Century reports a net loss of $29.4 million during second Quarter 2014

Century Aluminum Company 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."