Century Aluminum Company · NASDAQ:CENX
Century Aluminum — Investor Presentation (August 2019)
32 slides from Century Aluminum's investor presentation, Aug 6, 2019
Slide 1: Investor Presentation
Investor Presentation August 2019
Slide 2: Cautionary Statement
Cautionary Statement This press release and statements made by Century Aluminum Company management on the quarterly conference call contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 2
Slide 3: Today's Presenters
Today’s Presenters Management Presenters Michael Bless – President, Chief Executive Officer and Director Mr. Bless joined Century in 2006 as Chief Financial Officer. Mr. Bless was elected President and Chief Executive Officer in November 2011 and elected to the Board of Directors in December 2012
Slide 4: Table of Contents
Table of Contents 1 Business and Industry Overview 2 Financial Overview 3
Slide 5: Business and Industry Overview
1. Business and Industry Overview
Slide 6: Century Aluminum at a Glance
Century Aluminum at a Glance 2018A Revenue: $1,893 million 2018A Adj. EBITDA: $86 million LTM Revenue: $1,932 million LTM Q219 Adj. EBITDA: ($22) million LTM Q219 “Illustrative” EBITDA(1): $196 million Net PP&E (06/30/19): $933 million Equity market cap: $679 million Grundartangi, Sebree, Mt. Holly,
Slide 7: Century's Operational and Financial Strategy
Century’s Operational and Financial Strategy Safety & Productivity & Upstream Robust financial Strong balance enviromental efficiency investment profile sheet(1) opportunities Best-in-class Hot metal capacity Pursuing upstream Preserve lean Significant liquidity culture of safety creep inv
Slide 8: Key Company Highlights
Key Company Highlights 1 The leading primary aluminum producer in the U.S. with direct access to its major customer markets 2 World-class operations in Iceland backed by favorable renewable power source 3 Globally competitive U.S. operations producing value-added products with access to competit
Slide 9: Global Aluminum Producer with Direct Access to Major Customer Markets
1 Global Aluminum Producer with Direct Access to Major Customer Markets U.S. smelters Aluminum Smelter Grundartangi Grundartangi, Iceland Midwest regional delivery premium Annual capacity: 317 kT Proximity to European market 2018 Production: 317 kT Protected by import duties in U.S. market
Slide 10: World-Class Operations in Iceland Backed by Favorable Renewable Power Source
2 World-Class Operations in Iceland Backed by Favorable Renewable Power Source Grundartangi, Iceland Overview Update Pot lines 2 fully operational pot lines Continue to invest in capacity creep project Potential investment in a value-added casthouse Production 317 kT (31% of total) Power c
Slide 11: Globally Competitive Smelter, Strategically Located in the Midwestern Market
3 Globally Competitive Smelter, Strategically Located in the Middle of the Midwestern Market Sebree, KY Overview Update In May 2018, temporarily curtailed one potline due to an Pot lines 3 fully operational pot lines equipment failure − Returned the curtailed potline back to service during Produ
Slide 12: The Most Modern Primary Aluminum Smelter in the United States
3 The Most Modern Primary Aluminum Smelter in the United States Mt. Holly, SC Overview Update Pot lines 1 of 2 pot lines in operation Reached an agreement on the extension of the power contract (same terms as the previous agreement) through 2020 Production 229 kT (23% of total) capacity(1) C
Slide 13: Only Volume Producer of High Purity Primary Aluminum in the Western Hemisphere
4 Only Volume Producer of High Purity Primary Aluminum in the Western Hemisphere Hawesville, KY Overview Update Pot lines 4 of 5 pot lines in operation Three newly rebuilt potlines successfully completed on budget and ahead of schedule Production 250 kT (25% of total) Remaining two potlines
Slide 14: Long-standing Strategic Partnership with Glencore
5 Long-standing Strategic Partnership with Glencore Century benefits from a business relationship with its largest shareholder, Glencore, one of the world’s largest suppliers of a wide range of commodities and raw materials to industrial consumers Glencore has consistently been a major customer of
Slide 15: Highly-Experienced Senior Leadership Team
6 Highly-Experienced Senior Leadership Team with Commitment to Safety and Operational Excellence Name and Title Position and Duration Michael Bless Mr. Bless joined Century in 2006 as Chief Financial Officer. Mr. Bless was elected President and Chief Executive Officer in November 2011 and elected
Slide 16: Section 232 Tariffs Continues to Provide Upside
7 Section 232 Tariffs Continues to Provide Upside On March 23, 2018, the United States implemented a 10% import duty on all primary aluminum and certain other aluminum products entering the United States The purpose of the tariff is to protect national security by restarting production in the U.S.
Slide 17: Supply Deficit and Decreasing Inventories Support Higher LME Prices
7 Supply Deficit and Decreasing Inventories Support Higher LME Prices Global Inventory Days of Primary Aluminum Consumption 119 (16) 109 110 108 100 91 91 77 80 76 65 60 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 YTD 2019 (1) FY 2019 Supply, Demand, Balance Primary Aluminum (Mt) 95.0 75.
Slide 18: Favorable LME Aluminum Pricing Outlook
7 Favorable LME Aluminum Pricing Outlook LME Aluminum, Mid-West Premium and European Duty Paid Premium over time Historical Forward estimates 2,900 2,500 LME, Prices ($/T) 2,100 1,960 1,875 1,838 1,922 1,830 1,788 1,700 1,300 Aug-14 Aug-15 Aug-16 Aug-17 Aug-18 Aug-19 2019 2020 2021 LME LME + EDPP LM
Slide 19: Alumina to Aluminum Ratio Has Returned to Historical Levels
7 Alumina to Aluminum Ratio Has Returned to Historical Levels Historical average $750 35.0% (Jul. 2014 – Feb. 2018): 15-17% Current alumina to LME aluminum ratio is close $650 to historical 30.0% levels US sanctions on Alumina as a % of LME Rusal Alumina, Prices ($/T) $550 25.0% $450 20.0% 17.2% $35
Slide 20: Financial Overview
2. Financial Overview
Slide 21: Strong and Consistent Operational Performance
Strong and Consistent Operational Performance Shipments Revenue & average price per tonne (Tonnes in ‘000) ($ in millions, except per tonne amounts) $2,075 $1,931 $1,950 $1,932 $1,893 922 867 98 792 $1,589 139 750 $1,575 734 743 46 $1,319 $2,505 $2,333 $2,378 $2,169 $2,126 $1,075 $1,867 $1,825 $2,11
Slide 22: Proven Ability to Generate EBITDA and FCF Through Different Price Environments
Proven Ability to Generate EBITDA and FCF Through Different Price Environments Annual historical figures Q219 quarterly figures ($ in millions) $215 $168 $100 $86 $83 $55 $55 (1) $42 $32 $68 $29 $22 $12 $13 (2) $26 $24 $5 $7 ($25) 2014 2015 2016 2017 2018 Illustrative Q219 future quarter @ Adjusted
Slide 23: Significant Earnings Power
Significant Earnings Power ($ in millions) $45 $31 $42 $40 $35 Spot Alumina $30 prices will begin to $25 benefit $20 Century reported $15 $12 earnings with $10 ~3 month lag … beginning $5 Q4 2019 $0 Q219 Spot alumina benefit Illustrative future quarter Adjusted EBITDA @ spot alumina (1) Change Avera
Slide 24: Ability to Generate Significant EBITDA Across a Wide Range of LME and API Prices
Ability to Generate Significant EBITDA Across a Wide Range of LME and API Prices Q2 Annualized Adjusted EBITDA Sensitivity(1) ($ in millions) LME $/T $ 1,700 $ 1,750 $ 1,800 $ 1,850 $ 1,900 $ 1,950 $ 2,000 $ 270 96 134 172 210 248 286 324 Significant $ 280 82 120 158 196 234 272 310 earnings Alumina
Slide 25: Strong Liquidity Position and Significant Asset Coverage
Strong Liquidity Position and Significant Asset Coverage As of ($ in millions) 6/30/19A Cash and cash equivalents $26 Total Liquidity: $202 million Availability under Credit Facilities 222 Borrow ing under Credit Facilities (8) Total Asset Value(1) / Total Debt: 5.0x Letters of credit outstandin
Slide 26: Appendix
Appendix
Slide 27: Summary Corporate Structure
Summary Corporate Structure Non-Guarantor Restricted Subs Guarantors 100% owned 100% owned 100% owned 100% owned Century Aluminum Century Kentucky, Century Aluminum of Nordural ehf Sebree, LLC Inc., et. al. South Carolina, Inc. Grundartangi Sebree, KY Hawesville, KY Mt. Holly, SC Second priority lie
Slide 28: Adjusted EBITDA Non-GAAP Reconciliation
Adjusted EBITDA Non-GAAP Reconciliation Q1-19 Q2-19 $MM $MM Net income (loss) as reported ($34.6) ($20.7) Interest expense $5.8 $5.8 Interest expense - term loan – $0.6 Interest income ($0.2) ($0.2) Net (gain) loss on forward and derivative contracts $5.7 ($6.1) Other (income) expense - net (1.1) 1.
Slide 29: Adjusted EBITDA Non-GAAP Reconciliation
Adjusted EBITDA Non-GAAP Reconciliation (1) ($MM) 2014 2015 2016 2017 2018 LTM Q2-19 Net income / (loss) $126 ($59) ($252) $49 ($66) ($141) Net interest expense 22 22 21 21 21 23 Interest expense 22 22 22 22 22 24 Interest income (0) (0) (1) (1) (2) (1) Net (gain) / loss on forward and derivative co
Slide 30: Illustrative LTM Adjusted EBITDA
Illustrative LTM Adjusted EBITDA (Using Historical Average of API as % of LME) ($ in millions) $250 $218 $196 $200 $150 $100 $50 $0 ($22) -$50 LTM Q219 Adjusted for historical average of API as LTM Q219 Adjusted EBITDA % of LME (1) Adjusted EBITDA (Using historical average of API as % of LME) Change
Slide 31: 2019 EBITDA Sensitivities
2019 EBITDA Sensitivities Variance Annual EBITDA(6) ($MM) LME +/- $100/T $76 MWP (1) +/- $0.01/lb $7 EDPP (2) +/- $22.04/T $7 MISO Indiana Hub (3) +/- $1/MWh $6 NYMEX Henry Hub Nat Gas (4) +/- $0.10/MMBtu $1 Alumina Index Price +/- $10/T $14 Coke (5) +/- $10/T $3 Pitch (5) +/- $10/T $1 Source: Compa
Slide 32: Electrical Power Supply Agreements
Electrical Power Supply Agreements Facility Power supplier Term Pricing Grundartangi Landsvirkjun Through 2023 – 2036 Variable rate based on (i) the LME price for primary aluminum Orkuveita Reykjavíkur ("OR") or (ii) the Nord Pool power market for 161MW (~30%) of HS Orka hf ("HS") Landsvirkjun suppl
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