Q1 2009 Earning Report of Century Aluminum Co.

1st Quarter 2009Earnings Conference CallEarnings Conference Call

April 21 2009April 21, 2009

Cautionary Statement

The following presentation, accompanying press release and comments include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements relate to future events and expectations and involve known and unknown risks andevents 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. These forward-looking statements are based on our current expectations and we assume no pobligation to update these forward-looking statements. Investors are cautioned not to place undue reliance on these forward-looking statements.

For risks related to these forward-looking statements, please review Annex g , pA and our periodic SEC filings, including the “Risk Factors” and “Management's Discussion and Analysis” sections of our latest annual report and quarterly reports.

1st Quarter Conference Call 2

Participants

• Logan Kruger, CEO

• Wayne Hale, COOy

• Mike Bless, CFO


Q109 Overview

• Macro environment– End markets remain weak– Tentative signs of stabilizatione a e s g s o s ab a o– Early indications of improving economic conditions in China– Full impact of announced closures not yet seen - further

curtailments required to balance aluminum marketcurtailments required to balance aluminum market

• Operations– Plants performed safely and wellPlants performed safely and well– Full curtailment of Ravenswood – Curtailment of one potline (~50K T) at Hawesville– Gramercy producing at 50% of smelter grade alumina capacityGramercy producing at 50% of smelter grade alumina capacity

• Liquidity/restructuring– $267MM cash balance at 3/31

1st Quarter Conference Call

$267MM cash balance at 3/31 – Numerous processes aimed at improving cash flow

4

Iceland Update

• Macroeconomic / political environment– Rising unemployment– Banking system stabilizationa g sys e s ab a o– Permanent government change with upcoming elections

• Grundartangi – efficiencies improving, costs fallingg p g, g

• Helguvik– Site activity significantly reducedy g y– Review of capital estimate– Investment Agreement approved by Parliament


Global Days Aluminum Inventory vs. Price

90

100

$3,000

$3,200

60

70

80

$2,400

$2,600

$2,800

ory

)

40

50

60

$1 800

$2,000

$2,200

Day

s In

vent

o

Pric

e ($

/T)

20

30

$1,400

$1,600

$1,800 D

-

10

$1,000

$1,200

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009


Global Days Inventory Quarter End LME Price

6

Note: Inventory includes TOCOM, Japanese port, NYMEX, Shanghai, LME & IAI unwrought stocksSource: CRU Group - www.crugroup.com

Supply Significantly Reduced

40,000

38,000

39,000

nes

-000

s)

36 000

37,000

Pro

duct

ion

(Ton

n

35,000

36,000

Ann

ual P

33,000

34,000


2008 Other China Alcoa Chalco UC Rusal Rio Tinto Alcan Other April 2009

7

Source: CRU Group - www.crugroup.com and public news

Announced Closures as % of 2008 Capacity

28% 28% 28%

25%

30%

21%

19% 19%20%

25%

city

12%15%

of 2

008

capa

c

7%

5%

10%%

0%Century Norsk Hydro Chalco Alcoa UC Rusal Rio Tinto Other China Others


yAluminum

yAlcan

8

Source: CRU Group - www.crugroup.com and public news

LME Prices Appear to be Stabilizing

$3,250

$3,500

$2,750

$3,000

$2,250

$2,500

$/To

nne

$1,750

$2,000

50th Percentile of Global Cash Cost C r e

$

$1,250

$1,500 $1500/T

$1250/T

50th Percentile of Global Cash Cost Curve


$1,000 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09

9Source: CRU Group - www.crugroup.com

Operations

• Ravenswood– Safe/orderly curtailment– Sustaining staff on siteSus a g s a o s e– USWA negotiations upcoming

• Hawesville– Line 5 curtailed early March– Additional actions under consideration– New power contract pendingNew power contract pending

• Gramercy / St. Ann– Refinery operating efficiently at 500K mtpy smelter gradeRefinery operating efficiently at 500K mtpy smelter grade

alumina and 200K mtpy chemical grade alumina– Third party bauxite sales– Discussions with partner


Discussions with partner

10

Operations (continued)

• Mt. Holly – Ongoing discussions with power supplier– Discussions with partnerscuss o s pa e

• Grundartangi– Stable operations – no impact from Iceland environmentp p– Efficiencies improving, costs reductions successful

• Market– North American end markets weak, other than rod/cable

(transmission grid)– Short-term support due to scrap shortageShort term support due to scrap shortage– Signs of potential stabilization in 2009 sequential order rates– Stimulus spending in China yielding potential impact– Few signs of recovery in other international markets


Few signs of recovery in other international markets

11

Q109 Summary Results

($MM, except per share amounts)

Q408 Q109As Adjusted(a)

Net sales 402$ 225$ Operating loss (162) (107)Operating loss (162) (107) Net loss (694) (115) B i EPS (14 14)$ (1 77)$Basic EPS (14.14)$ (1.77)$Diluted EPS (14.14)$ (1.77)$


(a) Reflects the implementation of FASB Staff Position APB 14-1 – Accounting for Convertible Debt Instruments.

Liquidity Improved in Q1

90

43

25$350

$400

267 104

61 16

11

25

$250

$300

$MM

’s)

143

11

$150

$200

$250

nves

tmen

ts (

$

143

$100

$150

Cas

h a

nd S

T I

$0

$50

12/31/2008 Net equity Tax Working Revolver Cash loss Capex Cash 3/31/2009

C


q yproceeds refunds

gcapital/ other

repayment f rom operations*

pinterest

13*Includes cash curtailment costs at Ravenswood

Cash Flow

•Smelter cash costs* U.S. ~$1,800/T (assumes current power contract at Hawesville) Iceland ~$1,350/T

•Ravenswood curtailment Q2-Q4 2009 – $30-35MM 2010 – $25-30MM

•SG&A $6MM/quarter average•SG&A $6MM/quarter average

•Capex Q2-Q4 2009 – <$10MM2010 – ~$15MM

•Helguvik Q2-Q4 2009 – ~$15MM 2010 – ~$5MM (supplier payments)

C h i t t $22MM/ ($11MM i i i 2009)•Cash interest expense $22MM/year ($11MM remaining in 2009)

* f G f f S


*At recent LME prices; assumes a market based alumina cost for Grundartangi; net of premiums to LME for U.S. plants

Summary

• Macro environment– Early signs of potential stabilization– Further capacity curtailment requiredu e capac y cu a e equ ed

• Aggressive actions completed– Capacity curtailed at Ravenswood and Hawesvillep y– Costs reduced at all operating facilities– Liquidity increased with equity offering and tax refunds

• Next steps– Additional capacity curtailment– Discussions with suppliers, customers, partnersDiscussions with suppliers, customers, partners


AppendixAppendix

16

For Additional Information

Shelly LairyVP and [email protected]

Century Aluminum Company

2511 Garden Road, Building A, Suite 200

Monterey, CA 93940

831-642-9300 (Office)

831 642 9328 (F )831-642-9328 (Fax)

www.centuryca.com


Annex A: Forward Looking StatementsStatements in this presentation that relate to future results and events (including statements about Century’s anticipated financial and operating performance) are forward-looking statements based on current expectations and projections about future events. Many of these statements may be identified by the use of forward-looking words such as “expects,” “anticipates,” “plans,” “believes,” “projects,” “estimates,” “intends,” “should,” “could,” “would,” “will,” and “potential” and similar words. These forward-looking statements are subject to risks, uncertainties and assumptions including, among other things, those discussed in Century’s periodic filings with the Securities and Exchange Commission (SEC), including the “Risk Factors” and “Management’s Discussion and Analysis” section of our latest annual report and quarterly reports. Such factors include:

R t d li i l i i h d l ff t d fi i l iti d lt f ti d ld lt i t il t f ti t f• Recent declines in aluminum prices have adversely affected our financial position and results of operations and could result in curtailment of operations at one or more of our facilities if alternate sources of liquidity are not available or prices do not increase.

• A continuation or worsening of global financial and economic conditions could adversely impact our financial position and results of operations and limit our ability to access the credit and capital markets on acceptable terms to obtain funding for our operations and capital projects.

• The recent turmoil in the financial markets could have adverse effects on our pension funding obligations.• If economic and political conditions in Iceland continue to deteriorate, our financial position and results of operations could be adversely impacted.• The market price of our common stock has declined significantly, may continue to be volatile, and may decline further.• Our planned construction and development activities require substantial capital We may be unable to obtain needed capital or financing on satisfactory terms or at all• Our planned construction and development activities require substantial capital. We may be unable to obtain needed capital or financing on satisfactory terms or at all, which could delay or curtail our planned construction projects.

• We may be required to write down the value of certain assets.• Our credit ratings have been recently changed by two major credit rating agencies.• The cyclical nature of the aluminum industry causes variability in our earnings and cash flows.• Our molten aluminum sales at Hawesville are subject to long-term sales contracts which limit our ability to cut costs and create dependence on two major customers.• We would be required to incur substantial costs in order to curtail unprofitable aluminum production.• The cost of alumina used at Hawesville may be higher than under our LME-based alumina contracts• The cost of alumina used at Hawesville may be higher than under our LME-based alumina contracts.• Changes or disruptions to our raw material supply arrangements and power supply could increase our production costs and reduce the profitability of our operations.• Changes in the relative cost and availability of certain raw materials and energy compared to the price of primary aluminum could affect our operating results.• Unexpected events, including natural disasters, may increase our cost of doing business or disrupt our operations.• We are subject to the risk of union disputes.• We are subject to a variety of environmental laws and regulations that could result in costs or liabilities.• International operations expose us to political, regulatory, currency and other related risks.• Our historical financial information may not be comparable to our results for future periods.Our historical financial information may not be comparable to our results for future periods.• Our level of indebtedness requires significant cash flow to meet our debt service requirements, which reduces cash available for other purposes, such as the payment of dividends, and limits our ability to pursue our growth opportunities.

• Restrictive covenants in our credit facility and the indenture governing our senior notes limit our ability to incur additional debt and pursue our growth strategy.• Further consolidation within the metals industry could provide competitive advantages to our competitors.• Reductions in the duty on primary aluminum imports into the European Union decrease our revenues at Grundartangi.• We depend upon intercompany transfers from our subsidiaries to meet our debt service obligations.• Provisions in our charter documents and state law may make it difficult for others to obtain control of Century, even though some stockholders may consider them to be


y y, g ybeneficial.

We believe the expectations reflected in these forward-looking statements are reasonable, based on information available to us on the date of this presentation. However, given the described uncertainties and risks, we cannot guarantee our future performance or results of operations and you should not place undue reliance on these forward-looking statements. Century undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

18

Q1 2009 Earning Report of Century Aluminum Co.

Economy & Finance

Transcript of Q1 2009 Earning Report of Century Aluminum Co.