costs. course, in only of see couple power all, XX% price. of phase at increase increase you cost of the again, carbon little increase, carbon XX% offsetting take costs. XX% you you Hawesville’s there can power increase in say Grundartangi, Not impact overall cost the a Same XXX% in the of carbon same thing, can Sebree phase a was improved I know, if LME storage linked a out you to should see, flat conversion and lastly, costs. of X%, And cost as is That our

So it We hand. over be I’ll on to would give X.X% With to – increase due Shelly? other one increase through and it was the impact. and potline hand expense that Shelly, of that, it’s price the the X.X% on you the partly all and X.X% took an just out, who quarter carbon increase year. that will LME take a increase

Shelly Harrison

Mike. Thanks,

facility. take of production quarter-over-quarter, the shipments at from in you year. of our Let’s turn X% high-level On timing other impact results Slide at X% consolidated increase as up to full Hawesville, were from a quarter basis, the fourth global for I’ll shipments as through X. well and a reflecting

gain and adjusted QX $X.XX legacy certain items obligations. $X adjusted per this for Adjusting include non-cash contractual of was results, to had $XX the EPS we quarter, of million in termination share. EBITDA related operating at Looking million

We charge adjustment, cost million also $X lower a had of a our adjustments LME of XXXX market related $X to for inventory hedges. non-cash settlement million final and

remained our working prices and liquidity, balance of under flat on more by higher at of I by increased increase capital just Availability $XX the was a cash the relatively raw significant that extremely talk was balances driven offset capital. to mentioned. material year. Turning facilities of slides. capital back The higher investment in EBITDA I’ll that by credit working high about working a revolving the million our couple end in

you Slide walk to X, adjusted through Q-to-Q of I can go let’s EBITDA. Okay, and bridge our

ton. EBITDA, QX. The we produced to $XX we increase material million a as in partially $XX million driven our costs This were undelivered based of of price a on that call. the a line price $XX increases QX, three-month QX improvement During regional up last $XX LME by is which million million forecast premiums, is in in for a with Alumina compared $XXX $XXX QX significantly offset the raw of $XX a index ton, realized on million was realized lagged by from of and price from price. then

to continue off ton. to have prices worked $XXX QX until realized a prices dramatically price now for benefits prices the Alumina and come a into expect their are P&L alumina be in increase the we ton, $XXX highest these as alumina but QX, we However, just QX. and a around below sitting

with cash a cash flow our from a the results, carbon shorter side, the but lag. increase On story It’s is lag more in standpoint, important is much you’ll the similar note QX. that QX to than impacting so even see accounting price

is and that prices the P&L higher slide. raw impact material on occurred the has QX until already see I outflow that The next worked cash you’ll QX. So through

did [indiscernible] just quarter. like we Okay, last

to $XX realized this carbon, and million. be higher from impact around prices in to the QX alumina about that expect for be $XX million expect we We

couple for of our cold We that week the prices year, spike Kentucky period. caused also in a a to brief snap early power had

the expect by hour now power and QX on normalized LME $XX prices the improve megawatt to million. Hub about seeing expected perspective, We and EBITDA per by impact higher in regional we’re about EBITDA million. top the Indiana line nicely QX basis. $X to back these premiums are have Temperatures From prices XXs

years were in cash year We’ve $X at Okay, about a take cash with hedges, will the In point, quarter XXXX $X with the this impact but – cash our quick In XXXX. QX. X. that quarter expenditures hedges flow. hedge let’s by no outstanding the by at I semi-annual impact paid started during be million of biggest during turn P&L was are the associated Capital and in very we’ll our QX, our XXXX volume and quarter payout at $X see ended $XXX to also mentioned outflow capital million, for working modest the in At we to million that look $XXX have there December, but some final cash and Slide LME you’ll the million investment payment the we far, made interest We’ll hedge million on settlements. driven $X LME earlier. for the million. related

primarily form fourth the inventory of the raw During $XX in in million roughly material invested capital, we quarter, working prices. to increased related

We’re levels expect return QX. us and now, see back normal this to to investment in come seeing some we prices of to more

were I’ll $XXX and of for an adjusted $XXX from XXXX. and Despite our XX% raw sales increases, XX, Slide revenues EBITDA million material million to prices up increase regional turn Shipments the were relatively million LME of higher let’s were full back XXXX on premium. Hawesville XX% the past up Year-over-year significant flat able Holly year. we in of the hit some for Mt. two price is million, turn with $XX partially for EBITDA. to $XXX to and Year-over-year Okay, increase curtailed years. highlights into

in For income by the more improvement increased about And $X which it share that, to Pete hand I’ll translates with back than XXXX. adjusted saw million, EPS. to to bottom line, we $XXX net talk per roughly

Peter Trpkovski

continue we Hawesville to and Sebree run can in company’s at Grundartangi running measures Holly while to you respectively. capacity, financial If and through Slide for full – the Mt. me. XX. excuse take XX% expectations turn me at Thanks, I’ll and Shelly. XX%, Pardon XXXX.

have spend. where pot existing been and getting deferring production are closer As decision Mike rebuilding Hawesville a of cannibalizing we to realigning pots at our we on pots said,

on in potential Until be cell a or deferred have Hawesville’s In restart can costs these decision decision soon. yet of any curtailed items. could restart production not either XXXX coming be made, addition, we included a cost realigning

As to the many We premiums. of our in your sensitize regional is premium of premium LME presentation. of know, value-added for selling appendix give regional the you own product and you and comprised our price prices, tools LME

years, prior you in our we aluminum. value-added As premium products receive give premium ton for over overall over regional LME $XXX expectation average, our times. grade we estimate the weighted We just standard average over approximately and on per value-added the on tons, not our

Now the and can moving in our our QX you costs, on so to between year. our impact key performance cash broken lag of cost QX QX the expected to the and we’ve cost for components QX, rest versus the of see accounting

As Shelly we higher of our January. the a QX end cold U.S. in will couple year raw the so on and saw higher material cost power towards the of reflect this prices cost in weeks year discussed, last extremely based far

reflects cost levels. current QX to QX more Our

from in U.S. plan Iceland higher cash U.S. alumina up interest our it will gross about are assumption XX% remaining related is items. the prices. price to to from You increase Iceland LME as This and cost carbon from QX in than Iceland. to The is and XXX% linked related power more to increase prior-year and is notice QX still in the our

cost, above cash our We the metric price. premiums received, all but to this is the also directly LME, of present LME comparable net

needed. and adjustment result LME with our further our per net the take ton margin is cash cash no deduct the expected if cost, So you

cost our can assumption today’s and of net underlying of find presentation. the appendix reconciliation in cash our You

can over you a time to XX, give we more couple I’ll to you Mike. if Okay, it before turn back Slide turn

which million, non-cash. expected is $X to $XX million, expenses SG&A Our be of

essentially our state to to a Iceland, we shelter U.S. NOLs income In XX%. rate year, is our $XX spend of million continue $XX $XX Moving related down which will the taxes, taxable taxes. than On million, to between to maintenance. some to million is accrue we continue $XX to of expect U.S. and CapEx, last other all similar expected million of to modest to

and As to expect, U.S. minimal and reform be at did you our is tax larger analysis year on full to impact would going that a we due expected ultimately, of the QX determined forward, NOLs. end

Lastly, the all just our of discussed, $X,XXX items per ton. breakeven cash using flow consolidated is

As excluding an equivalent SG&A, reminder, maintenance CapEx, represents any corporate other flow any direct number cash was and a this interests, discretionary and our after CapEx. cash but cash cash LME taxes outflows,

from more prices. Just the be the alumina item like over carbon Mike we explained by comments. than can call XXXX expectation With and our increase his to our planned and can that, cash higher for cost, turn now closing

Mike Bless

to Thanks, get to questions. your Pete. We want right

of give you Just point at spent the cost through an what the fourth of future QX Pete as we’ve in we to quarter. the I the higher statement. reiterate Pete as been cost got constructive couple the after really said, about last including Shelly structure thoughts, both To will running company income a the as already be this again first Shelly the summarized, said, the and and cash especially anomaly U.S. operations, quarter. the has spend will

material what to to said, we believe be still he raw estimates conservative there. those on the come pricing include As and high wanting side abnormally

address, to plants. said, I of U.S. the In years as maintenance investments and other deferred addition, some in spending need two we

deferred to If QX you to for and Pete you the We and QX, had work premiums, plants. the versus catch-up prices for you if that if answer spending spot other take chance sense with were of and estimates in annualized increase of a an that yet. took use have $XXX took in commodities the a a you’d put the LME to these and you step the EBITDA, in you you But get probably prices costs, million. we for spot take give and you around through current adjusted cost course, back, the it estimates get same these, investments at just the structure realized prices both

before respect, quickly now three cell economics at let me that Hawesville those and on at is walk just focusing curtailed what restart this rebuild look said, you In through potlines. Hawesville. like any Pete As would activity the of potline

weeks, let’s end me, month quarter on incremental of September, the then later line, a first quarter. first we productive by pots full call could power, pardon next a And producing the first in the second than the in have no power the but tons. capacity the made couple of i.e. that, maybe even before we the end the and first decision line to the have of on first to potline third So as it of the have second quarter, the the me, quarter sorry, the within XX,XXX pardon by end pot

that would on bringing primarily that’s cost So operating million, rebuild. the that’s about of first The cell, that is potline $XX back do. expense we cell

there’s know, immediately, you don’t little capitalize it. that And CapEx expense well. as in that a we we As

$XX current a $XX basis, full once to of in on at the around XX,XXX million. the incremental third was be OpEx potline capacity $XX would million million plant tons, as was is there at folks, end $XX the We’d incremental a prices, said, just at that’s spot production. an it’s once rehired again, And combination of quarter, restarted the range CapEx. be EBITDA, of So the incremental the XX an million, I annualized and

gives these easy from said us I at order unlevered the why now, looking EBITDA, market are million Hawesville So investment, an the to you $XX so XXX the million IRR a of my that rational, potlines ones the you’re be that can a $XX reasonably six-month comments, understand see, at assuming million $XX beginning about a you hopefully of confidence standpoint. payback restart at and incremental will decisions can to

more should the those. costs first So the five excess you’re first and potlines, mostly capital restart further way a is back little the the of an potlines, completing the second third fourth departments fifth of works make say, curtailed The running you in The And plant in plants to some or the two bit of the just is restart we’re then potlines the potline. the that potline. support up. bring three the and costs if certain potlines, than on to need analysis currently on the I that’s investments infrastructure investments,

of cost leveraging because further each they those in lines slightly be plant. larger, but fixed incremental of they’re the So slightly there EBITDA larger as investments will will that well be the the

paybacks months pardon standpoint, a quite the can be so still math to well in payback, IRR sense. head but And a you bit a a bit going than an are your And the from make little me, year. longer six of again, do simple under there would unlevered perhaps

forward all about as with the be to to that. rather final with our And looking with month and we’d you than it it made we order next soon the turn that to So out to talking we sooner hope hope we President the take hopefully, look as – over we’ve have operator half, we a said later, to we’re as again all with of comes move forward a clear back your excited like that, that, at about and decisions the that were to questions.

in little us on than bare request bit and to Pete a Just Shelly. a a a with location – different

going. as So decide to please bear going with bit can us in if Ryan, a your With fumble that we get who’s we we answer questions.

Operator

the line Cowen Company. from Our first Please will question and come ahead. of Rassouli [Operator Novid Instructions] go with

Novid Rassouli

for questions. taking Thanks. Thanks my

stress Mike, XXX, frame potline as that a to fact So definitely EBITDA actually do relative his incrementally high five been the recent and not? know the that conference the the guys walk four with I that’s stressed Section incremental could far if of if of in more have as how as Can call. for think do how And several months positive could you and non-high that we on do in of know – your as Ross you restart as I demand if to And absorb maybe through Section the something maybe well purity us help But XXX? perhaps market as maybe much or think past get purity just us far Hawesville. maybe you I don’t on aluminum?

Mike Bless

Yes. Then to has It’s Secretary somehow. Ross in glad probably including a conference times, Friday. great Thank discussed his you yes, press and I’m on question. point many

there’s purity So no would the to product EBITDA to incremental as want incremental assumed. We you that be. the calculation, that factual first what that we a is point. incremental conservative be in In gave

XXXX we purity could tons that high think, read portion Number those purity in spot do a with that get do Department little, report on demand of in might in to very the this is that that assumed in purity is the which, of think element it. obviously, production, some there of at real it the scale, a we and recommendations purity better, so reserving large a the two he is the generally, year, incremental of But and eventually came only to U.S. world, put again, set annual be any, broader later of the you ramp there’s producer XXX,XXX to component if purity as have is cited numbers. XXXX And in XXXX. And capacity Hawesville, may an we and volume it significant we Commerce in Hawesville in course, President, the correctly, back up this

do potline but assumptions that re-enter to is we a have going of make purity want purity believe that that, to for will market immediately. the potline we we be example, assuming a or whole didn’t the capture lot would So appropriately, forward, of that the market, adjusted able whole to opportunity majority a

is The perspective, pots to technical make appropriate month other just take I many, to that not make from month, would in another another sure are note but will a or operating the further the thing configuration that couple it purity. two

be stable potline, the make really, XXXX. You need to to really especially

Novid Rassouli

what served for in of to is guys aluminum here opportunities Very would on incremental high-purity? what And get a sense relative the the imports to beyond helpful. just market purity on high-purity just for lines? then And future. comment and of EBITDA then sticking to by non-type that, just you percentage be trying the the you above able the currently, I’m

Mike Bless

one, first your last answer an XXX%. I’ll it’s easy question because

purity any making today. not We’re

years, see, we for So two after we the or since, it – and would – and since I the last we quit haven’t months, say. haven’t let’s so XX after

market and production our the well market at saturated well, established well, Department’s any Russia, it these report, product from us. out, with prices. Gulf to Persian of sense below are the didn’t Commerce So make regions, after in in called as course, particular, purity Hawesville, was two the We stop

first XXX%. I come the back me you So I’m part on what, or I’m point. of you answer not the asking were question, please if but sure, your answer not I’ll in to Novid, redirect try think is exactly

purity, just a incremental So assumed that EBITDA, again, smidge. little very incremental

can I Hawesville produce As tons. it proven up to that said, has XXX,XXX

we makes tons We good intention, could second of if be third that our the did there order So a assume up the and you chunk bring to the that which strong XX,XXX sense the that high-purity. market. again, us assuming correct could and XX,XXX that fourth believe and be is can fifth potlines XXX tons

As can the $X.XX a approaching market well XX $XXX think $XXX over well, a $X.XX, make and we mean,, typical $XXX I as XX you know, for ton. $XXX ton, even to which a ton $XXX sorry, little and a ton more, time a been a XXXX over well, well, I $X.XX I’m XXXX be traded or ton. has $XXX, And

there’s incremental incremental just good So there pure for opportunity cash flow.

in you told cost expense make the operating additional purity. we doesn’t the As significant past, to it us

you’re six and which supply seven to your know experienced our won’t to You who But that’s or sales, alumina attend limited. just those people aluminas need with you limited eight There’s how all. somewhat at narrow base maybe to those in current potlines to amend choices. are

tell if stop didn’t. I’ll I me got you now So and talking it or

Novid Rassouli

for That’s appreciate great, I answer. you very Thank thorough it. Mike.

Mike Bless

Thank very you much.

Operator

will Very Please LLC]. go question ahead. Research, the come line next of John our from Independent And Tumazos Tumazos, [John

John Tumazos

brought a a have as much, appropriate Iceland? been bulldozed, very opposed be back? to smelter could possibility Or Ravenswood of U.S. regulatory reform in you the new could Thank Mike. it with Has be there

Mike Bless

That’s John. a great question,

as So colleagues, haven’t have now. knowledge, it, recall the sad buyer ago, although site closed a Ravenswood followed even take in purpose. I different the or I can’t And bulldozed, use closely, my to plant two it if because my Shelly, the – don’t industrial I year know you ago bulldoze, and sold you don’t? maybe we for and answer fact years I use is, a been to situation do say to or Pete down know, the the intended

Shelly Harrison

specific, it that Not when but we Yes. a are sold was year you it. ago right,

Mike Bless

Yes.

your we’re second just that of hearing now. Okay, the XXXX. January part talk about – an of and answer to more question, John, your more

average especially data price note lot to all know, interesting a below on about electric obviously that say, prices seen wholesale competitive. of back power a who’d you can’t and hear John, the the you closely is is support people going the why to who XXX, industry think this opposing medium. side industry it’s and you world out follow I power an of the lot industry that XX% about the be the as from U.S. and people, you’ve “experts” now consultants The there. say,

by the so disadvantage And U.S. in means no is power prices.

envision a so suppose. this power would prices guess, crazy of other to, Greenfield, of deem Greenfield willing years having were in we takes we to ago, investments with But on the John, smelter. XX our earn XX back couple know, that’s to And where you to If now, be even I I discussion, I each guess, a they could couple it as someone done course, are. you of brand-new on years, decades,

But on here also, I’m So current I fix to based a stop you supplier know on prices. going have to is in the a price who moment. you’d willing answer power as have to think my

are the power backwardation. go, prices out of of curves to forward or slight six where to for tomorrow. now, can buy flat Forward years Five, forward price the buy whole extent you the in go from even a power in same streams you it can

know, saying. So information, a We that’s hear are answer lots we that I’m about of any but efforts it. long-winded don’t people if actually talking

John Tumazos

less long-term Mike, electricity. to thinking, the and was $X.XX or for for I $X $X.X gas

Mike Bless

capacity, would one you’re operating bring power smelter a like on I say said, Yes, payment where to transmission good to build going based rates, the get plant. we like say, something that and market or and if to at to the I expected calculations low-XXs – to curtailed of back to kind stuff, I our hand, where an some smelter clearly price, access on power it for full a Holly, John. partially would all need dog hunts. that Greenfield Mt. returns

before billion-dollar $XXs kind kind think kind math you I below, to what mid couple like our high going gas and on IRR a need closer the that’s power to investment, get $X a spot of to says. get that’s even something of prices interested of you people to gas or of bit

John Tumazos

you. Thank

Operator

further [Operator in Looks questions Instructions] questions. one queue. for we no Currently, have we queue have no in like,

Mike Bless

much speaking you you, forward look everybody’s to And thank to again, Ryan. Then, We appreciate Okay. very again… this time and we interest afternoon.

Peter Trpkovski

sorry just think I last with monitor, I Ryan, question we another on operator minute? the Mike, queue, just to interrupt. saw, have

Operator

have I go go moment, Lipschitz. One may And David we ahead. from Macquarie, there. back Please

David Lipschitz

you hear Can me, okay?

Mike Bless

David. Yes,

are good. How You’re you?

David Lipschitz

XXX, how you at decide a in question to you if peel you to it feel pretty that new back regards can you that? that do up or perspective anytime? President do from do guys much how Just a in work you How look with Mike, year the comes if that quick at two? is around the investing, a or about government change

Mike Bless

might any have Great question. been change was during different the at the point, can they I conference. question, venue. Secretary of Secretary in recall time. asked your to I Commerce, if And It believe, press that a

confident remedy any it sense get change can us, if initial us, feel the to it. they makes would clearly So We time. they David, because to

them thesis said, had is is they at have opinion, the would and read they if it it in viable in the just like reason to not the the remedy whatever I their the down report, line only we with objective be And there been of created is competitive, sounds word successfully, take comes ours, market with in that long term. the choose they’ve been structure U.S. it adjusted conditions i.e., or the – you as wherever line you what the If remedy over withdraw their strong change ours. have, for said, ever industry viable the

taken right, that or but and in to, that. further take are they action. we took it determine is action, would, we far, they to changed get strong it longer essence, they’ve would they’ve if they and things might could liked, and then it these change, again, If their hands reversed it put it situation have the is, ourselves got complicated, so things that do in that and believe we And get what whatever, or and we thus

that’s think a about. new of And even terms can administration, so not in something that we

bring We’re back soon this capacity what this in happy this get Secretary’s Commerce with be that’s be with line order happy we was administration, report. working in and to we’re on to to that as going

David Lipschitz

and XXXX? a it Thanks. just quick little the cost And Is the during then frame versus your you What one XXXX I missed Give nice comparison XXXX. quick XXXX? versus cost anything – were for call. maybe they last for there just a for with have a of

Mike Bless

but comment, how David, to guide have you quick you want Pete, one? Pete. as go off it. could for format, I he you take see. do might But Let’s that to go I ahead. nothing that the guess, There’s cuff, in sort of about

Peter Trpkovski

Sure. was looking you’re I for you could quarter. But lag XX% for what David, LME months like maybe, the me for. $X,XXX. was And up year, the the tell on two basis, about specifically LME, as said, two-month a

results, lag. pound two-month revenue XXXX, $X,XXX The lag lag I’m ton, premiums, doing was premium everything pay year on European because full per U.S. in side. that’s the about on two-month For the what that’s the $XX.XX per basis two-month

power can ton in alumina prices XXXX, go the $XXX the but side $XXX, per above. talking three lag, you’re two are to On month to you

versus on raise $XX MMBtu Just and hear Coke U.S. in guidance, XXXX gas. $X under and as prices saying. XXXX I your Midwest, for per and pitch were been for significantly natural we’ve

Shelly Harrison

compared at can then sense we numbers a we can with all also how you and take sensitivities, how what you the see that got assumption. have assumptions take Pete, and it match presentation, through And what Appendix give the So the the XXXX up of to to and have XXXX we XXXX. I’ll look you in then data for the we’ve a

Mike Bless

some avoiding more explained as of going. commodities, talk doubt what plants and maintenance to incremental pitch, costs are and all after on cost said, we say, in in we’ve find, commodity and jargon, that alumina what about, the by think, to to is going Pete which that I the of keep no made deferred increases. the comment the Pete remarks you’re just up of I the the that because up they’re Coke than as carbon, you’re increase that and increase about back been maybe then in catching investments But the is his David, it, all, up,

to up So current we could of enabling the plants in even put of the things continue back but to go those invest just, hope think would we our side, obviously, be in would going some And basically the time they say, take alumina reflected prices the and air continue We’ve able catch of in in to progresses, could at are to and doing fall. to a are – the keep pitch commodity I job offsetting reasonable we’ve coke we go to investments. on prices just there an view course. spot they going. will those, conservative still up, tell, down again, is but year to as us

Operator

And it like questions have queue. further we in no looks

Mike Bless

Okay, again, thanks everybody.

with when to weeks. report order coming President’s for And we’ll As time. that say I the was talking we when again and forward to of we your at copy optimistically, you saying, the Thanks something we have see let our you we final more time. look first know quarter hopefully, over a even if

Operator

Conference. gentlemen, today’s AT&T And participation does Executive that using for conference. Thank for and your conclude you ladies

disconnect. now may You

Century Aluminum (CENX) 22 Feb 182017 Q4 Earnings call transcript