Century Aluminum Q1 Earnings Call Highlights

Key Points

• Century says strong demand from light‑weighting and electrification, plus U.S. trade actions and Middle East supply disruptions, have widened its expected 2026 global aluminum deficit to 1.4 million tons, supporting higher prices and destocking in the U.S. and Europe.
• Operationally, Mount Holly has begun pot restarts and is on track to reach about 230,000 metric tons (adding more than 125 U.S. jobs) with full run‑rate expected in Q3, while Grundartangi line 2 pots are being restored and targeted to be fully back by the end of July.
• Century reported Q1 net income of $338 million (adjusted EBITDA $231 million), finished the quarter with $332 million cash and net debt of $220 million below target, guided Q2 adjusted EBITDA of $315–335 million with sizable spot‑price upside, and said its proposed 750,000‑ton Oklahoma smelter with EGA is advancing toward a year‑end FID with Bechtel engaged.

Century Aluminum NASDAQ: CENX used its first-quarter 2026 earnings call to outline what management described as one of the most dynamic aluminum markets in years, while providing updates on major capacity projects in the U.S. and Iceland and progress on its proposed new smelter in Oklahoma with joint venture partner Emirates Global Aluminium (EGA).

Market backdrop: strong demand and Middle East disruption

President and CEO Jesse Gary said strong global aluminum demand tied to “macro trends in light weighting and electrification” has continued into 2026 and broadened into additional end markets, including power and data infrastructure, commercial aviation, and defense manufacturing.

Gary also pointed to recent U.S. policy action affecting aluminum trade. He said the company is “already beginning to see increased value-added product demand” after President Trump’s April 2 executive order that, according to Gary, closed valuation loopholes used to circumvent Section 232 tariffs, “especially in downstream extruded products.”

On the supply side, Gary said disruptions in the Middle East have tightened markets further. Century estimates roughly 2.5 million tons of Gulf production has been disrupted due to curtailments from raw material shortages linked to the closure of the Strait of Hormuz, as well as “direct Iranian drone and missile attacks.” Gary said the disruption has expanded the company’s expected 2026 global aluminum deficit to 1.4 million tons, which he said should lead to further destocking and support a “healthy go-forward environment” in both the U.S. and Europe.

Operations: Mount Holly expansion begins ramp; Grundartangi line 2 restart underway

Gary said Century’s smelters posted “an excellent” first quarter with strong performance across Grundartangi, Mount Holly, and Sebree, enabling two major projects to progress in parallel.

At Mount Holly, the company began starting pots roughly three weeks prior to the call and said the restart is on schedule to bring the full expansion online by the end of June. Gary reiterated that the project is expected to increase Mount Holly’s total production to approximately 230,000 metric tons, add more than 125 full-time U.S. manufacturing jobs, and raise total U.S. primary aluminum production by nearly 10%. However, he noted the full expanded run-rate impact is not expected until the third quarter due to the incremental nature of the restart.

At the Grundartangi smelter in Iceland, Century restarted the first pots on line 2 on April 23, and Gary said the company remains on schedule to restore all pots by the end of July. He added that after all pots return to service, the plant will run at slightly reduced amperage until replacement transformers arrive and are installed in the fourth quarter.

Century also discussed Jamalco and Sebree operations. Gary said the Jamalco refinery continued to recover from Hurricane Melissa and related power instability, and is commissioning a new steam generation turbine that the company expects to complete later in the second quarter. He said Jamalco has faced lower bauxite quality from certain mining areas and is adjusting its mining plan. At Sebree, Gary said the smelter delivered another strong quarter despite higher energy prices stemming from Winter Storm Fern.

First-quarter financial results and cash position

Executive Vice President and CFO Peter Trpkovski said first-quarter shipments totaled approximately 123,000 tons, down sequentially because Grundartangi line 2 was offline for the full quarter following an idling in late October 2025. Net sales were $649 million, up $15 million, which he attributed primarily to higher LME prices and regional premiums despite lower volumes.

Net income was $338 million, or $3.23 per share, while adjusted net income (excluding exceptional items) was $171 million, or $1.63 per share. Trpkovski said exceptional items included unrealized derivative losses, restart expenses at Mount Holly, a gain on the Hawesville transaction, and business interruption in Iceland. Adjusted EBITDA was $231 million.

Trpkovski said realized LME was $2,900 per ton in the quarter, up about $285 sequentially. The U.S. Midwest premium increased to $2,200 per ton (up about $420), and the European premium rose about $80 to approximately $310 per ton. He said these combined price effects added $85 million versus the prior quarter, partially offset by higher energy and raw material costs.

Century ended the quarter with $332 million in cash, including proceeds from the Hawesville sale. The company used $8 million of the Hawesville proceeds to pay down industrial revenue bonds, and Trpkovski said net debt declined to $220 million, below the company’s target of less than $300 million.

Trpkovski also discussed timing-related cash items, including insurance recoveries tied to Iceland and U.S. “45X” tax credits. He said the company had a $198 million receivable for 45X tax credits as of March 31 covering full-year 2023 and 2025 U.S. production as well as the first three months of 2026, and expects to receive about $94 million for full-year 2025 “in the next few months” after filing its 2025 tax return. On insurance, he said recoveries in the quarter trailed claims by $38 million due to timing, and that Century received an additional $46 million advance in early April that was not reflected in first-quarter results. Trpkovski said total insurance recoveries to date are $83 million and that payments are expected to lag claims by one to two quarters.

Second-quarter outlook: higher realized pricing expected; ramp volumes build toward Q3

For the second quarter, Trpkovski forecast higher lagged realized pricing across LME and regional premiums, with expected realized LME of $3,175 per ton, U.S. Midwest premium of $2,450 per ton, and European duty paid premium of $485 per ton. He said these changes are expected to increase adjusted EBITDA by $85 million to $95 million versus the first quarter, while noting that due to contractual lags, realized prices will be below current spot levels in the second quarter and could provide a tailwind when they roll into third-quarter results.

Trpkovski said the company expects U.S. energy prices to improve by $15 million sequentially as power prices moderate, partially offset by higher heavy fuel oil. He also flagged higher coke, pitch, and caustic costs, along with Jamalco headwinds tied to lower bauxite quality, for a combined $10 million headwind. Operating expenses are expected to rise by $15 million to $20 million due to higher production and seasonal staffing, while volume and sales mix are expected to improve by $15 million to $20 million as Mount Holly ramps. Century guided to second-quarter adjusted EBITDA of $315 million to $335 million.

In Q&A, Trpkovski discussed spot-market upside relative to the company’s second-quarter realized assumptions, citing that spot levels were higher across LME and both regional premiums. He said a quick sensitivity-based estimate for the three major revenue components suggested roughly $70 million to $75 million of additional quarterly upside versus the second-quarter guide assumptions, and he referenced “a $400 million quarterly run rate level” when marking the guide midpoint to then-current spot pricing, excluding the full volume impact expected in the third quarter from the Mount Holly expansion.

Oklahoma smelter with EGA: engineering, power talks, and financing advance

Gary said Century and EGA continued to advance their proposed Oklahoma smelter project in the first quarter, including retaining Bechtel for the next stage of engineering, progressing power discussions in the state, and making “significant progress” on financing discussions. He said the partners expect a final investment decision and groundbreaking by the end of the year.

Gary said the planned facility would use EGA’s EX smelting technology and would be the first smelter to use it. He described the project as designed for 750,000 metric tons of capacity and said it would “more than double total U.S. aluminum production” while restoring domestic production of military-grade, high-purity aluminum.

Asked about power negotiations, Gary said the company has been pleased with the business environment in Oklahoma and has spent “a lot of time negotiating with PSO,” the local utility, adding that discussions are making good progress but he did not provide details on contract structure.

On capital allocation, Gary said Century has met its liquidity and net debt targets and is prioritizing sustaining capital spending and high-return organic investments, including the Mount Holly expansion and the Grundartangi restart. He said that after these investments largely conclude, the company expects improved cash generation and would continue evaluating the “best and highest best use” of cash, including potential capital returns if other high-return investments are not available.

About Century Aluminum NASDAQ: CENX

Century Aluminum Company is a primary aluminum producer that develops and operates smelters designed to supply low-carbon, high-purity aluminum products to a range of industrial and commercial markets. Established in 1995, the company has grown to become a significant North American aluminum producer with an expanding international footprint. Century Aluminum is headquartered in the United States and is focused on energy-efficient operations and cost management.

The company's core operations include three primary aluminum smelting facilities located in Hawesville, Kentucky; Mount Holly, South Carolina; and Grundartangi, Iceland.

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