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| 8-K - 8-K 2015 Q4 EARNIGS RELEASE - CENTURY ALUMINUM CO | a20151231q4earningsrelease.htm |
Exhibit 99.1
Century Reports Fourth Quarter 2015 Financial Results
CHICAGO, IL -- 02/18/16 -- Century Aluminum Company (NASDAQ: CENX) reported a net loss of $43.1 million ($0.50 per share) for the fourth quarter of 2015. Results were favorably impacted by a $23.5 million ($0.25 per share) lower of cost or market inventory adjustment and $3.4 million ($0.04 per share) related to non-cash, non-recurring post-retirement benefits. Results were negatively impacted by a $3.5 million charge ($0.04 per share) related to the partial curtailment of operations at Hawesville and Mt. Holly, a $5.0 million charge ($0.05 per share) for depreciation related to Mt. Holly purchase accounting and an $11.6 million impairment charge ($0.12 per share) at BHH. After consideration of these items, the company reported an adjusted net loss of $49.9 million and an adjusted loss per share of $0.53 for the fourth quarter.
For the fourth quarter of 2014, Century reported net income of $75.8 million ($0.78 per share). Results were positively impacted by $21.5 million ($0.22 per share) for purchase accounting related to the Mt. Holly acquisition and negatively impacted by $5.0 million ($0.05 per share) in non-cash, non-recurring pension charges and by $2.6 million ($0.03 per share) related to the separation of former senior executives.
Sales for the fourth quarter of 2015 were $383.9 million compared with $551.2 million for the fourth quarter of 2014. Shipments of primary aluminum for the fourth quarter of 2015 were 211,710 tonnes compared with 226,082 tonnes shipped in the fourth quarter of 2014.
Net cash used by operating activities in the fourth quarter of 2015 was $0.6 million compared to net cash provided of $110.0 million in the fourth quarter of 2014. Cash and cash equivalents decreased $7.6 million during the fourth quarter of 2015 compared to an increase in cash and cash equivalents of $29.8 million in the fourth quarter of 2014.
Our total liquidity position at the end of the fourth quarter of 2015 was $200 million, which is composed of $115 million in cash and $85 million of revolver availability.
For the full year 2015, Century reported a net loss of $59.3 million ($0.68 per share). Results were favorably impacted by $12.6 million related to purchase accounting for the Mt. Holly acquisition and $3.4 million related to non-cash, non-recurring post-retirement benefits. Results were negatively impacted by a $31.2 million charge related to the permanent closure of Ravenswood, $13.1 million in costs related to the labor disruption at Hawesville, $7.6 million due to partial curtailments of operations at Hawesville and Mt. Holly, $11.6 million related to the impairment at BHH, $1.6 million for signing bonuses related to a new labor agreement in Iceland, $1.0 million related to the separation of a former senior executive and a $7.5 million lower of cost or market inventory adjustment.
For full year 2014, the company reported net income of $126.5 million ($1.31 per share). Results were positively impacted by $21.5 million for purchase accounting related to the Mt. Holly acquisition, $5.5 million related to power contract amortization and a $1.2 million lower of cost or market inventory adjustment. Results were negatively impacted by $5.0 million in non-cash, non-recurring pension charges, $3.6 million for litigation related items and by $2.6 million related to the separation of former senior executives.
Sales for the year ended December 31, 2015 were $1,949.9 million compared with $1,931.0 million for 2014. Shipments of primary aluminum for 2015 were 921,958 tonnes compared with 867,125 tonnes shipped for 2014.
Net cash provided by operating activities in 2015 was $31.9 million compared to $207.7 million in 2014. Cash and cash equivalents decreased $47.8 million in 2015 compared to an increase in cash and cash equivalents of $79.2 million in 2014. During 2015, Century acquired 2.4 million shares of common stock for a total cost of $36.4 million and paid $34.6 million related to the Mt. Holly acquisition for pension funding obligations per the terms of the acquisition agreement.
"The fundamental demand picture in our sector has remained reasonably stable outside China," commented Michael Bless, President and Chief Executive Officer. "True demand growth in China has continued to deteriorate. Despite decreasing demand growth, the uneconomic supply expansion of the Chinese aluminum industry has continued through government intervention and manipulation. Evidence continues to mount that the illegal government subsidies and other practices underlying this supply growth are in violation of China's WTO obligations and have materially injured the industry around the globe. As direct evidence, this most recent quarter witnessed actions and announcements that will bring U.S. primary production down to an annualized rate of just over five hundred thousand metric tons. We continue to work with industry participants, including our labor partners, to encourage government action before it is simply too late."
"Inside Century, we have taken aggressive actions to bolster our businesses' competitive position and preserve the ability for our shareholders to participate in the improvement in industry conditions that will occur at some point," concluded Mr. Bless. "Our
safety performance across the company was quite good during 2015. This result was especially notable given the significant uncertainty under which all our plants have been operating. We have optimized product portfolios, reduced cost structures and, where necessary, rationalized production; the result of this effort has been the achievement of our stated goal of making each of our plants cash flow positive in the present environment. We were pleased to have preserved Sebree at full production; this excellent plant is operating very well. We were disappointed to have been faced with the necessity of curtailing half of Mt. Holly's production. We are working intently to produce a power supply arrangement that makes this world class plant competitive for the long-term."
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.
Non-GAAP Financial Measures
Adjusted net income and adjusted earnings per share are non-GAAP financial measures that management believes provide additional meaningful information regarding Century's financial performance as these measures generally exclude the effects of items that are considered non-recurring, are difficult to predict or to measure in advance or that are not directly related to the Company's ongoing operations. The table below, under the heading "Reconciliation of Non-GAAP Financial Measures," provides a reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company's reported results prepared in accordance with GAAP. In addition, because not all companies use identical calculations, adjusted net income and adjusted earnings per share included in this press release may not be comparable to similarly titled measures of other companies. Investors are encouraged to review the reconciliation in conjunction with the presentation of these non-GAAP financial measures.
Cautionary Statement
This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. 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," "hope," "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." Our forward-looking statements include, without limitation, statements with respect to: future global and local financial and economic conditions; our assessment of the aluminum market and aluminum prices (including premiums); our assessment of power pricing and our ability to successfully obtain and/or implement long-term competitive power arrangements for our operations and projects, including at Mt. Holly; our ability to procure alumina, carbon products and other raw materials and our assessment of pricing and costs and other terms relating thereto; our relationship with our employees and labor unions; our plans and expectations with respect to the disposal of our Ravenswood, West Virginia smelter, and the future operation or potential curtailment of our other U.S. assets, including our Hawesville, Mt. Holly and Sebree smelters; the future financial and operating performance of the Company, its subsidiaries and its projects; future earnings, operating results and liquidity; future inventory, production, sales, cash costs and capital expenditures; future impairment charges or restructuring costs; our business objectives, strategies and initiatives, including our ability to achieve productivity improvements or cost reductions.
Where we express an expectation or belief as to future events or results, such expectation or belief is expressed in good faith and believed to have a reasonable basis. However, our forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from future results
expressed, projected or implied by those forward-looking statements. Important factors that could cause actual results and events to differ from those described in such forward-looking statements 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 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 undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.
Contacts
Peter Trpkovski (investors and media) | 312-696-3112 | |
CENTURY ALUMINUM COMPANY | |||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||
(in thousands, except per share amounts) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three months ended December 31, | Twelve months ended December 31, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
NET SALES: | |||||||||||||||
Related parties | $ | 350,283 | $ | 363,170 | $ | 1,867,711 | $ | 1,262,101 | |||||||
Third-party customers | 33,632 | 188,069 | 82,146 | 668,941 | |||||||||||
Total net sales | 383,915 | 551,239 | 1,949,857 | 1,931,042 | |||||||||||
Cost of goods sold | 402,616 | 461,900 | 1,908,544 | 1,729,243 | |||||||||||
Gross profit (loss) | (18,701 | ) | 89,339 | 41,313 | 201,799 | ||||||||||
Selling, general and administrative expenses | 8,566 | 16,369 | 42,115 | 49,195 | |||||||||||
Ravenswood impairment | — | — | 30,850 | — | |||||||||||
Other operating expense – net | 1,219 | 6,776 | 7,436 | 12,481 | |||||||||||
Operating income (loss) | (28,486 | ) | 66,194 | (39,088 | ) | 140,123 | |||||||||
Interest expense | (5,412 | ) | (5,474 | ) | (21,954 | ) | (22,015 | ) | |||||||
Interest income | 91 | 104 | 339 | 301 | |||||||||||
Net gain on forward and derivative contracts | 396 | 353 | 1,600 | 179 | |||||||||||
Unrealized gain on fair value of contingent consideration | — | 7,943 | 18,337 | 7,943 | |||||||||||
Gain on remeasurement of equity investment | — | 15,955 | — | 15,955 | |||||||||||
Other income (expense) – net | (1,617 | ) | 1,414 | (356 | ) | 991 | |||||||||
Income (loss) before income taxes and equity in earnings of joint ventures | (35,028 | ) | 86,489 | (41,122 | ) | 143,477 | |||||||||
Income tax benefit (expense) | 2,929 | (11,304 | ) | (9,276 | ) | (18,308 | ) | ||||||||
Income (loss) before equity in earnings of joint ventures | (32,099 | ) | 75,185 | (50,398 | ) | 125,169 | |||||||||
BHH impairment | (11,584 | ) | — | (11,584 | ) | — | |||||||||
Equity in earnings of joint ventures | 603 | 644 | 2,672 | 1,305 | |||||||||||
Net income (loss) | $ | (43,080 | ) | $ | 75,829 | $ | (59,310 | ) | $ | 126,474 | |||||
Net income (loss) allocated to common stockholders | $ | (43,080 | ) | $ | 69,669 | $ | (59,310 | ) | $ | 116,118 | |||||
EARNINGS (LOSS) PER COMMON SHARE: | |||||||||||||||
Basic | $ | (0.50 | ) | $ | 0.78 | $ | (0.68 | ) | $ | 1.31 | |||||
Diluted | (0.50 | ) | 0.78 | (0.68 | ) | 1.30 | |||||||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | |||||||||||||||
Basic | 86,933 | 88,959 | 87,375 | 88,823 | |||||||||||
Diluted | 86,933 | 89,595 | 87,375 | 89,428 | |||||||||||
CENTURY ALUMINUM COMPANY | ||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||
(in thousands, except share amounts) | ||||||||
(Unaudited) | ||||||||
December 31, 2015 | December 31, 2014 | |||||||
ASSETS | ||||||||
Cash and cash equivalents | $ | 115,393 | $ | 163,242 | ||||
Restricted cash | 791 | 801 | ||||||
Accounts receivable — net | 9,475 | 77,667 | ||||||
Due from affiliates | 17,417 | 31,503 | ||||||
Inventories | 231,872 | 283,480 | ||||||
Prepaid and other current assets | 42,412 | 29,768 | ||||||
Assets held for sale | 30,697 | — | ||||||
Deferred taxes | — | 14,281 | ||||||
Total current assets | 448,057 | 600,742 | ||||||
Property, plant and equipment — net | 1,232,256 | 1,305,543 | ||||||
Other assets | 72,155 | 118,773 | ||||||
TOTAL | $ | 1,752,468 | $ | 2,025,058 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
LIABILITIES: | ||||||||
Accounts payable, trade | $ | 90,489 | $ | 151,443 | ||||
Due to affiliates | 10,045 | 22,261 | ||||||
Accrued and other current liabilities | 48,822 | 103,807 | ||||||
Accrued employee benefits costs | 10,148 | 10,159 | ||||||
Industrial revenue bonds | 7,815 | 7,815 | ||||||
Total current liabilities | 167,319 | 295,485 | ||||||
Senior notes payable | 247,278 | 246,888 | ||||||
Accrued pension benefits costs — less current portion | 43,999 | 59,906 | ||||||
Accrued postretirement benefits costs — less current portion | 125,999 | 152,894 | ||||||
Other liabilities | 53,009 | 53,272 | ||||||
Deferred taxes | 96,994 | 111,486 | ||||||
Total noncurrent liabilities | 567,279 | 624,446 | ||||||
SHAREHOLDERS’ EQUITY: | ||||||||
Series A Preferred stock (one cent par value, 5,000,000 shares authorized; 160,000 issued and 76,539 outstanding at December 31, 2015; 160,000 issued and 78,141 outstanding at December 31, 2014) | 1 | 1 | ||||||
Common stock (one cent par value, 195,000,000 authorized; 94,224,571 issued and 87,038,050 outstanding at December 31, 2015; 93,851,103 issued and 89,064,582 outstanding at December 31, 2014) | 942 | 939 | ||||||
Additional paid-in capital | 2,513,631 | 2,510,261 | ||||||
Treasury stock, at cost | (86,276 | ) | (49,924 | ) | ||||
Accumulated other comprehensive loss | (112,650 | ) | (117,682 | ) | ||||
Accumulated deficit | (1,297,778 | ) | (1,238,468 | ) | ||||
Total shareholders’ equity | 1,017,870 | 1,105,127 | ||||||
TOTAL | $ | 1,752,468 | $ | 2,025,058 | ||||
CENTURY ALUMINUM COMPANY | |||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
(in thousands) | |||||||
(Unaudited) | |||||||
Twelve months ended December 31, | |||||||
2015 | 2014 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
Net income (loss) | $ | (59,310 | ) | $ | 126,474 | ||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||
Unrealized gain on fair value of contingent consideration | (18,337 | ) | (7,943 | ) | |||
Gain on remeasurement of equity investment | — | (15,955 | ) | ||||
Unrealized gain on E.ON contingent obligation | (1,411 | ) | (1,412 | ) | |||
Lower of cost or market inventory adjustment | 7,539 | (1,247 | ) | ||||
Depreciation | 80,117 | 70,827 | |||||
Ravenswood impairment | 30,850 | — | |||||
BHH impairment | 11,584 | — | |||||
Sebree power contract amortization | — | (5,534 | ) | ||||
Pension and other postretirement benefits | (4,991 | ) | 6,939 | ||||
Deferred income taxes | (178 | ) | 2,633 | ||||
Stock-based compensation | 1,844 | 1,334 | |||||
Equity in earnings of joint ventures, net of dividends | (806 | ) | 425 | ||||
Change in operating assets and liabilities: | |||||||
Accounts receivable — net | 68,192 | (8,712 | ) | ||||
Due from affiliates | 14,086 | 12,084 | |||||
Inventories | 44,896 | (16,513 | ) | ||||
Prepaid and other current assets | (144 | ) | 3,392 | ||||
Accounts payable, trade | (60,583 | ) | 11,797 | ||||
Due to affiliates | (12,216 | ) | 3,058 | ||||
Accrued and other current liabilities | (31,540 | ) | 18,071 | ||||
Pension contribution - Mt. Holly | (34,595 | ) | — | ||||
Other — net | (3,131 | ) | 7,962 | ||||
Net cash provided by operating activities | 31,866 | 207,680 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
Purchase of property, plant and equipment | (54,700 | ) | (55,126 | ) | |||
Purchase of Sebree smelter | — | (1,042 | ) | ||||
Purchase of remaining interest in Mt. Holly smelter | 11,313 | (65,100 | ) | ||||
Proceeds from sale of property, plant and equipment | 14 | 46 | |||||
Restricted and other cash deposits | 10 | 896 | |||||
Net cash used in investing activities | (43,363 | ) | (120,326 | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
Repayment of debt | — | (2,603 | ) | ||||
Borrowings under revolving credit facilities | 1,737 | 92,423 | |||||
Repayments under revolving credit facilities | (1,737 | ) | (98,423 | ) | |||
Repurchase of common stock | (36,352 | ) | — | ||||
Issuance of common stock | — | 403 | |||||
Net cash used in financing activities | (36,352 | ) | (8,200 | ) | |||
CHANGE IN CASH AND CASH EQUIVALENTS | (47,849 | ) | 79,154 | ||||
Cash and cash equivalents, beginning of period | 163,242 | 84,088 | |||||
Cash and cash equivalents, end of period | $ | 115,393 | $ | 163,242 | |||
CENTURY ALUMINUM COMPANY
SELECTED OPERATING DATA
(Unaudited)
SHIPMENTS - PRIMARY ALUMINUM | ||||||||||||||||||||
Direct (1) | Toll | |||||||||||||||||||
United States | Iceland | Iceland | ||||||||||||||||||
Tonnes | Sales $ (000) | Tonnes | Sales $ (000) | Tonnes | Sales $ (000) | |||||||||||||||
2015 | ||||||||||||||||||||
4th Quarter | 131,849 | $ | 247,895 | 59,074 | $ | 101,497 | 20,787 | $ | 24,281 | |||||||||||
3rd Quarter | 149,187 | 304,948 | 60,939 | 116,919 | 20,914 | 26,226 | ||||||||||||||
2nd Quarter | 157,373 | 371,898 | 50,056 | 110,083 | 26,521 | 37,858 | ||||||||||||||
1st Quarter | 169,306 | 421,141 | 45,967 | 112,662 | 29,985 | 46,617 | ||||||||||||||
Total | 607,715 | $ | 1,345,882 | 216,036 | $ | 441,161 | 98,207 | $ | 134,982 | |||||||||||
2014 | ||||||||||||||||||||
4th Quarter | 147,291 | $ | 377,606 | 43,364 | $ | 102,912 | 35,427 | $ | 60,001 | |||||||||||
3rd Quarter | 143,338 | 353,246 | 38,056 | 85,117 | 36,820 | 60,032 | ||||||||||||||
2nd Quarter | 143,439 | 325,650 | 39,593 | 82,328 | 33,012 | 48,441 | ||||||||||||||
1st Quarter | 136,532 | 296,889 | 36,764 | 74,370 | 33,489 | 47,185 | ||||||||||||||
Total | 570,600 | $ | 1,353,391 | 157,777 | $ | 344,727 | 138,748 | $ | 215,659 | |||||||||||
(1) | Excludes scrap aluminum sales. |
CENTURY ALUMINUM COMPANY
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in millions, except per share amounts)
(Unaudited)
Three months ended | |||||||
December 31, 2015 | |||||||
$MM | EPS | ||||||
Net loss as reported | $ | (43.1 | ) | $ | (0.50 | ) | |
Partial curtailment of operations | 3.5 | 0.04 | |||||
Non-cash/non-recurring post-retirement benefits | (3.4 | ) | (0.04 | ) | |||
Mt. Holly purchase accounting | 5.0 | 0.05 | |||||
BHH impairment | 11.6 | 0.12 | |||||
Lower of cost or market inventory adjustment | (23.5 | ) | (0.25 | ) | |||
Impact of preferred shares | — | 0.05 | |||||
Adjusted net loss | $ | (49.9 | ) | $ | (0.53 | ) | |