Century Aluminum Reports Third Quarter 2007 Earnings
MONTEREY, CA--(Marketwire - October 25, 2007) - Century Aluminum Company
(NASDAQ: CENX) reported net income of $7.5 million ($0.18 per basic share and
$0.17 per diluted share) for the third quarter of 2007. Reported third quarter
results include an after-tax charge of $46.2 million ($1.13 per basic share and
$1.06 per diluted share) for mark-to-market adjustments on forward contracts
that do not qualify for cash flow hedge accounting.
In the third quarter of 2006, the company reported net income of $173.9 million
($5.36 per basic share and $5.26 per diluted share), which included an
after-tax gain of $134.6 million ($4.15 per basic share and $4.06 per diluted
share) for mark-to-market adjustments on forward contracts that do not qualify
for cash flow hedge accounting.
Third quarter 2007 highlights included:
-- The 40,000 tonne expansion of the Grundartangi, Iceland smelter
remains on schedule and budget for a fourth quarter, 2007 completion. At
the end of the third quarter, approximately two-thirds of the expansion
capacity was operational. Grundartangi produced at an annual rate of
242,000 tonnes during the quarter.
-- Nordural received a positive opinion from the Icelandic Planning
Agency on the Environmental Impact Assessment for the company's proposed
greenfield smelter to be constructed near Helguvik, Iceland. The project
remains on schedule.
-- All primary aluminum facilities operated at or above capacity.
-- Cash flow remained strong. Cash flow from operations for the first
nine months of 2007 was a use of cash of $41 million; included in this
result was a use of cash of $259 million due to an increase in short-term
investments. Cash flow from operations for the first nine months of 2006
was $118 million.
Sales in the third quarter of 2007 were $454.4 million, compared with $381.3
million in the third quarter of 2006. Shipments of primary aluminum for the
quarter totaled 195,540 tonnes compared with 169,598 tonnes in the third
quarter of 2006. The increase reflects additional volume from the continuing
expansion at Grundartangi and the temporary shutdown of one potline at the
Ravenswood, West Virginia smelter in 2006, which resulted in lost production of
approximately 8,000 tonnes in the year-ago quarter.
Net income for the first nine months of 2007 was $11.1 million ($0.31 per basic
and $0.29 per diluted share), which includes an after-tax charge of $172.1
million ($4.79 per basic share and $4.50 per diluted share) for mark-to-market
adjustments on forward contracts that do not qualify for cash flow hedge
accounting. Net income for the first nine months of 2006 was $78.2 million
($2.41 per basic share and $2.38 per diluted share) which included an after tax
charge of $68.4 million ($2.11 per basic share and $2.04 per diluted share) for
mark-to-market adjustments on forward contracts that do not qualify for cash
flow hedge accounting.
Sales in the first nine months of 2007 were $1,366.0 million compared with
$1,134.2 million in the same period of 2006. Shipments of primary aluminum for
the first nine months of 2007 were 568,812 tonnes compared with 498,264 tonnes
for the comparable 2006 period.
"Century achieved solid performance during the third quarter," said president
and chief executive officer Logan W. Kruger. "Our plants produced above
capacity and operating costs were within expectations, despite continuing
upward pressure on U.S. power costs. We made significant progress on our growth
projects in Iceland and elsewhere. We expect to complete the latest 40,000
tonne expansion of the Grundartangi facility later this year, on schedule and
on budget. The positive opinion by the Icelandic Planning Agency on the
Environmental Impact Assessment for our proposed greenfield smelter at Helguvik
is a significant milestone and we plan to begin preparing the site for
construction by early next year."
Century Aluminum Company owns primary aluminum capacity in the United States
and Iceland, as well as an ownership interest in alumina and bauxite assets in
the United States and Jamaica. Century's corporate offices are located in
Monterey, California.
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 may contain "forward-looking statements" within the meaning
of U.S. federal securities laws. The company has based its forward-looking
statements on current expectations and projections about the future; however,
these statements are subject to risks, uncertainties and assumptions, any of
which could cause the company's actual results to differ materially from those
expressed in its forward-looking statements. More information about these
risks, uncertainties and assumptions can be found in the risk factors and
forward-looking statements cautionary language contained in the company's
Annual Report on Form 10-K and in other filings made with the Securities and
Exchange Commission. The company does not undertake, and specifically
disclaims, any obligation to revise any forward-looking statements to reflect
the occurrence of anticipated or unanticipated events or circumstances after
the date such forward-looking statements are made.
Century Aluminum Company
Consolidated Statements of Operations
(in Thousands, Except Per Share Amounts)
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
-------------------- ----------------------
2007 2006 2007 2006
--------- --------- ----------- ---------
NET SALES:
Third-party customers $ 360,336 $ 312,038 $ 1,112,072 $ 966,753
Related parties 94,035 69,239 253,961 167,446
--------- --------- ----------- ---------
454,371 381,277 1,366,033 1,134,199
COST OF GOODS SOLD 369,875 310,303 1,062,493 878,753
--------- --------- ----------- ---------
GROSS PROFIT 84,496 70,974 303,540 255,446
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 13,372 8,144 40,784 28,639
--------- --------- ----------- ---------
OPERATING INCOME 71,124 62,830 262,756 226,807
INTEREST EXPENSE - Net (2,657) (9,823) (19,126) (25,025)
NET GAIN (LOSS) ON FORWARD
CONTRACTS (75,041) 210,268 (279,897) (106,948)
OTHER INCOME (EXPENSE) - Net (131) 3 (3,426) (121)
--------- --------- ----------- ---------
INCOME (LOSS) BEFORE INCOME
TAXES AND EQUITY IN EARNINGS
OF JOINT VENTURES (6,705) 263,278 (39,693) 94,713
INCOME TAX (EXPENSE) BENEFIT 10,438 (92,922) 39,396 (27,675)
--------- --------- ----------- ---------
INCOME (LOSS) BEFORE EQUITY
IN EARNINGS OF JOINT VENTURES 3,733 170,356 (297) 67,038
EQUITY IN EARNINGS OF JOINT
VENTURES 3,737 3,583 11,351 11,130
--------- --------- ----------- ---------
NET INCOME $ 7,470 $ 173,939 $ 11,054 $ 78,168
========= ========= =========== =========
EARNINGS PER COMMON SHARE
Basic - Net income $ 0.18 $ 5.36 $ 0.31 $ 2.41
Diluted - Net income $ 0.17 $ 5.26 $ 0.29 $ 2.38
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING
Basic 40,957 32,438 35,927 32,374
Diluted 43,459 33,148 38,246 33,515
Century Aluminum Company
Consolidated Balance Sheets
(Dollars in Thousands)
(Unaudited)
September 30, December 31,
ASSETS 2007 2006
------------- -------------
Current Assets:
Cash $ 64,776 $ 96,365
Restricted cash 867 2,011
Short-term investments 258,727 -
Accounts receivable - net 100,127 113,371
Due from affiliates 27,693 37,542
Inventories 166,400 145,410
Prepaid and other current assets 20,194 19,830
Deferred taxes - current portion 116,042 103,110
------------- -------------
Total current assets 754,826 517,639
Property, plant and equipment - net 1,259,776 1,218,777
Intangible asset - net 51,101 61,594
Goodwill 94,844 94,844
Other assets 323,824 292,380
------------- -------------
Total $ 2,484,371 $ 2,185,234
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable, trade $ 72,859 $ 64,849
Due to affiliates 225,960 282,282
Accrued and other current liabilities 44,250 75,143
Long term debt - current portion - 30,105
Accrued employee benefits costs - current
portion 11,083 11,083
Convertible senior notes 175,000 175,000
Industrial revenue bonds 7,815 7,815
------------- -------------
Total current liabilities 536,967 646,277
------------- -------------
Senior unsecured notes payable 250,000 250,000
Nordural debt 20,000 309,331
Accrued pension benefit costs - less current
portion 15,987 19,239
Accrued postretirement benefits costs - less
current portion 209,092 206,415
Due to affiliates - less current portion 716,636 554,864
Other liabilities 40,686 27,811
Deferred taxes 59,860 41,587
------------- -------------
Total noncurrent liabilities 1,312,261 1,409,247
------------- -------------
Shareholders' Equity:
Common stock (one cent par value,
100,000,000 shares authorized; 40,958,071
shares outstanding at September 30, 2007
and 32,457,670 at December 31, 2006) 410 325
Additional paid-in capital 854,545 432,270
Accumulated other comprehensive loss (86,653) (166,572)
Accumulated deficit (133,159) (136,313)
------------- -------------
Total shareholders' equity 635,143 129,710
------------- -------------
Total $ 2,484,371 $ 2,185,234
============= =============
Century Aluminum Company
Consolidated Statements of Cash Flows
(Dollars in Thousands)
(Unaudited)
Nine months ended
September 30,
2007 2006
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 11,054 $ 78,168
Adjustments to reconcile net income to net cash
(used in) provided by operating activities:
Unrealized net loss on forward contracts 201,999 62,766
Depreciation and amortization 57,735 50,090
Deferred income taxes (38,822) (26,224)
Pension and other postretirement benefits 6,499 11,005
Stock-based compensation 3,765 4,603
Excess tax benefits from share based
compensation (516) (1,244)
(Gain) loss on disposal of assets (49) 43
Non-cash loss on early extinguishment of debt 2,461 -
Increase in short-term investments - net (258,727) -
Undistributed earnings of joint ventures (11,351) (11,130)
Change in operating assets and liabilities:
Accounts receivable - net 13,244 628
Due from affiliates 9,849 (9,562)
Inventories (20,989) (29,084)
Prepaid and other current assets (1,988) (4,564)
Accounts payable, trade 11,849 (784)
Due to affiliates 12,018 3,129
Accrued and other current liabilities (52,289) (6,381)
Other - net 13,518 (3,949)
--------- ---------
Net cash (used in) provided by operating
activities (40,740) 117,510
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (13,693) (10,610)
Nordural expansion (79,560) (155,756)
Proceeds from sale of property, plant and
equipment 543 22
Restricted cash deposits 3,744 (3,998)
--------- ---------
Net cash used in investing activities (88,966) (170,342)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings of long-term debt 30,000 89,000
Repayment of long-term debt (349,436) (434)
Net repayments under revolving credit facility - (8,069)
Excess tax benefits from share based compensation 516 1,244
Issuance of common stock 417,037 3,433
--------- ---------
Net cash provided by financing activities 98,117 85,174
--------- ---------
NET (DECREASE) INCREASE IN CASH (31,589) 32,342
CASH, BEGINNING OF PERIOD 96,365 17,752
--------- ---------
CASH, END OF PERIOD $ 64,776 $ 50,094
========= =========
Century Aluminum Company
Selected Operating Data
(Unaudited)
SHIPMENTS - PRIMARY ALUMINUM
Direct (1) Toll
---------------------------- -----------------------------
Metric (000) Metric (000) (000)
Tons Pounds $/Pound Tons Pounds Revenue
-------- -------- -------- -------- -------- ---------
2007
3rd Quarter 134,494 296,509 $ 1.13 61,046 134,583 $ 120,554
2nd Quarter 132,496 292,104 $ 1.19 56,154 123,798 $ 117,667
1st Quarter 131,568 290,057 $ 1.15 53,054 116,964 $ 114,383
2006
3rd Quarter 126,810 279,568 $ 1.07 42,788 94,331 $ 81,424
2nd Quarter 132,590 292,311 $ 1.12 39,125 86,255 $ 77,702
1st Quarter 132,378 291,843 $ 1.03 24,573 54,174 $ 45,166
(1) Does not include Toll shipments from Nordural
FORWARD PRICED SALES - As of September 30, 2007
2011-
2007(1)(2) 2008(2) 2009(2) 2010(2) 2015(2)
-------- -------- -------- -------- --------
Base Volume
Pounds (000) 92,843 241,745 231,485 231,485 826,733
Metric Tons 42,113 109,654 105,000 105,000 375,000
Percent of
estimated
capacity 21% 14% 13% 13% 9%
Potential Additional
Volume(2)
Pounds (000) 27,778 220,903 231,485 231,485 826,733
Metric Tons 12,600 100,200 105,000 105,000 375,000
Percent of
estimated
capacity 6% 12% 13% 13% 9%
(1) The forward priced sales in 2007 exclude October 2007 shipments to
customers that are priced based upon the prior month's market price.
(2) Certain financial sales contracts included in the forward priced sales
base volume for the period 2007 through 2015 contain clauses that
trigger potential additional sales volume when the market price for a
contract month is above the base contract ceiling price. These
contracts will be settled monthly and, if the market price exceeds the
ceiling price for all contract months through 2015, the potential
additional sales volume would be equivalent to the amounts shown above.
Contacts:
Mike Dildine (media)
831-642-9364
Shelly Lair (investors)
831-642-9357
