Century Aluminum Company

Makaela Niles, Good afternoon, thank you for attending today's Century Aluminum Company second quarter 2025 earnings call. My name is Makaela and I'll be your moderator for today's call. Makaela Niles, All lines will be muted during the presentation portion of the call with an opportunity for your questions and answers at the end. At this time, I'd like to pass the call over to our host Ryan Crawford. Ryan, you may now begin today's call.

Ryan Crawford, Thank you, operator. Good afternoon, everyone, and welcome to the conference call. I'm joined here today by Jesse Gary, Century's President and Chief Executive Officer, and Peter Tripkoski, Executive Vice President and Chief Financial Officer 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 with respect to forward-looking statements and non-GAAP financial measures in today's discussion.

And with that, I'll hand the call to Jesse. Thanks, Ryan, and thanks to everyone for joining. We find ourselves today in an excellent market environment for CENTRI. So I'll start by reviewing our second quarter performance and the strong macro conditions we've had so far in 2025. I'll then walk through our operational performance for the quarter and an update on some of our strategic initiatives, including our very exciting announcement regarding the restart of 50,000 metric tons of additional production at Mount Holly. Pete will then take you through the details of the Q2 results and our third quarter outlook before we turn it over for questions. Let me begin with safety. which is core to everything we do here at Sentry. Our safety performance has shown improvement across our assets in the first half of the year. This is rewarding to see as we continue to invest substantial time and effort towards improving the safety culture at each of our locations. We've been specifically focused over the first half on the launch of our new safety program. Mount Holly will be the pilot site for this new initiative that we've been working on with DuPont Safety Systems, and we are really excited to get it off the ground as we head into the second half of the year. Turning to financial results, Century generated $74 million of adjusted EBITDA in the second quarter. Rising Midwest premiums offset lower realized LME and European premiums, as well as higher than expected market energy prices in the second quarter. Realized LME prices averaged $2,540 in Q2, while realized Midwest and European premiums averaged $850 and $220 in the quarter. William Boschelli, M.D.: : Midwest premium saw significant positive improvement during the quarter as we began to see the benefits from President trump's section 232 tariffs impact our results. William Boschelli, M.D.: : As we have discussed in February, President trump restored the effectiveness of the section 232 program by revoking all country and product exemptions and raising the tariff rate for aluminum from 10% to 25%. William Boschelli, M.D.: : These became effective on March 12 and due to our contractual lags first rolled through our results in Q2. In June, President Trump took additional action to raise the Section 232 tariff to 50% in order to support the domestic industry and incentivize domestic production to ensure our national security. Following this announcement, SPOT Midwest Premium today is sitting at close to $1,600 per ton or 72 cents per pound. Just please remember, while these tariffs became effective in Q2, they will only partially affect our results in Q3 and then be fully reflected in our results in Q4. Pete will give you more details here. The best part of this news is that the Section 232 program is working, as we have seen strong domestic demand for all of our products and our customers are increasing orders. And as the largest producer of primary aluminum in the United States, Century is doing its part to build and secure the aluminum production that is so essential to U.S. national security needs. More on that at the end of my remarks. In July, we were also very pleased to complete the refinancing of our outstanding seven and a half percent senior secured notes in Icelandic Cats House loan facility with the issuance of our new $400 million tranche of six and seven eighth notes. Pete will walk you through the details here, but we were really pleased to simplify our debt structure, lower our interest costs, and push out the maturities with this transaction. Tristan Marquez- Turning to slide four, power prices fell quarter over quarter but unusually warm summer temperatures led to slightly higher than expected energy costs for century and Q2. Tristan Marquez- These temperatures persisted into July, but we've now returned to more normalized levels. Tristan Marquez- With natural gas prices also falling to $3 per annum BTU, we expect power prices to continue to move lower as we enter into the fall shoulder season. Turning to page five, as you can see in the top left graph, we continue to expect constraints on new global supply to drive a global market deficit in 2025. Global aluminum supply remains challenged with China very near its 45 million ton production cap and limited announced new global projects. We believe demand growth will continue to outpace supply in 2025 and for years to come. Global inventories remain near post-financial crisis flows in Q2 at 47 days. We are seeing U.S. demand for domestically produced billets continue to grow this year, following the effectiveness of the revised Section 232 tariffs on aluminum in March. Century's domestic billet shipments are up 8% year over year in the first half, as downstream customers look to shift supply chains back to the U.S. following the expansion of the Section 232 program to cover extrusions. As we begin to enter into the 2026 billet season, The strong domestic demand growth should be supportive of higher value-added aluminum premiums in 2026. Just as a reminder, our value-added products in the U.S. are sold on an annual basis, so we would expect to see those increased bill of prices flow through the results beginning in the first quarter of next year. Returning to alumina, global supplies remain stable, with market pricing remaining at normalized levels in Q2. Spot API prices are approximately $375 today. The Atlantic region, where our Gemalco operations are located, has become increasingly short alumina, resulting in an expanding Atlantic premium for alumina of about $30 today. This is a good example of how Gemalco, like Century Smelters, benefits from its strategic geographic locations close to its customers in short markets. The bauxite market also continued to experience turbulence, especially in Guinea, where operating licenses for several key producers have been suspended and, in some cases, revoked. These disruptions have lent continued support to seaborne bauxite prices and, in turn, the alumina price. Please remember that Jamalco does not have exposure to seaborne bauxite prices as the plant is totally self-sufficient through its long-term mining licenses, another key strategic differentiator for the plant. Turning to page six, you can see that spot Coke, HFO, and caustic soda prices remain near their year-to-date average prices. Okay, on to operations. Our assets continued to deliver strong operating results in Q2. Starting with Severy, the plant had another excellent quarter, producing strong operating results despite the very hot summer weather. The plant also completed its planned major maintenance program in the carbon plant on schedule and without any impact on production levels. The team at Seabury continues to deliver quarter after quarter. In Iceland, Grunertangi continued to ramp its billet casthouse production as it optimizes performance during its first full year of operations. Grunertangi did see a slight production volume headwind of about 3,000 metric tons in the quarter as it experienced a failure in one of its electrical transformers. While the plant was able to continue full operations with redundant equipment, it will run on slightly lower amperage until a replacement is on site. Jamalco produced and targeted production levels in Q2 and remains focused on executing its major capital improvement program to return the plant to its nameplate capacity of close to 1.4 million tons. The new steam power generation turbine that we discussed in our last call is now on site, and the installation and integration process is underway at the plant. We continue to believe the turbine will be operational in the first quarter of 2026, which will enable Jamalco to be fully self-sufficient in its power generation and lower its cost structure by reducing costly third-party power purchases. At Hawesville, the strategic review process has gone well and we are now negotiating final terms. We expect to conclude the strategic review process by the end of Q3. Just before I turn the call over to Pete, I'd like to thank President Trump again for the significant actions that he and his administration have taken to restore American manufacturing and stand up for American workers. The Section 232 tariffs have truly enabled a new future for the US aluminum industry. And we believe a key part of that future will be our new smelter project. Once built, the new smelter will be amongst the most modern and efficient smelters in the world. It will represent the first new smelter built in the US in 50 years and will double the size of the existing US industry, creating over 1,000 full-time direct jobs and over 5,500 construction jobs. Combined with a second new smelter project announced since President Trump took office, President Trump's policies have enabled a future where we could see US production triple by the end of the decade. This is a monumental change from the last 25 years where failed trading policies led to the destruction of American manufacturing and American jobs. And to further Century's commitment to US aluminum production, we are very pleased to announce today that we've made the decision to restart the last 50,000 metric tons of capacity at Mount Holly and return the plant to full production. This project will increase Mount Holly's production to over 220,000 metric tons per year at nearly 100 full-time U.S. manufacturing jobs as a plant and represent an investment of approximately $50 million. We expect first hot metal from the incremental pots in the first quarter of 2026 and should be at our full 220,000 ton run rate by the end of Q2. We are confident that the combined efforts of Mount Holly team and our valued partners at Santee Cooper will successfully complete this critical project and ensure the long-term viability of this excellent plan. Pete will walk you through more details on the project spend in a bit. Century's metal hauling expansion will increase total U.S. primary aluminum production by nearly 10%, replacing imported metal. This project, along with our new smelter project, would not have been possible without President Trump's Section 232 program. We look forward to working with the Trump administration to continue to grow U.S. aluminum production to meet our national security needs. Pete will now take you through our financial performance in more detail.