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Century Aluminum Reports Third Quarter 2008 Earnings MONTEREY, CA--(MARKET WIRE)--Oct 21, 2008 -- Century Aluminum Company (CENX - News)
reported net income of $37.0 million ($0.59 per basic and
$0.57 per diluted
common share) for the third quarter of 2008. The reported
earnings per
share data reflect, as prescribed by GAAP, net income allocable
to common
shareholders without effect for the July 2008 issuance of
preferred shares.
These results were negatively impacted by a net after-tax
charge of $50.4
million for mark-to-market adjustments on forward contracts
that do not
qualify for cash flow hedge accounting. Quarterly results
were positively
impacted by a $3.3 million tax benefit related to the release
of tax
reserves no longer required. For a full reconciliation of
earnings per
share allocable to common and preferred shareholders, see
the attached
Exhibit A. In the third quarter of 2007, the company reported net income of $7.5 million ($0.18 per basic and $0.17 per diluted common share), which included an after-tax charge of $46.2 million for mark-to-market adjustments on forward contracts that do not qualify for cash flow hedge accounting. Recent highlights included:
-- Operating performance was strong at all primary aluminum facilities.
-- Direct and toll shipments of primary aluminum totaled a record 203,618
tonnes, up nearly three percent from the previous quarter.
-- Construction continues at the company's greenfield smelter project at
Helguvik, Iceland. The company is closely monitoring and evaluating the
project in light of the disruptions in global financial markets.
-- In early July, Century settled all of its remaining fixed price
aluminum financial sales contracts. The company made the final payment
under the deferred settlement amount on October 1.
Sales in the third quarter of 2008 were $552.2 million, compared with $454.4 million in the third quarter of 2007. Shipments of primary aluminum for the quarter totaled 203,618 tonnes compared with 195,540 tonnes in the year-ago quarter, reflecting the impact of the Grundartangi expansion to 260,000 tonnes, which was completed in the fourth quarter of 2007. For the first nine months of 2008, the company reported a net loss of $198.2 million ($4.57 per basic and diluted common share). The reported earnings per share data reflect, as prescribed by GAAP, net loss allocable to common shareholders without effect for the July 2008 issuance of preferred shares. These results were negatively impacted by a net after-tax charge of $466.2 million for mark-to-market adjustments on forward contracts that do not qualify for cash flow hedge accounting. Results for the nine month period were positively impacted by net tax benefits of $15.9 million for various non-recurring items. For a full reconciliation of earnings per share allocable to common and preferred shareholders, see the attached Exhibit A. Net income for the first nine months of 2007 was $11.1 million ($0.31 per basic and $0.29 per diluted common share), which included an after-tax charge of $172.1 million for mark-to-market adjustments on forward contracts that do not qualify for cash flow hedge accounting. Sales in the first nine months of 2008 were $1,568.6 million compared with $1,366.0 million in the same period of 2007. Shipments of primary aluminum for the first nine months of 2008 were 601,511 tonnes compared with 568,812 tonnes for the comparable 2007 period. "We had a busy and productive quarter," commented Logan W. Kruger, President and Chief Executive Officer. "Our operations continue to turn in sound performance, with our plants in Iceland and in the U.S. shipping well above their rated capacities. We made good progress on the new, fifteen-year, market-based power contract for our Hawesville smelter; this process is in its final stages. The team leading the construction at Helguvik has maintained the project on time and on budget. Mr. Kruger continued, "We are carefully managing the business in this environment of unprecedented dislocations in the global financial markets. We have suspended discretionary spending. The operations at our Grundartangi smelter, which is a primarily dollar based business with little exposure to economic conditions in Iceland, are performing normally. We have stabilized Nordural's cash management activities, and continue to believe our cash held in Iceland is secure. The performance of our team in Iceland has been exemplary; the quality of our team is one of the many reasons we believe Iceland will continue to be an attractive business environment over the long-term. "We are assessing the status of the Helguvik project across multiple fronts," concluded Mr. Kruger. "We continue to be confident that the smelter will be world class in terms of construction cost, productivity, conversion cost and environmental performance. In addition, the economic activity the project will create will be beneficial to Iceland during these volatile times. In the current environment, we have ceased making any new capital commitments and are reducing project spending. We believe the potential exists for a prudent way forward over time, but will soberly evaluate the feasibility of all elements of the project during the near term." Century Aluminum Company owns primary aluminum capacity in the United States and Iceland, as well as an 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. Certified Advisors for the First North market of the OMX Nordic Exchange Iceland hf. for Global Depositary Receipts in Iceland: Helga Gunnarsdottir, Director-Corporate Finance, New Landsbanki Islands hf. Olafur Finsen, Senior Legal Advisor-Corporate Finance, New Landsbanki Islands hf.
Century Aluminum Company
Consolidated Statements of Operations
(in Thousands, Except Per Share Amounts)
(Unaudited)
Three months ended Nine months ended
September 30 September 30
------------------------ ------------------------
2008 2007 2008 2007
----------- ----------- ----------- -----------
NET SALES:
Third-party
customers $ 426,771 $ 360,336 $ 1,203,696 $ 1,112,072
Related parties 125,468 94,035 364,882 253,961
----------- ----------- ----------- -----------
552,239 454,371 1,568,578 1,366,033
COST OF GOODS SOLD 430,256 369,875 1,194,376 1,062,493
----------- ----------- ----------- -----------
GROSS PROFIT 121,983 84,496 374,202 303,540
SELLING, GENERAL AND
ADMINISTRATIVE
EXPENSES 11,253 13,372 43,970 40,784
----------- ----------- ----------- -----------
OPERATING INCOME 110,730 71,124 330,232 262,756
INTEREST EXPENSE - Net (4,434) (2,657) (12,043) (19,126)
INTEREST EXPENSE -
RELATED PARTIES (998) - (998) -
NET LOSS ON FORWARD
CONTRACTS (79,103) (75,041) (731,195) (279,897)
OTHER EXPENSE - Net (1,370) (131) (1,597) (3,426)
----------- ----------- ----------- -----------
INCOME (LOSS) BEFORE
INCOME TAXES AND
EQUITY IN EARNINGS OF
JOINT VENTURES 24,825 (6,705) (415,601) (39,693)
INCOME TAX BENEFIT 9,641 10,438 204,971 39,396
----------- ----------- ----------- -----------
INCOME (LOSS) BEFORE
EQUITY IN EARNINGS OF
JOINT VENTURES 34,466 3,733 (210,630) (297)
EQUITY IN EARNINGS OF
JOINT VENTURES 2,507 3,737 12,466 11,351
----------- ----------- ----------- -----------
NET INCOME (LOSS) $ 36,973 $ 7,470 $ (198,164) $ 11,054
=========== =========== =========== ===========
EARNINGS (LOSS) PER
COMMON SHARE
Basic - Net income
(loss) $ 0.59 $ 0.18 $ (4.57) $ 0.31
Diluted - Net income
(loss) $ 0.57 $ 0.17 $ (4.57) $ 0.29
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING
Basic 47,720 40,957 43,317 35,927
Diluted 49,975 43,459 43,317 38,246
Percentage of Net
Income (Loss)
Allocated to Common
Shareholders 76.73% 100% 100% 100%
Century Aluminum Company
Consolidated Balance Sheets
(Dollars in Thousands)
(Unaudited)
September 30, December 31,
ASSETS 2008 2007
------------- -------------
Current Assets:
Cash $ 129,055 $ 60,962
Restricted cash 10,583 873
Short-term investments 29,285 280,169
Accounts receivable - net 115,854 93,451
Due from affiliates 36,463 26,693
Inventories 211,255 175,101
Prepaid and other current assets 33,275 40,091
Deferred taxes - current portion 60,299 69,858
------------- -------------
Total current assets 626,069 747,198
Property, plant and equipment - net 1,300,932 1,260,040
Intangible asset - net 36,296 47,603
Goodwill 94,844 94,844
Deferred taxes - less current portion 581,405 321,068
Due from affiliates - less current portion 9,353 -
Other assets 145,918 107,518
------------- -------------
Total $ 2,794,817 $ 2,578,271
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable, trade $ 106,908 $ 79,482
Due to affiliates 104,303 216,754
Accrued and other current liabilities 86,184 60,482
Accrued employee benefits costs - current
portion 11,662 11,997
Convertible senior notes 175,000 175,000
Industrial revenue bonds 7,815 7,815
------------- -------------
Total current liabilities 491,872 551,530
------------- -------------
Senior unsecured notes payable 250,000 250,000
Accrued pension benefit costs - less current
portion 14,876 14,427
Accrued postretirement benefits costs - less
current portion 193,536 184,853
Due to affiliates - less current portion - 913,683
Other liabilities 52,886 39,643
Deferred taxes 69,561 62,931
------------- -------------
Total noncurrent liabilities 580,859 1,465,537
------------- -------------
Shareholders' Equity:
Preferred stock (one cent par value,
5,000,000 shares authorized; 155,800
shares outstanding at September 30, 2008 and
none at December 31, 2007) 2 -
Common stock (one cent par value, 100,000,000
shares authorized; 49,048,396
shares outstanding at September 30, 2008 and
40,988,058 at December 31, 2007) 490 410
Additional paid-in capital 2,239,005 857,787
Accumulated other comprehensive loss (73,785) (51,531)
Accumulated deficit (443,626) (245,462)
------------- -------------
Total shareholders' equity 1,722,086 561,204
------------- -------------
Total $ 2,794,817 $ 2,578,271
============= =============
Century Aluminum Company
Consolidated Statements of Cash Flows
(Dollars in Thousands)
(Unaudited)
Nine months ended
September 30,
2008 2007
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (198,164) $ 11,054
Adjustments to reconcile net income (loss) to
net cash used in operating activities:
Unrealized net loss on forward contracts 605,105 201,999
Depreciation and amortization 62,912 57,735
Deferred income taxes (198,352) (38,822)
Pension and other postretirement benefits 11,677 6,499
Stock-based compensation 12,034 3,765
Excess tax benefits from share based
compensation (657) (516)
(Gain) loss on disposal of assets 248 (49)
Non-cash loss on early extinguishment of debt - 2,461
Purchase of short-term trading securities (97,532) (645,909)
Sale of short-term trading securities 348,416 387,182
Undistributed earnings of joint ventures (12,466) (11,351)
Change in operating assets and liabilities:
Accounts receivable - net (22,403) 13,244
Due from affiliates (9,771) 9,849
Inventories (36,119) (20,990)
Prepaid and other current assets (389) (1,988)
Accounts payable, trade 15,266 11,849
Due to affiliates (695,720) 12,018
Accrued and other current liabilities (28,523) (52,289)
Other - net (5,001) 13,519
---------- ----------
Net cash used in operating activities (249,439) (40,740)
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (26,738) (13,693)
Nordural expansion (53,397) (79,560)
Investments in and advances to joint ventures (36,973) -
Proceeds from sale of property, plant and
equipment 47 543
Restricted cash deposits (9,710) 3,744
---------- ----------
Net cash used in investing activities (126,771) (88,966)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings of long-term debt - 30,000
Repayment of long-term debt - (349,436)
Excess tax benefits from share based
compensation 657 516
Issuance of common stock - net of issuance costs 443,646 417,037
---------- ----------
Net cash provided by financing activities 444,303 98,117
---------- ----------
NET INCREASE (DECREASE) IN CASH 68,093 (31,589)
CASH, BEGINNING OF PERIOD 60,962 96,365
---------- ----------
CASH, END OF PERIOD $ 129,055 $ 64,776
========== ==========
Century Aluminum Company
Selected Operating Data
(Unaudited)
SHIPMENTS - PRIMARY ALUMINUM
Direct (1) Toll
-------------------------- --------------------------
Metric (000) Metric (000) (000)
Tons Pounds $/Pound Tons Pounds Revenue
------- ------- -------- ------ ------- ---------
2008
3rd Quarter 135,200 298,065 $ 1.36 68,418 150,835 $ 148,227
2nd Quarter 131,639 290,214 $ 1.37 66,533 146,681 $ 147,128
1st Quarter 133,004 293,223 $ 1.17 66,717 147,086 $ 127,177
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
(1) Does not include Toll shipments from Nordural Grundartangi
EXHIBIT A
Century Aluminum Company
Reconciliation of Earnings Per Share to Adjusted Earnings Per Share
(in Millions, Except Per Share Amounts)
(Unaudited)
Third Quarter 2008 YTD
-------------------------- ----------------------------
Diluted Diluted Diluted Diluted
$MM Shares EPS $MM Shares EPS
------ -------- -------- -------- -------- --------
Net income (loss)
as reported $ 37.0 50.0 $ 0.57 $ (198.2) 43.3 $ (4.57)
Adjusted net
income
calculation:
Net income (loss)
allocated to
common
shareholders $ 28.4 50.0 $ 0.57 $ (198.2) 43.3 $ (4.57)
Net income (loss)
allocated to
preferred
shareholders 8.6 14.5 - 4.8 -
------ -------- -------- -------
Net income (loss) $ 37.0 64.5 $ (198.2) 48.1
After tax net
loss on forward
contracts 50.4 - 0.79 466.2 - 10.76
Tax changes (3.3) - (0.05) (15.9) - (0.37)
Dilutive effect - - - - 2.8 (0.87)
------ -------- -------- -------- ------- --------
Adjusted net
income $ 84.1 64.5 $ 1.31 $ 252.1 50.9 $ 4.95
====== ======== ======== ======== ======= ========
The Company's management believes the presentation of adjusted net income
and associated adjusted earnings per share data are useful measures that
help investors evaluate the Company's earnings per share based on total
common stock, common stock equivalents and preferred shares outstanding
during the period. The Company's calculation of adjusted net income and
associated adjusted earnings per share may not be comparable to similarly
titled measures reported by other companies due to differences in the
components used in the calculation. Adjusted net income and associated
adjusted earnings per share should not be considered as a substitute for
net income and earnings per share as determined in accordance with GAAP.Contact: Contacts:
Mike Dildine (media)
831-642-9364
Shelly Lair (investors)
831-642-9357
Source: Century Aluminum Company
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