Century Aluminum Company (CENX)

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Century Aluminum Co. (CENX)

Q3 2009 Earnings Call

October 27, 2009 05:00 PM ET


Michelle M. Lair - Vice President and Treasurer

Logan W. Kruger - President, Chief Executive Officer and Director

Wayne R. Hale - Executive Vice President and Chief Operating Officer

Michael A. Bless - Executive Vice President and Chief Financial Officer


Bret Levy - Jefferies & Company

Kuni Chen - Merrill Lynch

Chris Dougherty - Oppenheimer & Co.



Thank you for standing by ladies and gentleman welcome to the Century Aluminum Third Quarter 2009 Earning Conference Call. At this time all participants are in listen-only mode. Later we will conduct a question-and-answer session and instructions will be given at that time (operator instructions) I would now like to turn the conference over to your host Michelle Lair, Head of Investor Relations. Please go ahead ma'am.

Michelle M. Lair

Thank you, Christopher. Good afternoon everyone and welcome to the conference call. For those of you joining us by telephone this presentation is being webcast on the Century Aluminum website www.centruryaluminum.com

Please note that website participants have been advised to advance their own slides. The following presentation and discussion may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Such statements related to future events and expectations and involve known and unknown risks and uncertainties. Century's actual results or actions may differ materially from those projected in these forward-looking statements, for summary the risk factors, that could cause actual results to differ from those expressed in these forward-looking statements please review Annex-A and refer to Century's Form 10-K for year ended December 31, 2008; Form 10-Q third quarter ended June 30, 2009 and other reports filed with the Securities and Exchange Commission.

Information were added in this presentation and discussion is based on information available as of October 27, 2009. Century undertakes no duty to update or revise any forward-looking statements whether as the result of new information actual events, future events or otherwise. In addition, throughout the conference call, we will use non-GAAP financial measures, reconciliation of the most comparable GAAP financial measures can be found in the appendix of today's presentation which is available on our website.

I'd now like introduce to Logan Kruger, Century's President and Chief Executive Officer.

Logan W. Kruger

Thank you Sherry, good afternoon everyone and thank you for joining us. We continue to focus our efforts on preserving the company's value and welcome the opportunity to report on our progress. So let's get started and move on slide 4.

The global economic environment undeniably strengthened during the past several months. As this conditions in industrial metro markets. Stimulus spending in China has combined with a recently rapid return to higher levels of consumer activity. I will provide some detail in a moment. But I will summarize our view as being recently constructive on the return to a consistent attractive growth in China and several other developing regions.

This positive trend has been counted by the restart of miniscule Chinese capacity providing a reminder of the flexibility of this particular supply. In the developed world the data while not merely straight forward, demand in many regions seems to be at least step bottom. However, you are all familiar with the real structural challenges that remain. Only time will tell whether the high enough levels are sustainable of growth can be created to counter the very real imbalances which persists.

In a similar context we continue to run the company with emphasis of preserving the significant improvement in financial states we have created. The cost reduction programs that holds lot -- had proven their sustainability. On the other hand we continue to see disappointing performance at Mt. Holly. Wayne will provide more detail on the operations at the plant. And importantly we have progress the happened obvious and a careful timings.

I'm very pleased with our success, we've significantly improved a cost free financial profile. Mike will elaborate in a few moment. In a nut shell we have successfully mitigated the risk of the debt, which effectively matures in 2011. And in current it has reduced the company's leverage.

In addition, we came to what we believe was an attractive resolution for our interest in Gramercy and St. Ann businesses and we're able to put in place some downside try key protection for our Hawesville facility. We ended the quarter, with just shy of 200 million in cash.

Let's move on to slide number five. The automated cash drives averaged $1800 per ton for the third quarter of 2009 and it recently increased the approximately 1900 per ton based around 2003 months. The much recent spots in aluminum price in the Pacific basin was started at $284 per ton up from the $241 per ton in the second quarter.

Chinese GDP grew at a pace of 8.9% over third quarter. The fastest pace in a year and similar spending and record lending growth have had the desired effect and the industrial production was 13.9 in September. These growths levels are some what lower in China than we are and seen in recent years but in trace of in the lights of global economic recession. India's economy is on the upswing which is reflected by the 6.1 year-on-year rise in second quarter GDP. Industrial production growth 10.4% year-on-year in the month of August

Compared to other markets which were severely depressed for the first quarter the Indian economy merely slowed down and is recovering strongly. Similarly Brazilian GDP expand to 1.9% in Q2 and out the plan of 1% in Q1 and is now back to pre recession levels. Let's move on to slide number 6

With rising metal prices in the third quarter new capacity could tell have essentially come to our halt. In fact as indicated by the dotted boxes approximately 2.5 million tones in re-stock have occurred in China and another approximately 1.5 million tones of newly commissioned capacity have come on line with produced continue to enjoy a $200 flat premium per ton a metal to that sold out with. Global consignments now stand at 4 million that compared to 6.7 million tons of production at the height of the consignments in Q1 of this year.

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