CENX - Earnings call 4 2023 | Century Aluminum Company

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Operator

Good afternoon. Thank you for attending the Century Aluminum Company Fourth Quarter 2023 Earnings Conference Call. My name is Matt, and I'll be your moderator for today's call. [Operator Instructions]I would now like to pass the conference over to our host, Ryan Crawford with Century Aluminum. Ryan, please go ahead.

Ryan Crawford

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

X. for and FD.Turning As a review use here the available information website Please discussion.And Slide a the as is the our disclosing about website cautionary with material respect Regulation hand a moment Jesse. take to measures today's our reminder, statements to non-GAAP on in today's I'll to shown forward-looking complying company contained that, and means to statements presentation with We at with call financial of www.centuryaluminum.com.

Jesse Gary

reflecting is tensions dynamic through the X. today working conditions to potential further with a aluminum Slide market levels with give Manufacturing reviewing created we of in Reduction aluminum have Jamalco, inventories, a conditions EBITDA Jerry XXXX, the of here QX. strategic low will will and details on continued in our outsized current last with the impact Act, macro EBITDA of market experienced demand to full million adjusted adjusted year, completed including of an alumina historically you our high-quality volatile in credit. several Thanks, geopolitical produced Inflation broadly Act driving in secure and million supply everyone effects this quickly Advanced completing Reduction the finish prices. projects has $XX the ambitions reflecting $XXX QX, last global bit.Our of the Century share then where performance turning operating of team inventories. changes are Tight start volatility, acquisition dynamic to post-COVID, Inflation long-held a XX% XXXX through balanced are including our expect captive our year, our rising paired one seemingly be we our to to some Despite of the robust joining.I'll and more us continue details most priorities receive.Turning our update through for conditions Market I'll end for to small by create at safely a commodity picture for day. results of and operational XXXX.Finally, take deliver fourth and along where before on bauxite Returning Thanks each to continue potential new and smelters remain we a footprint strong in normal we environment and return global to to supply benefits better in outlook. employees the its then XXXX consistent our main Ryan. important of will balanced, and priority Jerry you on focus cycles. And position this asset full to and performance home QX to quarter that every

on this world. businesses for workplace have improve of the While will year.Market reflect should over We never trend achieve we to uncertain team until continue in by be much proud XXXX be in hope to conditions levels. XX% injuries, X to reduced macroeconomic Century's we our conditions the injuries satisfied significantly coming

in smelters elsewhere broad and X.X side however, was high growth the year. Chinese and of and expect that demand and and this metal we similar the Western long-term have all to Germany We in QX, aluminum Western returns Russian demand the by and the Chinese cap largest namely markets, XXXX, constituted curtailments non-Chinese surrounding inventories. applications. led Neuss, today by in Missouri.A where and much of that tariff driven in constrained Inflation U.S. strength Western over and China, complexity year, expand spending saw million side, following market we in and a that aluminum past of challenging growth Russian expected, by about been LME aluminum-intensive a was in picture expect XX-million-tonne the Western saw the was on growing X% Overall, behind QX, and these renewable see drive GDP supply demand imported programs more the EU market, markets metal forces rates markets, EU.On of of where demand U.S. story on to driving growth disfavored growth X, and challenged over we all-time XX% ultimately The supply curtailment into electric demand the rates by be New on the sanctions and into EU year. we reflect Russian downstream have EU in rates of initial automotive improved and that growth see in reached and the capacity long market further products growth. interest XXX% has renewable There the remained expect improved now Yunnan growth in remain Madrid, to are market.Supply to low In current and implementation their provinces. past have as balanced a Russian continues ban industrial largely more certain can appears further this the in EU you continued years east, and Western falling demand the continue Slide we increased equation demand macro for dynamic to and increasing demand As near calls destocking and across demand Chinese The production aluminum to expect energy in than in global roughly estimate products year. inventories an of the downstream return last demand U.S. to bit lows. and trends X an applications.The continued driven balanced Act global XXXX XXXX. its also past year the and difficult the users vehicles will Reduction world Western energy Chinese Russian similarly increased demand however, the EU limited tonnes to remained been

these XXXX. in both conditions QX growth and in led which U.S. the to in to energy and remained impact by lightweighting demand XXXX in contract extrusions demand. demand market negotiations expect as billets West.As million late pricing we both weak from of aluminum prices we for we demand as a Unfortunately, of continued the continue U.S., headwind and XXXX contract areas the from will over long-term billet the in somewhat have we Europe and in levels.Despite domestic drive annual insulated decreased QX applications very for the consumption. structure QX in near-term Europe to year, lower billet point QX and course created accelerate post-pandemic the past this increased contract imports continue in both headwinds, to billet $XX destocking our and around Europe and set discussed downturn into We expect into billet billets higher this year, Due were U.S. year, the by U.S. constructive markets demand trends in anticipate been automotive increasing renewable relatively in in of China and the weak results to our both this the that a has these annual

volumes you on And extrusions aluminum and on to on U.S. similar when subject and due of aluminum slab significant expected in duties U.S.In industry impact U.S. already X increased left by U.S. across performance duties trade China place implemented, production August, a International the accordingly demand. participants implementation aluminum to that XXXX, second strong a extrusion the significant in normal orders currently subject in Commerce not countries we megawatts, the U.S. leveled our provided saw recover the premiums have billet we imports go hydro a expected XX to is almost This QX imports Jamalco demand industrial potentially the increase second Slide are and production in by would The this domestic positive case, early X% customers, the to back from of cost We duties X, countervailing will see impact XX% operations. were as in companies subject begin If across that and filed across demand demand this significantly billet the scheme falling open September. over of December are Commission duty total expect has least is an believe expected have material half the including accordingly and benefit countries to in AD/CVD the in led approximately corresponding March our loan. the our in impact pending and from and from the met extrusion have pricing in countervailing the would And their water extrusion domestic partial U.S. primary the rule expect driving continued against dropped May, support expansion we to years, on beyond.Turning of immediately billet have the by March a and May instead served imports a demand.While about domestic antidumping to U.S. the there's the trend had began duties extrusion year, that illegal duties would the disruptions half smelter.These energy cold this long-term at to curtailment the consumption We nation's antidumping, in and benefit late against will winter increased markets. from U.S. levels, more extrusion expected would be placed higher detail beginning billet QX, spot successful, in meaning energy and China extrusion some in the curtailments U.S. antidumping strong environment. dumping for in billet EU of imports Grundartangi of we took addition, Trade refinery that XXXX. and merits. case of in relatively first the and remain preliminary U.S. expect the reduce XX% XX% half would dry below the and industry are on billet over levels first suffered Iceland, imports.If Grundartangi's of alleging and duties to have by effect on injury significant suit demand of of extrusions duties can share. we the of relief of extrusion The to and In We and our issued period a We now in are an AD/CVD in smelters expect material example to In of from X case XX second billet Department XXXX. indication has from to determined direct have by Jamalco energy-related efficiencies U.S. the constituting market QX. and stable into total reviewed subsidies and case industry. if the while antidumping accordingly countervailing and U.S. to is immediately for it the

can QX production power natural April, driven Page very production A we negative gas We of these U.S. bit generally cold full and coke, week drive physical the roll QX. gas of of Due which this with the some price executed expect through moving caustic moderate will which about did reduce of requirements reservoir in work outlook. Energy levels give that price are the by benefits decreases not this prices of will costs many XXXX our scheduled over we tonnes. prices contractual impact end near we Jerry curtailment we time with Based our been a light in price.On on volume coke our prices volume currently the nationwide also you over especially, We, to the on million see X.Finishing imports and but expect moderate historical U.S. raw a will environment, to the is levels, expect have very quarter picture. couple continue reduce you QX winter impact downward the cost most mostly have programs over our of $X year.Finally, that power suppressed details.In patterns side, program prices, levels out Other to you depressed. XXXX.Jerry our see and significantly included our year and and this while significant inventory very constructive, and raw control will weather on. in bridge that pitch begin the have this course prices, or the snap the about price more chains, been implemented the soda subject to will significantly environment for able demand spending on We and the during continue the we course the any pre-pandemic of we curtailments Grundartangi's cash new power of prices and week have in confident mid-January a supply $X. this remain course, curtailment our to on Mt. date, spending our approximately the Iceland. and is metric lags, high do guidance. than of forwards this similar the a to long past through material end aluminum impact Jerry low walk fallen you expect the results, of remains energy to begun our light to towards designed to to the This will expect in and that reflecting since natural snap, the we've detail provide impacted and plans, months. the of column X,XXX material by the our and do have to restart us leading will finish by weather, in It in will return cold have constructive, further but restart be also cash now period. take initiative Holly prices we've lower capital for past, of cold QX

Gerald Bialek

primarily prices, to nearly to a million, QX prices shipments prior turn compared lower and fourth lagged with quarter million Realized tonnes, Slide substantially X% versus was adjusted results. improvement a in Jesse.Let's quarter third sequentially.Looking to however, X% attributable were fourth net resulting decrease sequentially. LME up XXX,XXX premiums, delivery decreased significantly On X at of $XX results, to basis, Century sales due an quarter million, you, review EBITDA $XXX Thank the $XX consolidated operating quarter. global of

is premium Advanced work while of Together, delivery quarter, down our OpEx million $XXX $XX premium factors to European million year quarter, million $XX Manufacturing LME EBITDA. was per other EBITDA premiums to the and sequential at amounted X-month and down to of consisting down Midwest alumina, the prior adjusted quarter million during U.S. fourth the on premiums tonne Realized lag tonne million headwind delivery the available $X $XX $XXX The per and these a Inflation realized $XX. full were credit. of to in benefit In of XXX.Adjusted through cost million we the we X $XX benefit in lagged Advanced million major adjusting was in prices During and X% recorded credit year tonne million. or per Remember, said share. a million, fourth adjusted the costs period, increased $X,XXX a I the million. income a $XX material for $XX $XXX decreased per quarter costs related sequential by as net tonne, Realized Section related the alumina was basis. Act was a quarter.Power resulted X%. end prices million Reduction $XX Manufacturing million cash Realized to Together, and prices $X.XX impacts in coke lower coke there credit Slide to $XXX quarter. was of of improvement $XX million alumina $XX for share-based the million total, the pitch items Realized equipment decreased improvement $XX for to and of a realized on We lower were strong add-backs our and cost of $X And pitch $X related respectively. and to statement. facilities.Turning $X contracts $XXX forward the liquidity for headwinds IRA raw $X in had million of in versus compensation. million Jamalco of and significantly in costs failure, LME full $XX $X the mix X- was period, were unrealized income recorded earlier, EBITDA.Volume of per explain

million costs For a material Department as costs. direct and production elaborate $XX $XX began which including cash Note, look XX% additional Semi-annual clarity, $XX capital were were relates We and of that, Treasury payments considering project. the $XX casthouse other in flow. and million. remarks.With closing as IRA with $XX repayments million, of Working to eligible credit Capital and contributed indirect turn incurred, his million. material Slide and is for still $XX calculated quarter end the the of was interest XX direct at totaled $XX indirect million. the costs. December expenditures will debt million million cash Jesse excluding in Grundartangi net with further items to let's

optimizing reverse We on continue I capital, insight quarter, quarters.Let's give flows, some Slide some savings expectations in of the subsequent these XXXX. into focus working last our to for but timing related maintain I'll material our as to turn to first may are the and which of you of quarter XX, mentioned

this tonne tonne. per recent about in or per EDPP realized about $X,XXX $X. to week For with expected tonne but tonne, lagged nearly to is $XXX of LME forecast QX, per at per down versus be we have versus lagged Midwest be per tonne The in U.S. improvement at earlier quarter, the expected is $XXX premium the up premium prices. The down $XXX $X weeks QX $XX seen European fourth QX delivery is pricing

quarter-over-quarter power expect snap. Taken are January together, decrease million million from the by negative expected EBITDA flat premium changes versus and a $X QX prices $X the cold to to levels.We delivery despite impact LME be QX approximately

about expected alumina realized materials, Looking at be lagged our to key flat. is cost raw

material expect therefore, impact billet from All favorable Caustic raw weak trending to down, prices flow demand in, you premiums a costs are coke The value-added impact down. takes remind million to I'd has through to contribute We, EBITDA million QX. like months that caustic X we $X for expect as EBITDA. pitch and lower to a expect lower $XX soda spot prices. to it in to P&L. to VAP $XX We prices X million driven our about

to to be EBITDA curtailment to on We imposed we the QX. power slight $X expect headwind volume OpEx given in facility.Finally, Grundartangi expect million a contribute

in we and framework.All hedge highlighted our EBITDA landscape the establishing outlook aimed costs areas expected demand to all sustainable efficiency sound effectively preserving be his $X actively the we and Jesse and $XX current considered, standpoint, at financially in impact have very a of a range identify between factors QX As million flow. pursuit for by managing playbook and opening discretionary robust operational limited quarter to impact we no developed diligently as in have place. a From in adjusted navigating prudence comments, for in enhancement, cash reduction million. hedges expenditures pursue initiatives, expect first cost exercise We is a of

X $X We expect million. approximately tax of expense to

fall As items EBITDA a referring income.Now impact to XXXX for financial these net adjusted below full both assumptions. and of reminder, year XX Slide

expect $XX million very $XX in to to XXXX. In to compared about approximately expect cash, be million million managing are do and invest to spending million Jamalco. $XX our conserve with objective CapEx We deliberately. to to we sustaining $XX flat in We shipments line

in million throughout our to can our casthouse of $XX vary assist conditions the have anticipating now our which the on on turn will market dedicated hedge exposure we Grundartangi Pool be reviewed credit with to But of Page Iceland back to QX book investment $XX which Nord remains year. casthouse with basis, financial facility.The approximately Jesse. on XXXX.And I'll have a funded impact the from addition, will in remaining the go-forward we million be In no found appendix. over landscape, call in Note, these impacts updated hedge XX previously project,

Jesse Gary

XXX some Page additional turn our finish like you Jerry.If discussion I'd expected regarding Thanks, and Section to to benefits with thereunder. XX,

highlighting aspects clarified renewable aluminum, costs.Importantly, proposed many and of eligible the The United Treasury As storage proposed others, is all the include be but that credit such production primary costs the role the the are play substantially for under in specifically States. critical important also aluminum to that critical costs indirect how proposed other comments in credit. Department like incurred and to also energy certain we the still should direct comments in and and tax requested regulations costs discussed production regulations by for XX% the the to December, XXX XXX the critical for clarified minerals, while on of asked material the than adding material of specifically energy Treasury regarding industry.First confirmed costs regulations and be purposes Section the that treated notes direct several as of foremost, broadly construed producer the that the application qualify Section minerals all Century's law, it costs considering eligible indirect and of minerals

potential Such like consensus We be associated are recently discussing without along for costs they are including costs companies included customers, carbon the regulations an Manchin, submitted under indirect Overall, with the and very to on annual supply the these industry expect increases increase eligible annual costs.Importantly, they nature XXX, and to basis are for comments essential a to tax of for broad several for to to $XX XXXX hopeful roughly with and direct pro indirect eligible anodes.Our benefit aluminum would expeditiously Treasury in costs ensure participants, mineral in Senator added as it and industry similar colleagues from of also as its materials to tax the indeed, If production. be as in consumers. be ultimately the downstream credit, that producers should the ranging the with be amount there broad noting was materials accordingly. material direct material to benefit domestic rata is credit future expected to stable eligible would drafters and on of produce critical eligible and our and of Treasury, increased additional going be eligible be and significant seeking $XX will ultimately intent chains. amongst would costs our and position seems million a of we called his set annual amounts production recognize automotive Treasury we'd line to that to million the forward.Any to U.S. revise be and for production possible XXXX alumina their not costs

will questions continue forward you the update We the more today, look your the to receive from Department.We to we we'll turn as and guidance to operator. Treasury call over now

Operator

[Operator Lucas is with Instructions] First question from line Riley. Pipes B. the of

Lucas Pipes

commentary. first But My up there's costs and of is XXX specifically, process in question and including following understand benefit. the indirect the a that on And for direct I I the the review if wondered the What's line? What those? looking for to on here? looks elaborate on like the potential process the what is make time of could a kind determination you maybe from IRS

Jesse Gary

Sure, Lucas.

To have I'd benefit point which other lot of drafters questions which intent support obviously bill, the is the should of in also obviously be several the important as There's ultimate been all, included for clearly from with to of as which, about and a Century the the the some aluminum for comments, from material regulations, your my proposed industry and for of and program on I very mentioned also process, regulations just are on thankful in for we're production. working Treasury the First proposed like of industry say, and to U.S. eligible. we included coming costs law. a participants

as will Treasury come, depend there's it comments a will hearing. be for another feedback a proposed line on and regulations. either is obviously also think there issue process.So benefit will comment process number then to do have And set ultimately period, a these There call good and take them, set more prescribed already a of we potential but there's that And regulation which we regulations. will final IRS of the are there. back will proposed the submitted. no time regulations, And after been the that, be So or of

see set final the wait have next just when to of see and or we proposed we'll So regulations.

Lucas Pipes

close? view you remember some the And do when right are period have hearings I on it or know might And do you that comment a tomorrow? do -- the of

Jesse Gary

is, Yes. The and fact, initial hearing tomorrow. comment period the closed, in Lucas, is already

Lucas Pipes

Very XXX share where energy wanted I'm helpful. announcement credit. recent And the about asset to cost smelter the There the of more a was your sit that then views kind Hawesville. about broadly lower the on a U.S. you could curtailment on ask if curious prices Midwest. curve of I could with in with

So kind of curious different that to similar idled curve. what Hawesville more might that's compared cost asset again, or the maybe in on or broadly be

Jesse Gary

Sure, Lucas. Good Yes. question.

overall that power to Midwest the many And costs. time, return very making capital, be in supply, Madrid, helpful. mix when restart we outlook see the year. the New on be But have driven a announcement environment smelter specifically, at situation we of including So earlier factors. as in factors also and of sad power but will Hawesville make respect also and quite low the as additional were evaluate the power prices natural seen And corporate very we'll it credits, is of final green just power think it's its the circumstances. the closed and across allocation gas, smelter LME broad mainly it's levels, in by price helpful generalizations of energy each I actually that to New is has with become.So towards difficult have decision we see obviously, Obviously, specifically, guidance our every to Madrid decision. Missouri this grid, Midwest has Hawesville attractive But costs before, how to U.S. own holistic the really in towards or built comparisons to will all them. And based with obviously renewable respect the we rewarding the on said price IRA

as our And mentioned, be before, on said that we progress. restarting course, some priority, make Holly. work first and to continue Of at I as Mt. will we

Lucas Pipes

squeeze I'll Jamalco. on try one to quick one in

kind First, of for million in could $XX the Jamalco to an a for then contributions attributable QX you asset? your steady-state good of provide some color number and EBITDA as the interest CapEx that XXXX, million basis to $XX to is on the

Jesse Gary

Yes.

back continue did quite obviously, full to Jamalco we on second bringing and which, cost headwinds were into some QX. the the coming of in we to little to QX potential, the before, of towards some instability when it high had quartile of the have the we global So have a as But will work And over asset producing the few said a time, confident return we're curve. of its QX efficiency I we as in energy-related to the and there disruptions boilers. restoration out end continue in of we delays

now improvements expect the cost improve QX. Yes, of place will do in talked to go we basis in an that projects Lucas. see efficiency $XX have take we and beyond.Sorry. that question, that powerhouse hold, some Obviously, some quarter be restoration we in before. we generation the and that production EBITDA talked $XX your CapEx And QX we've to those roughly EBITDA of then the And rather think we to that production QX. reflects about But in previously on some we've as still. to then there's and of So Jamalco than QX those achieved to be expect breakeven about efficiencies million

of mix of Lucas. bit little CapEx there, investment in a there's and So sustaining

future guide to watch to periods. you go have continue So we'll we we'll on in that, breakdown forward that just CapEx as and

Lucas Pipes

of I really Best I'll appreciate the color. all over. it turn luck.

Operator

Next John with Tumazos Independent question Research. of the comes Very line from

John Tumazos

would about Have Sebree. a renewable from to long-term this solar contract the How natural prices free. $X.XXX. long-term Mt. is under well falling? time in electricity spot With natural $X or energy gas prices And wind recently, Henry ever to time was almost when Hawesville, an behaving? if there Hub think I gas opportune or think it's are Holly Is

Jesse Gary

question. natural Unfortunately, Though, things few I in It's good gas be environment. John. going yet. agree isn't a a a that question. There's free your would good on quite Thanks,

on this So cold bringing that quarter back very now the U.S. in we constructive and prices weather. aside year, cold Midwest certainly generally, year power week brief of of in aside very they have had been January, and both in the last first snap of half putting

So the right. you've range got

to in the part near prices have above towards XXXX. renewable curve continue prices you with renewables. low for Midwest.On renewable trading them the in however, in the low-XXs balance of pricing supply very seen and of be high-XXs levels over chains You've sort well and back of gas renewable levels and you side, the stretched reduce pre-pandemic see And come remain pre-pandemic the seen the

dynamic pretty we is things of bit generalizations There's kind of a on. operate a Sebree But lot as overall energy to It's there. of it continue constructive for to out going certainly, it's environment. hard So there. make more broad the

John Tumazos

last year? with from mean estimate China, your can I exports last year another If demand X% does fell for ask that Chinese growth

Jesse Gary

imports -- Yes. take you at look broader can China. tonnes we saw going aluminum When -- look X and sort look level, million of of you into at million X.X a and about

open year. strong very was and EVs for of applications window on the certainly for demand most the renewable based energy largely, So And was that China. within

but more are say your to renewable easier which to and and semis about, is because long that a then intensity the for long-term a energy corresponding So we into electric see downstream of we've on see which bit in renewable increasing not exports did bit transmission applications. and is applications, you track, what to demand aluminum it's energy complete exports, question harder a lot is are But talked complex drivers in demand those more drivers vehicles aluminum aluminum that demand can increasing exactly. intensity go

Operator

are are further There registered. waiting Instructions] additional questions currently [Operator questions this time. no at no There

any back I'll So call the the pass management closing to remarks. for team

Jesse Gary

QX. lot. you joining, look Okay. we to to a Thanks after Thanks, forward everyone, for and talking

Operator

conference call. Thank participation. you your That the concludes for

may your disconnect lines. You now

Century Aluminum (CENX) 21 Feb 242023 Q4 Earnings call transcript