NASDAQ:CENX Century Aluminum Q2 2024 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-$0.03Consensus EPS $0.02Beat/MissMissed by -$0.05One Year Ago EPSN/ACentury Aluminum Revenue ResultsActual Revenue$560.80 millionExpected Revenue$530.90 millionBeat/MissBeat by +$29.90 millionYoY Revenue GrowthN/ACentury Aluminum Announcement DetailsQuarterQ2 2024Date8/8/2024TimeN/AConference Call DateThursday, August 8, 2024Conference 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 2024 Earnings Call TranscriptProvided by QuartrAugust 8, 2024 ShareLink copied to clipboard.There are 7 speakers on the call. Operator00:00:00Good afternoon. Thank you for attending today's Century Aluminum Company Second Quarter 2024 Earnings Conference Call. My name is Forum, and I will be your moderator for today's call. All lines will remain muted during the presentation portion of the call with an opportunity for questions and answers at the end. It is now my pleasure to pass the conference over to our host, Ryan Crawford with Century Aluminum. Operator00:00:27Mr. Crawford, you may proceed. Speaker 100:00:30Thank 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 Trebzkowski, Senior Vice President of Finance and Treasurer. After our prepared comments, we will take your questions. As a reminder, today's presentation is available on our website atwww.centuryaluminum.com. Speaker 100:01:02We use our website as a means of disclosing material information about the company and for complying with Regulation FD. Turning 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, and thanks to everyone for joining. I'll start Speaker 200:01:30the call today by reviewing our 2nd quarter performance and providing some thoughts on the current market environment before turning it over to Jerry for the detailed financial results and then taking your questions. Our team produced excellent results in the Q2 with adjusted EBITDA of $34,000,000 Speaker 300:01:49Jerry will Speaker 200:01:49give you the full details here, but we are really pleased with the continued strong operating performance across our plants. Overall, improving aluminum prices both at the LME and regional premium level drove increased profitability in the quarter and will continue to benefit our Q3 financial performance as the strong alumina prices observed in the Q2 began to roll through our lagged contractual pricing and financial results. We also reduced our outstanding debt by nearly $50,000,000 in the quarter, driving strong liquidity of over $340,000,000 Turning to Slide 5, aluminum prices rose during the Q2 as stronger global demand, especially in China drove both LME and regional premiums higher. Demand was strongest in areas relating to the green economy, especially in solar energy and other renewable and energy transmission applications. More recently, aluminum prices have retreated as broad macro concerns have weighed on markets. Speaker 200:02:51Over the longer term, we are confident that global trends towards electrification and light weighting will continue to drive increased demand for aluminum. When paired with inventory levels that remain near historic lows and little in the U. S. And Europe. Turning to alumina, the API rose significantly during the quarter with Q2 prices averaging 19% higher than Q1 levels and reaching over $500 per tonne in June. Speaker 200:03:32These prices reflect a continued tight market for alumina as production issues in Australia and China led to a lack of available spot cargoes during the quarter and drove prices higher. Aluminum prices have remained near their high so far in the Q3 as supply remains constrained. Given this constrained aluminum market, we were very pleased with Jamalco's strong operational performance during the Q2. As previously noted, our Jamalco operations make us roughly net neutral to API pricing as a company when combined with our long term commercial contracts that are linked to the price of aluminum. Chomelco produces targeted 1,200,000 tonnes per annum production rate in the second quarter. Speaker 200:04:18Over the longer term, while we expect global alumina prices to largely follow aluminum prices, we suspect that alumina will continue to remain exposed to supply driven volatility as refineries without a dedicated source of bauxite remain exposed to the seaborne bauxite market and supply from difficult geopolitical locations. In addition, Chinese regulators announced earlier this year that Chinese alumina refineries would be subject to more stringent energy and emission efficiency standards. We believe these actions will act to constrain Chinese alumina production growth over the near to medium term. Turning to the global trading environment, the U. S. Speaker 200:04:59And EU governments each took additional actions towards near shoring industrial and strategic mineral during the quarter that will impact global aluminum flows and supply into our key markets in the U. S. And Europe. In May, I joined President Biden at the White House where he announced an expansion of the Section 301 tariffs on 1,000,000,000 of dollars of Chinese goods, including many aluminum products. Similarly, in June, the EU announced additional tariffs of up to 38% on Chinese electric vehicles. Speaker 200:05:32In July, the U. S. Announced a new smelted and cast requirement that ensures that aluminum that was smelted and cast in Russia, China and certain other countries cannot be transformed into downstream aluminum products in Mexico in order to avoid the 10% Section 232 duties. Finally, as we anticipated on our last call, in May, the U. S. Speaker 200:05:57Department of Commerce imposed significant antidumping duties on aluminum extrusions entering the U. S. From 14 countries, including China, Mexico, Colombia and Vietnam. The duties, which went into effect immediately, have started to support domestic extrusion demand and correspondingly domestic billet demand. As a reminder, we did hold back some second half billet volumes for spot sales this year in anticipation of improving U. Speaker 200:06:24S. Market conditions and a more constructive pricing environment. We've started to see some uptick here on the demand side and continue to expect this will be positive for U. S. Billet pricing over the balance of the year and into 2025. Speaker 200:06:40These trade actions, especially when viewed together with the substantial trade measures already in place in the U. S. And EU markets, including the Section 232 tariffs and the EU carbon border adjustment mechanism and other existing aluminum tariffs, show the significant value of Centuri's U. S. And EU based production footprint. Speaker 200:06:59This allows us to provide short supply chains and better service to our customers, but to also benefit from better pricing environments in these markets. Turning to operations, we saw strong and stable performance across our operating locations in the Q2. In Iceland, as expected, the previously announced 20 megawatt energy curtailment was lifted during the Q2 and Krumjertangi returned to full production by quarter end. Our team did an excellent job restoring production quickly and efficiently once the power curtailment ended. As we have seen at many smelters around the world, restoring production following a curtailment is not easy. Speaker 200:07:39I'd like to congratulate the Grundartangi team on a job well done. We expect normal production levels from Grundartangi in Q3. At the Grundartangi cast house, we continue to produce trials and to qualify our new Naturale green billets with our key customers over Q2 and Q3. We remain very excited to begin supplying this much needed Naturale low carbon billet into the European market. In the U. Speaker 200:08:07S, energy prices continue to be constructive driven by natural gas prices near $2 Operations at Sebree and Mt. Holly remained stable, which is a testament to our operating teams during these very hot summer months. At Jamalco, as previously announced, we were unfortunately impacted by Hurricane Beryl when the Catapult Cory 4 storm made landfall in Point in Clarendon Parish in early July. The hurricane brought heavy storm surge, significant rain and high winds to both our operations and surrounding communities and we are working with local officials in Clarendon and other parishes to assist those in need. While we are fortunate to not suffer any significant injuries or damage to the refinery operations, we did temporarily curtail operations at the refinery as part of our standard hurricane preparation procedures. Speaker 200:09:03The Gemalco team did a remarkable job restoring operations once the storm had passed and the refinery had returned to full production levels. In addition, while Gemalco's production facilities escaped significant damage, the port facility was impacted by the storm where a portion of the alumina conveyor was damaged and is undergoing repair. While those repairs are being completed, Gemalco has secured alternative port arrangements to ensure continued alumina shipments to its customers. Finally, we made good progress on our growth projects during the Q2. While we don't have any significant updates at this time, we continue to work diligently on evaluating each and would expect to be able to provide a further update on our Q3 call. Speaker 200:09:49Jerry will now walk you through the quarter and our Q3 outlook. Speaker 300:09:53Thank you, Jesse. Let's turn to Slide 7 to review 2nd quarter results. On a consolidated basis, 2nd quarter global shipments were approximately 168,000 tons, slightly lower than last quarter due to typical timing fluctuations. Realized prices increased versus prior quarter driven by higher metal prices and regional delivery premiums, resulting in net sales of $561,000,000 a 15% increase sequentially. Looking at Q2 operating results, adjusted EBITDA attributable to Centuri was $34,000,000 This was a sequential increase of $9,000,000 mainly driven by higher The main adjusting items were add backs of $4,000,000 for share based compensation and $2,000,000 for the unrealized impact of forward contracts, partially offset by a $2,000,000 deduction for lower of cost or net realizable value on inventory. Speaker 300:10:58We improved liquidity to $343,000,000 by the end of the quarter. This is the strongest liquidity position in nearly a decade and consists of $41,000,000 in cash and $302,000,000 available on our credit facility. Turning to Slide 8 to explain 2nd quarter sequential improvement in adjusted EBITDA. In total, adjusted EBITDA for the 2nd quarter was $34,000,000 Realized LME of $2,288 per ton was up $98 versus prior quarter, while realized U. S. Speaker 300:11:33Midwest premium of $4.16 per ton was up $7 and European delivery premium of $2.84 per ton was up $61 Together, higher metal prices and regional premiums contributed an incremental $22,000,000 compared with the prior quarter. Aluminum production costs were mixed as higher LME market prices increased power costs for Iceland smelter by $4,000,000 As a reminder, the power expense for Iceland smelter is mostly linked to LME prices. Realized coke prices decreased $31 per ton and realized pitch prices decreased $35 per ton. Together, other raw material prices improved by $3,000,000 helping offset the power headwind. The lower shipment volume was a $7,000,000 headwind to adjusted EBITDA. Speaker 300:12:27The decreased volume was due to normal fluctuations in shipment timing. We expect these shipments in Q3 and therefore no change to our full year volume expectations. As discussed last quarter, we completed the deferred pot relining activities related to the Ison power curtailment. These activities drove an incremental $5,000,000 of expense in Q2 that will not repeat. With that, let's turn to Slide 9 for a look at cash flow. Speaker 300:12:56We began the quarter with $93,000,000 in cash. Adjusted EBITDA contributed $34,000,000 Capital expenditures totaled $16,000,000 $11,000,000 of which relates to the completion of the Grundartangi casthouse project. We reduced short term borrowings on our revolving credit facilities with both our U. S. And Iceland revolvers paid down to 0 balance at quarter end, and we experienced normal working capital flows. Speaker 300:13:25At the end of quarter 2, we had $41,000,000 in cash. Let's turn to Slide 10 and I'll give you some insight into our expectations for the Q3. For Q3, the lagged LME of $2,440 per tonne is expected to be up about $153 versus Q2 realized prices. The Q3 lagged U. S. Speaker 300:13:47Midwest premium is forecast to be $4.25 per tonne, up $10 The European delivery premium is expected at $3.20 per tonne or above $35 per tonne versus the 2nd quarter. Taken together, the LME and delivery premium changes are expected to increase Q3 EBITDA by approximately $30,000,000 to $40,000,000 versus Q2 levels. We expect power prices to be a $5,000,000 headwind. Collectively, we expect our key raw materials to be about flat. The previously discussed timing of shipment volume will be a quarter over quarter tailwind of approximately $10,000,000 Finally, we expect a headwind of about $5,000,000 related to a summer seasonality and administrative expenses as we continue to progress on our growth projects. Speaker 300:14:41All factors considered, our outlook for Q3 adjusted EBITDA is expected to be in a range of between $65,000,000 to $75,000,000 The financial impact of Hurricane Beryl would be adjusted in results and is reflected as such in our Q3 outlook. We look forward to your questions today, and we'll now turn the call over to the operator. Operator00:15:05Thank Our first question comes from the line of Lucas Pipes with B. Riley Securities. Lucas, your line is now open. Speaker 400:15:34Thank you very much, operator. Good afternoon, everyone. Jesse, I wanted to get your perspective on the power markets. There's been a lot of excitement out there on the need for power in AI. We saw a very constructive PJM auction last week. Speaker 400:15:55You have long power at Hawesville with about 500 megawatts. And so I wondered how you think about the optionality around that power infrastructure today and if there has been any interest from third parties? Thank you very much. Speaker 200:16:11Yes. Hi, Lucas. Thanks for the question. Obviously, we as you know are constantly looking at the power markets both here in the U. S. Speaker 200:16:20And Europe and really around the world, watching for trends and what's going on out there. Obviously, we are aware of a lot of the storyline around the AI build out and really quite substantial estimates of energy required to power all of that. With our own assets, of course, we're always looking at all alternatives and especially with our curtailed assets in order to figure out how we maximize value. And so I guess what I would just say with Hawesville is we continue to think it's a great option on higher aluminum prices in the future. But in the end, we'll maximize value of that asset and whatever form that may come in is what we'll pursue. Speaker 400:17:11Jesse, I appreciate that color. That's helpful. Thank you. I'll follow-up on 45x. It's been pretty quiet in terms of kind of incremental guidance from treasury. Speaker 400:17:26One, have you any update from your side, anything that you might be able to share at this point in terms of a timeline for additional guidance? And then 2, there has been increased attention to the new smelter development. And are you able to move forward with that development in the absence of kind of full clarification from treasury on what is going to be included in 45x? Thank you very much. Speaker 200:18:00Sure. Thanks, Lucas. Yes, as you might imagine, we continue to engage with the administration on 45x in many of the same ways that we've talked about on previous calls. We think both the timing of the ultimate final regulations as well as the inclusion of raw materials and the ultimate calculations are very important for the U. S. Speaker 200:18:21Industry. And so we continue to have those discussions. I don't really have an updated timeline for you at this time. But I would just say we continue to be very engaged and we're very thankful from the administration for their continued engagement on this matter. I think everyone recognizes the importance of the aluminum industry in the United States and is moving forward with that in mind. Speaker 400:18:51All right. Well, we'll stay tuned. Jesse, I'll try to squeeze one last one in. With the Mount Holly restart of the last 25%, can you speak a little bit to the margin profile of those incremental volumes? Would those be kind of above, below, in line with your current EBITDA margin profile? Speaker 400:19:10Thank you very much. Speaker 200:19:13Sure. Good question, Lucas. And as I mentioned in my prepared remarks, we continue to do work on that project. And we continue to monitor macro conditions as well and put all of those things together in terms of looking at the timing of that restart. But to your specific question on margins, as we probably talked about in the past, those last tons, those incremental tons out of smelter are always the most profitable tons as we continue to spread what are really compared to other industry pretty large fixed costs over those incremental tons and get the benefit from that from a margin perspective. Speaker 200:19:54So as I said in the past, it's really a project we would like to do and it's one that we continue to get ready for. And when the time is right, we remain confident in our ability to execute that. Speaker 400:20:09Jesse, I appreciate the color. I'll turn it over for now. All the best of luck. Speaker 200:20:14Thanks a lot, Lucas. Operator00:20:17Thank you for your question. Our next question comes from the line of Katya Jansic with BMO. Katya, your line is now open. Speaker 500:20:26Hi. Thank you for taking my questions. Maybe starting on Jamal Cole, there were some reports that the refinery declared force majeure. Can you talk a bit more if that is correct? And why would that be if the volumes or the shipments are normal? Speaker 200:20:45Yes. That is correct, Katya. And of course, you declared force majeure for a variety of reasons. As we've said, our main port of export, which is Rocky Point, is out of commission right now and we are running through an alternative port right now. And so the force majeure really related to that setup going forward. Speaker 200:21:08But as I said, the plant is back to full production and we continue to have those alternative port solutions in place and to export alumina off the island. Speaker 500:21:24So shipments are going as normal right now? Speaker 200:21:30Yes. We don't expect a material impact to our results or to Janalba's results going forward. You can't say they're exactly as normal when they're running out of an alternative port, but we're continuing to make exports from the island. Speaker 500:21:51Okay. And then maybe on to as a follow-up to Lucas' question about Hawesville. Have you looked at there's obviously there's a lot of questions about the power. And have you looked at if that would be an option from a perspective, would the utility or your agreement with the utility allow that? Speaker 200:22:16Yes. As you might recall, Katya, both Kentucky plants have fairly unique energy arrangements where through a variety of contractual arrangements, we have access to what is essentially the wholesale markets in MISO. And so that's been a very advantageous arrangement for us and it's provided us with a lot of flexibility over time. And so if we look at both the future of Hassel from a variety of perspectives, we continue to think that flexibility will be advantageous for us kind of no matter what the outcome ultimately is. Speaker 500:22:58Okay. Thank you very much. Speaker 200:23:01Thanks, Hatje. Operator00:23:04Thank you for your question. Our next question comes from the line of Timna Tanners with Wolfe Research. Timna, your line is now open. Yes. Thank you and good afternoon. Speaker 600:23:16I wanted to ask a little bit more about the situation at Jamalco. Is it entirely benign, like doesn't have impact on Q3? And is there any insurance collectibles on an issue like this or just wondering a little more color? Speaker 200:23:32Sure. Yes. I mean, we were definitely impacted, right? That's what we said in the press release and that's what we said on the phone call. As we said, a portion of the aluminum conveyor report was blown away. Speaker 200:23:45At the plant itself, we really haven't had any impact other than sort of taking the plant down as part of our hurricane preparations and then bringing it back up. But like I said, we're back at full production today. So while we, of course, would have preferred that the hurricane skirted the island to the south more than it did, I think the team has really done a good job making it work, while we get the repairs done at our port at Rocky Point and sort of making these alternative shipping arrangements work. There is, of course, some impacts. We lost some volume while we took the plant down for a few days and while we brought it back up, but it's really not material overall to our financial results. Speaker 600:24:33Okay. Thank you for that. Back to Mount Holly, is it fair to say that if we're here in past the middle of the year and you're still mulling it over that probably wouldn't see a restart imminently? Or can you give us a little bit more color about what you're looking for to make that decision? Speaker 200:24:51Yes. So as with any restart anywhere in the world, we look at a variety of factors, whether the market is calling for that volume at the time, what the return profile is on the CapEx that would go in to enable the restart, what global aluminum prices are, what the Midwest premium is, what value added premiums are. And so it's really a multi variable analysis. And what we've been focused on is just bringing down the time to restart once we do make that decision. And so as I talked about in previous calls, that's shortening supply chains for things we need, making sure we have the materials, making sure we can get the people, making sure we have the energy, all of those things that we've been working on over the past few months. Speaker 200:25:39And then when the time is right, we'll be ready to act. But I think as I said on the last call, kind of no matter what the decision is, I don't think you'll see a lot of CapEx requirements from us on that project in 2024. Operator00:25:56Got it. Thanks. And if I could just one high level question. I'm just Speaker 600:25:59curious what you're thinking about the broader aluminum markets. I know you had some prepared remarks on this, but it's been really baffling to see aluminum go up and straight back down. Alumina continue to march forward. And it's a great thing that you have the Jamalco as a hedge now. But I mean, how sustainable is this? Speaker 600:26:16Or what have we seen in the past about how long this last? If I recall it's not usually that long, but just wondering if there could be any action to you know see a change in the dynamic here that's so Speaker 500:26:29unusual. Speaker 200:26:31Yes, it's a good point. We haven't seen this relatively high alumina price to aluminum price, which is somewhere in the mid-twenty percent today on what we would call an LME percentage basis. And so we do think that should be supportive to the aluminum price from here. And the shortages in the aluminum market are quite real today. It is quite tight out there and that's really what's been driving up at the price. Speaker 200:27:07And that's for some structural reasons. We've seen shutdowns in Australia. We've seen increasing regulation of alumina production in China. And so the market is relatively tight for alumina. And over time, I said we're in the mid-twenty percent now with the relationship of alumina to aluminum. Speaker 200:27:28Traditionally, that's more in the mid teens. So it really is quite a high relationship and really should be supportive of the aluminum price from here. Operator00:27:38Okay. That's it for me. Thanks for the thoughts. Speaker 200:27:43Great. Thanks, Timna. Operator00:27:45Thank you for your question. At this time, there are no additional questions registered.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallCentury Aluminum Q2 202400:00 / 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.comTrump purposefully forcing markets to crash…Whether you agree with the plan or not doesn’t matter. It’s happening. 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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 7 speakers on the call. Operator00:00:00Good afternoon. Thank you for attending today's Century Aluminum Company Second Quarter 2024 Earnings Conference Call. My name is Forum, and I will be your moderator for today's call. All lines will remain muted during the presentation portion of the call with an opportunity for questions and answers at the end. It is now my pleasure to pass the conference over to our host, Ryan Crawford with Century Aluminum. Operator00:00:27Mr. Crawford, you may proceed. Speaker 100:00:30Thank 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 Trebzkowski, Senior Vice President of Finance and Treasurer. After our prepared comments, we will take your questions. As a reminder, today's presentation is available on our website atwww.centuryaluminum.com. Speaker 100:01:02We use our website as a means of disclosing material information about the company and for complying with Regulation FD. Turning 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, and thanks to everyone for joining. I'll start Speaker 200:01:30the call today by reviewing our 2nd quarter performance and providing some thoughts on the current market environment before turning it over to Jerry for the detailed financial results and then taking your questions. Our team produced excellent results in the Q2 with adjusted EBITDA of $34,000,000 Speaker 300:01:49Jerry will Speaker 200:01:49give you the full details here, but we are really pleased with the continued strong operating performance across our plants. Overall, improving aluminum prices both at the LME and regional premium level drove increased profitability in the quarter and will continue to benefit our Q3 financial performance as the strong alumina prices observed in the Q2 began to roll through our lagged contractual pricing and financial results. We also reduced our outstanding debt by nearly $50,000,000 in the quarter, driving strong liquidity of over $340,000,000 Turning to Slide 5, aluminum prices rose during the Q2 as stronger global demand, especially in China drove both LME and regional premiums higher. Demand was strongest in areas relating to the green economy, especially in solar energy and other renewable and energy transmission applications. More recently, aluminum prices have retreated as broad macro concerns have weighed on markets. Speaker 200:02:51Over the longer term, we are confident that global trends towards electrification and light weighting will continue to drive increased demand for aluminum. When paired with inventory levels that remain near historic lows and little in the U. S. And Europe. Turning to alumina, the API rose significantly during the quarter with Q2 prices averaging 19% higher than Q1 levels and reaching over $500 per tonne in June. Speaker 200:03:32These prices reflect a continued tight market for alumina as production issues in Australia and China led to a lack of available spot cargoes during the quarter and drove prices higher. Aluminum prices have remained near their high so far in the Q3 as supply remains constrained. Given this constrained aluminum market, we were very pleased with Jamalco's strong operational performance during the Q2. As previously noted, our Jamalco operations make us roughly net neutral to API pricing as a company when combined with our long term commercial contracts that are linked to the price of aluminum. Chomelco produces targeted 1,200,000 tonnes per annum production rate in the second quarter. Speaker 200:04:18Over the longer term, while we expect global alumina prices to largely follow aluminum prices, we suspect that alumina will continue to remain exposed to supply driven volatility as refineries without a dedicated source of bauxite remain exposed to the seaborne bauxite market and supply from difficult geopolitical locations. In addition, Chinese regulators announced earlier this year that Chinese alumina refineries would be subject to more stringent energy and emission efficiency standards. We believe these actions will act to constrain Chinese alumina production growth over the near to medium term. Turning to the global trading environment, the U. S. Speaker 200:04:59And EU governments each took additional actions towards near shoring industrial and strategic mineral during the quarter that will impact global aluminum flows and supply into our key markets in the U. S. And Europe. In May, I joined President Biden at the White House where he announced an expansion of the Section 301 tariffs on 1,000,000,000 of dollars of Chinese goods, including many aluminum products. Similarly, in June, the EU announced additional tariffs of up to 38% on Chinese electric vehicles. Speaker 200:05:32In July, the U. S. Announced a new smelted and cast requirement that ensures that aluminum that was smelted and cast in Russia, China and certain other countries cannot be transformed into downstream aluminum products in Mexico in order to avoid the 10% Section 232 duties. Finally, as we anticipated on our last call, in May, the U. S. Speaker 200:05:57Department of Commerce imposed significant antidumping duties on aluminum extrusions entering the U. S. From 14 countries, including China, Mexico, Colombia and Vietnam. The duties, which went into effect immediately, have started to support domestic extrusion demand and correspondingly domestic billet demand. As a reminder, we did hold back some second half billet volumes for spot sales this year in anticipation of improving U. Speaker 200:06:24S. Market conditions and a more constructive pricing environment. We've started to see some uptick here on the demand side and continue to expect this will be positive for U. S. Billet pricing over the balance of the year and into 2025. Speaker 200:06:40These trade actions, especially when viewed together with the substantial trade measures already in place in the U. S. And EU markets, including the Section 232 tariffs and the EU carbon border adjustment mechanism and other existing aluminum tariffs, show the significant value of Centuri's U. S. And EU based production footprint. Speaker 200:06:59This allows us to provide short supply chains and better service to our customers, but to also benefit from better pricing environments in these markets. Turning to operations, we saw strong and stable performance across our operating locations in the Q2. In Iceland, as expected, the previously announced 20 megawatt energy curtailment was lifted during the Q2 and Krumjertangi returned to full production by quarter end. Our team did an excellent job restoring production quickly and efficiently once the power curtailment ended. As we have seen at many smelters around the world, restoring production following a curtailment is not easy. Speaker 200:07:39I'd like to congratulate the Grundartangi team on a job well done. We expect normal production levels from Grundartangi in Q3. At the Grundartangi cast house, we continue to produce trials and to qualify our new Naturale green billets with our key customers over Q2 and Q3. We remain very excited to begin supplying this much needed Naturale low carbon billet into the European market. In the U. Speaker 200:08:07S, energy prices continue to be constructive driven by natural gas prices near $2 Operations at Sebree and Mt. Holly remained stable, which is a testament to our operating teams during these very hot summer months. At Jamalco, as previously announced, we were unfortunately impacted by Hurricane Beryl when the Catapult Cory 4 storm made landfall in Point in Clarendon Parish in early July. The hurricane brought heavy storm surge, significant rain and high winds to both our operations and surrounding communities and we are working with local officials in Clarendon and other parishes to assist those in need. While we are fortunate to not suffer any significant injuries or damage to the refinery operations, we did temporarily curtail operations at the refinery as part of our standard hurricane preparation procedures. Speaker 200:09:03The Gemalco team did a remarkable job restoring operations once the storm had passed and the refinery had returned to full production levels. In addition, while Gemalco's production facilities escaped significant damage, the port facility was impacted by the storm where a portion of the alumina conveyor was damaged and is undergoing repair. While those repairs are being completed, Gemalco has secured alternative port arrangements to ensure continued alumina shipments to its customers. Finally, we made good progress on our growth projects during the Q2. While we don't have any significant updates at this time, we continue to work diligently on evaluating each and would expect to be able to provide a further update on our Q3 call. Speaker 200:09:49Jerry will now walk you through the quarter and our Q3 outlook. Speaker 300:09:53Thank you, Jesse. Let's turn to Slide 7 to review 2nd quarter results. On a consolidated basis, 2nd quarter global shipments were approximately 168,000 tons, slightly lower than last quarter due to typical timing fluctuations. Realized prices increased versus prior quarter driven by higher metal prices and regional delivery premiums, resulting in net sales of $561,000,000 a 15% increase sequentially. Looking at Q2 operating results, adjusted EBITDA attributable to Centuri was $34,000,000 This was a sequential increase of $9,000,000 mainly driven by higher The main adjusting items were add backs of $4,000,000 for share based compensation and $2,000,000 for the unrealized impact of forward contracts, partially offset by a $2,000,000 deduction for lower of cost or net realizable value on inventory. Speaker 300:10:58We improved liquidity to $343,000,000 by the end of the quarter. This is the strongest liquidity position in nearly a decade and consists of $41,000,000 in cash and $302,000,000 available on our credit facility. Turning to Slide 8 to explain 2nd quarter sequential improvement in adjusted EBITDA. In total, adjusted EBITDA for the 2nd quarter was $34,000,000 Realized LME of $2,288 per ton was up $98 versus prior quarter, while realized U. S. Speaker 300:11:33Midwest premium of $4.16 per ton was up $7 and European delivery premium of $2.84 per ton was up $61 Together, higher metal prices and regional premiums contributed an incremental $22,000,000 compared with the prior quarter. Aluminum production costs were mixed as higher LME market prices increased power costs for Iceland smelter by $4,000,000 As a reminder, the power expense for Iceland smelter is mostly linked to LME prices. Realized coke prices decreased $31 per ton and realized pitch prices decreased $35 per ton. Together, other raw material prices improved by $3,000,000 helping offset the power headwind. The lower shipment volume was a $7,000,000 headwind to adjusted EBITDA. Speaker 300:12:27The decreased volume was due to normal fluctuations in shipment timing. We expect these shipments in Q3 and therefore no change to our full year volume expectations. As discussed last quarter, we completed the deferred pot relining activities related to the Ison power curtailment. These activities drove an incremental $5,000,000 of expense in Q2 that will not repeat. With that, let's turn to Slide 9 for a look at cash flow. Speaker 300:12:56We began the quarter with $93,000,000 in cash. Adjusted EBITDA contributed $34,000,000 Capital expenditures totaled $16,000,000 $11,000,000 of which relates to the completion of the Grundartangi casthouse project. We reduced short term borrowings on our revolving credit facilities with both our U. S. And Iceland revolvers paid down to 0 balance at quarter end, and we experienced normal working capital flows. Speaker 300:13:25At the end of quarter 2, we had $41,000,000 in cash. Let's turn to Slide 10 and I'll give you some insight into our expectations for the Q3. For Q3, the lagged LME of $2,440 per tonne is expected to be up about $153 versus Q2 realized prices. The Q3 lagged U. S. Speaker 300:13:47Midwest premium is forecast to be $4.25 per tonne, up $10 The European delivery premium is expected at $3.20 per tonne or above $35 per tonne versus the 2nd quarter. Taken together, the LME and delivery premium changes are expected to increase Q3 EBITDA by approximately $30,000,000 to $40,000,000 versus Q2 levels. We expect power prices to be a $5,000,000 headwind. Collectively, we expect our key raw materials to be about flat. The previously discussed timing of shipment volume will be a quarter over quarter tailwind of approximately $10,000,000 Finally, we expect a headwind of about $5,000,000 related to a summer seasonality and administrative expenses as we continue to progress on our growth projects. Speaker 300:14:41All factors considered, our outlook for Q3 adjusted EBITDA is expected to be in a range of between $65,000,000 to $75,000,000 The financial impact of Hurricane Beryl would be adjusted in results and is reflected as such in our Q3 outlook. We look forward to your questions today, and we'll now turn the call over to the operator. Operator00:15:05Thank Our first question comes from the line of Lucas Pipes with B. Riley Securities. Lucas, your line is now open. Speaker 400:15:34Thank you very much, operator. Good afternoon, everyone. Jesse, I wanted to get your perspective on the power markets. There's been a lot of excitement out there on the need for power in AI. We saw a very constructive PJM auction last week. Speaker 400:15:55You have long power at Hawesville with about 500 megawatts. And so I wondered how you think about the optionality around that power infrastructure today and if there has been any interest from third parties? Thank you very much. Speaker 200:16:11Yes. Hi, Lucas. Thanks for the question. Obviously, we as you know are constantly looking at the power markets both here in the U. S. Speaker 200:16:20And Europe and really around the world, watching for trends and what's going on out there. Obviously, we are aware of a lot of the storyline around the AI build out and really quite substantial estimates of energy required to power all of that. With our own assets, of course, we're always looking at all alternatives and especially with our curtailed assets in order to figure out how we maximize value. And so I guess what I would just say with Hawesville is we continue to think it's a great option on higher aluminum prices in the future. But in the end, we'll maximize value of that asset and whatever form that may come in is what we'll pursue. Speaker 400:17:11Jesse, I appreciate that color. That's helpful. Thank you. I'll follow-up on 45x. It's been pretty quiet in terms of kind of incremental guidance from treasury. Speaker 400:17:26One, have you any update from your side, anything that you might be able to share at this point in terms of a timeline for additional guidance? And then 2, there has been increased attention to the new smelter development. And are you able to move forward with that development in the absence of kind of full clarification from treasury on what is going to be included in 45x? Thank you very much. Speaker 200:18:00Sure. Thanks, Lucas. Yes, as you might imagine, we continue to engage with the administration on 45x in many of the same ways that we've talked about on previous calls. We think both the timing of the ultimate final regulations as well as the inclusion of raw materials and the ultimate calculations are very important for the U. S. Speaker 200:18:21Industry. And so we continue to have those discussions. I don't really have an updated timeline for you at this time. But I would just say we continue to be very engaged and we're very thankful from the administration for their continued engagement on this matter. I think everyone recognizes the importance of the aluminum industry in the United States and is moving forward with that in mind. Speaker 400:18:51All right. Well, we'll stay tuned. Jesse, I'll try to squeeze one last one in. With the Mount Holly restart of the last 25%, can you speak a little bit to the margin profile of those incremental volumes? Would those be kind of above, below, in line with your current EBITDA margin profile? Speaker 400:19:10Thank you very much. Speaker 200:19:13Sure. Good question, Lucas. And as I mentioned in my prepared remarks, we continue to do work on that project. And we continue to monitor macro conditions as well and put all of those things together in terms of looking at the timing of that restart. But to your specific question on margins, as we probably talked about in the past, those last tons, those incremental tons out of smelter are always the most profitable tons as we continue to spread what are really compared to other industry pretty large fixed costs over those incremental tons and get the benefit from that from a margin perspective. Speaker 200:19:54So as I said in the past, it's really a project we would like to do and it's one that we continue to get ready for. And when the time is right, we remain confident in our ability to execute that. Speaker 400:20:09Jesse, I appreciate the color. I'll turn it over for now. All the best of luck. Speaker 200:20:14Thanks a lot, Lucas. Operator00:20:17Thank you for your question. Our next question comes from the line of Katya Jansic with BMO. Katya, your line is now open. Speaker 500:20:26Hi. Thank you for taking my questions. Maybe starting on Jamal Cole, there were some reports that the refinery declared force majeure. Can you talk a bit more if that is correct? And why would that be if the volumes or the shipments are normal? Speaker 200:20:45Yes. That is correct, Katya. And of course, you declared force majeure for a variety of reasons. As we've said, our main port of export, which is Rocky Point, is out of commission right now and we are running through an alternative port right now. And so the force majeure really related to that setup going forward. Speaker 200:21:08But as I said, the plant is back to full production and we continue to have those alternative port solutions in place and to export alumina off the island. Speaker 500:21:24So shipments are going as normal right now? Speaker 200:21:30Yes. We don't expect a material impact to our results or to Janalba's results going forward. You can't say they're exactly as normal when they're running out of an alternative port, but we're continuing to make exports from the island. Speaker 500:21:51Okay. And then maybe on to as a follow-up to Lucas' question about Hawesville. Have you looked at there's obviously there's a lot of questions about the power. And have you looked at if that would be an option from a perspective, would the utility or your agreement with the utility allow that? Speaker 200:22:16Yes. As you might recall, Katya, both Kentucky plants have fairly unique energy arrangements where through a variety of contractual arrangements, we have access to what is essentially the wholesale markets in MISO. And so that's been a very advantageous arrangement for us and it's provided us with a lot of flexibility over time. And so if we look at both the future of Hassel from a variety of perspectives, we continue to think that flexibility will be advantageous for us kind of no matter what the outcome ultimately is. Speaker 500:22:58Okay. Thank you very much. Speaker 200:23:01Thanks, Hatje. Operator00:23:04Thank you for your question. Our next question comes from the line of Timna Tanners with Wolfe Research. Timna, your line is now open. Yes. Thank you and good afternoon. Speaker 600:23:16I wanted to ask a little bit more about the situation at Jamalco. Is it entirely benign, like doesn't have impact on Q3? And is there any insurance collectibles on an issue like this or just wondering a little more color? Speaker 200:23:32Sure. Yes. I mean, we were definitely impacted, right? That's what we said in the press release and that's what we said on the phone call. As we said, a portion of the aluminum conveyor report was blown away. Speaker 200:23:45At the plant itself, we really haven't had any impact other than sort of taking the plant down as part of our hurricane preparations and then bringing it back up. But like I said, we're back at full production today. So while we, of course, would have preferred that the hurricane skirted the island to the south more than it did, I think the team has really done a good job making it work, while we get the repairs done at our port at Rocky Point and sort of making these alternative shipping arrangements work. There is, of course, some impacts. We lost some volume while we took the plant down for a few days and while we brought it back up, but it's really not material overall to our financial results. Speaker 600:24:33Okay. Thank you for that. Back to Mount Holly, is it fair to say that if we're here in past the middle of the year and you're still mulling it over that probably wouldn't see a restart imminently? Or can you give us a little bit more color about what you're looking for to make that decision? Speaker 200:24:51Yes. So as with any restart anywhere in the world, we look at a variety of factors, whether the market is calling for that volume at the time, what the return profile is on the CapEx that would go in to enable the restart, what global aluminum prices are, what the Midwest premium is, what value added premiums are. And so it's really a multi variable analysis. And what we've been focused on is just bringing down the time to restart once we do make that decision. And so as I talked about in previous calls, that's shortening supply chains for things we need, making sure we have the materials, making sure we can get the people, making sure we have the energy, all of those things that we've been working on over the past few months. Speaker 200:25:39And then when the time is right, we'll be ready to act. But I think as I said on the last call, kind of no matter what the decision is, I don't think you'll see a lot of CapEx requirements from us on that project in 2024. Operator00:25:56Got it. Thanks. And if I could just one high level question. I'm just Speaker 600:25:59curious what you're thinking about the broader aluminum markets. I know you had some prepared remarks on this, but it's been really baffling to see aluminum go up and straight back down. Alumina continue to march forward. And it's a great thing that you have the Jamalco as a hedge now. But I mean, how sustainable is this? Speaker 600:26:16Or what have we seen in the past about how long this last? If I recall it's not usually that long, but just wondering if there could be any action to you know see a change in the dynamic here that's so Speaker 500:26:29unusual. Speaker 200:26:31Yes, it's a good point. We haven't seen this relatively high alumina price to aluminum price, which is somewhere in the mid-twenty percent today on what we would call an LME percentage basis. And so we do think that should be supportive to the aluminum price from here. And the shortages in the aluminum market are quite real today. It is quite tight out there and that's really what's been driving up at the price. Speaker 200:27:07And that's for some structural reasons. We've seen shutdowns in Australia. We've seen increasing regulation of alumina production in China. And so the market is relatively tight for alumina. And over time, I said we're in the mid-twenty percent now with the relationship of alumina to aluminum. Speaker 200:27:28Traditionally, that's more in the mid teens. So it really is quite a high relationship and really should be supportive of the aluminum price from here. Operator00:27:38Okay. That's it for me. Thanks for the thoughts. Speaker 200:27:43Great. Thanks, Timna. Operator00:27:45Thank you for your question. At this time, there are no additional questions registered.Read morePowered by