Release Date: February 20, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Century Aluminum Co (NASDAQ:CENX) reported strong financial performance in 2024, with an adjusted EBITDA of $245 million for the year and $82 million for the fourth quarter.
• The company benefited from strong realized aluminum prices and low energy costs, contributing to increased profitability.
• Century Aluminum Co (NASDAQ:CENX) successfully reached a financial settlement with a major alumina supplier, offsetting additional costs due to a force majeure.
• The Jamalco acquisition and LME-linked commercial contracts have been advantageous during periods of alumina price volatility.
• The company is making progress on its new smelter project in the US, which will double the size of the existing US industry and create significant job opportunities.

Negative Points

• Century Aluminum Co (NASDAQ:CENX) faced operational instability at the Mount Holly plant, leading to increased operating costs and slightly lower production.
• The company experienced a force majeure from one of its major alumina suppliers, requiring procurement of spot API alumina at higher costs.
• Higher operating expenses are anticipated due to pot relining costs and restructuring costs associated with workforce changes at Jamalco.
• Seasonal increases in power prices are expected to negatively impact Q1 2025 earnings.
• The financial settlement benefit realized in Q4 will not offset the higher alumina costs until Q1, creating a temporary financial headwind.

Q & A Highlights

• Warning! GuruFocus has detected 11 Warning Signs with CENX.

Q: Can you explain the impact of the recent rise in Midwest premiums on your earnings power? A: Yes, the Midwest premium has increased from $0.20 in Q4 to $0.39 currently. Our Q1 outlook assumes a realized Midwest premium of $0.27. If the premium reaches the spot level, it could imply an annual impact of around $100 million. We believe the Midwest premium could rise further, potentially adding another $0.05 to $0.10.

Q: What is the status of the potential Mount Holly restart, and how do current Midwest premiums and 232 tariffs affect this decision? A: The tariff program is very constructive for Mount Holly. We are updating our analysis following the recent tariff announcement. While there was some operational instability in Q4, we expect improvements in Q1. We are moving in the right direction for a restart, and the decision will be influenced by ongoing evaluations.

Q: Regarding the Q1 guidance, is there a double impact from the non-recurring settlement and alumina spot purchase? Will this reverse in Q2? A: Yes, there is some accounting noise. If the financial settlement was booked in Q1 instead of Q4, there wouldn't be a headwind in Q1. These do fully offset, and you won't see this repeat in Q2, so it should all come back then.

Q: If you decide to restart Mount Holly, how long would it take, and what investment is needed? A: We are updating our analysis, but typically, it would take around nine months from the decision to restart. We will provide an update on the cost once the decision is made.

Q: Can you provide more details on the new smelter project in the US, including costs? A: We have made significant progress, including securing a $500 million grant from the Department of Energy. We are finalizing energy contract negotiations and site selection, expected by the end of Q2. Further updates will be provided once these steps are completed.

Q: Is there any assumption of an additional tariff on Canada in your Midwest Premium forecast? A: No, our guidance and views on Midwest premium do not include any additional tariffs on Canada. We expect the Midwest premium to be in the $0.45 to $0.50 range with the 25% tariff, excluding any further tariffs.

Q: How do you interpret the record Chinese aluminum output in winter, and should the 45 million ton cap be adjusted? A: We believe China is respecting the 45 million ton cap. The elimination of the VAT rebate on exports supports this cap, indicating China's intention to meet its own downstream demand internally.

Q: What is the progress on the Jamalco expansion, and how does it relate to the Mount Holly restart? A: The investment CapEx at Jamalco is estimated at $50 to $20 million in 2025, with a similar range in 2026. The expansion is not necessarily linked to the Mount Holly restart, but we aim to keep our book balanced and are excited about the additional production.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.