CENTURY ALUMINUM CO - FORM 8-K - EX-99.1 - PRESS RELEASE DATED JULY 30, 2014 - July 30, 2014

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Exhibit 99.1

Century Reports Second Quarter 2014 Financial Results

CHICAGO, IL -- 07/30/14 -- Century Aluminum Company (NASDAQ: CENX) reported net income of $20.3 million or $0.21 per common share for the second quarter of 2014 on higher aluminum prices and lower power prices in the Midwestern U.S. Results were negatively impacted by a charge of $0.5 million or $0.01 per common share for the finalization of a legal settlement.
Sales for the second quarter of 2014 were $458.3 million compared with $331.9 million for the second quarter of 2013. Shipments of primary aluminum for the second quarter of 2014 were 216,044 tonnes, which includes 53,966 tonnes from the Sebree operation acquired June 1, 2013, compared with 176,270 tonnes shipped in the second quarter of 2013.
For the second quarter of 2013, Century reported a net loss of $29.4 million or $0.33 per common share. Financial results for the year-ago quarter were positively impacted by a gain on bargain purchase of $5.3 million and power contract amortization of $2.7 million associated with the Sebree acquisition. Results were negatively impacted by a charge of $3.3 million for the early extinguishment of our 8.0% Senior Notes and a charge for severance and other expenses of $1.7 million related to our corporate headquarters relocation. Cost of sales for the quarter included a $10.2 million charge for lower of cost or market inventory adjustments.
For the first half of 2014, the company reported net income of $0.2 million or $0.00 per common share. Cost of sales for the first half included a benefit of $5.5 million related to power contract amortization and $1.2 million for lower of cost or market inventory adjustments. Results were negatively impacted by a reserve of $3.6 million for a legal settlement.
Sales in the first half of 2014 were $879.2 million compared with $653.2 million in the same period of 2013. Shipments
of primary aluminum for the first half of 2014 were 422,829 tonnes, including 104,597 tonnes from the Sebree operation, compared with 335,046 tonnes for the comparable 2013 period.
This result compares to a net loss of $21.1 million or $0.24 per common share for the first half of 2013. Results for the first half of 2013 were positively impacted by an unrealized gain of $16.1 million related to an LME-based contingent obligation, a gain on bargain purchase of $5.3 million and power contract amortization of $2.7 million. Results were negatively impacted by a charge of $3.3 million for the early extinguishment of our 8.0% Senior Notes and a charge of $4.0 million for severance and other expenses related to our corporate headquarters relocation. Cost of sales for the first half of 2013 included a $16.0 million charge for lower of cost or market inventory adjustments.
"Industry conditions appear to be headed in a positive direction," commented Michael Bless, President and Chief Executive Officer.  "The data suggest the developed world demand picture is moving from stability to growth, with certain key end markets displaying particularly strong fundamentals.  While structural problems persist in developing economies, including China, the potential for a "hard landing" seems more remote.  The geographic markets which Century serves look robust.  We see these industry conditions continuing for a reasonable period of time, and in this context are preparing prudent investments to exploit what we deem to be attractive opportunities for the company."
"Our operations performed well during the quarter," continued Mr. Bless.  "Safety results, while still better than industry averages, fell a bit after several years of excellent improvement; we are rededicating our efforts in this most important area.  Conversion costs were generally in line with expectations.  Production metrics were favorable, other than the inefficiencies caused by the weather-related power curtailments in Iceland, which were expected.  In addition, in May, we experienced some localized transmission congestion in Kentucky which had a minor negative impact on power prices at our plants; these conditions have largely dissipated.  Importantly, Midwest power prices have fallen as expected.  We remain convinced that the power strategy we pursued in Kentucky, while difficult at times, was ultimately the correct one."
Mr. Bless concluded, "We are very focused on executing a longer-term power strategy in Kentucky, and are actively working on a range of alternatives. We are confident enough in the future of these two excellent plants to be evaluating a number of investments aimed at upgrading the value-added content of our product portfolio.  In South Carolina, we regrettably deemed it necessary to provide the post-2015 termination notice of Mt. Holly's power contract.  That said, we are committed to finding a long-term solution and are in active discussions with the power company.  In West Virginia, in cooperation with the power company, we are continuing to work hard to develop a power agreement that will enable a restart of our Ravenswood plant; reaching this objective remains one of our key priorities."





About Century Aluminum
Century Aluminum Company owns primary aluminum capacity in the United States and Iceland. Century's corporate offices are located in Chicago, IL. Visit www.centuryaluminum.com for more information.
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.

Cautionary Statement

This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements about future events and are based on our current expectations. These forward-looking statements may be identified by the words “believe,” “expect,” “target,” “anticipate,” “intend,” “plan,” “seek,” “estimate,” “potential,” “project,” “scheduled,” “forecast” or words of similar meaning, or future or conditional verbs such as “will,” “would,” “should,” “could,” “might,” or “may.” Actual results and events in future periods may differ materially from those expressed or implied by these forward-looking statements because of a number of risks, uncertainties or other factors, including, without limitation: declines in aluminum prices or increases in our operating costs; worsening of global financial and economic conditions; weakening of the company's U.S. and European customer markets; increases in market power prices in the U.S. and our ability to successfully obtain and/or implement long-term competitive power arrangements for Mt. Holly and Ravenswood. Forward-looking statements in this press release include, without limitation, statements regarding: future global and local financial and economic conditions, including with respect to U.S. and European markets; our assessment of the aluminum market and aluminum prices (including premiums); our assessment of power pricing; our ability to successfully obtain long-term competitive power arrangements for Mt. Holly and Ravenswood; and whether or not we are able to restart the Ravenswood plant. More information about these risks and uncertainties can be found in the risk factors and forward-looking statements cautionary language contained in our Annual Report on Form 10-K, quarterly reports on Form 10-Q and in other filings made with the Securities and Exchange Commission. Although we have attempted to identify those material factors that could cause actual results or events to differ from those described in such forward-looking statements, there may be other factors, currently unknown to us or deemed immaterial at the present time, that could cause results or events to differ from those anticipated, estimated or intended. Many of these factors are beyond our ability to control or predict. Given these uncertainties, the reader is cautioned not to place undue reliance on our forward-looking statements. We do not undertake, and specifically disclaim, any obligation to revise any forward-looking statements, whether as a result of new information, actual events, future events or otherwise.

Contacts
Kenny Barkley (media)

 
270-577-2070

Shelly Harrison (investors)    
 
312-696-3140









CENTURY ALUMINUM COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(Unaudited)
 
Three months ended June 30,
 
Six months ended June 30,
 
2014
 
2013
 
2014
 
2013
NET SALES:
 
 
 
 
 
 
 
Third-party customers
$
169,751

 
$
220,950

 
$
305,015

 
$
409,464

Related parties
288,573

 
110,987

 
574,156

 
243,747

 
458,324

 
331,937

 
879,171

 
653,211

Cost of goods sold
419,820

 
337,635

 
842,425

 
641,327

Gross profit (loss)
38,504

 
(5,698
)
 
36,746

 
11,884

Other operating expense – net
1,874

 
3,018

 
4,288

 
4,114

Selling, general and administrative expenses
10,618

 
15,154

 
20,680

 
31,453

Operating income (loss)
26,012

 
(23,870
)
 
11,778

 
(23,683
)
Interest expense – third party
(5,571
)
 
(6,224
)
 
(11,048
)
 
(12,300
)
Interest income – third party
34

 
186

 
174

 
317

Net gain (loss) on forward and derivative contracts
352

 
204

 
(527
)
 
15,711

Gain on bargain purchase
—

 
5,253

 
—

 
5,253

Loss on early extinguishment of debt
—

 
(3,272
)
 
—

 
(3,272
)
Other income (expense) – net
300

 
(1,284
)
 
47

 
(1,214
)
Income (loss) before income taxes and equity in earnings of joint ventures
21,127

 
(29,007
)
 
424

 
(19,188
)
Income tax expense
(1,654
)
 
(813
)
 
(560
)
 
(3,330
)
Income (loss) before equity in earnings of joint ventures
19,473

 
(29,820
)
 
(136
)
 
(22,518
)
Equity in earnings of joint ventures
871

 
436

 
376

 
1,387

Net income (loss)
$
20,344

 
$
(29,384
)
 
$
240

 
$
(21,131
)
 
 
 
 
 
 
 
 
Net income (loss) allocated to common shareholders
$
18,675

 
$
(29,384
)
 
$
220

 
$
(21,131
)
EARNINGS (LOSS) PER COMMON SHARE:
 
 
 
 
 
 
 
Basic and Diluted
$
0.21

 
$
(0.33
)
 
$
—

 
$
(0.24
)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
 
 
 
 
 
 
 
Basic
88,787

 
88,597

 
88,752

 
88,576

Diluted
89,352

 
88,597

 
89,292

 
88,576






CENTURY ALUMINUM COMPANY
CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
(Unaudited)
 
June 30, 2014
 
December 31, 2013
ASSETS
 
 
 
Cash and cash equivalents
$
61,384

 
$
84,088

Restricted cash
3,031

 
1,697

Accounts receivable — net
52,253

 
56,184

Due from affiliates
54,094

 
43,587

Inventories
243,648

 
239,615

Prepaid and other current assets
25,320

 
32,276

Deferred taxes
13,614

 
13,614

Total current assets
453,344

 
471,061

Property, plant and equipment — net
1,230,014

 
1,247,661

Other assets
93,122

 
91,474

TOTAL
$
1,776,480

 
$
1,810,196

LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
LIABILITIES:
 
 
 
Accounts payable, trade
$
95,897

 
$
108,490

Due to affiliates
52,356

 
53,582

Accrued and other current liabilities
45,182

 
69,466

Accrued employee benefits costs
8,533

 
8,410

Industrial revenue bonds
7,815

 
7,815

Total current liabilities
209,783

 
247,763

Senior notes payable
246,705

 
246,528

Accrued pension benefits costs — less current portion
41,724

 
39,848

Accrued postretirement benefits costs — less current portion
128,287

 
129,284

Other liabilities
37,416

 
37,743

Deferred taxes
108,932

 
106,218

Total noncurrent liabilities
563,064

 
559,621

 

 

SHAREHOLDERS’ EQUITY:
 
 
 
Series A Preferred stock (one cent par value, 5,000,000 shares authorized; 160,000 issued and 79,226 outstanding at June 30, 2014; 160,000 issued and 79,620 outstanding at December 31, 2013)
1

 
1

Common stock (one cent par value, 195,000,000 shares authorized; 93,591,282 issued and 88,804,761 outstanding at June 30, 2014; 93,496,798 issued and 88,710,277 outstanding at December 31, 2013)
936

 
935

Additional paid-in capital
2,509,186

 
2,508,574

Treasury stock, at cost
(49,924
)
 
(49,924
)
Accumulated other comprehensive loss
(91,864
)
 
(91,832
)
Accumulated deficit
(1,364,702
)
 
(1,364,942
)
Total shareholders’ equity
1,003,633

 
1,002,812

TOTAL
$
1,776,480

 
$
1,810,196





CENTURY ALUMINUM COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
 
Six months ended June 30,
 
2014
 
2013
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
Net income (loss)
$
240

 
$
(21,131
)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
 
 
 
Unrealized net gain on forward contracts
—

 
(397
)
Gain on bargain purchase
—

 
(5,253
)
Unrealized gain on E.ON contingent obligation
(706
)
 
(16,075
)
Accrued and other plant curtailment costs — net
2,181

 
2,268

Lower of cost or market inventory adjustment
(1,247
)
 
16,049

Depreciation
35,143

 
31,898

Sebree power contract amortization
(5,534
)
 
(2,741
)
Debt discount amortization
177

 
502

Pension and other postretirement benefits
2,368

 
(3,616
)
Deferred income taxes
2,731

 
(2,038
)
Stock-based compensation
533

 
499

Loss on early extinguishment of debt
—

 
3,272

Equity in earnings of joint ventures, net of dividends
(376
)
 
(1,387
)
Change in operating assets and liabilities:
 
 
 
Accounts receivable — net
3,931

 
(33,883
)
Due from affiliates
(10,508
)
 
12,906

Inventories
(2,786
)
 
(22,334
)
Prepaid and other current assets
6,816

 
(3,281
)
Accounts payable, trade
(8,413
)
 
30,696

Due to affiliates
(1,226
)
 
27,607

Accrued and other current liabilities
(12,200
)
 
(3,827
)
Other — net
(2,496
)
 
13,242

Net cash provided by operating activities
8,628

 
22,976

CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
Purchase of property, plant and equipment
(16,758
)
 
(16,565
)
Nordural expansion — Helguvik
(186
)
 
(2,559
)
Purchase of carbon anode assets and improvements
(7,226
)
 
(3,670
)
Purchase of Sebree smelter
—

 
(48,058
)
Proceeds from sale of property, plant and equipment
46

 
515

Restricted and other cash deposits
(1,334
)
 
(720
)
Net cash used in investing activities
(25,458
)
 
(71,057
)




CENTURY ALUMINUM COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
 
Six months ended June 30,
 
2014
 
2013
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
Repayment of debt
—

 
(249,604
)
Proceeds from issuance of debt
—

 
246,330

Borrowings under revolving credit facilities
86,646

 
—

Repayments under revolving credit facilities
(92,646
)
 
—

Debt issuance costs
—

 
(3,926
)
Debt retirement costs
—

 
(1,208
)
Issuance of common stock
126

 
44

Net cash used in financing activities
(5,874
)
 
(8,364
)
CHANGE IN CASH AND CASH EQUIVALENTS
(22,704
)
 
(56,445
)
Cash and cash equivalents, beginning of period
84,088

 
183,976

Cash and cash equivalents, end of period
$
61,384

 
$
127,531







CENTURY ALUMINUM COMPANY
SELECTED OPERATING DATA
(Unaudited)

 
 
SHIPMENTS - PRIMARY ALUMINUM
 
Direct (1)
 
Toll
 
Tonnes
 
(000)
Pounds
 
$/Pound
 
Tonnes
 
(000)
Pounds
 
$ (000)
Revenue
2014
 
 
 
 
 
 
 
 
 
 
 
2nd Quarter
183,032

 
403,516

 
$
1.02

 
33,012

 
72,780

 
$
48,441

1st Quarter
173,296

 
382,053

 
0.98

 
33,489

 
73,830

 
47,185

Total
356,328

 
785,569

 
$
1.00

 
66,501

 
146,610

 
$
95,626

 
 
 
 
 
 
 
 
 
 
 
 
2013
 
 
 
 

 
 
 
 
 
 
2nd Quarter
106,284

 
234,317

 
$
0.98

 
69,986

 
154,291

 
$
101,290

1st Quarter
93,472

 
206,070

 
1.06

 
65,304

 
143,971

 
103,973

Total
199,756

 
440,387

 
$
1.02

 
135,290

 
298,262

 
$
205,263



 

 

 

 

 

(1) Does not include toll shipments from Nordural Grundartangi



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