Century Aluminum Co’s Earnings Call Highlights Financial Gains and Challenges

Century Aluminum Co ((CENX)) has held its Q1 earnings call. Read on for the main highlights of the call.

Century Aluminum Co’s recent earnings call presented a balanced sentiment, highlighting significant achievements in financial performance, liquidity, and operational recovery. The company reported notable successes in alumina production and benefits from tariffs, yet acknowledged challenges such as increased energy costs due to weather events, operational issues at Mt. Holly, and a weak European market.

Strong Financial Performance and Liquidity Improvement

Century Aluminum demonstrated robust financial performance in the first quarter, generating $78 million in adjusted EBITDA. The company successfully reduced its net debt by $55 million and increased liquidity by $94 million, showcasing a solid financial footing.

Record Alumina Production

Jamalco, a key asset for Century, achieved its highest quarterly volume since its acquisition in 2023. This milestone was supported by ongoing investments in capital improvement programs, underscoring the company’s commitment to enhancing production capabilities.

Positive Impact of Section 232 Tariffs

The announcement of Section 232 tariffs had a favorable impact on Century’s financials, with the Midwest premium doubling and contributing $16 million to Q1 results. The company anticipates further benefits in the upcoming quarter.

Full Production Recovery at Grundartangi

Grundartangi’s return to full production in March marked a significant recovery after previous power curtailments. A new power supply agreement extending to 2032 ensures long-term operational stability.

Operational Improvements at Sebree

Sebree facility reported higher volumes and reduced costs, enabling advanced maintenance activities aimed at improving reliability and efficiency.

Impact of Polar Vortex on Energy Costs

The Polar Vortex led to increased energy prices at Century’s U.S. operations, negatively impacting Q1 adjusted EBITDA by $18 million, highlighting the vulnerability to extreme weather conditions.

Operational Instability at Mt. Holly

Mt. Holly faced operational challenges, resulting in increased costs and reduced production. The company is actively working on recovery efforts to stabilize operations.

European Market Weakness

The European market showed signs of weakness, with lower-than-expected billet orders. Although demand remains weak, there is a slight improvement as the company enters the second quarter.

Increased Raw Material Costs

Rising prices for raw materials such as coke, pitch, and caustic soda posed a $27 million headwind in Q1, impacting the company’s cost structure.

Forward-Looking Guidance

Looking ahead, Century Aluminum provided optimistic guidance for the second quarter, projecting an adjusted EBITDA between $80 million and $90 million. The company expects to benefit from a rise in the U.S. Midwest premium and continues to focus on operational improvements and cost reductions, particularly through capital projects like the new steam turbine installation at Jamalco.

In summary, Century Aluminum Co’s earnings call reflected a balanced sentiment, with strong financial performance and operational recoveries offset by challenges in energy costs and market conditions. The company’s forward-looking guidance remains positive, with expectations of continued improvements and strategic investments driving future growth.