CENX - Earnings call transcript Q3 2021 | Century Aluminum Company

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Operator

Good evening. Thank you for attending today's Century Aluminum Company's Third Quarter 2021 Earnings Conference Call. My name is Hannah, and I will be your moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. [Operator Instructions] I would now like to pass the conference over to our host, Peter Trpkovski with Century Aluminum. ahead. go Please

Peter Trpkovski

Vice and and conference Hannah, Gary, everyone welcome we'll Vice questions. Conti, and President and your Financial Thank Harrison, take After Shelly I'm good our joined the Senior Executive Craig Officer; call. Chief of Jesse and here to Chief and Officer; Finance you, President Executive afternoon, President Treasurer. today Century’s comments, by prepared

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

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

Jesse Gary

thanks the joining environment billet Pete current quarter the walking today. Thanks, the casthouse speaking start call exciting the from Grundartangi. everyone market and project you to I'll take Pete, through for through by highlights new call third by our some and the like I'd details. you then about finish Craig at before and give to

Okay.

So on Page X. starting

costs month. hitting market high We with to extent, combined west continue curtailments quarter the China in to supply driven in across prices transportation continued has world. momentum Europe robust and the some especially to earlier third aluminum for in the been see a and this by Price strength, XX-year consumer with high energy-driven

despite XXXX in automotive airline Recovery pre-COVID aerospace and growth be help XXXX shortage these will travel the semiconductor growth continued levels. from demand would beyond. demand have demand drive commercial headwinds lagging XXXX in and in lower and On expect nearly growth that return in we sectors respectively. the consumption comes levels XXXX side, given and seen XX% to This

premiums and in have continued billet extrusions, and the U.S. Europe. especially all spot to strong see highs in at remaining demand demand with We time

on set current our billet prices the prices. billet XXXX before because U.S. reminder, an a production annual was market are in As the up priced basis, run

XXXX pleased mostly and billet now achieve that are XXXX are near season, commercial we through we our we for announce sales. However, annualized premiums the are able record to to

are we midpoint expect we book, $X.XX the incremental range, $X.XX billet that near achieve will of entirety gains we the our price still of our call. on I While finalizing the to last provided

to to If billet XXXX tons XXX,XXX EBITDA production our that see our XXXX, substantial versus incremental will expected XXX,XXX you this you of extrapolate be against generator in that we metric a performance. expect

capacity now continued disruptions. as On consumption, X flooding production the million approaching equation, system control are tons other and the as well China curtailments Chinese of compliance supply of with energy side in for the new annualized due dual energy to

result, to next a China as has importer and in a well. remained net net As remain is expected importer a XXXX year

smaller seen and record these U.S. markets curtailments also in exceedingly curtailments left the near due in have key energy premiums production tight have to supply in market Pete regional We delivery Europe high and led our to Europe. levels. could have the much prices. significant both to highs All-in-all, deficits across result continued give into inventories world, will the continued falling We production bringing anticipate that below lows. curtailments in a crisis minute. in in the inventories drawdowns details now These equilibrium XXXX physical you inventories post-financial

Most Nord seeing are raised have are and coal rising input significantly across we side, gas the price and we MISO oil, continued commodities. side, the On inflation energy energy on our Pool key prices. prices

Asia exports in the XXXX and EU are QX the QX and Nord U.S. rising Pool XXXX from reflecting by prices trading LNG driven elevated prices for at and now gas coal and and levels, and rising MISO Forward coal the shortages

reflected return results, impact the our we steep in will beyond, our more to provide and Pool. to and MISO levels QX significant normalized expected QX both the Craig the and detail prices these prices Nord of second results XXXX markets and which QX will quarter forward in impact shortly. be curves expect will the the in to of these of backwardation these elevated we do While is believe and the

On the we Jamaica. refinery raw alumina in the recently side, supply by seen price material increases in and Jamalco curtailments a alumina mainly in China have in driven fire

historical While aluminum alumina XX%, to XX% from in prices remain are the relationship price levels they elevated to the year. within prices earlier price their

reported, production widely curtailed magnesium China. certain materials due to to earlier led been of shortages. has of of from amounts have as energy And significant the to China globally, this XX% concerns alloying shortages in silicon. now magnesium Close production comes of they this Finally, mainly world's cuts and quarter, production

to begun pricing production some for now week as or the increase these in in past have we China. Fortunately, see to started easing two

ton vast of administration and remain tons to Under aluminum all apply is XX,XXX why supply EU are why XX% agreement we jobs. are to XXX majority example and imperative, believe with implement this the a aluminum year, tariff-rate materials industry raw programs a EU to aluminum invest physical program expand. tariffs. quota on XXX believe with needs of continue market Biden of imports a that meet to the year. EU to the administration show the for We along pass show agreement, imports The on we price imports domestic its tariff-rate has from level million its situation with continue and and of means chains are this back the for domestic to so agreement and its associated as Section next well While the supply domestic situated above important to monitoring primary into support new to just Section for closely, like are sufficient continues of will the the continued shortage U.S. X a key of metric majority subject support to the recent to to we the level per bring hand primary workers we U.S. aluminum This tightness into the which quota another industry is well our all of increase the have any

Turning to own our operations.

in progress and restart programs the and good on remains in a the Mt. In consistent I'm and we substantial system. that Holly made have on operations our our stable continued quarter to progress expansion generally project U.S., the to across had our program, We make glad say track.

production and restart process of or on In remind to we the annualized capacity once point, Just order an line operating line since XXXX. tons complete, the of shuttered basis. to on everyone, will its reach reenergize majority plant to XXX,XXX had the of this as the fail. has reline one, occurring been in with year will which of been two, and XX% which continuously, also program relines and reline of cells all The activity about the reline metric this place ultimately will XXXX XXXX remaining return half take

to some mainly to our we have experienced from of difficulty forward required originally the over materials due relining return line hiring in suppliers all our new of our about some and project. last pushed hiring year our during in to shipping of of has At activity of on to labor and we course, of planned schedule pots. supply reliant risks, made supplies estimates. our amount of and discussed goal the course we at we've complete QX occurring of the and pipelines time operation remain in our capacity. pandemic. on and occur gains call, into the XXXX and the issued XXXX the XX% reaching complete to good of schedules make These QX. to of employees incremental that progress run efforts of pot bulk take locations our of brought This remains end This are four necessary As XXXX the and COVID, like reline to we and delays into to had additional and the Hawesville, tight, to with specific markets volume issues, chain remain acknowledgement on on I'd as time towards restart teams previously hiring the process extraordinary full

COVID each During our across across infection levels wave and traveled our operating infection of locations QX, experienced of the U.S. the as Europe. we of Delta highest

all receded have Europe, accustomed billet their completing levels our In our on casthouse we remain infection become project project very of at for research our Grundartangi across at we that the end and and both well. operating focused levels of that call. are Mt. these targeted levels the our exciting Hawesville and performance entering discuss excellent We'll continued at Fortunately, All-in-all, now XXXX to. Vlissingen system. locations Grundartangi production and towards Holly new pre-Delta

Pete. of And front I'll implemented our to in to programs in continued that, positive are execution progress some future. that We over and starting operational it turn to see with hope developments on that signs have the recently

Peter Trpkovski

from growth prior was world from an the the up aluminum year. move XX% global the the X% supply the In China supply production sequentially prior XX%, was prior supply in in up In up mainly can X, up state you our at increase X% U.S., X%. current third while was X%. year, growth from up In Europe, demand market. we quarter, was the was global X%. with China was of flat. up and a driven If the approximately and from third down growth in of world XX% Jesse. ex-China, only was only X% which regions. increase Taking quarter Thanks, Slide demand approximately look take with approximately saw I'll closer ex-China, This the by global please, Global year, prior growth was through X% while supply to aluminum demand demand approximately year

two markets year see next will and shortest into these as to the continue that beyond. We carry world, markets the and in

days aluminum deficit levels saw around in and resulting fallen and of should last year forward. have of in projects. tightening to in projected market less with Most a the million in power we These aluminum ton consumption. deficit inventory next outpace post-financial curtailments inventory due aluminum to primary now levels market prices delays higher to along participants world estimate growth a quarter, lows X.X the XX in expansion is continues the crisis demand larger XXXX. the going be supply to global to support availability than China, supply continue deficit of global Global As

Okay.

X, please. Slide to Turning

are third approximately per XX% quarter, the the premiums pound in The In quarter, sequentially. $XXX averaged Currently, XX% years $X.XX freight approximately pound over per $XXX XX% ton. record averaged on remain sequentially. XX in Europe ton highest Current are ton approximately that, cash per spot $X.XX pricing the an near continue I'll high $X,XXX and ton Midwest call per and in see And price up aluminum of tight We for prices averaged to U.S., U.S. or approximately ton. increasingly over near for which to third approximately spot the Europe, approximately hand per the and LME per with per premium sequentially was the $XXX increase highs which around was of in regional price prices record $X,XXX rates premiums. in in market Craig.

Craig Conti

Thanks, Pete.

I'll for quarter. turn and Slide through Let's take to the the X third results you

Before out adjustments point a remove into details, that share-based earnings. from mark-to-market to we the I our basis, impact fluctuations adjusted was like distortive will by This I'd on made compensation non-cash get and decision their on the historic go-forward in results.

two shown our quarter refer and in an Please between for of basis. $XXX,XXX basis the to an as quarter presented EPS. the details. earnings approximately views earnings prior additional and of $X.XX have release is adjusted The We historical on both previous change updated

XX% X% consolidated sequential increased and prices quarter-over-quarter, traction. Hawesville net rebuild a up quarter driven basis, gained substantially higher were as lagged prices Mt. On LME prior and Realized the increase a versus premiums of QX delivery result Okay. ongoing primarily as shipments a in Holly sales. driving by

this net quarterly adjusted Looking had represents or was achieved $XX $XX.X We loss share. $X.X at highest level six million operating was of quarter of disputes This million compensation. settlement historical adjusted results, EBITDA and the prior items the represents the the and million million earnings million of two adjusting of adjusted a unrealized at in million $X.XX a quarter for last a we've the the of quarter, years. impacts of were which QX, facilities. In an for separate versus credit contracts, forward share-based $XXX end $X cash Liquidity mix XX% liquidity levels. of improvement total composed the $X.X for

Slide X. the Turning

ton Both increased ton ton per ton realized $X,XXX of domestic delivery Realized Hub same Indy European per $XXX quarter. call, megawatt or prior hour and alumina versus prices while $XXX megawatt trend on QX versus and Indy of were prices realized continued or throughout the the Pool $XXX QX or forecast prices per and about while quarter. per XX% U.S. quarterly LME up per QX, per we European Pitch an $XX about flat Hub As per per as steadily up averaged $XX prices average ton quarter, up XX% well. upward per Midwest $XXX their at of $XX ended were over up Nord Both premiums Nord period. prior last energy QX Pool was versus quarter. prior about on up was XX% prices average. versus Coke premiums up Carbon ton ton of $XXX were with hour the our

million quick related restart was ended timing. driven for $XX Slide cash included and and with million $XX September which prior $XX for with quarter, an the quarter started payable look hedge Let's X of a $XX $X capital inflow Working turn for at We cash and will Holly Mt. CapEx, the few about the to million million. flow. outflows versus primarily of notable quarter in we by settlements. majority take million was A

to Slide to the follow. turn some next you a into is to deck, and This quarter. new I'll easier intended buildup which make our Let's detail X, the we've of the inserted give bit slide is quarter a on fourth

always, forecast, forward and note volume a that please could intended combined precise spot prices increases is this profitability. with not show to is intended solely As as our impact how but

to or at premium be is realized $XX the ton, ton European ton to $XXX about ton versus alumina alumina LME premium $XX quarter. to delivery U.S. be $XXX expected QX, up million For per million per is expected $X,XXX is levels. lagged moves about about be and per is pricing Realized premium or expected $XX QX ton versus up by EBITDA QX forecast per The per per the together, $XXX quarter. or delivery third ton $XXX QX up QX the of realized ton expected to the to Midwest prices. prior are per versus $XXX per and versus Taking ton up increase $XX LME,

Hawesville. scheduled significant to production Both and plants to make continue year We progress by end. Holly levels targeted Mt. on hit their are

to domestic by versus million forwards, a have XX% expect market. We increase a increase expect quarter prior Power continued trend increased prices At the $XX Hub particularly we sequentially production. EBITDA Indy current upward, driven values in million moderately lower Pool the reduction These versus quarter-to-date versus prices are to to expected $XX domestic combined realized QX, equate previous energy Nord in prices quarter. while prices than be QX. EBITDA forward with our a in

and QX increase As Coke into I expect noted earlier, prices continue have continued to that an overall of X%. rise we with to about trend

EBITDA to for total about $XX items $XX to increase an of these forma million QX realized We versus sum, $XXX equate of together of $XXX taken In million. driving than about levels expect $XX $X QX Coke million be in per approximate $XXX or ton from QX, expect per prices greater decrease will quarter. QX we million pro million a ton all prior EBITDA to to a

to a we to prices, spot million loss largely in long-term discussed be net Holly commodities into have result past $XX will forward the adjusted current of below our in in in various entering support million we realized EBITDA This exposure expect on by geographically income. As managed Mt. the our our contracts hedges various project. impact and on restart will we've Based previously, QX. investment $XX

targeted coupled and ongoing progress levels production issues, solid our XX% projects Holly with respectively. COVID continue rates will XXXX QX hiring Mt. to and and make we we rising exit that despite earlier, the capacity XX% Hawesville mentioned Jesse As supply expect and chain with on

capital the the quarter the to fourth Mt. be as XXXX XXXX spending call, relining we As operation. limited we and with the the into Holly the expenses extending for of in legacy we bulk last discussed incurred of complete only remaining finish restart expect on our overhaul

Jesse, turn everyone's I over the included Before some attention details to today's to the call of we've new call presentation. like back in appendix I'd to

on performance with volume. of value expected and added product as our total expected have our as analysis total on items breakdown financial year We a year-to-date and operational capacity included year total well portfolio various

our the costs. of Additionally, pricing we cash components outlined in our conventions have

a and of we Finally, provided by hedge have our volumes commodity year. by financial detailed schedule

you that to additional in intend presentations and on helpful. to I'll tools will is find and provide basis our quarterly With hope earning these the We that, disclosures data and update turn Our insightful going this both a call over back forward. Jesse.

Jesse Gary

Craig. Thanks,

powered The bringing Turning will our foundry fully XX,XXX to hydropower Page with really renewable new capacity metric plant of will of announce of XXX,XXX be of I'm a produce tons pleased XX. Natur-Al total alloy commencement foundry casthouse at which the will an Grundartangi. to at of to billet Landsvirkjun year. from new incremental our partners provide tons also construction capacity, per metric billet and alloy the metric tons XXX,XXX casthouse,

of expansion current in creep as casthouse production levels. tons new replace additional metric a of will will value-added production margin excellent to the capacity bring XXX,XXX PXXXX All which its source product continued to Grundartangi to XX% capacity ultimately capability enable at value-added the also of per provide our operations. above of resulting standard-grade metric XXX,XXX tons believe this will our value-added The production over production year progress incremental current from we cast program, new will already product. This Grundartangi’s

once and purchase our short in tons X, market interest X production billet capability Just ton X we've existing high less of than our the have project Century’s and that via of over from at currently green amortization expected This and financed is construction operational, footprint. debt the of which this of to total This X% billet cash lowest to a about they increasing Current high to annually obligations emissions advances XXX% resources, of continue open base it's from and footprints our be than project in it's our sources, our external of Europe carbon all leading than of several project to vigorously these our the market And tons grow carbon our service, to be on the filled produce. the line would expect already we the of for and the We The as will with and aluminum will will green strategy fits the quarter number Europe the first markets, X the years. cost Grundartangi. and green value all has thereby we billet the market in short record term the important, and discussed customers customers directly provide than be European and low of for I with leverage European within project in the our billet all case, low to tons also Natur-Al intend shareholders. financing. like to part $XXX the profitability amongst will principle pursue customer's last is million metric in The position our to will already to debt brand, eight-year billet requirements We this to and products deliver lowering industry Bank believe in calling strategies that, to the aluminum We the the increasingly by and X both incremental additional anticipate issue we completed your products call. billet project have per position interest which world's production, Natur-Al, the aluminum deliver as the flow carbon quality seen less above placing To growth facility loan and value-added marketplace. COX new of for our term that the cover more strategies carbon currently world of carbon this is our shortest customer structural cash billet flows the businesses will production of repayment other market, next is in the cast premiums of from import premium to marginal average. due we further the Due footprint any Iceland. Natur-Al not on that internal financing, strong XXXX in customers underway. from will have Arion of This very replaced questions. to near-term production million show our over industry billet with by XX% do value carbon project the market that the high reliable and we'd additional in up green Scope an high be receive local require. service currently increasing expect two structure no

Operator

B. Thank is question you. [Operator Lucas Instructions] Securities. of line The with Riley Pipes the first from

may proceed. You

Lucas Pipes

on in afternoon appendix. see additional could you you much wonder you were hedges and and exposure premium. good look this Thank forward? if you I first very you when for – place Slide much read appreciate to the XX, I hedged really the in Thank how the those put Midwest is about perspective. right, the going everybody. Midwest premium question share that. I your My to about very kind manage I on provided of [XXX] disclosures that

Jesse Gary

Lucas. Yes,

pretty those at. association hedges restart So in hedges were where gives of most were of you Holly a in with so struck sense project and the good Mt. place these that put

pricings on footprint Midwest Holly, we know probably we reason, if the these our like Mt. to we'd make with be I in markets sure any to going you intention all look future that the be And LME. both the associated do and that. capital said will and structural change a to any for do forward and when in let call it of project remain we exposed last Europe, As as to forward, sort U.S. going these generally and our is in given

Lucas Pipes

Could return appreciate and figure project. billet you much. you a then Thank project capital switching Maybe like the And for took the I very attached I missed you. it, capital Thank to And frame the see return expectations but release, didn't would a casthouse that. then it. that I expectations the up requirements look appreciate this? topics quick for to through project. I

Jesse Gary

be Sure. discussing it with Yes. an with little won't the we now so. all project. like our excited over about triggered at $XXX all but past we said, have this this to financed We're of we've we million. the our we're Arion total mid-teens. entirely think power facility year obviously From a the really to ability extension the construction. casthouse been – I the details, this into you with I will Obviously, contract something is And about as it be our into bit new unlevered our that'll in was last as talked And was what on could Iceland. Bank for enter commenced projects excited as debt about IRR sort expect triggered by we Landsvirkjun you in And of a allocate return return the project this, The capital. and go look perspective, with project, or call for exact that costs

Craig Conti

to mid-teens just on we've historical little bit historical IRR are assumptions. assumptions add the And used Right. unlevered is to long-term a that that

We Jesse to mentioned where number. premiums billet run certainly that rates in haven't assumption, that we've today. those European longstanding had to get So used are today used historical mid-teen

Lucas Pipes

would appreciate your you That's to that. balance for appreciate us increase question That's I you. that. perspectives due the And on yes, what – drove great balance up? super Could affiliates. now. What is? to from Thank helpful. remind noticed that Last hear. Really an me share the in

Craig Conti

is to catch, Sure. And be alumina that of purchases. that's Yes. going the timing. majority pure good Lucas,

So see you'll that.

all out you'd quarters, and If look were over you move than go a more around. balance see that to couple

line purely that's you'll next So two. just the or timing quarter see and into come over it back

Lucas Pipes

accounts this wasn't payable? just if And be would this affiliate, part so of an

Craig Conti

It is accounts payable.

Lucas Pipes

way the to… that Is

Craig Conti

Yes.

Lucas Pipes

Got it.

it turn I'll Thank helpful. over for now. Thank much. very you Very Okay. you.

Craig Conti

you. Thank

Operator

Pipes. Gagliano next Capital BMO you, Thank The with of from Mr. Markets. question line the is David

You may proceed.

David Gagliano

for Thanks taking questions. Hi. my

the didn't the what I $X.XX questions already again, associated XXXX increase? the I around $X.XX catch covered. us volumes you tell with and it Some the previously. you commentary volumes But on But quite mentioned just been know that are are can to billet, of

Craig Conti

year, be billet It'll to tons XXX,XXX Yes. production XXX,XXX David. of next the on about side

David Gagliano

Okay, products it for perfect. XX, And total year for balance what value-add about what non-billet XXX,XXX back is terms think Is to in I Slide, I – tons. with products it of if here, any then the expectations there there? the flip next is

Craig Conti

Yes.

at in just you So metric subtract to off if is the Holly, just – total, products go of should XXX,XXX directly production. value-added around about XXX,XXX just the David, This and tons can Hawesville, then we Mt. through you smelters tons. tons at production, At from do about here. it XXX,XXX and XXX, be what we Sebree, at about be should be XXX, should say, Grundartangi, of we XXX, metric

David Gagliano

kind XXX,XXX mental at Okay. of right. I And year is, to look the it I little if way. the products, doing ask so just right trying I And I What was total just a didn't that value-added I know tons. math question was really ask fiscal on, outlook, XXXX like looks

is to XXX,XXX next call pricing for wondering for got XXX,XXX year. between So comment if we've it, on the accounted other, on whatever roughly numbers difference average the two I'm that’s XXX,XXX those tons? expectations can you the

Jesse Gary

Yes.

to – if our you're to getting exactly you following guidance, sure not QX trying look just look just at. to the all what which should out balance incorporate can the I'm may exactly. year, of that Craig David, within think be I not I you can you're gave the you. guidance So that

David Gagliano

Yes.

try Let it me again.

For right. is next XXXX, for what I'm year, asking

products is what your commentary year? do XXXX. you us is tons, value-add right relative this saying at I'm for increase for year for XXX,XXX to think basically, $X.XX gave to next to what remainder on $X.XX $X.XX., And increase You XXX,XXX of the increase $X.XX for the

Jesse Gary

for looking products of for for You're XXXX? pricing the value-added remaining

David Gagliano

Yes. Correct.

Jesse Gary

that. you give We'll

when forward David, and normal you for we'll call. As QX February call, round going give that that back on whole XXXX for out stack we come in the

David Gagliano

be a know not I casthouse, bit it's answer the for new Okay. The a just make outflow CapEx – that. to to associated there's the as correct, of No It's to that's but is outflow – going cash here, going to the said, debt be on any I tied everybody think up of And sort the is again, basically? it. just, clarification, problem. going Thanks interest the be that then but go on cash the to for clear sure to increase, CapEx going flow statement. and you with

Craig Conti

CapEx, zero. be about to it to it's be the show a geographically, up mean, David, cash will – think flow from it net with is way will It I but standpoint. going

loan. So as be and term it's build have right the of place interest-only we facility, it'll the coming we drawdown an that loan, off to in revolving

to the on not first for be that. X.X amortization So any having couple – going right, years, we're

a flow the So net from loan, the you're asking. on in think going is going is standpoint which to spend an you're be I drawdown which company, to for the see cash a zero, what increase capital

David Gagliano

Yes.

can you give the of on a sense those guess… us timing just I So

Craig Conti

Yes, sure.

a project, construction $XXX million two time is Jesse years, it's right. mentioned. The as So

metal on remaining coming drawdown the out spend months, change and that spend shape of drawdown The with in So in of probably at million and this of and start tail-end will million six spend to is materially. the I hence – – $XX million XXXX. but going million be don't XXXX $XX to facility in XXXX of $XX about the think $XX then

David Gagliano

the Okay. for And outlook. Slide Board, Perfect. then across X, Thanks. appreciate including by way the me. last current the question Really the additional one disclosure

$XXX trying new expectations? as million. now that a $XX is million changes I Can to the million versus change for is a buckets I there now this reconcile quarter, of the million are is I kind was fourth since $XXX give quarter each versus $XXX to believe to the I commentary Now a quarter. [indiscernible] those was was incremental since believe you was quarter, us $XXX million, last about where just of and $XX of volume there million see in the and last sense what slide, it last

Craig Conti

Yes. Sure. The biggest you. give And biggest the you I'll down that far I'll for and two break power, buckets. bucket is by

another And quantum you quarter, up okay. was that $XX. QX to of if $X. is $XX, Indy So $XXX a forward to million to Pool right, that Nord million forma, about Hub the that assume were about now at which $XX just what the at QX time, it, on start looking And is last from we'd power, pro is right the out put price

quarter forwards Pool we had Nord and now were – So talked $XX. they're when $XX we thought last

majority up, that The $XXX from million remainder that add – the remainder is and the So million. that's of pitch. $XX coke

versus talked per ton pitch QX to we about is XX% to up XXX. forwards, last up when coke and about is So XXX $XX the

So that to prepared in coke time, was you million that make from to it down my real simple, we to pitch that last about $XXX million $XXX and million back talked power, in was gets $XXX million in million $XX comments. $XX

David Gagliano

Okay.

didn't number, Mt. Hawesville the So Perfect. change. same are at volume Holly and

me. for it That's Okay. Thanks.

Operator

Very Mr. you, question the is Independent John Tumazos of Thank The from Research. line Gagliano. with next

proceed. may You

John Tumazos

interpret Thank for you, X alumina? was disclosures. we Should and cost and thank there where quarterly your change price an you next change will for all but no contract very in the changed. have coming quarter, don't the In prices the alumina, you It's annual January year that from breakdown for that the coated extra helpful. be alumina prices have change

Jesse Gary

No.

John. right, you're And great So question.

percent it from to few relatively really flat, due realized So was QX only receipts. alumina timing was to QX that of a and was

stack. have alumina on. the appendix today one our in what remember don't is So page the we I And it's that exactly of things

Let look it. can me at find a I can take tell so you Thank you it, Pete. you, so

on how buying here in corner, actually the right we lower hand XX So spiked Page year. alumina we're out this

fixed, quantified And linkage value API XX% the be XX% okay. past that where we've LME it's past. in LME about XX% fare in would talked historical linkage. that in of alumina. the somewhere the and So We've

internalize. as piece delivery one sometimes as it's going it, two on of in So impact looks quarter-over-quarter. that it's With it's of what obviously like actually again, when we consume that to it to – still It now. respect be keep site, months versus a stack but inventory like to going look three through course, we're another, it to to take worth we of it negotiating XXXX, going how then and on going we will and stack mix

John Tumazos

because but from you're because So inventory? market were working not quarter impact there's no fourth the stable, prices

Jesse Gary

for alumina of it lags And things. a so how there's journalizes, couple

$XX just course alumina and the that’s I couple landed things. increase it the talked the buying that stack then and how of I'm number that I'm in into in going fourth to alumina, to Going quarter is consuming that be lags. alumina, a When weighted of

Peter Trpkovski

Slide X. disclosure on John, as X on do little Slide in And of you to alumina as of Craig's a bit the walk that well see impact the

John Tumazos

the it the XX, in netted Yes. It’s I be in okay. guess item I guess to might XX. a XX

Jesse Gary

Correct.

John Tumazos

on flow $XXX.X means US$XXX.X so a make Thanks looks I been income It to million In the from only wanted $XX.X nine for million, has deducted the guess that. clarifying that the revenue. statement sheet cash cash like hedge the already million flow I impact, revenue impact of sure I statement deduction balance from and… understood is and interaction accounting. months the income statement

Jesse Gary

I'm I little sorry, a line we got I – on here, think lag lag I'm the John. apologize. we a on got little sorry,

as recorded is the for This this in income and is a reduction other not expense us. So revenue.

John Tumazos

hedge guess $XXX.X it's is as guess liability million that is that it's the and balance means next after which that XX.X the means So of year. next sheet right? quarters that short-term, XX I I four on over September Is long-term,

Jesse Gary

reconcile you That's that… correct. can And

John Tumazos

short-term, said $XXX.X down is million numbers Yes. it since next year quarter, million of and be first quarter, next dribble is would $XX the lot September million in $XX average, a quarters round million on then in only three is and long-term fourth $XX.X year. the you XX after about about a

at diminishes characterization? next of sort that fair we're Is So of year. and peak it it the course the of over a

Jesse Gary

It's fair a characterization. very

did you there. good Some that math really

about, would a hedges talking got unrealized think other look I and can thing the and there's that see I easiest And as you right, you on you that is realized and were you it the those quantum at XX, I caution, to gain. then think way page maybe the roll John, by way this difference where of between the the see off.

going in the $XXX things of continually last point are number right. get in that is so that's quarter, unrealized of you're and that time, that the going day that when seeing blend So on today, And unrealized. realized snapshot remember to million that number impact plus a mark-to-market is you're determined as a

you quantum So that. Page to look it, in I on got put to very of we to way that but close at at think best appendix, the look hedges the XX the the

John Tumazos

You called a and assume we $X.X asset which million. rose derivative but short-term true treasury you're a bond have from collateral, like for assets, a hand Should hedger million something to left side not that held a $XX.X that's spec.

it's So the for counterparty cash revenue wouldn't and be hypothetically, hedge went for revenue no account, $XX, worried or flow it's gone. just hard amendment gone bank if There's to accounting. debt price item, because that's it's debt true because just the

Craig Conti

John done mainly some Pool, asset power we've Nord volume on the relates that see is to XX. slide which that hedges in Page also you'll on

John Tumazos

requirement hedge because there's true collateral a and a So spec? no it's regarding not aluminum,

Craig Conti

see look of as – We again, QX, in do the you'll to then as half quickly by on the as about helpful point I see on high characterize at counterparties, are well. you'll right especially reduce going But that it's you're you you requirements now if And our to XX, hedging. off the rolling think you see, Midwest, LME John, are have imagine. as those to quite collateral but you might just Slide

spread into to evenly the by year then balance reduce XXXX across fiscal XXXX. going roll fiscal as you'll and You're see half those pretty of year about we

John Tumazos

fair a physically as small for an or we me, the see visible because a that And big lot balance it commodities Is can't of sheet account asset aluminum very I collateral did your collateral forgive never really is myself. liability? the on

Craig Conti

be to the going liquidity is company. side other of The the

collateral letter going posted be right. is to of the or against posted cash this credit, either a So

the to at… look So way

John Tumazos

buried It's okay. of lines your unused credit, in

Craig Conti

and John, we're of there. is started going is XXX company near have getting But I think maybe good liquidity there. today, the which should about quarter-over-quarter, at we're up XX% It the historical levels

you the picture. getting the again, think, we're in could end see to exercise I So of this hedging

John Tumazos

is down So the going liquidity is bigger, is credit bigger. unused the collateral the because

Craig Conti

Correct.

John Tumazos

Forgive my dumb questions.

Craig Conti

not at dumb researched. They're well very are questions Your all.

So thanks for asking.

John Tumazos

Thank you.

Operator

Tumazos. with question question Lucas Pipes is Thank follow-up next The you, from line a Riley. the of Mr. B.

You may proceed.

Lucas Pipes

you of or up? approach versus frame more preferred and I take to LME, that contracting LME, questions recent your that activity much floating the in wondered, in it? and of kind thank XXXX. about that into you distant covered follow-up touched you do account think alumina very on floating regards well Maybe locking of about for if trading versus Thank a and how the would very – a go bit about in recently. how more John recent there we to room Sorry for here is for Alumina you more you question. perspective. the one just balance you my And it much to have first are alumina taking prices, his

Jesse Gary

commercial different thanks. year, market. season and alumina do the there look purchase Lucas, We as the every on ways we of way three alumina to XXXX is sort Yes. view the it we are for at

or And whether what market that be We those have against obviously our for of the we rates whether book. sense fixed. API, it – the whether it of negotiate suppliers that for those be metrics, of are each best to mix percentage be it LME try

a mix look see I I we you'll as like we so between see change may balance and us but expect slightly, you think do think And to forward, as move always that percentage some to the that should see continue – mix we LME forward. to look have past, in API

given to position marketplace. prudent I in do our for think us the that's

Lucas Pipes

best that. And appreciate of I right. All Okay. luck.

Jesse Gary

Thanks.

Operator

is follow-up you, The of Thank from Gagliano question BMO. Pipes. question next line the a Mr. David with

You may proceed.

David Gagliano

it's the Okay, actually last question. great. related And to Thanks.

is that of – of be this XX, pretty on API XX% for Slide alumina with with XXXX cash So sort XX% It straightforward. was LME should fixed. link, like, costs, looks it and XX%

mix the three? just about similar think For we or to those XXXX, materially change as as expect buckets between you mix, mentioned, should you that

Jesse Gary

David. still That's a good say those It's we're into contracts, to question. negotiating because tough

to and more at pricing are competitive of is, the I the to purchase of kind see type – relative of alumina see quotes getting you both go on marketplace, so these you'll you're other for some that And when you what than diff receiving. was

So in versa. prices better as others LME percentage API compared than words, receive may to vice or in some you years other

that manage the view so we And of outcomes just to achieve to marketplace. the try given our best

percentage I year. think LME would you a normal little in you saw see last a what it's general, in year, probably than heavier

here percentage. see in API year side, normalized then And of take a balance a think fixed makes generally, ability the the or opportunistic sense with end there just and have And you against reduction pricing. I be fixed that in that at in we grab book we if the to that general, up to tends if so pricing the our how sort we of on cargo to more is tend LME would

very API more more in than year as simply, think you normalized a see we I compared XXXX, So would saw in to XXXX.

David Gagliano

stays, you questions in truly try the John's cadence is, But world next it modeling million then my in those back the of it going to few just And where simplify side of it – and know, If perspective. to a which to assume quarter XQ some each hedge the loss $XX just on per to reasonable losses John's not that's where from of Okay. quarters? it realized of terms theoretically, is of realized the from happen. a quarter, to sort XQ stayed

Craig Conti

Yes. That's tough one. a real

there. But gave you little right. would mean, the a us out look think I David, in know, you I of at question it As premium, in I Midwest terms

in February. So premium XXXX, talk probably to of way we half the this in the think realized that's into have so Midwest more a bad come to loss anticipate And would going course, and it. not is visibility as cutting about major some and we'll you in roughly when driver,

Jesse Gary

we're the to evenly just dollar those would you pretty David. on to talking XXXX. quantum expect talking the in general, spread just volumes, if without about And of add quantum, But be about over

David Gagliano

it adjustments. – then Even similar that Century generating last of looked stays bit, having bit time. world Okay, quite with where you great. it's cooled And actually as a we again, start got I cash with XXXX, like at a looks you XXXX same and think little question even idea, will things is. It a

the the And net you zero with can XXXX, plans? updated one capital number, questions, allocation part XXXX, and for two CapEx. CapEx know the speak the you for to I also thoughts of overall possible? just it casthouse the actually on then of So any but rest if just mentioned

Jesse Gary

sure. Yes,

going call we CapEx we give level, detail with think Mt. year on spoke But year, our as online. February annual more this very year we items back this come XXXX. you obviously, high volumes Just work to at Holly very capital as about said, being at our bring Hawesville again, as and just the we the back because XXXX, looking on for back a intensive and normally as lot David, a at we'll do into a I

And so year contracts mentioned, went by those end. majority capital the And we of you completed towards continue we substantially as to year be projects. this saw expect those will

the quantum obviously, of CapEx And just from Thanks. casthouse see I for you there's so towards capital as and you just second a towards levels, part, allocation. Grundartangi historical the forget David. that more excluding look And it XXXX XXXX, should return comment. Oh,

David Gagliano

cash What are the your exactly? plans with all

Jesse Gary

you. new we Thank But casthouse are building a $XXX million Iceland. in

that I and that perspective. we're from service As that of projects that repayment that But project. cash from the and idea in give the interested of you cover incremental to that types do think that the of is flows we an think finance, organic an we will debt said, starts debt

end of So my into think opportunities of level to as returns strategy our inorganically. arise that the to Against the all we continue any we'll obviously offer that we're forward, look things, of sort on overall terms from that, look And XXXX. with out then I that level similar at of towards covered continue in debt I within a and also that look may pushed comments. side fit projects the M&A good we'll spot towards

that all balance account that, return into continue out. could of shareholders value stands to how XXXX and to for taking variety forms on in come obviously a the look of of depending opportunities after we'll our to So

David Gagliano

the Thanks for insights. Okay.

Jesse Gary

Thanks.

Operator

Mr. you, Actually the with of one Pipes Gagliano. question B. Thank line we Lucas follow-up from Riley. have

You may proceed.

Lucas Pipes

rather very much regarding just now taking on capital Dave's it's follow-up And you follow-up. Thank for or my a question M&A allocation.

much. than others? You mentioned rank still would if be still of was very kind so, areas Could integration what might be remember Thank And priorities you today have mentioned. an your in you're interests? you past where strategically vertical or years you Is interested that alumina more shifted? strategic or you I looking would M&A. area share interesting how

Jesse Gary

start, and here. It’s then we're close. I reiterate bring to maybe last Sure, Lucas. the said it I'll focused a reiterate just call near-term, existing we execution, In these question. the to very just follow-up And so to what need a on projects good on

we'll an that's just to Obviously, opportunistic. Mt. focused at if strong course and for don't focus from return of primary the I So of a on ready into growth the project. in for within this to our a moment. talk casthouse sort is I'll Hawesville thought if good example priorities. quarter, arise and your the with right and going be really Holly But this of question Grundartangi expectations view think be opportunities just that is second, to you a of M&A we strategic our given then that I perspective, think fit our and very act We've XXXX. organic

think leverage And first foremost. focus so markets going U.S. these I be in just European short our speaking from position strategic perspective, a and continue is to to and try to our

within framework. to fits our sort of of demanding. types the of at be increase And low tend that fit think, going. so They And customers we a to We They the be idea tend of types where our products our that producing. value-added is are margins be well that see is world when that we're assets for the we view within guiding that products to carbon. might tons see then and the I the secondly, look can

out to to say as I just then Grundartangi. if would look there, go looking look think of to just here it. casthouse from that's I'm thing things of came and focused we'll to foot they out But bring type and mindful the need finishing on to the those good, just at available, we primarily. the opportunistic the that we'd I sure again, so existing reiterate, and be of look our think opportunities within look in on – looking right Not try things we're guidance, shareholders, pillars fit we But again, that terms on right opportunities to the And focused two very very projects, at in we forward very that wouldn't we businesses towards. on make getting on there. that off value fact but the perform

Lucas Pipes

again, Thank helpful. luck. Terrific. of Very best And you.

Jesse Gary

Thanks, Lucas.

Operator

Thank you, no this are Mr. at time. additional There waiting Pipes. questions

the remarks. closing management to pass will team conference over I for the So

Jesse Gary

everyone Thanks, February. your in look soon. forward to Talk with again we you speaking you for and to time,

Operator

quarter the for third call. participation. earnings concludes Aluminum you XXXX That Century Company your conference Thank

You may disconnect now lines. your

Peter Trpkovski	Director of Financial Planning and Analysis
Jesse Gary	President and Chief Executive Officer
Craig Conti	Executive Vice President and Chief Financial Officer
Shelly Harrison	Senior Vice President of Finance and Treasurer
Lucas Pipes	B. Riley Securities, Inc.
David Gagliano	BMO Capital Markets
John Tumazos	Very Independent Research, LLC

Century Aluminum (CENX) 4 Nov 212021 Q3 Earnings call transcript