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| 8-K - 8-K EARNINGS RELEASE - CENTURY ALUMINUM CO | a20130331q1earningsrelease.htm |
Exhibit 99.1
Century Reports First Quarter 2013 Results
MONTEREY, CA -- 04/25/13 -- Century Aluminum Company (NASDAQ: CENX) reported net income of $8.3 million ($0.09 per basic and diluted common share) for the first quarter of 2013. Financial results were positively impacted by a litigation reserve adjustment of $2.2 million and an unrealized gain of $15.7 million related to a LME-based contingent obligation. Results were negatively impacted by severance and other expenses of $2.2 million related to our corporate headquarters relocation. Cost of sales for the quarter included a $5.8 million charge for lower of cost or market inventory adjustments.
For the first quarter of 2012, Century reported a net loss of $4.4 million ($0.05 per basic and diluted common share). Financial results were negatively impacted by an unrealized loss on forward contracts of $5.0 million primarily related to the mark to market of aluminum price protection options. Cost of sales for the quarter included a $17.1 million benefit for lower of cost or market inventory adjustments.
Sales for the first quarter of 2013 were $321.3 million, compared with $326.2 million for the first quarter of 2012. Shipments of primary aluminum for the 2013 first quarter were 158,776 tonnes, compared with 159,967 tonnes shipped in the year-ago quarter.
“Market volatility has increased due to a number of factors,” commented Michael Bless, President and Chief Executive Officer. “Economic data from China have been mixed, with underlying industrial and consumer activity growing at a reasonable, but slower pace. Growth in other developing economies has also slowed and conditions in the Eurozone remain difficult. In the U.S., end markets remain generally strong. Overall, we continue to expect medium and longer-term global trends to be favorable, and are thus executing our strategic plans. We are, however, working to preserve considerable flexibility in the present uncertain environment.”
Mr. Bless continued, “We continue to discuss with Hawesville's electric power provider an arrangement for supply after the termination of the existing contract in August. Given that we have yet to reach an agreement, we recently deemed it necessary to issue a termination notice to the plant's largest customer and notifications under the WARN Act to our employees. We remain optimistic that a solution exists that would support the plant's continued operation and would have, at worst, no impact on any other rate payer in Kentucky. I am proud of our people who have remained dedicated to operating the plant safely and productively during a time of uncertainty. Their efforts, coupled with a market-based power price, will provide the basis for Hawesville to operate for many years to come.
“We are pushing forward on our other key initiatives,” concluded Mr. Bless. “The restart of Ravenswood remains a priority, and we are in discussions with the power provider and other key constituencies aimed at finding a suitable arrangement. For Grundartangi, we are working hard on the two key investment projects, aimed at expanding the plant's capacity and restarting the recently acquired anode plant in the Netherlands. Discussions with the current power suppliers for the new plant at Helguvik have continued, albeit at a slow pace. We are hopeful that a new government, expected as a result of the national elections in Iceland at the end of April, will provide the support necessary to allow a restart of major construction activity; an adequate supply of power and a guarantee of the necessary transmission capacity are the only impediments to a full restart of this attractive project.”
Century Aluminum Company owns primary aluminum capacity in the United States and Iceland. Century's corporate offices are located in Monterey, California. More information can be found at www.centuryaluminum.com.
Century Aluminum's quarterly conference call is scheduled for 5:00 p.m. Eastern time today. To listen to the conference call and to view related presentation materials, go to www.centuryaluminum.com and click on the conference call link on the homepage.
Cautionary Statement
This press release and comments made by Century management on the quarterly conference call contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements about future, not past, events and involve certain important risks and uncertainties, any of which could cause our actual results to differ materially from those expressed in our forward-looking statements. Such risks and uncertainties may include, without limitation, declines in aluminum prices or increases in our operating costs; worsening of global financial and economic conditions; increases in global aluminum inventories; market volatility and growth in developing economies; variations in sales and consumer demand for aluminum; and our ability to secure competitive long-term power arrangements for our facilities. Forward-looking statements in this press release include, without limitation, statements regarding global economic and financial trends; our ability to successfully access wholesale or market-based power for our Hawesville smelter and achieve an attractive long-term power solution for the plant; our ability to obtain a power arrangement that enables a restart of our Ravenswood smelter; our ability to successfully execute our key investment projects for Grundartangi; and our ability to restart major construction activity at Helguvik and procure a reliable source of power. More information about these risks, uncertainties and assumptions can be found in the risk factors and forward-looking statements cautionary language contained in our Annual Report on Form 10-K and in other filings made with the Securities and Exchange Commission. We do not undertake, and specifically disclaim, any obligation to revise any forward-looking statements to reflect the occurrence of future events or circumstances.
Certified Advisors for the First North market of the OMX Nordic Exchange Iceland hf. for Global Depositary Receipts in Iceland:
Atli B. Gudmundsson, Senior Manager -- Corporate Finance, Landsbankinn hf.
Steingrimur Helgason, Director -- Corporate Finance, Landsbankinn hf.
Contacts
Mike Dildine (media) | 831-642-9364 | |
Shelly Harrison (investors) | 831-642-9357 | |
CENTURY ALUMINUM COMPANY | ||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||
(Dollars in thousands, except per share amounts) | ||||||
(Unaudited) | ||||||
Three months ended March 31, | ||||||
2013 | 2012 | |||||
NET SALES: | ||||||
Third-party customers | $ | 188,514 | $ | 188,839 | ||
Related parties | 132,760 | 137,351 | ||||
321,274 | 326,190 | |||||
Cost of goods sold | 303,692 | 305,598 | ||||
Gross profit | 17,582 | 20,592 | ||||
Other operating expenses – net | 1,096 | 3,721 | ||||
Selling, general and administrative expenses | 16,299 | 8,459 | ||||
Operating income | 187 | 8,412 | ||||
Interest expense - third party - net | (5,945 | ) | (5,840 | ) | ||
Interest income – related parties | — | 60 | ||||
Net gain (loss) on forward and derivative contracts | 15,507 | (5,159 | ) | |||
Other income - net | 70 | 306 | ||||
Income (loss) before income taxes and equity in earnings of joint ventures | 9,819 | (2,221 | ) | |||
Income tax expense | (2,517 | ) | (2,821 | ) | ||
Income (loss) before equity in earnings of joint ventures | 7,302 | (5,042 | ) | |||
Equity in earnings of joint ventures | 951 | 641 | ||||
Net income (loss) | $ | 8,253 | $ | (4,401 | ) | |
Net income (loss) allocated to common shareholders | $ | 7,567 | $ | (4,401 | ) | |
EARNINGS (LOSS) PER COMMON SHARE: | ||||||
Basic and Diluted | $ | 0.09 | $ | (0.05 | ) | |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | ||||||
Basic | 88,555 | 88,727 | ||||
Diluted | 89,020 | 88,727 | ||||
CENTURY ALUMINUM COMPANY | ||||||
CONSOLIDATED BALANCE SHEETS | ||||||
(Dollars in thousands, except share data) | ||||||
(Unaudited) | ||||||
March 31, 2013 | December 31, 2012 | |||||
ASSETS | ||||||
Cash and cash equivalents | $ | 195,471 | $ | 183,976 | ||
Restricted cash | 258 | 258 | ||||
Accounts receivable — net | 52,312 | 50,667 | ||||
Due from affiliates | 43,561 | 37,870 | ||||
Inventories | 156,815 | 159,925 | ||||
Prepaid and other current assets | 41,163 | 34,975 | ||||
Deferred taxes - current portion | 19,726 | 19,726 | ||||
Total current assets | 509,306 | 487,397 | ||||
Property, plant and equipment — net | 1,180,770 | 1,188,214 | ||||
Other assets | 101,039 | 100,715 | ||||
TOTAL | $ | 1,791,115 | $ | 1,776,326 | ||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||
LIABILITIES: | ||||||
Accounts payable, trade | $ | 75,796 | $ | 75,370 | ||
Due to affiliates | 50,210 | 39,737 | ||||
Accrued and other current liabilities | 49,001 | 40,099 | ||||
Accrued employee benefits costs — current portion | 18,668 | 18,683 | ||||
Industrial revenue bonds | 7,815 | 7,815 | ||||
Total current liabilities | 201,490 | 181,704 | ||||
Senior notes payable | 250,861 | 250,582 | ||||
Accrued pension benefits costs — less current portion | 67,322 | 67,878 | ||||
Accrued postretirement benefits costs — less current portion | 143,794 | 143,105 | ||||
Other liabilities | 25,278 | 40,162 | ||||
Deferred taxes | 110,361 | 110,252 | ||||
Total noncurrent liabilities | 597,616 | 611,979 | ||||
SHAREHOLDERS’ EQUITY: | ||||||
Series A Preferred stock (one cent par value, 5,000,000 shares authorized; 80,084 and 80,283 issued and outstanding at March 31, 2013 and December 31, 2012, respectively) | 1 | 1 | ||||
Common stock (one cent par value, 195,000,000 shares authorized; 93,382,730 issued and 88,596,209 outstanding at March 31, 2013; 93,335,158 issued and 88,548,637 outstanding at December 31, 2012) | 934 | 933 | ||||
Additional paid-in capital | 2,507,671 | 2,507,454 | ||||
Treasury stock, at cost | (49,924 | ) | (49,924 | ) | ||
Accumulated other comprehensive loss | (150,297 | ) | (151,192 | ) | ||
Accumulated deficit | (1,316,376 | ) | (1,324,629 | ) | ||
Total shareholders’ equity | 992,009 | 982,643 | ||||
TOTAL | $ | 1,791,115 | $ | 1,776,326 | ||
CENTURY ALUMINUM COMPANY | ||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||
(Dollars in thousands) | ||||||
(Unaudited) | ||||||
Three months ended March 31, | ||||||
2013 | 2012 | |||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||
Net income (loss) | $ | 8,253 | $ | (4,401 | ) | |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||
Unrealized net (gain) loss on forward contracts | (141 | ) | 4,955 | |||
Unrealized gain on E.ON contingent obligation | (15,722 | ) | — | |||
Accrued and other plant curtailment costs — net | 1,154 | 1,374 | ||||
Lower of cost or market inventory adjustment | 5,838 | (17,051 | ) | |||
Depreciation | 15,688 | 15,652 | ||||
Debt discount amortization | 279 | 256 | ||||
Pension and other postretirement benefits | 1,443 | (1,138 | ) | |||
Stock-based compensation | 217 | 145 | ||||
Undistributed earnings of joint ventures | (951 | ) | (641 | ) | ||
Change in operating assets and liabilities: | ||||||
Accounts receivable — net | (1,998 | ) | (2,884 | ) | ||
Due from affiliates | (5,691 | ) | (249 | ) | ||
Inventories | (2,728 | ) | 18,710 | |||
Prepaid and other current assets | (6,072 | ) | (5,366 | ) | ||
Accounts payable, trade | 2,264 | (11,442 | ) | |||
Due to affiliates | 10,472 | (360 | ) | |||
Accrued and other current liabilities | 7,538 | 7,003 | ||||
Other — net | 2,558 | 335 | ||||
Net cash provided by operating activities | 22,401 | 4,898 | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||
Purchase of property, plant and equipment | (9,364 | ) | (2,899 | ) | ||
Nordural expansion — Helguvik | (1,745 | ) | (1,946 | ) | ||
Purchase of carbon anode assets and improvements | (150 | ) | — | |||
Investments in and advances to joint ventures | — | (100 | ) | |||
Dividends and payments received on advances from joint ventures | — | 3,166 | ||||
Proceeds from the sale of property, plant and equipment | 353 | 58 | ||||
Net cash used in investing activities | (10,906 | ) | (1,721 | ) | ||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||
Borrowings under revolving credit facility | — | 18,076 | ||||
Repayments under revolving credit facility | — | (18,076 | ) | |||
Repurchase of common stock | — | (4,033 | ) | |||
Net cash used in financing activities | — | (4,033 | ) | |||
CHANGE IN CASH AND CASH EQUIVALENTS | 11,495 | (856 | ) | |||
Cash and cash equivalents, beginning of the period | 183,976 | 183,401 | ||||
Cash and cash equivalents, end of the period | $ | 195,471 | $ | 182,545 | ||
CENTURY ALUMINUM COMPANY
SELECTED OPERATING DATA
(Unaudited)
SHIPMENTS - PRIMARY ALUMINUM | |||||||||||||
Direct (1) | Toll | ||||||||||||
Tonnes | (000) Pounds | $/Pound | Tonnes | (000) Pounds | $ (000) Revenue | ||||||||
2013 | |||||||||||||
1st Quarter | 93,472 | 206,070 | 1.06 | 65,304 | 143,971 | 103,973 | |||||||
2012 | |||||||||||||
1st Quarter | 94,087 | 207,426 | 1.06 | 65,880 | 145,240 | 106,416 | |||||||
(1) Does not include Toll shipments from Nordural Grundartangi | |||||||||||||