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Century Aluminum Company (CENX)
Q3 2012 Earnings Call
November 1, 2012 5:00 PM ET
Enrique De Anda – Senior Corporate Financial Analys
Michael Bless – President and CEO
Shelly Harrison – VP and Treasurer
Kuni Chen – CRT Capital Group
David Gagliano – Barclays
Sal Tharani – Goldman Sachs
Brett Levy – Jefferies & Company
Richard Garchitorena – Credit Suisse
Tim Hayes – Davenport & Company
Timna Tanners – Bank of America
Paul Massoud – Stifel Nicolaus
Previous Statements by CENX
» Century Aluminum's CEO Discusses Q2 2012 Results - Earnings Call Transcript
» Century Aluminum's CEO Discusses Q1 2012 Results - Earnings Call Transcript
» Century Aluminum's CEO Discusses Q4 2011 Results - Earnings Call Transcript
» Century Aluminum's CEO Discusses Q3 2011 Results - Earnings Call Transcript
I would now like to turn the conference over to our host, Mr. Enrique De Anda. Please go ahead.
Enrique De Anda
Thank you very much, Cathy. Hello everyone and welcome to the conference call. Before we begin, I would like to remind you that today’s discussion will contain forward-looking statements related to future events and expectations, including our expected future financial performance, results of operations, and financial conditions.
These forward-looking statements involve important known and unknown risks and uncertainties which could cause actual our results to differ materially from those expressed in our forward-looking statements. Please review the forward-looking statements disclosure in today’s slides and press release for a full discussion of these risks and uncertainties. In addition, we included some non-GAAP financial measures in our discussion. Reconciliations to the most comparable GAAP financial measures can be found in the appendix to today’s presentation and on our website at centuryaluminum.com.
I’d now like to introduce Michael Bless, Century Aluminum’s President and Chief Executive Officer.
Thanks Enrique. Pardon me, and thanks for everybody for joining us this afternoon, especially those of you in the North East who are dealing with the aftermath of the storm. You got our very best wishes. I was raised in New England and lived at Manhattan for 10 years and despite that having like most people watched the images on TV, on the web last couple of days can imagine what you all are dealing with both professionally and personally. And so we got our best wishes at the recovery period is as efficient and as quick as reasonably possible.
Let’s go to slide three please and let me give you quick update of what we’ve been working on here at Century over the last couple of months. Most importantly we continue to make very good progress across the company on our safety initiatives. We made major investments in initiatives like training and behavioral based safety and these are showing terrific results. We’re right now focusing on making sure our people can recognize the hazards that exits in the tasks that they perform both everyday tasks and also most difficult and nonrecurring tasks for which procedures are written but obviously not studied every day.
We need to make sure our people understand that it’s their responsibility to stop these activities rather than accepting appropriate risk. The performance metrics and safety have been good across the company. I’ll review those in a few minutes. And it’s interesting when we go a couple of months at each of our facilities and we have at each of them without a reportable incident, people being sort of gain a new attitude, they become convinced that a zero accident environment is indeed possible and this is obviously – it’s success I suppose building upon success. So excellent, excellent progress there across the company. In 2013, I am happy to report that each of our facilities, each of our businesses has committed to take their safety performance to a new level.
Okay, let’s move on Hawesville obviously. The plant continues to perform exceptionally well. This despite the fact that we continued to deal with the aftermath of the upset conditions in the power rooms [ph] that we experienced as you remember in the summer and the fall of 2011. It’s a testament to the management team that they are dealing with these issues one by one and that none of them are impacting the bottom line.
As we said the issue in Hawesville is now an uncompetitive power contracting arrangement. As you know, we’ve had a lot of discussion and effort on this issue since the beginning of the year and as we feared towards the end of the summer, we came to the regrettable conclusion that the plant just isn’t viable under the current power price and under the current metal price environment. Lastly, if there were no change to this environment, we’d regrettably have to close the plant at the end of the notice period in August of 2013, as you remember we put out a press release. We did in fact issue a notice of termination to the power supplier in August of 2013.
We’re now working aggressively with all the constituencies including the Big Rivers and Kenergy, as you know those are respectably the wholesale and retail power providers. We got a long way to go but I can report very good progress and a good co-operative spirit over the last couple of months and I’ll detail for you at the end of my comments about what we see over the next couple of months.
Moving onto Grundartangi, our Board has approved the expansion of hot metal capacity at the plant and thus we’ve begun the major engineering work and ordering the major equipment. Just to remind you here, this is an increase in the hot metal capacity at the plant by about 15% over the next couple of years. We’re doing this without a change to the footprint of the plant, i.e., no new reduction in sales. In order to achieve this, we’ll require a modest amount of additional electric power. It’s important to note that this will have no impact on the power that we require for Helguvik. As you might imagine this is an attractive project. It’s got a good financial return and very low technical risk so we’re excited about it.