NASDAQ:CENX Century Aluminum Q2 2023 Earnings Report $16.79 -0.46 (-2.67%) Closing price 04/25/2025 04:00 PM EasternExtended Trading$16.78 -0.01 (-0.06%) As of 04/25/2025 07:29 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast Century Aluminum EPS ResultsActual EPS$0.16Consensus EPS -$0.12Beat/MissBeat by +$0.28One Year Ago EPSN/ACentury Aluminum Revenue ResultsActual Revenue$575.50 millionExpected Revenue$521.20 millionBeat/MissBeat by +$54.30 millionYoY Revenue GrowthN/ACentury Aluminum Announcement DetailsQuarterQ2 2023Date8/9/2023TimeN/AConference Call DateWednesday, August 9, 2023Conference Call Time5:00PM ETUpcoming EarningsCentury Aluminum's Q1 2025 earnings is scheduled for Tuesday, April 29, 2025Conference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Quarterly Report (10-Q)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by Century Aluminum Q2 2023 Earnings Call TranscriptProvided by QuartrAugust 9, 2023 ShareLink copied to clipboard.There are 5 speakers on the call. Operator00:00:00Afternoon, and thank you for attending today's Century Aluminum Company Second Quarter 2023 Earnings Conference Call. My name is Shae san, and I'll be the moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. I'd now like to pass the conference over to our host, Ryan Crawford. Speaker 100:00:22Thank you, operator. Good afternoon, everyone, and welcome to the conference call. I'm joined here today by Jesse Gary, Century's President and Chief Executive Officer Jerry Bialik, Executive Vice President and Chief Financial Officer and Peter Trzepkowski, Senior Vice President of Finance and Treasurer. After our prepared comments, As a reminder, today's presentation is available on our website at www .centuryaluminum.com. We use our website as a means of disclosing material information about the company and for complying with Regulation FD. Speaker 100:01:03Turning to Slide 1, please take a moment to review the cautionary statements shown here with respect to forward looking statements and non GAAP financial measures contained in today's discussion. And with that, I'll hand the call to Jesse. Thanks, Ryan. Thanks to everyone for joining. Speaker 200:01:21I'll start today by reviewing our 2nd quarter financial and operational performance before discussing the current market conditions. Jerry will then take you through the financial results, And I'll wrap up before turning it over for questions. Turning to Slide 3. Continued strong operational performance And falling input prices in our smelters drove a Q2 adjusted EBITDA of $30,000,000 which was an improvement of about $6,000,000 over Q1. We made significant progress over the last several months welcoming our new Gemalco colleagues and beginning to integrate the Gemalco operations into the Century system. Speaker 200:02:00We are encouraged by the quality of the people at Gemalco, and perhaps most especially by their excellent safety culture. Tramelco has a long history of prioritizing the safety of its workforce and the sustainability of its operations with excellent systems in place to ensure its people will return home safely each day. We have some nice opportunities to import some of the JAMALCO safety systems and procedures into the rest of Century's operations. Gemalco did suffer an adverse weather event in early June when lightning strikes damaged the local grid. This caused a complete disruption of power to the refinery for several days and resulted in damage to several key pieces of equipment. Speaker 200:02:42The outage, resulting in stability and a staged restart of the plant, resulted in lost production in June. The refinery returned to full and stable operations in July after gradually returning to targeted production levels over the course of June. Jerry will cover the financial impact on Q2 in a bit. As we discussed on our last call, we are in the process of We're also implementing a series of operational improvements and investments at Gemalco to restore the refinery to its design capacity of 1,400,000 tons over the course of the next several years. We expect to see some of those volume gains begin to appear in Q3 and Q4 of this year, which should allow the refinery to reach an annualized run rate of 1,200,000 tons by the end of the year. Speaker 200:03:28We'll provide additional detail on 2024 and beyond on our Q4 call. On the smelter side, our teams have done an excellent job operating each of our plants through some very high temperature days over the past several months. Operational performance at each smelter was stable and at targeted levels across the quarter. We are pleased to see that Operational improvement programs we began implementing 2 years ago really paying off with the excellent stability the smelters have seen over the past several quarters. We expect these programs will continue to pay dividends as we move into 2024. Speaker 200:04:04Turning to the market environment on Page 4, You can see the global supply and demand remains roughly balanced as we enter the Q3. Although Chinese supply gains and some short term demand weakness Have moved the market from a slight deficit last quarter to a slight surplus this quarter. In Q2, the 3 month aluminum price averaged 2,286 dollars per tonne, down about $150 from Q1 levels. Regional delivery premiums declined in the quarter as well, but remain elevated from historical levels. In general, the aluminum market in the 2nd quarter reflected the uncertainty in the broader economy. Speaker 200:04:43Persistent inflation and rising interest rates have cooled demand in the short term. This is most evident in our value added product sales, where billet demand remained slow during Q2. This is most acute among our building and construction customers, while automotive and renewable energy markets remained a bright spot. In this environment, we remain focused on disciplined cost management and executing our improvement programs to best position ourselves for the eventual market rebound. Turning to the supply side, previously curtailed production in Yunnan began to restart in the quarter as power availability in the province improved. Speaker 200:05:21These restarts more than offset curtailments in Sichuan and brought the overall Chinese markets closer to balance. While Yunnan hydropower production did benefit from recent rainfall, Reservoir levels in the province remain below normal levels, leaving it at risk of a 3rd straight season of production cuts once dry season returns this fall. Overall, while global supply and demand have returned to near balanced levels, global days of inventory remain near 50 days. Inventories have remained at these relatively low levels despite a growing number of global consumers no longer accepting Russian metal following the Russian invasion of Ukraine. This means that while overall global inventories have remained low, they are increasingly made up of Russian origin metal. Speaker 200:06:08In fact, Russian metal now makes up around 80% of LME inventories, up from just 10% prior to the war in Ukraine. With inventories at these historically low levels, LME prices and regional premiums should respond swiftly once demand conditions improve. As you can see from our energy chart on Page 5, EU energy prices remain significantly elevated, leaving remaining European smelter margins challenged. With forward energy prices remaining above $150 per megawatt hour, We do not anticipate any significant European smelter restarts in the near term. Turning to Page 6, we can see that smelting costs have come down across the board, Most significantly on the energy side, where Q2 Indy Hub and Northvolt both reflect an over 50% reduction from year ago levels. Speaker 200:06:59Energy supply and demand fundamentals remain constructive with U. S. Natural gas reserves sitting 22% above year ago levels and 12% above the 5 year average. Utility coal stockpiles are also full, nearly 60% above a year ago. These high level of U. Speaker 200:07:16S. Gas and coal reserves should help to ensure power prices remain constructive over the next 6 months. Turning to raw materials, coke and pitch prices have now finally begun to fall, With coke prices averaging $5.82 in the quarter, down almost 25% from year ago levels. Pitch prices also moderated. On the refining side of our business, Jamalco's primary outside raw material inputs are caustic soda, LNG, which is priced off of reference to Henry Hub, And HFO. Speaker 200:07:47Most of these input costs have declined over the first half, with U. S. Natural gas prices averaging $2.15 for MMBtu in Q2, down over 70% from year ago levels and HFO averaging $63 a barrel, down about a third from Q2 2022. Caustic prices have also been falling precipitously, down over 50% from last year. With that, I'll turn it over to Jerry to walk you through the financial results and our Q3 outlook. Speaker 200:08:17Jerry? Thank you, Jesse. Speaker 300:08:20Let's turn to Slide 7, and I'll walk you through the results for the Q2. Consolidated Q2 global shipments 174,000 tons, slightly down sequentially, related to normal variation in quarter end shipment cutoffs. Realized metal prices were in line with expectations, helping to deliver net sales for the quarter of $576,000,000 A 4% increase sequentially. Looking at Q2 operating results, adjusted net income was $16,000,000 or $0.16 per share. This was an improvement of $27,000,000 compared with prior quarter. Speaker 300:08:57The adjusting items for the Q2 were add backs of 6 charge for the Hawesville curtailment, dollars 1,600,000 for share based compensation and $700,000 for Gemalco acquisition costs. These partially offset by a deduction of $4,300,000 in unrealized gains on forward contracts. Adjusted EBITDA attributable to Centuri was $30,000,000 an improvement of $6,000,000 sequentially. Note this includes our 55% share of the Jamalco JV in Jamaica. Liquidity remains strong at $231,000,000 at the end of the quarter, consisting of $51,000,000 in cash will close in the Q3 with an expected final sale price of approximately $25,000,000 Turning to Slide 8 to explain the $6,000,000 2nd quarter sequential improvement in adjusted EBITDA. Speaker 300:10:10On balance, realized lagged LME prices and delivery premiums were in line with the outlook we provided during our last call. 2nd quarter realized LME was $2,371 per ton, up $21 versus the prior quarter, While realized U. S. Midwest premium of $5.63 per ton was down $10 And realized European delivery premium of $2.99 per ton was up $9 these reflecting our 1 to 3 month lags in realized metal prices. Together, these factors contributed to a $3,000,000 benefit in the quarter. Speaker 300:10:49Power costs We're down from prior quarter due to a 33% reduction in Nord Pool market prices as well as favorability in the cost of service rate for our Mt. Holly operations. The remaining benefit was attributable to the year over year reduction in the MISO capacity charge for Sebree. As a reminder, MISO holds an annual capacity auction every spring that sets the price for capacity for the subsequent 12 month period. This year's auction saw capacity prices return towards normalized levels, which will reduce our capacity costs by approximately $20,000,000 year over year. Speaker 300:11:26This change went into effect June 1 and will remain in place until May 31, 2024. Q2 realized alumina cost was $400 per ton, dollars 11 higher on a sequential basis. Recall there is a 3 to 4 month lag for alumina costs to work through our income statement. Realized coke prices decreased 10% And realized pitch prices decreased 1%. Together, alumina and other raw material costs resulted in a $1,000,000 improvement in EBITDA. Speaker 300:11:59OpEx, mix and other were slightly below expectations, primarily due to slightly lower billet premiums and an unfavorable sales mix. We incurred a $6,000,000 loss at Gemaco due to downtime and lost production output caused by the weather event mentioned by Jesse in his opening comments. Moving forward, Gemalco's performance will be consolidated into our total Century results and forecast similar to our smelters and carbon anode facility. You will be able to sensitize to the appropriate raw materials as provided in the appendix of today's presentation. Overall, adjusted EBITDA for the 2nd quarter improved sequentially by $6,000,000 reaching $30,000,000 Let's turn to Slide 9 for a look at cash flow. Speaker 300:12:43We started the quarter with $30,000,000 in cash and added $30,000,000 in adjusted EBITDA. Borrowings increased this quarter, Primarily to offset our semiannual interest payments and ongoing CapEx projects, mainly for the construction of our new cast house in Iceland. These changes resulted in Q2 ending cash of $51,000,000 Now let's move to Slide 10 for insight into our expectations for the Q3. For Q3, the lagged LME of $2,240 per tonne is expected to be down about $131 versus Q2 realized prices. The Q3 lagged U. Speaker 300:13:23S. Midwest premium is forecast to be $505 per ton, down $58 per ton, And the European delivery premium is expected to be $3.20 per tonne or up about $21 per tonne compared with the 2nd quarter. Taken together, the LME and delivery premiums are expected to decrease Q3 EBITDA by approximately $20,000,000 to $25,000,000 compared with Q2 levels. Energy costs are expected to be in line with Q2 with slightly higher seasonal Indy Hub prices offset by lower Nord Pool market prices. We also expect the benefit of a reduction in the capacity charge for Sebree to be offset by a slightly higher cost of service based rate for Mt. Speaker 300:14:06Holly. Note on the refinery side, we have added additional reference prices related to Gemalco's energy mix. We have now also added sensitivities for these prices in the appendix to allow you to sensitize our results to these additional markets going forward. Looking at our other key raw materials, lagged realized alumina cost is expected to be $3.90 per ton, down slightly. Jamalco will supply about 40% of our aluminum mix for the remainder of this year. Speaker 300:14:38We also expect favorable impacts from lower coke and pitch prices. Caustic soda prices are down approximately 50% from year ago levels with current spot prices in the mid-300s. In the appendix, we have also introduced the sensitivity for caustic soda, and note it takes 5 to 6 months for spot prices to flow through our P and L. All in, we expect lower raw material costs to contribute between $5,000,000 to $10,000,000 to EBITDA compared with the 2nd quarter. We expect volume gains and operating cost improvements to offset continued headwinds for value added premium sales mix. Speaker 300:15:16All factors considered, our Q3 outlook for adjusted EBITDA is expected to be in a range of between $10,000,000 to $20,000,000 Just a few more points to make. From a hedge impact standpoint, we expect a realized gain of between $0,000,000 to $5,000,000 in the 3rd quarter. We expect tax expense to be approximately 0. As a reminder, both of these items fall below EBITDA and impact adjusted net income. One last comment about the Jamalco acquisition. Speaker 300:15:47As discussed in Note 2 of our current quarter 10 Q, We are currently working through the purchase accounting, which requires the acquired assets and liabilities to be reported at fair value as of the acquisition date. We have up to 12 months from the acquisition date to perform the necessary work to finalize the fair value. And based on our preliminary fair value estimates, We've reported a deferred gain as a current liability on the balance sheet as of June 30. And now, I'll turn the call back over to Jesse. Speaker 200:16:19Thanks, Jerry. Despite a complex macro environment, Centuri's focus on cost discipline and operational performance as part is in a good position to continue to deliver results throughout this portion of the cycle and beyond. The operational Improvement programs Gunnar Gudlausten began implementing when we took over our global operations 2 years ago are consistently delivering strong performance in our smelters. Our major capital investment program in the Grundartangi Cast House project is nearing completion and on track to deliver our first sales of low carbon natural billet to European customers in the Q1 of next year. Paired with our ongoing U. Speaker 200:16:57S. Casthouse debottlenecking programs, The Grundartangi Cast House will give us the ability to sell 80% of Centuri's total production value added product in the form of billet, slab, foundry alloys or Naturale low carbon aluminum. Our new JAMELCO operations have derisked the supply chain for our most Critical raw material and provides a meaningful opportunity for value creation as we execute our planned capital and operational improvement programs to return this asset to its full potential. All in all, we remain focused on what is in front of us and excited about our future. Thank you. Speaker 200:17:33And I'll now turn the call over to the operator for questions. Operator00:17:53Our first question is from Lucas Pipes with B. Riley. Your line is now open. Speaker 400:18:00Thank you very much, operator. Good afternoon, everyone. Thank you for taking Question. My first question is on Gemalco. I think last quarter you mentioned an expectation that at Spot price at that time, Jamalco would be accretive to the financial results starting, I think This quarter, Q3. Speaker 400:18:21So I wondered if you could comment on that, whether that is still your expectation. And if you could maybe quantify the impact, I would appreciate Thank you very much. Speaker 200:18:32Thanks, Lucas. It's Jesse. Thanks for joining. Thanks for the question. Yes, So going back to the last call, I think you stated the question correctly that at spot prices at that time, we did expect that Genalco would be accretive to the financial results in Q3. Speaker 200:18:51And I think had that continued to be the case, that statement would remain true. But as Jerry stated, going forward, what we'll do is we'll just include the Jamalco results in the guide. And so you have that for the 4 90 days. It's within that $10,000,000 to $20,000,000 that you have in front of you. But just for context, yes, that statement would have remained true had Spot prices remain in Speaker 300:19:15the same. Okay. Speaker 400:19:21Thanks And switching topics for now. You mentioned the MISO auction during I think that happened during the Q2. Could you remind us kind of what the details were of that auction and the implications for your business? And any read through to a potential household restart? Thank you for your perspective on that. Speaker 200:19:49Sure, Lucas. Thanks. Again, good question. Yes, so the MISO capacity auction, remember, we pay for power in basically 3 portions within Our Kentucky both Kentucky plants, a portion of that is capacity, a portion of that is energy, and a portion of that is delivery. And so the capacity auction takes place every April May. Speaker 200:20:10And this year, the capacity auction returned to normalized levels. You may remember A year ago, we saw capacity prices within MISO have a large surprise to the upside. Capacity prices were up quite significantly. This year, capacity prices return to those normalized levels. And so the impact that you'll have, now this is Sebree specific, We'll be about $20,000,000 benefit for that new 12 month period from the year ago period. Speaker 200:20:42So about a month of that came through in the Q2 results, and you'll see about $5,000,000 benefit in the Q3 results. Obviously, that will impact Hawesville as well. But And you would see a similar benefit if you're purchasing energy at the same levels at Hawesville. But overall, With respect to a hostile restart, we're still in the same place we are when we spoke last quarter. We continue to monitor market conditions both on the revenue side and the cost side. Speaker 200:21:19And we'll come back to you once we've made that decision. Speaker 400:21:23Thank you. And a quick follow-up. The capacity price, I think it's quoted in megawatts Per day of capacity, can you share kind of what the prices that you Locked in on that Speaker 200:21:45auction? Yes. So They do I think they actually clear in on a monthly basis, but we can give it to you on a megawatt day basis. So it's less than $10 a megawatt day for the upcoming 12 month period. Got it. Speaker 400:22:05Okay. I appreciate that. I'll turn it over. Thank you very much and best of luck. Speaker 200:22:13Thanks Lucas. Operator00:22:20There are no more questions. So I'll pass the call back over to the management team for closing remarks. Speaker 400:22:29Let's read the questions one more Speaker 200:22:30time, please. Okay. Thank you very much everyone for joining the call and we look forward to talking to you in Q3.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallCentury Aluminum Q2 202300:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release(8-K)Quarterly report(10-Q) Century Aluminum Earnings HeadlinesCentury Aluminum Co (CENX) Announces First Quarter 2025 Earnings Release Date | CENX stock newsApril 24 at 5:13 PM | gurufocus.comCentury Aluminum's Long-Term Strategy Is Solid But Economic Uncertainty WeighsApril 24 at 8:12 AM | seekingalpha.comThe Trump Dump is starting; Get out of stocks now?The first 365 days of the Trump presidency… Will be the best time to get rich in American history.April 26, 2025 | Paradigm Press (Ad)Growth Without The Premium: 6 Value Stocks For AprilApril 16, 2025 | seekingalpha.comCentury Aluminum Co (CENX) Trading 3.56% Higher on Apr 14April 14, 2025 | gurufocus.comCentury Aluminum Is A Risky Bet On The Rebounding Of The US Aluminum IndustryApril 11, 2025 | seekingalpha.comSee More Century Aluminum Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Century Aluminum? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Century Aluminum and other key companies, straight to your email. Email Address About Century AluminumCentury Aluminum (NASDAQ:CENX) Company, together with its subsidiaries, engages in the production of standard-grade and value-added primary aluminum products in the United States and Iceland. It also owns and operates an alumina production facility in Iceland, and a carbon anode production facility in the Netherlands. 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There are 5 speakers on the call. Operator00:00:00Afternoon, and thank you for attending today's Century Aluminum Company Second Quarter 2023 Earnings Conference Call. My name is Shae san, and I'll be the moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. I'd now like to pass the conference over to our host, Ryan Crawford. Speaker 100:00:22Thank you, operator. Good afternoon, everyone, and welcome to the conference call. I'm joined here today by Jesse Gary, Century's President and Chief Executive Officer Jerry Bialik, Executive Vice President and Chief Financial Officer and Peter Trzepkowski, Senior Vice President of Finance and Treasurer. After our prepared comments, As a reminder, today's presentation is available on our website at www .centuryaluminum.com. We use our website as a means of disclosing material information about the company and for complying with Regulation FD. Speaker 100:01:03Turning to Slide 1, please take a moment to review the cautionary statements shown here with respect to forward looking statements and non GAAP financial measures contained in today's discussion. And with that, I'll hand the call to Jesse. Thanks, Ryan. Thanks to everyone for joining. Speaker 200:01:21I'll start today by reviewing our 2nd quarter financial and operational performance before discussing the current market conditions. Jerry will then take you through the financial results, And I'll wrap up before turning it over for questions. Turning to Slide 3. Continued strong operational performance And falling input prices in our smelters drove a Q2 adjusted EBITDA of $30,000,000 which was an improvement of about $6,000,000 over Q1. We made significant progress over the last several months welcoming our new Gemalco colleagues and beginning to integrate the Gemalco operations into the Century system. Speaker 200:02:00We are encouraged by the quality of the people at Gemalco, and perhaps most especially by their excellent safety culture. Tramelco has a long history of prioritizing the safety of its workforce and the sustainability of its operations with excellent systems in place to ensure its people will return home safely each day. We have some nice opportunities to import some of the JAMALCO safety systems and procedures into the rest of Century's operations. Gemalco did suffer an adverse weather event in early June when lightning strikes damaged the local grid. This caused a complete disruption of power to the refinery for several days and resulted in damage to several key pieces of equipment. Speaker 200:02:42The outage, resulting in stability and a staged restart of the plant, resulted in lost production in June. The refinery returned to full and stable operations in July after gradually returning to targeted production levels over the course of June. Jerry will cover the financial impact on Q2 in a bit. As we discussed on our last call, we are in the process of We're also implementing a series of operational improvements and investments at Gemalco to restore the refinery to its design capacity of 1,400,000 tons over the course of the next several years. We expect to see some of those volume gains begin to appear in Q3 and Q4 of this year, which should allow the refinery to reach an annualized run rate of 1,200,000 tons by the end of the year. Speaker 200:03:28We'll provide additional detail on 2024 and beyond on our Q4 call. On the smelter side, our teams have done an excellent job operating each of our plants through some very high temperature days over the past several months. Operational performance at each smelter was stable and at targeted levels across the quarter. We are pleased to see that Operational improvement programs we began implementing 2 years ago really paying off with the excellent stability the smelters have seen over the past several quarters. We expect these programs will continue to pay dividends as we move into 2024. Speaker 200:04:04Turning to the market environment on Page 4, You can see the global supply and demand remains roughly balanced as we enter the Q3. Although Chinese supply gains and some short term demand weakness Have moved the market from a slight deficit last quarter to a slight surplus this quarter. In Q2, the 3 month aluminum price averaged 2,286 dollars per tonne, down about $150 from Q1 levels. Regional delivery premiums declined in the quarter as well, but remain elevated from historical levels. In general, the aluminum market in the 2nd quarter reflected the uncertainty in the broader economy. Speaker 200:04:43Persistent inflation and rising interest rates have cooled demand in the short term. This is most evident in our value added product sales, where billet demand remained slow during Q2. This is most acute among our building and construction customers, while automotive and renewable energy markets remained a bright spot. In this environment, we remain focused on disciplined cost management and executing our improvement programs to best position ourselves for the eventual market rebound. Turning to the supply side, previously curtailed production in Yunnan began to restart in the quarter as power availability in the province improved. Speaker 200:05:21These restarts more than offset curtailments in Sichuan and brought the overall Chinese markets closer to balance. While Yunnan hydropower production did benefit from recent rainfall, Reservoir levels in the province remain below normal levels, leaving it at risk of a 3rd straight season of production cuts once dry season returns this fall. Overall, while global supply and demand have returned to near balanced levels, global days of inventory remain near 50 days. Inventories have remained at these relatively low levels despite a growing number of global consumers no longer accepting Russian metal following the Russian invasion of Ukraine. This means that while overall global inventories have remained low, they are increasingly made up of Russian origin metal. Speaker 200:06:08In fact, Russian metal now makes up around 80% of LME inventories, up from just 10% prior to the war in Ukraine. With inventories at these historically low levels, LME prices and regional premiums should respond swiftly once demand conditions improve. As you can see from our energy chart on Page 5, EU energy prices remain significantly elevated, leaving remaining European smelter margins challenged. With forward energy prices remaining above $150 per megawatt hour, We do not anticipate any significant European smelter restarts in the near term. Turning to Page 6, we can see that smelting costs have come down across the board, Most significantly on the energy side, where Q2 Indy Hub and Northvolt both reflect an over 50% reduction from year ago levels. Speaker 200:06:59Energy supply and demand fundamentals remain constructive with U. S. Natural gas reserves sitting 22% above year ago levels and 12% above the 5 year average. Utility coal stockpiles are also full, nearly 60% above a year ago. These high level of U. Speaker 200:07:16S. Gas and coal reserves should help to ensure power prices remain constructive over the next 6 months. Turning to raw materials, coke and pitch prices have now finally begun to fall, With coke prices averaging $5.82 in the quarter, down almost 25% from year ago levels. Pitch prices also moderated. On the refining side of our business, Jamalco's primary outside raw material inputs are caustic soda, LNG, which is priced off of reference to Henry Hub, And HFO. Speaker 200:07:47Most of these input costs have declined over the first half, with U. S. Natural gas prices averaging $2.15 for MMBtu in Q2, down over 70% from year ago levels and HFO averaging $63 a barrel, down about a third from Q2 2022. Caustic prices have also been falling precipitously, down over 50% from last year. With that, I'll turn it over to Jerry to walk you through the financial results and our Q3 outlook. Speaker 200:08:17Jerry? Thank you, Jesse. Speaker 300:08:20Let's turn to Slide 7, and I'll walk you through the results for the Q2. Consolidated Q2 global shipments 174,000 tons, slightly down sequentially, related to normal variation in quarter end shipment cutoffs. Realized metal prices were in line with expectations, helping to deliver net sales for the quarter of $576,000,000 A 4% increase sequentially. Looking at Q2 operating results, adjusted net income was $16,000,000 or $0.16 per share. This was an improvement of $27,000,000 compared with prior quarter. Speaker 300:08:57The adjusting items for the Q2 were add backs of 6 charge for the Hawesville curtailment, dollars 1,600,000 for share based compensation and $700,000 for Gemalco acquisition costs. These partially offset by a deduction of $4,300,000 in unrealized gains on forward contracts. Adjusted EBITDA attributable to Centuri was $30,000,000 an improvement of $6,000,000 sequentially. Note this includes our 55% share of the Jamalco JV in Jamaica. Liquidity remains strong at $231,000,000 at the end of the quarter, consisting of $51,000,000 in cash will close in the Q3 with an expected final sale price of approximately $25,000,000 Turning to Slide 8 to explain the $6,000,000 2nd quarter sequential improvement in adjusted EBITDA. Speaker 300:10:10On balance, realized lagged LME prices and delivery premiums were in line with the outlook we provided during our last call. 2nd quarter realized LME was $2,371 per ton, up $21 versus the prior quarter, While realized U. S. Midwest premium of $5.63 per ton was down $10 And realized European delivery premium of $2.99 per ton was up $9 these reflecting our 1 to 3 month lags in realized metal prices. Together, these factors contributed to a $3,000,000 benefit in the quarter. Speaker 300:10:49Power costs We're down from prior quarter due to a 33% reduction in Nord Pool market prices as well as favorability in the cost of service rate for our Mt. Holly operations. The remaining benefit was attributable to the year over year reduction in the MISO capacity charge for Sebree. As a reminder, MISO holds an annual capacity auction every spring that sets the price for capacity for the subsequent 12 month period. This year's auction saw capacity prices return towards normalized levels, which will reduce our capacity costs by approximately $20,000,000 year over year. Speaker 300:11:26This change went into effect June 1 and will remain in place until May 31, 2024. Q2 realized alumina cost was $400 per ton, dollars 11 higher on a sequential basis. Recall there is a 3 to 4 month lag for alumina costs to work through our income statement. Realized coke prices decreased 10% And realized pitch prices decreased 1%. Together, alumina and other raw material costs resulted in a $1,000,000 improvement in EBITDA. Speaker 300:11:59OpEx, mix and other were slightly below expectations, primarily due to slightly lower billet premiums and an unfavorable sales mix. We incurred a $6,000,000 loss at Gemaco due to downtime and lost production output caused by the weather event mentioned by Jesse in his opening comments. Moving forward, Gemalco's performance will be consolidated into our total Century results and forecast similar to our smelters and carbon anode facility. You will be able to sensitize to the appropriate raw materials as provided in the appendix of today's presentation. Overall, adjusted EBITDA for the 2nd quarter improved sequentially by $6,000,000 reaching $30,000,000 Let's turn to Slide 9 for a look at cash flow. Speaker 300:12:43We started the quarter with $30,000,000 in cash and added $30,000,000 in adjusted EBITDA. Borrowings increased this quarter, Primarily to offset our semiannual interest payments and ongoing CapEx projects, mainly for the construction of our new cast house in Iceland. These changes resulted in Q2 ending cash of $51,000,000 Now let's move to Slide 10 for insight into our expectations for the Q3. For Q3, the lagged LME of $2,240 per tonne is expected to be down about $131 versus Q2 realized prices. The Q3 lagged U. Speaker 300:13:23S. Midwest premium is forecast to be $505 per ton, down $58 per ton, And the European delivery premium is expected to be $3.20 per tonne or up about $21 per tonne compared with the 2nd quarter. Taken together, the LME and delivery premiums are expected to decrease Q3 EBITDA by approximately $20,000,000 to $25,000,000 compared with Q2 levels. Energy costs are expected to be in line with Q2 with slightly higher seasonal Indy Hub prices offset by lower Nord Pool market prices. We also expect the benefit of a reduction in the capacity charge for Sebree to be offset by a slightly higher cost of service based rate for Mt. Speaker 300:14:06Holly. Note on the refinery side, we have added additional reference prices related to Gemalco's energy mix. We have now also added sensitivities for these prices in the appendix to allow you to sensitize our results to these additional markets going forward. Looking at our other key raw materials, lagged realized alumina cost is expected to be $3.90 per ton, down slightly. Jamalco will supply about 40% of our aluminum mix for the remainder of this year. Speaker 300:14:38We also expect favorable impacts from lower coke and pitch prices. Caustic soda prices are down approximately 50% from year ago levels with current spot prices in the mid-300s. In the appendix, we have also introduced the sensitivity for caustic soda, and note it takes 5 to 6 months for spot prices to flow through our P and L. All in, we expect lower raw material costs to contribute between $5,000,000 to $10,000,000 to EBITDA compared with the 2nd quarter. We expect volume gains and operating cost improvements to offset continued headwinds for value added premium sales mix. Speaker 300:15:16All factors considered, our Q3 outlook for adjusted EBITDA is expected to be in a range of between $10,000,000 to $20,000,000 Just a few more points to make. From a hedge impact standpoint, we expect a realized gain of between $0,000,000 to $5,000,000 in the 3rd quarter. We expect tax expense to be approximately 0. As a reminder, both of these items fall below EBITDA and impact adjusted net income. One last comment about the Jamalco acquisition. Speaker 300:15:47As discussed in Note 2 of our current quarter 10 Q, We are currently working through the purchase accounting, which requires the acquired assets and liabilities to be reported at fair value as of the acquisition date. We have up to 12 months from the acquisition date to perform the necessary work to finalize the fair value. And based on our preliminary fair value estimates, We've reported a deferred gain as a current liability on the balance sheet as of June 30. And now, I'll turn the call back over to Jesse. Speaker 200:16:19Thanks, Jerry. Despite a complex macro environment, Centuri's focus on cost discipline and operational performance as part is in a good position to continue to deliver results throughout this portion of the cycle and beyond. The operational Improvement programs Gunnar Gudlausten began implementing when we took over our global operations 2 years ago are consistently delivering strong performance in our smelters. Our major capital investment program in the Grundartangi Cast House project is nearing completion and on track to deliver our first sales of low carbon natural billet to European customers in the Q1 of next year. Paired with our ongoing U. Speaker 200:16:57S. Casthouse debottlenecking programs, The Grundartangi Cast House will give us the ability to sell 80% of Centuri's total production value added product in the form of billet, slab, foundry alloys or Naturale low carbon aluminum. Our new JAMELCO operations have derisked the supply chain for our most Critical raw material and provides a meaningful opportunity for value creation as we execute our planned capital and operational improvement programs to return this asset to its full potential. All in all, we remain focused on what is in front of us and excited about our future. Thank you. Speaker 200:17:33And I'll now turn the call over to the operator for questions. Operator00:17:53Our first question is from Lucas Pipes with B. Riley. Your line is now open. Speaker 400:18:00Thank you very much, operator. Good afternoon, everyone. Thank you for taking Question. My first question is on Gemalco. I think last quarter you mentioned an expectation that at Spot price at that time, Jamalco would be accretive to the financial results starting, I think This quarter, Q3. Speaker 400:18:21So I wondered if you could comment on that, whether that is still your expectation. And if you could maybe quantify the impact, I would appreciate Thank you very much. Speaker 200:18:32Thanks, Lucas. It's Jesse. Thanks for joining. Thanks for the question. Yes, So going back to the last call, I think you stated the question correctly that at spot prices at that time, we did expect that Genalco would be accretive to the financial results in Q3. Speaker 200:18:51And I think had that continued to be the case, that statement would remain true. But as Jerry stated, going forward, what we'll do is we'll just include the Jamalco results in the guide. And so you have that for the 4 90 days. It's within that $10,000,000 to $20,000,000 that you have in front of you. But just for context, yes, that statement would have remained true had Spot prices remain in Speaker 300:19:15the same. Okay. Speaker 400:19:21Thanks And switching topics for now. You mentioned the MISO auction during I think that happened during the Q2. Could you remind us kind of what the details were of that auction and the implications for your business? And any read through to a potential household restart? Thank you for your perspective on that. Speaker 200:19:49Sure, Lucas. Thanks. Again, good question. Yes, so the MISO capacity auction, remember, we pay for power in basically 3 portions within Our Kentucky both Kentucky plants, a portion of that is capacity, a portion of that is energy, and a portion of that is delivery. And so the capacity auction takes place every April May. Speaker 200:20:10And this year, the capacity auction returned to normalized levels. You may remember A year ago, we saw capacity prices within MISO have a large surprise to the upside. Capacity prices were up quite significantly. This year, capacity prices return to those normalized levels. And so the impact that you'll have, now this is Sebree specific, We'll be about $20,000,000 benefit for that new 12 month period from the year ago period. Speaker 200:20:42So about a month of that came through in the Q2 results, and you'll see about $5,000,000 benefit in the Q3 results. Obviously, that will impact Hawesville as well. But And you would see a similar benefit if you're purchasing energy at the same levels at Hawesville. But overall, With respect to a hostile restart, we're still in the same place we are when we spoke last quarter. We continue to monitor market conditions both on the revenue side and the cost side. Speaker 200:21:19And we'll come back to you once we've made that decision. Speaker 400:21:23Thank you. And a quick follow-up. The capacity price, I think it's quoted in megawatts Per day of capacity, can you share kind of what the prices that you Locked in on that Speaker 200:21:45auction? Yes. So They do I think they actually clear in on a monthly basis, but we can give it to you on a megawatt day basis. So it's less than $10 a megawatt day for the upcoming 12 month period. Got it. Speaker 400:22:05Okay. I appreciate that. I'll turn it over. Thank you very much and best of luck. Speaker 200:22:13Thanks Lucas. Operator00:22:20There are no more questions. So I'll pass the call back over to the management team for closing remarks. Speaker 400:22:29Let's read the questions one more Speaker 200:22:30time, please. Okay. Thank you very much everyone for joining the call and we look forward to talking to you in Q3.Read morePowered by