Century Aluminum Company

Good afternoon. Thank you for attending today's Century Aluminum Company second quarter 2024 earnings conference call. My name is Forum, and I will be your moderator for today's call. All lines will remain muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question, please press star 1 on your telephone keypad. It is now my pleasure to pass the conference over to our host, Ryan Crawford with Century Aluminum. Mr. Crawford, you may proceed.

Thank you, operator. Good afternoon, everyone, and welcome to the conference call. I'm joined here today by Jesse Gehry, Century's President and Chief Executive Officer, Jerry Bialik, Executive Vice President and Chief Financial Officer, and Peter Trzcowski, Senior Vice President of Finance and Treasurer. After our prepared comments, we will take your questions. As a reminder, today's presentation is available on our website at www.centuryaluminum.com. We use our website as a means of disclosing material information about the company and for complying with Regulation FD. Turning to slide one, please take a moment to review the cautionary statements shown here with respect to forward-looking statements and non-GAAP financial measures contained in today's discussion. And with that, I'll hand the call to Jesse.

Thanks, Ryan, and thanks to everyone for joining. I'll start the call today by reviewing our second quarter performance and providing some thoughts on the current market environment before turning it over to Jerry for the detailed financial results and then taking your questions. Our team produced excellent results in the second quarter with adjusted EBITDA of $34 million. Jerry will give you the full details here, but we are really pleased with the continued strong operating performance across our plant. Overall, improving aluminum prices, both at the LME and regional premium level, drove increased profitability in the quarter and will continue to benefit our third quarter financial performance as the strong LME prices observed in the second quarter begin to roll through our lagged contractual pricing and financial results. We also reduced our outstanding debt by nearly $50 million in the quarter, driving strong liquidity of over $340 million. Turning to slide five, aluminum prices rose during the second quarter as stronger global demand, especially in China, drove both LME and regional premiums higher. Demand was strongest in areas relating to the green economy, especially in solar energy and other renewable and energy transmission applications. More recently, aluminum prices have retreated as broad macro concerns have weighed on markets. Over the longer term, We are confident that global trends towards electrification and lightweighting will continue to drive increased demand for aluminum. When paired with inventory levels that remain near historic lows and little expected aluminum supply growth over the next several years, it is easy to see why aluminum markets remain in steep contango, and we continue to believe our assets are well-placed to benefit from short aluminum markets in the U.S. and Europe. Turning to Illumina, the API rose significantly during the quarter with Q2 prices averaging 19% higher than Q1 levels and reaching over $500 per ton in June. These prices reflect a continued tight market for Illumina as production issues in Australia and China led to a lack of available spot cargoes during the quarter and drove prices higher. Illumina prices have remained near their highs so far in the third quarter as supply remains constrained. Given this constrained aluminum market, we were very pleased with Jamalco's strong operational performance during the second quarter. As previously noted, our Jamalco operations make us roughly net neutral to API pricing as a company when combined with our long-term commercial contracts that are linked to the price of aluminum. Jamalco produces targeted 1.2 million tons per annum production rate in the second quarter. Over the longer term, while we expect global alumina prices to largely follow aluminum prices, we suspect that alumina will continue to remain exposed to supply-driven volatility as refineries without a dedicated source of bauxite remain exposed to the seaborne bauxite market and supply from difficult geopolitical locations. In addition, Chinese regulators announced earlier this year the Chinese alumina refineries would be subject to more stringent energy and emission efficiency standards. We believe these actions will act to constrain Chinese alumina production growth over the near to medium term. Turning to the global trading environment, the U.S. and EU governments each took additional actions towards nearshoring industrial and strategic mineral production during the quarter. that will impact global aluminum flows and supply into our key markets in the US and Europe. In May, I joined President Biden at the White House, where he announced an expansion of the Section 301 tariffs on billions of dollars of Chinese goods, including many aluminum products. Similarly, in June, the EU announced additional tariffs of up to 38% on Chinese electric vehicles. In July, the US announced a new smelted and cast requirement that ensures that aluminum that was smelted and cast in Russia, China, and certain other countries cannot be transformed into downstream aluminum products in Mexico in order to avoid the 10% Section 232 duties. Finally, as we anticipated on our last call, In May, the U.S. Department of Commerce imposed significant anti-dumping duties on aluminum extrusions entering the U.S. from 14 countries, including China, Mexico, Colombia, and Vietnam. The duties, which went into effect immediately, have started to support domestic extrusion demand and correspondingly domestic bill of demand. As a reminder, we did hold back some second-half billet volumes for spot sales this year in anticipation of improving U.S. market conditions and a more constructive pricing environment. We've started to see some uptick here on the demand side and continue to expect this will be positive for U.S. billet pricing over the balance of the year and into 2025. These trade actions, especially when viewed together with the substantial trade measures already in place in the U.S. and EU markets, including the Section 232 tariffs and the EU carbon border adjustment mechanism and other existing aluminum tariffs, show the significant value of Century's U.S. and EU-based production footprint. This allows us to provide short supply chains and better service to our customers, but to also benefit from better pricing environments in these markets. Turning to operations, we saw strong and stable performance across our operating locations in the second quarter. In Iceland, as expected, the previously announced 20 megawatt energy curtailment was lifted during the second quarter, and Krundertangi returned to full production by quarter end. Our team did an excellent job restoring production quickly and efficiently once the power curtailment ended. As we have seen at many smelters around the world, restoring production following a curtailment is not easy, and I'd like to congratulate the Krundertangi team on a job well done. We expect normal production levels from Grunertangi in Q3. At the Grunertangi casthouse, we continue to produce trials and to qualify our new natural green billets with our key customers over Q2 and Q3. We remain very excited to begin supplying this much needed natural low carbon billet into the European market. In the U.S., energy prices continue to be constructive, driven by natural gas prices near $2. Operations at Seabree and Mount Holly remain stable, which is a testament to our operating teams during these very hot summer months. At Jamalco, as previously announced, we were unfortunately impacted by Hurricane Beryl when the Catafalcori 4 storm made landfall near our port facilities at Rocky Point in Clarendon Parish in early July. The hurricane brought heavy storm surge, significant rain, and high winds to both our operations and surrounding communities, and we are working with local officials in Clarendon and other parishes to assist those in need. While we were fortunate to not suffer any significant injuries or damage to the refinery operations, we did temporarily curtail operations at the refinery as part of our standard hurricane preparation procedures. The Jemalco team did a remarkable job restoring operations once the storm had passed, and the refinery had returned to full production levels. In addition, while Jamalco's production facilities escaped significant damage, the port facility was impacted by the storm, where a portion of the alumina conveyor was damaged and is undergoing repair. While those repairs are being completed, Jamalco has secured alternative port arrangements to ensure continued alumina shipments to its customers. Finally, We made good progress on our growth projects during the second quarter. While we don't have any significant updates at this time, we continue to work diligently on evaluating each and would expect to be able to provide a further update on a third quarter call. Jerry will now walk you through the quarter and our Q3 outlook.