Century Aluminum Q2 Earnings Call Highlights

Key Points

• Strong second-quarter results: Shipments rose 6% sequentially to about 131,000 tons, while sales increased to $752 million and adjusted EBITDA climbed to $327 million, supported by higher aluminum prices, premiums and volumes.
• Production capacity expanded: Century completed the Mount Holly restart and restarted Line 2 at its Grundartangi facility, bringing its assets to full capacity by late July. The company expects the full Mount Holly benefit in the third quarter, although temporary operational instability and raw-material issues at Jamalco remain headwinds.
• Positive outlook and strategic projects: Century forecast third-quarter adjusted EBITDA of $325 million to $345 million and ended June with $388 million in cash and $98 million of net debt. It continues to target a final investment decision on its Oklahoma smelter by the end of 2026, with potential tariff incentives helping fund the project.

Century Aluminum NASDAQ: CENX reported higher second-quarter shipments, sales and adjusted EBITDA as it expanded output at its Mount Holly plant and advanced the restart of a potline at its Grundartangi facility in Iceland.

The company said second-quarter shipments rose 6% from the prior quarter to approximately 131,000 tons. Net sales increased by $103 million sequentially to $752 million, driven by higher realized London Metal Exchange aluminum prices, stronger regional premiums and increased shipment volumes.

Century reported net income of $249 million, or $2.39 per share, for the quarter. Adjusted net income was $257 million, or $2.46 per share, excluding exceptional items including unrealized derivative gains, business-interruption losses in Iceland and Mount Holly restart expenses. Adjusted EBITDA increased $96 million from the prior quarter to $327 million.

Restarts Bring Portfolio to Full Capacity

President and Chief Executive Officer Jesse Gary said Century had achieved its goal of having all company assets operating at full capacity by the end of July.

At Mount Holly, Century completed the restart of its final 90 pots in late June, returning the South Carolina plant to full capacity. The project was completed on time and on budget, according to Gary. He said the expansion increases total U.S. primary aluminum production by nearly 10% and added more than 150 full-time jobs at the facility.

The company said the second quarter included only a partial contribution from Mount Holly’s higher run rate because the restart occurred incrementally. Century expects to see the full production benefit in the third quarter. Gary noted that Mount Holly has experienced some operational instability following the restart, which he characterized as not unusual after a project of that scale. The impact is included in the company’s third-quarter outlook, and Century does not expect effects beyond the third quarter.

At Grundartangi, Century completed the restart of Line 2 at the end of July, about six months sooner than the timeline management had first discussed in October. The plant is operating near full production, though Line 2 is being run at slightly reduced amperage until replacement transformers arrive and are installed in the fourth quarter. Management said it does not expect the installation work to interrupt production.

Century also brought its new TG4 power-generation turbine online at Jamalco in early August. Gary said the turbine enables the Jamaican alumina refinery to operate using entirely self-generated electricity, reducing reliance on costly and sometimes unreliable purchases from the Jamaican grid. He said the financial benefit will phase in through the remainder of the year. During the question-and-answer session, Gary estimated the benefit at about $20 per ton, depending on Jamaican energy prices.

Jamalco continues to encounter lower-quality bauxite from certain mining areas. The company has implemented a revised mining plan, but Gary said it could take another couple of quarters to fully execute, leaving a modest near-term headwind to costs and volumes.

Pricing and Balance Sheet Support Results

Chief Financial Officer Peter Trpkovski said second-quarter adjusted EBITDA benefited primarily from higher aluminum prices and premiums. Century’s realized LME price was $3,250 per ton, up $350 per ton from the prior quarter. Its realized U.S. Midwest Premium was $2,480 per ton, up $280, while the European premium increased $140 to $450 per ton.

Combined pricing changes contributed an incremental $95 million to adjusted EBITDA compared with the first quarter, Trpkovski said. Higher volumes and sales mix added another $8 million, though shipment timing at quarter-end increased finished-goods inventory tied to the Mount Holly expansion. Century expects that inventory to ship during the third quarter.

The company ended June with $388 million in cash after repaying $66 million of debt during the quarter. It had no outstanding borrowings under its revolving credit facilities and reduced net debt to $98 million. Century said that, by the end of July, cash on hand exceeded total debt after it received $94 million related to 45X tax credits for fiscal 2025 and another $19 million in insurance recoveries tied to the Grundartangi interruption.

Quarterly capital expenditures totaled $59 million, including $37 million for the Mount Holly expansion and TG4 project. Management said growth capital expenditures associated with the Mount Holly and Grundartangi projects are now complete, leaving primarily sustaining capital expenditures during the second half of 2026.

Third-Quarter EBITDA Outlook

Century forecast third-quarter adjusted EBITDA of $325 million to $345 million. The outlook assumes a lagged LME price of $3,325 per ton, about $75 above the company’s second-quarter realized price, and a U.S. Midwest Premium of $1.09 per pound, down $0.03 from the second-quarter realized level. The company expects the European duty-paid premium to rise about $70 per ton to approximately $520 per ton.

• Pricing and delivery-premium changes are expected to add $5 million to $10 million to adjusted EBITDA sequentially.
• Higher summer energy costs are expected to create a $10 million to $15 million headwind.
• Higher raw-material costs are expected to reduce EBITDA by approximately $5 million.
• Higher Mount Holly production and shipments are expected to add $15 million to $25 million through volume and sales mix.

Century also expects realized hedge settlements to reduce third-quarter adjusted net income by $20 million to $25 million, while tax expense is projected at $10 million to $15 million.

Oklahoma Smelter and Tariff Incentive

Management said it continues to advance its proposed Oklahoma aluminum smelter with joint-venture partner Emirates Global Aluminium. Bechtel is conducting detailed engineering work, while Century is negotiating a final energy agreement and progressing financing discussions. The company continues to target a final investment decision and groundbreaking by the end of 2026, with first hot metal expected by the end of 2029.

Gary also highlighted a July 20 executive order from President Trump that establishes a reduced-tariff import incentive for approved companies building or expanding U.S. primary aluminum production. Under the program described by Century, approved companies could import primary aluminum equal to the amount of new production being built at a 25% tariff rate rather than the otherwise applicable 50% rate.

Century expects the Oklahoma project to qualify for imports of up to 750,000 metric tons annually beginning in 2027, with 60% allocated to EGA and 40% to Century. That would allow Century to import up to 300,000 metric tons per year at the reduced rate, subject to Commerce Department rules and project approval. Gary said the company intends to use the benefit to help fund its portion of the Oklahoma project.

Century also retained a 6.8% non-dilutive interest in a Hawesville data-center project after selling the site in February for $200 million in cash. Gary said the company’s partner, TeraWulf, has signed Anthropic to a 20-year lease expected to generate approximately $19 billion in lease revenue over its initial term. Century has no obligation to fund the project’s development costs and may exercise a right to sell its stake back to TeraWulf one year after expected energization in the second half of 2027.

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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