Published:
Century Aluminum Reports Second Quarter 2006 Earnings
Century Aluminum Company (NASDAQ: CENX)
reported net income of $45.8 million ($1.41 per basic share and $1.35 per
diluted share) for the second quarter of 2006. Reported second quarter
results were negatively impacted by an after-tax charge of $19.5 million
($0.60 per basic share and $0.57 per diluted share) for mark-to-market
adjustments on forward contracts that do not qualify for cash flow hedge
accounting.
In the second quarter of 2005, the company reported net income of $40.7
million ($1.27 per basic and diluted share), which included an after-tax
gain of $15.7 million ($0.49 per basic and diluted share) for
mark-to-market adjustments on forward contracts that do not qualify for
cash flow hedge accounting.
Second quarter 2006 highlights included:
-- Revenues of $406.0 million and operating income of $99.6 million were
up 17 percent and 55 percent respectively from highs set in the first
quarter of 2006
-- Strong operating results at all locations
-- At Nordural, the capacity expansion from 90,000 to 220,000 metric tons
per year (mtpy) remains on schedule and budget for a fourth quarter, 2006
completion
-- The expected completion date of the further expansion of Nordural to
260,000 mtpy was accelerated to the fourth quarter of 2007
-- A labor agreement was reached with the United Steelworkers at the
Hawesville, Kentucky smelter
-- A memorandum of understanding to purchase electrical energy for the
greenfield smelter project in Helguvik, Iceland was signed with Icelandic
power producers Hitaveita Sudurnesja and Orkuveita Reykjavikur
-- A joint venture agreement was reached with Minmetals Aluminum Company
to explore the potential of developing a bauxite mine and associated 1.5
million mtpy alumina refining facility in Jamaica
Sales in the second quarter of 2006 were $406.0 million, compared with
$283.3 million in the second quarter of 2005. Shipments of primary
aluminum for the quarter totaled 378.6 million pounds compared with 339.5
million pounds in the year-ago quarter, reflecting the impact of the
Nordural expansion.
For the first half of 2006 the company reported a net loss of $95.8 million
($2.96 per basic and diluted share), which includes an after-tax charge of
$203.0 million ($6.28 per basic and diluted share) for mark-to-market
adjustments on forward contracts that do not qualify for cash flow hedge
accounting. This result compares with net income of $52.5 million ($1.63
per basic and diluted share) in the year-ago period.
Sales in the first six months of 2006 were $752.9 million compared with
$568.7 million in the same period of 2005. Shipments of primary aluminum
for the first six months of 2006 were 724.6 million pounds compared with
676.5 million pounds for the comparable 2005 period.
"Ongoing sound operating results at all of our facilities, robust markets
and good progress on our Icelandic expansion resulted in an outstanding
second quarter," said president and chief executive officer Logan W.
Kruger. "The labor contract at Hawesville provides stability for the
long-term operation of that plant. Importantly, we continued to make solid
progress on our growth plan. We brought forward the 40,000 mtpy Nordural
expansion to 260,000 mtpy into 2007. Also in Iceland, we advanced our
growth plans by securing electrical energy for the first phase of the
Helguvik greenfield project. Lastly, we are pleased to be working with our
partners at Minmetals toward what could become a major expansion of our
presence in Jamaica."
Century's primary aluminum capacity will stand at 745,000 mtpy by the
fourth quarter of 2006. The company owns and operates a 244,000 mtpy plant
at Hawesville, Kentucky; a 170,000 mtpy plant at Ravenswood, West Virginia;
and a 90,000 mtpy plant at Grundartangi, Iceland that is currently being
expanded to 220,000 mtpy by the fourth quarter of 2006. The company also
owns a 49.67-percent interest in a 222,000 mtpy reduction plant at Mt.
Holly, South Carolina. ALCOA Inc. owns the remainder of the plant and is
the operating partner. Century also holds a 50-percent share of the 1.25
million mtpy Gramercy Alumina refinery in Gramercy, Louisiana and related
bauxite assets in Jamaica. Century's corporate offices are located in
Monterey, California.
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 Six months ended
June 30, June 30,
-------------------- --------------------
2006 2005 2006 2005
--------- --------- --------- ---------
NET SALES:
Third-party customers $ 356,242 $ 243,329 $ 654,715 $ 490,754
Related parties 49,734 39,927 98,207 77,898
--------- --------- --------- ---------
405,976 283,256 752,922 568,652
COST OF GOODS SOLD 297,972 237,908 568,450 471,737
--------- --------- --------- ---------
GROSS PROFIT 108,004 45,348 184,472 96,915
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 8,376 8,046 20,495 16,842
--------- --------- --------- ---------
OPERATING INCOME 99,628 37,302 163,977 80,073
INTEREST EXPENSE - Net (8,647) (6,242) (15,202) (12,708)
NET GAIN (LOSS) ON FORWARD
CONTRACTS (30,456) 24,496 (317,216) 1,001
OTHER INCOME (EXPENSE) - Net 37 (472) (124) (65)
--------- --------- --------- ---------
INCOME (LOSS) BEFORE INCOME
TAXES AND EQUITY IN EARNINGS
OF JOINT VENTURES 60,562 55,084 (168,565) 68,301
INCOME TAX (EXPENSE) BENEFIT (19,109) (17,880) 65,247 (22,733)
--------- --------- --------- ---------
INCOME (LOSS) BEFORE EQUITY IN
EARNINGS OF JOINT VENTURES 41,453 37,204 (103,318) 45,568
EQUITY IN EARNINGS OF JOINT
VENTURES 4,347 3,540 7,547 6,906
--------- --------- --------- ---------
NET INCOME (LOSS) $ 45,800 $ 40,744 $ (95,771) $ 52,474
========= ========= ========= =========
EARNINGS (LOSS) PER COMMON
SHARE
Basic - Net income (loss) $ 1.41 $ 1.27 $ (2.96) $ 1.63
Diluted - Net income (loss) $ 1.35 $ 1.27 $ (2.96) $ 1.63
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING
Basic 32,419 32,140 32,341 32,099
Diluted 34,297 32,196 32,341 32,162
Century Aluminum Company
Consolidated Balance Sheets
(Dollars in Thousands)
(Unaudited)
June 30, December 31,
ASSETS 2006 2005
----------- -----------
Current Assets:
Cash $ 29,175 $ 17,752
Restricted cash 6,029 2,028
Accounts receivable - net 118,191 83,016
Due from affiliates 15,635 18,638
Inventories 132,956 111,436
Prepaid and other current assets 21,375 23,918
Deferred taxes - current portion 53,281 37,705
----------- -----------
Total current assets 376,642 294,493
Property, plant and equipment - net 1,155,732 1,070,158
Intangible asset - net 68,118 74,643
Goodwill 94,844 94,844
Other assets 251,358 143,293
----------- -----------
Total $ 1,946,694 $ 1,677,431
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable, trade $ 59,291 $ 61,919
Due to affiliates 221,650 158,682
Accrued and other current liabilities 52,691 53,715
Long term debt - current portion 16,093 581
Accrued employee benefits costs - current
portion 9,333 9,333
Convertible senior notes 175,000 175,000
Industrial revenue bonds 7,815 7,815
----------- -----------
Total current liabilities 541,873 467,045
----------- -----------
Senior unsecured notes payable - net 250,000 250,000
Nordural debt 283,636 230,436
Revolving credit facility - 8,069
Accrued pension benefit costs - less current
portion 10,904 10,350
Accrued postretirement benefits costs - less
current portion 103,245 96,660
Due to affiliates - less current portion 592,550 337,416
Other liabilities 28,420 28,010
Deferred taxes 16,890 16,890
----------- -----------
Total noncurrent liabilities 1,285,645 977,831
----------- -----------
Shareholders' Equity:
Common stock (one cent par value, 100,000,000
shares authorized; 32,426,835
shares outstanding at June 30, 2006 and
32,188,165 at December 31, 2005) 324 322
Additional paid-in capital 429,797 419,009
Accumulated other comprehensive loss (119,816) (91,418)
Accumulated deficit (191,129) (95,358)
----------- -----------
Total shareholders' equity 119,176 232,555
----------- -----------
Total $ 1,946,694 $ 1,677,431
=========== ===========
Century Aluminum Company
Consolidated Statements of Cash Flows
(Dollars in Thousands)
(Unaudited)
Six months ended
June 30,
2006 2005
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (95,771) $ 52,474
Adjustments to reconcile net income to net cash
provided by operating activities:
Unrealized net (gain) loss on forward contracts 283,573 (3,429)
Depreciation and amortization 32,224 28,050
Deferred income taxes (65,247) 22,733
Pension and other post retirement benefits 7,139 7,421
Stock-based compensation 3,872 -
Excess tax benefits from share based compensation (1,090) -
(Gain) loss on disposal of assets 45 (4)
Non cash loss on early extinguishment of debt - 253
Change in operating assets and liabilities:
Accounts receivable - net (35,175) (24,999)
Due from affiliates 3,003 327
Inventories (17,880) 6,834
Prepaid and other current assets (3,459) (5,712)
Accounts payable, trade (710) (6,745)
Due to affiliates 2,173 (9,548)
Accrued and other current liabilities (33,802) (3,948)
Other - net (11,605) (4,983)
--------- ---------
Net cash provided by operating activities 67,290 58,724
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (7,568) (5,481)
Nordural expansion (109,002) (113,654)
Proceeds from sale of property, plant and equipment 10 59
Restricted cash deposits (4,001) (350)
Business acquisitions, net of cash acquired - (7,000)
--------- ---------
Net cash used in investing activities (120,561) (126,426)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings of long-term debt 69,000 145,378
Repayment of long-term debt (288) (83,023)
Net repayments under revolving credit facility (8,069) -
Financing fees - (4,617)
Excess tax benefits from share based compensation 1,090 -
Dividends - (16)
Issuance of common stock 2,961 986
--------- ---------
Net cash provided by financing activities 64,694 58,708
--------- ---------
NET INCREASE (DECREASE) IN CASH 11,423 (8,994)
CASH, BEGINNING OF PERIOD 17,752 44,168
--------- ---------
CASH, END OF PERIOD $ 29,175 $ 35,174
========= =========
Century Aluminum Company
Selected Operating Data
(Unaudited)
SHIPMENTS - PRIMARY ALUMINUM
Direct (1) Toll
------------------------- -------------------------
Metric (000) Metric (000) (000)
Tons Pounds $/Pound Tons Pounds Revenue
------- ------- ------- ------- ------- -------
2006
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
2005
2nd Quarter 130,974 288,748 $ 0.86 23,025 50,761 $34,174
1st Quarter 130,083 286,783 $ 0.88 22,756 50,168 $33,372
(1) Does not include Toll shipments from Nordural
2006(1) 2011-
(2) 2007(2) 2008(2) 2009(2) 2010(2) 2015(2)
------- ------- ------- ------- ------- -------
Base Volume
Pounds (000) 197,267 374,565 240,745 231,485 231,485 826,733
Metric Tons 89,479 169,900 109,200 105,000 105,000 375,000
Percent of
estimated
capacity 24% 22% 14% 13% 13% 9%
Potential Additional
Volume(2)
Pounds (000) 27,778 111,113 220,903 231,485 231,485 826,733
Metric Tons 12,600 50,400 100,200 105,000 105,000 375,000
Percent of
estimated
capacity 3% 7% 12% 13% 13% 9%
(1) The forward priced sales in 2006 exclude July 2006 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 2006 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.
Copyright © 2008, MarketWire
Copyright © 2008, NewsBlaze,
Daily NewsTags: ,Manufacturing and Production:MiningandMetals, ,NASDAQ01,NASDAQ01,CA,MONTEREY, CA
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