CENTURY ALUMINUM CO
For the period ended Sep 30, 2024. Filed Nov 4, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 4, 2024
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Item 1. Financial Statements
| CENTURY ALUMINUM COMPANY | ||||
|---|---|---|---|---|
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
| (in millions, except per share amounts) | ||||
| (Unaudited) | ||||
| Three months endedSeptember 30, | Nine months EndedSeptember 30, | |||
| 2024 | 2023 | 2024 | 2023 | |
| NET SALES: | ||||
| Related parties | $332.1 | $400.9 | $971.3 | $1,240.3 |
| Other customers | 207.0 | 144.3 | 618.1 | 432.8 |
| Total net sales | 539.1 | 545.2 | 1,589.4 | 1,673.1 |
| Cost of goods sold | 457.3 | 556.7 | 1,470.7 | 1,620.6 |
| Gross profit (loss) | 81.8 | (11.5) | 118.7 | 52.5 |
| Selling, general and administrative expenses | 15.6 | 10.8 | 42.0 | 36.2 |
| Other operating expense - net | 2.4 | 1.9 | 4.6 | 13.7 |
| Operating income (loss) | 63.8 | (24.2) | 72.1 | 2.6 |
| Interest expense | (11.9) | (9.2) | (31.4) | (26.6) |
| Interest income | 0.4 | 0.4 | 1.7 | 1.1 |
| Net loss on forward and derivative contracts | (4.0) | (25.2) | (0.6) | (73.7) |
| Bargain purchase gain | — | — | 245.9 | — |
| Other income (loss) - net | (4.0) | 1.3 | (4.4) | (2.5) |
| Income (loss) before income taxes | 44.3 | (56.9) | 283.3 | (99.1) |
| Income tax (expense) benefit | (2.0) | 11.0 | (3.0) | 21.2 |
| Net income (loss) | 42.3 | (45.9) | 280.3 | (77.9) |
| Net loss attributable to noncontrolling interests | (5.0) | (3.9) | (11.3) | (4.8) |
| Net income (loss) attributable to Century stockholders | 47.3 | (42.0) | 291.6 | (73.1) |
| Less: net income allocated to participating securities | 2.5 | — | 15.5 | — |
| Net income (loss) allocated to common stockholders | $44.8 | $(42.0) | $276.1 | $(73.1) |
| NET INCOME (LOSS) ATTRIBUTABLE TO CENTURY STOCKHOLDERS PER COMMON SHARE: | ||||
| Basic | $0.48 | $(0.45) | $2.98 | $(0.79) |
| Diluted | 0.46 | (0.45) | 2.83 | (0.79) |
| WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | ||||
| Basic | 92.8 | 92.4 | 92.7 | 92.4 |
| Diluted | 98.4 | 92.4 | 98.8 | 92.4 |
| CENTURY ALUMINUM COMPANY | ||||
|---|---|---|---|---|
| CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | ||||
| (in millions) | ||||
| (Unaudited) | ||||
| Three months endedSeptember 30, | Nine months endedSeptember 30, | |||
| 2024 | 2023 | 2024 | 2023 | |
| Comprehensive income (loss): | ||||
| Net income (loss) | $42.3 | $(45.9) | $280.3 | $(77.9) |
| Other comprehensive income (loss) before income tax effect: | ||||
| Net loss on foreign currency cash flow hedges reclassified as income | — | — | (0.1) | (0.1) |
| Defined benefit plans and other postretirement benefits: | ||||
| Net loss arising during the period | — | — | (3.4) | — |
| Amortization of prior service benefit during the period | 0.1 | — | 0.1 | 0.1 |
| Amortization of net gain during the period | 1.6 | 1.7 | 4.9 | 5.0 |
| Other comprehensive income before income tax effect | 1.7 | 1.7 | 1.5 | 5.0 |
| Income tax effect | — | — | — | — |
| Other comprehensive income (loss) | 1.7 | 1.7 | 1.5 | 5.0 |
| Comprehensive income (loss) | 44.0 | (44.2) | 281.8 | (72.9) |
| Comprehensive loss attributable to noncontrolling interests | (5.0) | (3.9) | (11.3) | (4.8) |
| Comprehensive income (loss) attributable to Century stockholders | $49.0 | $(40.3) | $293.1 | $(68.1) |
| CENTURY ALUMINUM COMPANY | ||
|---|---|---|
| CONSOLIDATED BALANCE SHEETS | ||
| (in millions) | ||
| (Unaudited) | ||
| September 30, 2024 | December 31, 2023 | |
| ASSETS | ||
| Cash and cash equivalents | $32.6 | $88.8 |
| Restricted cash | 2.8 | 1.5 |
| Accounts receivable - net | 62.2 | 53.7 |
| Non-trade receivables | 52.7 | 36.2 |
| Due from affiliates | 12.0 | 20.2 |
| Manufacturing credit receivable | 78.8 | 59.3 |
| Inventories | 544.5 | 477.0 |
| Derivative assets | 2.1 | 2.9 |
| Prepaid and other current assets | 19.2 | 27.5 |
| Total current assets | 806.9 | 767.1 |
| Property, plant and equipment - net | 965.3 | 1,004.2 |
| Other assets | 124.7 | 75.2 |
| TOTAL ASSETS | $1,896.9 | $1,846.5 |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||
| LIABILITIES: | ||
| Accounts payable, trade | $240.9 | $249.5 |
| Accrued compensation and benefits | 41.5 | 38.1 |
| Due to affiliates | 104.5 | 101.4 |
| Accrued and other current liabilities | 43.7 | 50.9 |
| Derivative liabilities | 5.1 | 1.4 |
| Deferred credit - preliminary bargain purchase gain | — | 273.4 |
| Current debt due to affiliates | 10.1 | 10.0 |
| Current maturities of long-term debt | 26.5 | 38.3 |
| Total current liabilities | 472.3 | 763.0 |
| Long-term debt - net | 449.3 | 430.9 |
| Accrued benefits costs - less current portion | 119.2 | 120.3 |
| Deferred taxes | 75.1 | 72.4 |
| Asset retirement obligations - less current portion | 54.1 | 49.5 |
| Other liabilities | 98.4 | 66.3 |
| Total noncurrent liabilities | 796.1 | 739.4 |
| TOTAL LIABILITIES | $1,268.4 | $1,502.4 |
| COMMITMENTS AND CONTINGENCIES (NOTE 12) | ||
| SHAREHOLDERS’ EQUITY: | ||
| Preferred stock (Note 8) | — | — |
| Common stock (Note 8) | 1.0 | 1.0 |
| Additional paid-in capital | 2,546.3 | 2,542.9 |
| Treasury stock, at cost | (86.3) | (86.3) |
| Accumulated other comprehensive loss | (96.4) | (97.9) |
| Accumulated deficit | (1,712.5) | (2,004.1) |
| Total Century shareholders’ equity | 652.1 | 355.6 |
| Noncontrolling interests | (23.6) | (11.5) |
| Total equity | 628.5 | 344.1 |
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $1,896.9 | $1,846.5 |
| CENTURY ALUMINUM COMPANY | ||
|---|---|---|
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
| (in millions) | ||
| (Unaudited) | ||
| Nine months ended September 30, | ||
| 2024 | 2023 | |
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||
| Net income (loss) | $280.3 | $(77.9) |
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
| Unrealized loss on derivative instruments | 0.8 | 84.2 |
| Depreciation, depletion and amortization | 64.8 | 55.3 |
| Change in deferred tax expense | 1.7 | (23.5) |
| Gain on sale of assets | (2.3) | — |
| Bargain purchase gain | (245.9) | — |
| Other non-cash items - net | 4.7 | (1.2) |
| Change in operating assets and liabilities, net of acquisition: | ||
| Accounts receivable - net | (15.9) | 21.4 |
| Non-trade receivables | 7.1 | — |
| Manufacturing credit receivable | (71.9) | — |
| Due from affiliates | 8.3 | (13.0) |
| Inventories | (67.5) | 26.3 |
| Prepaid and other current assets | 9.6 | 4.8 |
| Accounts payable, trade | 40.1 | (45.1) |
| Due to affiliates | 6.6 | 15.8 |
| Accrued and other current liabilities | (3.9) | (2.0) |
| Ravenswood retiree medical settlement | (2.0) | (2.0) |
| Other - net | 2.2 | (3.5) |
| Net cash provided by operating activities | 16.8 | 39.6 |
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||
| Purchase of property, plant and equipment | (69.1) | (62.7) |
| Proceeds from sales of property, plant and equipment | — | 25.7 |
| Proceeds from sale of assets | 2.3 | — |
| Acquisition of subsidiary, net of cash acquired | — | 19.4 |
| Net cash used in investing activities | (66.8) | (17.6) |
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||
| Borrowings under revolving credit facilities | 409.4 | 575.2 |
| Repayments under revolving credit facilities | (423.6) | (632.0) |
| Repayments under Iceland term facility | (1.2) | (9.8) |
| Borrowings under Grundartangi casthouse debt facility | 25.0 | 40.0 |
| Repayments under Grundartangi casthouse debt facility | (4.5) | — |
| Borrowings under Vlissingen credit facility | — | 10.0 |
| Carbon credit proceeds | — | 33.8 |
| Carbon credit repayments | (10.0) | — |
| CENTURY ALUMINUM COMPANY | ||
|---|---|---|
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
| (in millions) | ||
| (Unaudited) | ||
| Nine months ended September 30, | ||
| 2024 | 2023 | |
| Net cash (used) provided by financing activities | (4.9) | 17.2 |
| CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | (54.9) | 39.2 |
| Cash, cash equivalents and restricted cash, beginning of period | 90.3 | 55.5 |
| Cash, cash equivalents and restricted cash, end of period | $35.4 | $94.7 |
| Supplemental Cash Flow Information: | ||
| Cash paid for: | ||
| Interest | $22.1 | $22.3 |
| Taxes, net of refunds | 5.5 | 1.0 |
| Non-cash investing activities: | ||
| Capital expenditures | 3.0 | 10.2 |
| Capitalized interest | 3.4 | 4.0 |
| Distribution of property, plant and equipment to NCI | 16.1 | — |
| CENTURY ALUMINUM COMPANY | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY | |||||||||||
| (in millions, except share data) | |||||||||||
| (Unaudited) | |||||||||||
| Preferred stock · Common stock · Additional paid-in capital · Treasury stock, at cost · Accumulated other comprehensive loss · Accumulateddeficit · Total Century Equity · Noncontrolling Interest · Total equity | |||||||||||
| Shares · Amount · Shares · Amount | |||||||||||
| Three months endedSeptember 30, 2024 | |||||||||||
| Balance, June 30, 2024 | 52,238 | $— | 92,739,089 | $1.0 | $2,544.7 | $(86.3) | $(98.1) | $(1,759.8) | $601.5 | $(18.6) | $582.9 |
| Net income (loss) | — | — | — | — | — | — | — | 47.3 | 47.3 | (5.0) | 42.3 |
| Other comprehensive loss | — | — | — | — | — | — | 1.7 | — | 1.7 | — | 1.7 |
| Share-based compensation | — | — | 17,549 | — | 1.6 | — | — | — | 1.6 | — | 1.6 |
| Conversion of preferred stock to common stock | (421) | — | 42,206 | — | — | — | — | — | — | — | — |
| Noncontrolling interest | — | — | — | — | — | — | — | — | — | — | — |
| Balance, September 30, 2024 | 51,817 | $— | 92,798,844 | $1.0 | $2,546.3 | $(86.3) | $(96.4) | $(1,712.5) | $652.1 | $(23.6) | $628.5 |
| Balance, June 30, 2023 | 53,707 | $— | 92,358,549 | $1.0 | $2,541.0 | $(86.3) | $(90.7) | $(1,992.1) | $372.9 | $31.9 | $404.8 |
| Net income (loss) | — | — | — | — | — | — | — | (42.0) | (42.0) | (3.9) | (45.9) |
| Other comprehensive income | — | — | — | — | — | — | 1.7 | — | 1.7 | — | 1.7 |
| Share-based compensation | — | — | 26,324 | — | 0.8 | — | — | — | 0.8 | — | 0.8 |
| Conversion of preferred stock to common stock | (199) | — | 19,790 | — | — | — | — | — | — | — | — |
| Noncontrolling interest | — | $— | — | — | — | — | — | — | — | 25.3 | 25.3 |
| Balance, September 30, 2023 | 53,508 | — | 92,404,663 | $1.0 | $2,541.8 | $(86.3) | $(89.0) | $(2,034.1) | $333.4 | $53.3 | $386.7 |
| CENTURY ALUMINUM COMPANY | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY | |||||||||||
| (in millions, except share data) | |||||||||||
| (Unaudited) | |||||||||||
| Preferred stock · Common stock · Additional paid-in capital · Treasury stock, at cost · Accumulated other comprehensive loss · Accumulateddeficit · Total Century Equity · Noncontrolling Interest · Total equity | |||||||||||
| Shares · Amount · Shares · Amount | |||||||||||
| Nine months EndedSeptember 30, 2024 | |||||||||||
| Balance, December 31, 2023 | 52,284 | $— | 92,689,864 | $1.0 | $2,542.9 | $(86.3) | $(97.9) | $(2,004.1) | $355.6 | $(11.5) | $344.1 |
| Net income (loss) | — | — | — | — | — | — | — | 291.6 | 291.6 | (11.3) | 280.3 |
| Other comprehensive income | — | — | — | — | — | — | 1.5 | — | 1.5 | — | 1.5 |
| Share-based compensation | — | — | 62,212 | — | 3.4 | — | — | — | 3.4 | — | 3.4 |
| Conversion of preferred stock to common stock | (467) | — | 46,768 | — | — | — | — | — | — | — | — |
| Noncontrolling interest | — | — | — | — | — | — | — | — | — | (0.8) | (0.8) |
| Balance, September 30, 2024 | 51,817 | $— | 92,798,844 | $1.0 | $2,546.3 | $(86.3) | $(96.4) | $(1,712.5) | $652.1 | $(23.6) | $628.5 |
| Balance, December 31, 2022 | 53,854 | — | 92,323,978 | $1.0 | $2,539.6 | $(86.3) | $(94.0) | $(1,961.0) | $399.3 | $— | $399.3 |
| Net income (loss) | — | — | — | — | — | — | — | (73.1) | (73.1) | (4.8) | (77.9) |
| Other comprehensive income | — | — | — | — | — | — | 5.0 | — | 5.0 | — | 5.0 |
| Share-based compensation | — | — | 46,059 | — | 2.2 | — | — | — | 2.2 | — | 2.2 |
| Conversion of preferred stock to common stock | (346) | — | 34,626 | — | — | — | — | — | — | — | — |
| Noncontrolling interest | — | $— | — | — | — | — | — | — | — | 58.1 | 58.1 |
| Balance, September 30, 2023 | 53,508 | — | 92,404,663 | $1.0 | $2,541.8 | $(86.3) | $(89.0) | $(2,034.1) | $333.4 | $53.3 | $386.7 |
Condensed Notes to the Consolidated Financial Statements
Nine months ended September 30, 2024 and 2023
- General
The accompanying unaudited interim consolidated financial statements of Century Aluminum Company should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2023. In management’s opinion, the unaudited interim consolidated financial statements reflect all adjustments, which are of a normal and recurring nature, that are necessary for a fair presentation of financial results for the interim periods presented. Operating results for the first nine months of 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024. Throughout this Form 10-Q, and unless expressly stated otherwise or as the context otherwise requires, "Century Aluminum", "Century", "the Company", "we", "us", "our" and "ours" refer to Century Aluminum Company and its consolidated subsidiaries.
Our consolidated financial statements include the consolidated results of the Jamalco joint venture ("Jamalco"), an unincorporated joint venture between General Alumina Jamaica Limited ("GAJL"), an indirect, wholly-owned subsidiary of the Company, and Clarendon Alumina Production Limited ("CAP"). CAP's interest in the joint venture is reflected as noncontrolling interest on the accompanying Consolidated Balance Sheets.
Recently Issued Accounting Standards
In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update No. ("ASU") 2023-07, "Improvements to Reportable Segment Disclosures." ("ASU 2023-07"). Among other changes, the ASU requires disclosure of significant segment expenses and extends certain annual disclosures to interim periods. The ASU is effective for the Company beginning with its annual financial statements for the year ending December 31, 2024, early adoption is permitted. The Company is currently evaluating the requirements of ASU 2023-07.
In December 2023, the FASB issued ASU No. 2023-09, "Improvements to Income Tax Disclosures." ("ASU 2023-09"). The guidance is intended to improve income tax disclosure requirements by requiring (i) consistent categories and greater disaggregation of information in the rate reconciliation and (ii) the disaggregation of income taxes paid by jurisdiction. The ASU is effective for the Company beginning with its annual financial statements for the year ending December 31, 2025, with early adoption permitted, and is required to be applied prospectively with the option of retrospective application. The Company is currently evaluating the requirements of ASU 2023-09.
- Acquisition of Jamalco
On May 2, 2023, our wholly-owned subsidiary, Century Aluminum Jamaica Holdings, Inc. ("CAJH"), completed the acquisition of all the outstanding share capital of General Alumina Holdings Limited ("GAHL"), the indirect holder of a 55% interest in Jamalco, an unincorporated joint venture engaged in bauxite mining and alumina production in Jamaica. The remaining 45% interest in Jamalco is owned by CAP, which is owned by the Government of Jamaica. The results of operations have been included in the consolidated financial statements since the acquisition date. The purchase price of the acquisition was $1.00, primarily due to the seller experiencing financial distress following curtailment of Jamalco's operations in the second half of 2021 due to a facility fire, with operations restarting in the second half of 2022.
The acquisition was accounted for as a business combination under the acquisition method of accounting in accordance with ASC 805 - Business Combinations, resulting in the Company recognizing the assets and liabilities at fair value with the excess over fair value of consideration transferred to the seller presented as a bargain purchase gain of $245.9 million recognized within the Consolidated Statements of Operations for the nine months ended September 30, 2024. During the first quarter of 2024, the Company finalized the Jamalco purchase price allocation and recognized measurement period adjustments, which primarily resulted from third-party valuation adjustments to risk premiums, reducing the value of property, plant and equipment by $29.0 million. This reduction in value of property plant and equipment resulted in a corresponding reduction to the bargain purchase gain of $29.0 million decreasing the value of the previously recognized bargain purchase gain of
$273.4 million as of December 31, 2023 to $245.9 million as of March 31, 2024. The Company finalized its purchase accounting as of March 31, 2024.
The following table represents the allocation of the estimated fair value of identified assets acquired, liabilities assumed and noncontrolling interest at the date of acquisition:
| Purchase price allocation | Amount |
|---|---|
| Identifiable assets acquired and liabilities assumed | |
| Cash and cash equivalents | $19.4 |
| Restricted cash | 8.3 |
| Accounts receivable - net | 7.7 |
| Non-trade receivables | 40.4 |
| Inventories | 103.9 |
| Prepaid and other current assets | 4.2 |
| Property, plant and equipment - net | 217.2 |
| Other assets | 26.1 |
| Accounts payable, trade | (94.6) |
| Accrued and other current liabilities | (29.5) |
| Other liabilities | (36.5) |
| Asset retirement obligation | (23.9) |
| Total identifiable net assets acquired and liabilities assumed | 242.7 |
| Less: noncontrolling interest | (3.2) |
| Bargain purchase gain | $245.9 |
The following unaudited pro forma financial information reflects the results of operations of the Company for thenine months ended September 30, 2023 as if the acquisition of Jamalco had been completed on January 1, 2023. This unaudited pro forma financial information has been prepared for informational purposes and is not necessarily indicative of the actual consolidated results of operations had the acquisition been completed on January 1, 2023, nor is the information indicative of future results of operations of the combined companies.
| Revenue | $1,722.8 |
|---|---|
| Earnings | (77.0) |
- Curtailment of Operations - Hawesville
In August 2022, we fully curtailed production at the Hawesville facility. We continue to explore all options related to the Hawesville facility.
For the three and nine months ended September 30, 2024, we incurred curtailment charges of approximately $2.7 million and $5.0 million, respectively. These charges were partially offset by income related to scrap and materials sales of $0.5 million for the nine months ended September 30, 2024. There were no scrap and materials sales as of the three months ended September 30, 2024. Comparatively, for the three and nine months ended September 30, 2023 we incurred curtailment charges of approximately $2.0 million and $13.4 million, including $0.0 million and $9.0 million related to demand capacity charges for power, respectively. These charges were partially offset by income related to scrap and materials sales of $0.0 million and $1.2 million for the three and nine months ended September 30, 2023.
- Related Party Transactions
The significant related party transactions occurring during the three and nine months ended September 30, 2024 and 2023 are described below. All of our related party transactions are subject to the Company's Related Party Transaction Policy and are required to be made on an arm's length basis and on terms that are fair and reasonable to the Company and substantially the same as would apply if the other party was not a related party. We believe all of our transactions with related parties are at prices that approximate market.
Glencore Ownership
As of September 30, 2024, Glencore plc and its affiliates (together "Glencore") beneficially owned 42.9% of Century’s outstanding common stock (45.9% on a fully-diluted basis assuming the conversion of all of the Series A Convertible Preferred Stock) and all of our outstanding Series A Convertible Preferred Stock. See Note 8. Shareholders' Equity for a description of our outstanding Series A Convertible Preferred Stock. Century and Glencore enter into various transactions from time to time such as the purchase and sale of primary aluminum, purchase and sale of alumina and other raw materials, tolling agreements as well as forward financial contracts and borrowing and other debt transactions.
Sales to Glencore
For thethree months ended September 30, 2024 and 2023, we derived approximately 61.6%and 73.5% of our consolidated net sales from Glencore, respectively. For thenine months ended September 30, 2024 and 2023, we derived approximately 61.1%and 74.1% of our consolidated net sales from Glencore, respectively.
Glencore purchases aluminum produced at our U.S. smelters at prices based on the LME plus the Midwest regional delivery premium plus any additional market-based product premiums. Glencore purchases aluminum produced at our Grundartangi, Iceland smelter at prices primarily based on the LME plus the European Duty Paid premium plus any additional market-based product premiums.
We have entered into agreements with Glencore pursuant to which we sell certain amounts of alumina at market-based prices.
Purchases from Glencore
We purchase a portion of our alumina and certain other raw material requirements from Glencore. Alumina purchases from Glencore during the three and nine months ended September 30, 2024 and September 30, 2023, were priced based on published alumina and aluminum indices as well as fixed prices.
Financial Contracts with Glencore
We have certain financial contracts with Glencore. See Note 15. Derivatives regarding these forward financial sales contracts.
Summary
A summary of the aforementioned significant related party sales and purchases is as follows:
| Three months endedSeptember 30, | Nine months endedSeptember 30, | |||
|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |
| Net sales to Glencore | $332.1 | 400.9 | $971.3 | $1,240.3 |
| Purchases from Glencore(1) | 63.9 | 23.2 | 179.1 | 174.5 |
(1)Includes settlements of financial contract positions.
On December 9, 2022, Vlissingen entered into a Facility Agreement with Glencore International AG, which was amended and extended on October 1, 2024 (as amended, the “Vlissingen Credit Facility”). The availability period for borrowings under the Vlissingen Credit Facility was extended by two years and now ends on December 2, 2026. Under the Vlissingen Credit Facility Vlissingen may borrow from time to time up to $90.0 million in one or more loans at either (i) a fixed interest rate equal to 8.75% per annum (the “Fixed Rate”), or (ii) a variable interest rate equal to the 1-month SOFR rate plus 3.687 percentage points, subject to an absolute maximum level of 9.00% and an absolute minimum level of 7.00% (the “Variable Rate”). The Fixed Rate is only applicable to borrowings made on or before December 1, 2024, after which the Variable Rate shall apply to all borrowings under the Vlissingen Credit Facility. See Note 11. Debt for additional information. Borrowings under the Vlissingen Credit Facility are expected to be used for general corporate and working capital purposes of Century and its subsidiaries.
Carbon Credit Repurchase Agreement
In September 2023, our wholly owned subsidiary Nordural Grundartangi ehf ("Grundartangi"), entered into a structured repurchase arrangement ("Agreement") with an affiliate of Glencore and sold 390,000 European Union Allowances ("Carbon Credits") at a price of €82.18 per Carbon Credit, for an aggregate amount of €32.1 million. The terms of the transaction permitted Grundartangi to repurchase the same number of Carbon Credits by December 21, 2023, at a price of€83.72 per Carbon Credit, for an aggregate amount of€32.7 million. In December 2023, the Agreement was amended ("Amended Agreement") to extend the repurchase window to March 25, 2024, and increased the repurchase price to €85.13 per Carbon Credit, for an aggregate amount of €33.2 million. In addition, Grundartangi entered into a second repurchase agreement ("Second Agreement") with Glencore to sell 40,000 Carbon Credits at a price of €69.30 per Carbon Credit and to repurchase the same number of Carbon Credits at a price of €70.71 per Carbon Credit by March 25, 2024 for an aggregate amount of €2.8 million.
In March 2024, the Amended Agreement was amended to extend the repurchase window from March 25, 2024 to August 30, 2024 and the repurchase price was revised to €87.01 per Carbon Credit, for an aggregate amount of €33.9 million. In addition, the Second Agreement was amended to extend the repurchase window from March 25, 2024 to August 30, 2024 and revised the repurchase price to €72.59 per Carbon Credit, for an aggregate amount of €2.9 million.
In August 2024, the Amended Agreement was amended to extend the repurchase window from August 30, 2024 to December 27, 2024 for 370,700 Carbon Credits. The repurchase price was revised to €71.20 per Carbon Credit, for an aggregate amount of €26.4 million. In addition, 59,300 Carbon Credits were settled on August 30, 2024 for an aggregate amount of €11.1 million.
Due to the repurchase element of these transactions, the Company retains substantially all of the remaining benefits of the assets and has accounted for the transaction as a financing arrangement in accordance with Topic 606, Revenue from Contracts with Customers ("ASC 606").
- Revenue
We disaggregate our revenue by geographical region as follows:
| Net Sales | Three months ended September 30, | Nine months ended September 30, | ||
|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |
| United States | $336.3 | $337.3 | $1,011.2 | $1,042.8 |
| Iceland | 202.8 | 207.9 | 578.2 | 630.3 |
| Total | $539.1 | $545.2 | $1,589.4 | $1,673.1 |
The table below shows the amount of net sales to external customers for each of the Company's product categories which accounted for 10% or more of consolidated net sales in either period for the three and nine months ended September 30, 2024 and 2023.
| Net Sales | Three months ended September 30, | Nine months Ended September 30, | ||
|---|---|---|---|---|
| 2024 | 2023 | 2024 | 2023 | |
| Aluminum | $489.6 | $474.1 | $1,393.9 | $1,515.1 |
| Alumina | 49.5 | 71.1 | 195.5 | 158.0 |
| Total | $539.1 | $545.2 | $1,589.4 | $1,673.1 |
We enter into contracts to sell primary aluminum and alumina to our customers. Revenue is recognized when our performance obligations with our customers are satisfied. Our obligations under the contracts are satisfied when we transfer control of our primary aluminum or alumina to our customers which is generally upon shipment or delivery to customer directed locations. The amount of consideration we receive, thus the revenue we recognize, is a function of volume delivered, market price of primary aluminum which is based on the LME, plus regional premiums and any value-added product premiums or alumina which is based on the alumina pricing index, plus Atlantic differential.
The payment terms and conditions in our contracts vary and are not significant to our revenue. We complete an appropriate credit evaluation for each customer at contract inception. Customer payments are due in arrears and are recognized as accounts receivable - net and due from affiliates in our consolidated balance sheets.
In connection with our sales agreements with certain customers, including Glencore, we invoice the customer prior to physical shipment of goods for a majority of production generated from each of our U.S. domestic smelters. For those sales, revenue is recognized only when the customer has specifically requested such treatment and has made a commitment to purchase the product. The goods must be complete, ready for shipment and separated from other inventory with control over the goods passing to the customer. We must retain no further performance obligations.
Contract liabilities are recorded when cash payments are received or due in advance of performance. Amounts recognized in Due to affiliates was $41.5 million and $30.6 million, as of September 30, 2024 and December 31, 2023, respectively.
- Fair Value Measurements
We measure certain of our assets and liabilities at fair value. Fair value represents the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
In general, reporting entities should apply valuation techniques to measure fair value that maximize the use of observable inputs and minimize the use of unobservable inputs. Observable inputs are developed using market data and reflect assumptions that market participants would use when pricing the asset or liability. Unobservable inputs are developed using the best information available about the assumptions that market participants would use when pricing the asset or liability.
The fair value hierarchy provides transparency regarding the inputs we use to measure fair value. We categorize each fair value measurement in its entirety into the following three levels, based on the lowest level input that is significant to the entire measurement:
Level 1 Inputs - quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at the measurement date.
Level 2 Inputs - inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3 Inputs - unobservable inputs for the asset or liability.
| Recurring Fair Value Measurements | As of September 30, 2024 | |||
|---|---|---|---|---|
| Level 1 | Level 2 | Level 3 | Total | |
| ASSETS: | ||||
| Cash equivalents | $2.7 | $— | $— | $2.7 |
| Trust assets(1) | 0.7 | — | — | 0.7 |
| Derivative instruments | — | 1.7 | — | 1.7 |
| TOTAL | $3.4 | $1.7 | $— | $5.1 |
| LIABILITIES: | ||||
| Derivative instruments | $— | $8.1 | $— | $8.1 |
| TOTAL | $— | $8.1 | $— | $8.1 |
| Recurring Fair Value Measurements | As of December 31, 2023 | |||
|---|---|---|---|---|
| Level 1 | Level 2 | Level 3 | Total | |
| ASSETS: | ||||
| Cash equivalents | $16.8 | $— | $— | $16.8 |
| Trust assets(1) | 0.2 | — | — | 0.2 |
| Derivative instruments | — | 2.9 | — | 2.9 |
| TOTAL | $17.0 | $2.9 | $— | $19.9 |
| LIABILITIES: | ||||
| Derivative instruments | $— | $7.9 | $— | $7.9 |
| TOTAL | $— | $7.9 | $— | $7.9 |
(1)Trust assets are currently invested in money market funds. These trust assets are held to fund the non-qualified supplemental executive pension benefit obligations for certain of our officers.
The following section describes the valuation techniques and inputs for fair value measurements categorized within Level 2 of the fair value hierarchy:
| Level 2 Fair Value Measurements: | ||
|---|---|---|
| Asset / Liability | Valuation Techniques | Inputs |
| LME forward financial sales contracts | Discounted cash flows | Quoted LME forward market, Secured Overnight Financing Rate ("SOFR") discount rate |
| Midwest Premium ("MWP") forward financial sales contracts | Discounted cash flows | Quoted MWP forward market, SOFR discount rate |
| Fixed for floating swaps | Discounted cash flows | Quoted LME forward market, quoted MWP forward market |
| FX swaps | Discounted cash flows | Euro/USD forward exchange rate |
| Indiana Hub power price swaps | Discounted cash flows | Quoted Indiana Hub forward market, SOFR discount rate |
| Casthouse currency hedges | Discounted cash flows | Euro/USD forward exchange rate; ISK/USD forward exchange rate |
| Heavy Fuel Oil ("HFO") price swaps | Discounted cash flows | Quoted HFO forward market |
When valuing Level 3 assets and liabilities, we use certain significant unobservable inputs. Management incorporates various inputs and assumptions including forward commodity prices, commodity price volatility and macroeconomic conditions, including interest rates and discount rates. Our estimates of significant unobservable inputs are ultimately based on our estimates of risks that market participants would consider when valuing our assets and liabilities.
The following table presents the fair value reconciliation of Level 3 assets and liabilities measured at fair value on a recurring basis. There was no activity related to Level 3 assets and liabilities measured at fair value on a recurring basis for the three and nine months ended September 30, 2024.
| Level 3 Assets | Level 3 Liabilities | |
|---|---|---|
| For the nine months ended September 30, 2023 | LME Forward financial sales contracts | LME forward financial sales contracts |
| Balance as of January 1, 2023 | $1.8 | $(4.6) |
| Transfers out of Level 3(1) | (1.8) | 4.6 |
| Balance as of September 30, 2023 | $— | $— |
| Change in unrealized gains (losses)(2) | $— | $— |
(1)Transfer out of Level 3 due to period of time remaining in derivative contract.
(2)Gains and losses are presented in the Consolidated Statement of Operations within the line item "Net gain (loss) on forward and derivative contracts."
- Earnings Per Share
Basic and diluted earnings per share ("EPS") amounts are calculated using the two-class method. Under the two-class method, net earnings are allocated to each class of common stock and participating securities as if all of the net earnings for the period had been distributed. Basic earnings per common share excludes dilution and is calculated by dividing net income (loss) allocated to common stockholders by the weighted average number of common shares outstanding during the period. Diluted EPS amounts assume the issuance of common stock for all potentially dilutive securities. Prior to the three months ended March 31, 2024, diluted EPS amounts were calculated by applying the if-converted method as net income allocated to participating securities was not significant.
The following table shows the basic and diluted (loss) earnings per share:
| For the three months ended September 30, | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| 2024 · 2023 | |||||||||
| Net Income (Loss) · Shares (in millions) · $ Per Share · Net Income (Loss) · Shares (in millions) · $ Per Share | |||||||||
| Net income (loss) attributable to Century stockholders | $47.3 | $(42.0) | |||||||
| Less: net income allocated to participating securities | 2.5 | — | |||||||
| Basic EPS: | |||||||||
| Net income (loss) allocated to common stockholders | $44.8 | 92.8 | $0.48 | $(42.0) | 92.4 | $(0.45) | |||
| Effect of Dilutive Securities(1): | |||||||||
| Share-based compensation | — | 1.0 | — | — | |||||
| Convertible senior notes | 0.7 | 4.6 | — | — | |||||
| Diluted EPS: | |||||||||
| Net income (loss) allocated to common stockholders | $45.5 | 98.4 | $0.46 | $(42.0) | 92.4 | $(0.45) | |||
| For the nine months ended September 30, | |||||||||
| 2024 · 2023 | |||||||||
| Net Income (Loss) · Shares (in millions) · Per Share · Net Income (Loss) · Shares (in millions) · Per Share | |||||||||
| Net income (loss) attributable to Century stockholders | $291.6 | $(73.1) | |||||||
| Less: net income allocated to participating securities | 15.5 | — | |||||||
| Basic EPS: | |||||||||
| Net (loss) income allocated to common stockholders | $276.1 | 92.7 | $2.98 | $(73.1) | 92.4 | $(0.79) | |||
| Effect of Dilutive Securities(1): | |||||||||
| Share-based compensation | 1.2 | 1.5 | — | — | |||||
| Convertible senior notes | 2.7 | 4.6 | — | — | |||||
| Diluted EPS: | |||||||||
| Net income (loss) allocated to common stockholders with assumed conversion | $280.0 | 98.8 | $2.83 | $(73.1) | 92.4 | $(0.79) | |||
| Three months endedSeptember 30, · Nine months endedSeptember 30, | |||||||
|---|---|---|---|---|---|---|---|
| Securities excluded from the calculation of diluted EPS (in millions)(1): · 2024 · 2023 · 2024 · 2023 | |||||||
| Share-based compensation | 0.5 | 0.8 | — | 0.9 | |||
| Convertible preferred shares | 5.2 | 5.4 | 5.2 | 5.4 | |||
| Convertible notes | 4.6 | — | 4.6 | ||||
(1)In periods when we report a net loss, all share-based compensation awards, convertible preferred shares and convertible senior notes are excluded from the calculation of diluted weighted average shares outstanding because of their anti-dilutive effect on earnings (loss) per share.
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.