Century Aluminum sees record production at Sebree, Kentucky, smelter

Century Aluminum Co., headquartered in Chicago, has announced its fourth-quarter and full-year 2024 results, posting net sales of $631 million for the quarter and $2.2 billion for the year.

The company also reported net income attributable to Century stockholders of $47.7 million, or 47 cents per diluted share; adjusted net income of $45.9 million, or 49 cents per share; and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) attributable to Century stockholders of $82.4 million for the quarter. Its year-end figures were net income attributable to Century stockholders of $339.4 million, or $3.29 per share; adjusted net income of $104 million, or $1.11 per share; and adjusted EBITDA attributable to Century stockholders of $245.2 million.

The company also reports the highest annual production volume at its Sebree, Kentucky, plant over the past five years and completed its Iceland billet casthouse expansion project, increasing its value-added product offerings.

In the fourth quarter of 2024, shipments of primary aluminum decreased 1 percent sequentially, according to the company, while net sales increased by 17 percent sequentially largely because of higher third-party alumina sales, higher aluminum price and increased regional premiums.

Net income improved by $0.4 million sequentially, which the company primarily attributes to a nonrecurring benefit from a force majeure settlement, recovery from Hurricane Beryl and improved realized metal prices and regional premiums offset by the one-time Inflation Reduction Act 45X adjustment for final regulations published in the third quarter. Fourth quarter results were affected by $0.7 million of net exceptional items, in particular $5.8 million in unrealized losses on forward derivative contracts (net of tax), which were more than offset by $5.3 million in share-based compensation costs and $2 million of lower cost or net realizable value inventory adjustment (net of tax). Its adjusted net income for the quarter was a $14.1 million change from Q3 of 2024.

Adjusted EBITDA of $82.4 million was a sequential decrease of $21.3 million given updated U.S. Treasury guidance allowing a one-time Section 45X true-up in the third quarter. Normalizing for the one-time Section 45X true-up, adjusted EBITDA improved primarily driven by favorable realized London Metal Exchange (LME) and regional price premiums and a nonrecurring benefit from a force majeure settlement, partially offset by additional operating expenses and higher raw materials costs.

For the full year 2024, Century's shipments of primary aluminum decreased by 3 percent sequentially, while net sales increased by $34.9 million sequentially owing to higher realized aluminum prices.

Net income attributable to Century stockholders improved by $382.5 million from the previous year. Full-year 2024 results were affected by $217.5 million in exceptional items, in particular recognition of the bargain purchase gain from the Jamalco, Jamaica, acquisition of $245.9 million, $5.5 million of net losses on forward derivative contracts (net of tax) and $6.4 million lower of cost or net realizable value inventory adjustment (net of tax) that were partially offset by $15.5 million in share-based compensation costs, $4.7 million related to the power equipment failure at Jamalco and $6.9 million related to the hurricane impact at Jamalco. Thus, Century reported an adjusted net income of $104 million, a $73.3 million improvement from 2023.

Adjusted EBITDA for the full year increased by $125.2 million from the prior year, primarily driven by higher metal prices and lower input costs that were partially offset by lower regional premiums, lower value-added product mix and increased operating expenses.

Greenfield investment’s progress

In March of last year, Century was selected by the U.S. Department of Energy Office of Clean Energy Demonstrations to begin award negotiations for up to $500 million in Bipartisan Infrastructure Law and Inflation Reduction Act funding to build a new aluminum smelter as part of the Industrial Demonstrations Program (IDP). With the aid of this funding, Century plans to build the first new primary aluminum smelter in the U.S. in 45 years. Upon completion, the smelter would double the size of the current U.S. primary aluminum industry, according to the company.

Regarding its progress on this project, Century indicates in its accompanying earnings presentation that it is evaluating locations in the Mississippi/Ohio River basins, noting that the tariffs the Trump administration announced support this investment in U.S. production. The company has primary aluminum smelting sites in Sebree; Mt. Holly, South Carolina; and Hawesville, Kentucky, in the U.S., though the latter has been idled since mid-2022 owing to energy prices, and in Grundartangi, Iceland.

Century says the U.S primary aluminum market is short about 4.2 million metric tons per year and that it plans to build a large, modern and efficient smelter primarily powered by carbon-free energy.

It will be four to six years until metal production at the new smelter, the company adds, which will add 5,500 construction jobs and 1,000 permanent, direct jobs. In its earnings call, the company revealed that it is finalizing energy contract negotiations and site selection, which are expected by the end of Q2, with further updates to follow once these steps have been finalized.

First-quarter 2025 outlook

Century expects first-quarter 2025 adjusted EBITDA to range between $75 to $85 million based on improved metal pricing and regional premiums offset by higher energy and raw material costs.