Earnings call transcript Q2 2023

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Operator

Good afternoon and thank you for attending today's Century Aluminum Company Second Quarter 2023 Earnings Conference Call. My name is Shesan [ph] and I'll be the moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for question and answers at the end. [Operator Instructions]

I would now like to pass the conference over to our host, Ryan Crawford.

Ryan Crawford

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

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

take a shown please to review to Turning statements statement one, to financial discussion. moment the cautionary in here forward-looking slide today's respect with measures and non-GAAP contained

I'll that, with to hand And Jesse. the call

Jesse Gary

market Thanks the it our Ryan. financial before over I'll and results, joining. I'll to current then for performance and turning second Jerry you take start conditions. today financial wrap-up will through quarter for everyone by before operational reviewing the questions. Thanks discussing

Turning of an to in QX. strong drove prices continued million $X smelters QX performance million, input falling over $XX operational and slide of about three, adjusted which EBITDA our improvement was

made last System. welcoming colleagues new Jamalco the integrate several beginning operations progress the to We our and Century the months Jamalco over significant into

at are their quality We the the and of by by most perhaps especially, excellent people encouraged culture. safety Jamalco

people long that Jamalco will its and the return operations safety safely of sustainability history has ensure of home a day. of place, in with the prioritizing its to workforce excellent each systems

damage lost damage resulted staged equipment. early pieces grid. resulting an the of when stability some caused event The Safety the strikes several the in refinery a production Century's a weather into for import complete the key We in and to Jamalco rest This power June. of Jamalco operations. adverse have disruption nice several to local June suffer of resulted and some opportunities days in in lightning plant outage of the and restart Systems did procedures of in to

QX to returning after the course in bit. over stable targeted to will a the operations full on gradually The in of and refinery June. impact production returned cover July Jerry levels financial

As of of of we course the restore improvements Jamalco process million to the next capacity design on over call, series at and a to the we investments our last of its operational X.X discussed the several in are years. refinery implementing

beyond to the expect of call. begin provide an see to the refinery in which additional X.X gains QX allow of some and end XXXX appear this year. We the QX annualized volume our those of We'll of and tons detail on run should by reach million to rate QX year, on

job several and have smelter the side, Operational plants operating our On smelter at across each high an quarter. levels done targeted was our stable through at the months. the days temperature over past teams excellent very performance each some of

we really improvement seen past over began that programs pleased off the the We stability excellent operational paying the two several see ago, years are with to implementing smelters have quarters.

continue We pay programs XXXX. these into we move as expect that dividends will to

global balanced enter the third four, quarter. see market on roughly supply the can remains and page we to Turning as you the demand environment

demand a short-term market slight quarter moved this last some deficit slight weakness, from gains Although to Chinese have and supply quarter. the surplus a

quarter In a elevated about levels. premiums down QX $X,XXX Regional price QX, aluminum remain from in declined historical levels. of per the from three-month $XXX averaged the delivery well, ton, as but

the in have short-term. the demand in interest and in market aluminum cooled the second reflected rising broader inflation economy. general, rates Persistent quarter In the uncertainty the

This remains bright our spot. and our evident sales acute most markets is constructing during customers, [ph] build building among a renewable QX. most in is energy while automotive low This where added product value and demand remained

and programs the eventual for executing disciplined market focused remain to In best this cost rebound. we ourselves on management position improvement our environment,

power Yunnan province to balance. availability began the than closer the previously to improved. side, markets restarts offset Chinese quarter curtailments These production in brought Sichuan as in in overall supply restart and the the curtailed Turning to more in

power risk of season of cuts recent levels, third levels from normal hydro returns a straight did remain a While dry Yunnan production rainfall, production benefit this once reservoir in season at province fall. leaving the below

global while levels, consumers longer supply days. remain following levels growing the of demand of inventory Overall, these have near days global invasion have of near and despite XX a metal, Russian to Russian accepting number returned no at Ukraine. low Inventories remained balance global relatively

are inventories made have of global up means origin that This remained they metal. Russian increasingly while overall low,

Russian low inventories around makes With the felony up LME fact, war swiftly these XX% just and now premiums to should in metal improve. prices once In respond historically levels, at from Ukraine. demand prior XX% inventories, regional up conditions

can five, significantly not anticipate page any you energy remain per above challenged. remaining near-term. see With energy energy $XXX elevated, chart prices do European megawatt-hour, on EU European smelter remaining prices the from forward As restarts we a in margins smelters leaving our significant

see smelting reduction year significantly come have down where most XX% Pool that across the from side, can board, the Turning and energy Indi QX levels. Hub reflect on to we over an costs page ago Nord six, both

XX% ensure demand of These level over year reserves remain the a reserves coal cold ago with year are XX% average. XX% and Energy remain above power gas high sitting constructive supply levels constructive to US above help stockpiles above year next prices six the Utility and and fundamentals US ago. gas months. also full, should five natural nearly

XX% to with the materials, to averaging prices now in prices begun levels. fall, moderated. $XXX and almost coke Pitch coke down prices Turning also raw year ago pitch quarter, finally from have

LNG, are Henry outside Most averaging first XXXX. of $X.XX. for of a from and reference HFO. and raw third refining to Jamalco's inputs caustic barrel. gas XX% the from have a the MMBtu these off declined input costs down On side US Hub, prices of ago $XX business, natural priced our soda, which is QX half QX, over averaging primary HFO with down in over levels, year about material

down from over XX% precipitously, last falling year. been also have prices Caustic

financial to through Jerry? outlook. With walk QX our it results that, over I'll turn Jerry and the you to

Jerry Bialek

Thank you, Jesse.

slide XXX,XXX sequentially down turn and shipment walk to related quarter. global variation results to the I'll normal for end slightly you second through the tons, cutoffs. seven, shipments in quarter Consolidated QX Let's were

metal for were prices the sales helping million, X% $XXX a to expectations quarter of with line deliver in sequentially. Realized increase net

cost net by for of was million operating at or per an prior value $XX results, million for quarter quarter. $XX second final million of contracts. Looking unrealized on share. These $X.X $X.X deduction with income costs. charge lower forward realizable adjusted to $XXX,XXX for in related of items compared on $X.XX inventory; curtailment, QX add share-based and a This were gains The offset was adjusting improvement the compensation, acquisition Hawesville million capacity net for million for up or $X.X back Jamalco million $X.X the the partially

to wrong our and at Jamaica. was JV of $X quarter, $XXX at improvement Adjusted this million Liquidity Century facilities. of EBITDA the share sequentially. $XX an of million $XXX Note in million includes remains credit in our million, the attributable the available Jamalco of on consisting XX% end cash million $XX

million. we sale in approximately note with Please price expect Holly's Mt. sale our final close that $XX of land transaction expected quarter the an third will

improvement LME with we the Turning provided to our in to line call. explain realized during last in outlook premiums prices $X delivery slide lagged EBITDA. second adjusted balance, sequential the quarter million On were eight and

and to $XX the $XXX contributed $XXX Together, $XX realized of $X. prices. realized European US factors Second versus Midwest per prior these three to quarter, quarter premium while lags realized delivery are ton, a was month These ton LME was metal in per up the premium was up reflecting per million down benefit realized ton $X,XXX of quarter. in $X one

quarter due prior as of Nord for a were Pool Power favorability to reduction Mt. rate Holly our in the cost from costs well market as down prices operations. XX% in service

the was Sebree. capacity the in year-over-year reduction benefit remaining MISO charge attributable to The for

of MISO for into place This sets price May reminder, a change an return approximately XXst will XXXX. As year-over-year. capacity year's auction every June in our will until $XX went prices costs annual capacity effect period. spring towards auction remain Xst reduce the normalized saw This which capacity subsequent holds million by for levels, the capacity and that XX-month

ton, through was and income basis. Realized X%. there for decreased coke on alumina pitch lag realized $XXX XX% a decreased higher prices realized cost a is $XX our four QX months prices statement. alumina work per to three to Recall, sequential costs

$X primarily due expectations, other and and resulted in material alumina raw below other premiums an mix. slightly billet costs a improvement EBITDA. million lower OpEx, in Together, to slightly mix, were sales unfavorable and

$X Jesse in million loss event output comments. Jamalco a opening incurred lost his We caused by and to the downtime by production mentioned at weather due

forward, Jamalco's to similar our Century consolidated performance and facility. Moving into results total anode and our smelters forecast carbon will be

million, Overall, second reaching appendix adjusted appropriate You will raw materials quarter as sequentially by million. improved able $X today's to sensitize provided of the for EBITDA presentation. to $XX in the be

with Let's Iceland. started These $XX Borrowings at new turn to projects, cash semi-annual quarter, cash for of and interest slide increased offset nine for EBITDA. CapEx primarily flow. quarter $XX adjusted mainly million resulted casthouse ongoing of QX cash look in in the $XX our our added million. We to changes this and a ending payments in million in construction the

site for move let's insight to Now, XX expectations the for third quarter. our into

or $X,XXX per down to of European per to premium and expected is expected premium compared the US up about $XX ton, QX ton The the to $XX is be QX, For be ton $XXX down versus about realized second is ton, with per $XXX lagged prices. per quarter. forecast LME $XXX lagged be Midwest ton, QX per the delivery

QX the lower with LME QX Energy $XX by in prices, million Pool higher $XX expected be premiums prices. million QX Indi offset and compared with decrease are EBITDA slightly with delivery to expected levels. market to Taken seasonal line Hub costs to are approximately Nord together, by

to Mt. We added of related capacity have cost rate refinery reference for Note, Jamalco's of offset reduction also charge mix. to side, a Holly. Sebree in energy service the we higher based the for slightly a by additional expect on benefit the be prices

for to also appendix now additional in the markets sensitivities We you sensitize these allow forward. prices results have our these going to to added

lagged will of other down aluminum to this mix $XXX our per our Looking be year. ton, supply XX% about Jamalco at materials, the cost realized is of alumina expected remainder raw for key slightly.

also prices. We impacts favorable pitch coke expect and lower from

flow note down with to raw ago lower P&L. we have six through mid-$XXX. soda also the current months costs the million $X prices five to appendix, for and spot takes prices the EBITDA In soda caustic All-in, second are prices for between year $XX material million approximately Caustic the XX% in levels spot expect we from to sensitivity to it our introduced contribute quarter. to compared with

offset expect operating between of range headwinds $XX is gains value-added considered, We sales improvements expected million. mix. adjusted cost for to in our QX million All for a volume factors EBITDA continued outlook to be and premium to $XX

gain realized to a more make. standpoint, to a the in quarter. a Just million points expect a third few between hedge of $X From impact we $X

expect X. expense to approximately tax We be

As impact of a reminder, both and these adjusted net fall EBITDA below items income.

One last acquisition. the about comment Jamalco

Note quarter to in purchase requires assets the fair current X of currently and acquisition are reported at discussed through date. XX-Q, we working the As our the as liabilities accounting, acquired value of which be

acquisition work gain on as a months perform value. XX estimates, we've to And XXth. as on reported value the fair sheet up finalize the have current from preliminary liability We balance fair to the date our deferred June the necessary of to based a

back now over I'll Jesse. to call the And turn

Jesse Gary

Thanks, macro and of us this to the continue put beyond. discipline position Jerry. has on cycle and a complex in focus throughout cost performance good portion Century's a results Despite deliver to environment, operational

global when implementing performance operations began delivering and we smelters. took [Indiscernible] programs two our years our consistently over strong ago, improvement in operational are The

first capital billet in natural low-carbon and program casthouse next on nearing to our European to of project is year. the the sales quarter first completion customers Grundartangi investment deliver Our in of major track

billet, Paired sell product our programs, give form Grundartangi ability casthouse or with the XX% US slab, of alloys, total ongoing low-carbon the in production aluminum. natural of casthouse foundry to will Century's the debottlenecking us value-added

Jamalco new programs planned meaningful return proven its chain for to full provides operations derisked and we Our our operational to raw supply capital most opportunity as asset potential. this have the and a execute critical for material our creation value

in is call the to turn about of Thank I'll what us now our and we excited you. And front operator for All-in-all, on remain focused future. questions. the over

Operator

Instructions] [Operator

Our question from Pipes with is Lucas B. first Riley.

Your line is now open.

Lucas Pipes

everyone. afternoon, question Thank my Thank My question. on Jamalco. first much, Good you taking operator. for you is very

financial at time, the I at an quarter. quarter think the would expectation accretive Jamalco I prices to you think, that spot quarter, mentioned be that third this results starting, last

on appreciate comment you could is So I that could if if your wondered quantify still you and that, maybe that. you impact. the very I whether Thank much. expectation, would

Jesse Gary

would think going And so financial that the prices Jamalco results joining. case, the expect we question. did call, Yeah, true. Lucas. stated accretive Thanks, had you the to in Thanks remain I would Jesse. that last that spot It's for be Thanks continued that that at back the the to be I think correctly for time, to at question QX. statement

But do is as Jerry forward, what include guide. going the we'll results in stated, Jamalco we'll just the

for XX statement had to days. same. And XX But remain within million that of now spot front have would prices in that XX It's you remained true have the that you so context, million for have that just you.

Lucas Pipes

for any Okay. Thanks for mentioned perspective that auction and kind you implications and that the think to read-through for during us you a that. your now hospital Switching during on were MISO of auction details restart? the remind potential the I topics what for the of Could you that. Thank business second happened quarter. your --

Jesse Gary

Yeah, for Kentucky question. energy, capacity three Kentucky within -- that delivery. of portion basically portion A and plants. so MISO in a a portions is Again, portion capacity, of good we Lucas. Sure, power remember the of that is both pay that auction, our Thanks. is

levels. capacity so, takes And year, the place to auction normalized May. And April the this and every capacity returned auction

we the upside. remember surprise a saw within year ago, You MISO a prices have may to capacity large

prices normalized from now, XX-month -- up specific to significantly. for benefit quite be prices is year have those new period this will were This million that Seabreeze that period. and year-ago impact capacity the so Capacity $XX the returned about you'll levels,

that are about the will and came in benefit as about at similar $X the see to well, So Obviously, QX would that levels we you'll spoke last in Hawesville the respect at we same month results. purchasing when we're of overall, you with QX a Hawesville restart, were impact if benefit million through see Hawesville. in still but energy you same But quarter. a the place results,

we'll market back conditions, side you to the to the come we've decision. cost continue and and made monitor that on once We revenue both side,

Lucas Pipes

auction? capacity megawatts Thank you. capacity. the think I Can that And a you in, price, in it's quoted what you locked of The day share quick that follow-up. prices on per

Jesse Gary

Yeah.

they basis, a you do it to So, we megawatt-day -- monthly they actually I think can on on clear give but a basis.

$XX XX-month than the for less day a it's upcoming period. megawatt So,

Lucas Pipes

it. Got

that. and appreciate turn Okay. Thank I'll much over. luck. I of it very best you

Jesse Gary

Thanks, Lucas.

Operator

There more are no to closing I'll the back remarks. pass the management over so call questions, team for

Jesse Gary

questions time. one more the Let's re-prompt

Operator

Instructions] [Operator

Jesse Gary

talking look for call, you joining to and Okay, very thank everyone you much the we forward to QX. in

Century Aluminum (CENX) 9 Aug 232023 Q2 Earnings call transcript