Century Aluminum projects Q4 adjusted EBITDA of $170M-$180M while advancing Mt. Holly expansion

Earnings Call Insights: Century Aluminum Company (CENX) Q3 2025

MANAGEMENT VIEW

* Jesse Gary, President and CEO, began by recognizing the safety response to Hurricane Melissa at Jamalco, noting that “Jamalco weathered this catastrophic storm, protecting the refinery from any significant damage and most importantly, without suffering a single injury.” Production has restarted at the refinery and full production is expected to resume within weeks; the company does not anticipate any material financial impact from the storm.
* Gary detailed the temporary halt at Grundartangi’s potline 2 due to transformer failures, stating the “time line for restart is dependent on how quickly replacement transformers can be manufactured, shipped and installed,” with current estimates at 11 to 12 months. The company is exploring repairs to reduce downtime and expects insurance coverage for these losses.
* Century signed an extension to the Mt. Holly power agreement through 2031, supporting the restart of over 50,000 metric tons per year of incremental production at Mt. Holly. The restart is expected to begin in Q2 2026 and be completed by the end of June, with production ramping up throughout the second quarter.
* The Hawesville site strategic review was extended due to heightened interest. The company is also progressing with a new U.S. smelter project, narrowing focus to one site and power provider, and is in early talks with potential joint venture partners.
* Gary highlighted “outstanding global market conditions” with rising aluminum prices and “persistently challenged supply side” dynamics, citing realized LME prices of $2,508 in Q3 and spot aluminum prices near $2,850. Midwest and European premiums have strengthened, now averaging $1,425 and $193 per ton, respectively, with spot premiums even higher in Q4.
* “We now expect that we will see an approximately $0.05 year-over-year increase across our 2026 billet sales, which should generate an additional $30 million of 2026 EBITDA.” (President, CEO & Director Jesse Gary)
* Peter Trpkovski, CFO, stated: “Net sales for the quarter were $632 million, a $4 million increase primarily due to higher realized Midwest premium, partially offset by lower shipments. For the quarter, we reported net income of $15 million or $0.15 per share. Our adjusted net income was $58 million or $0.56 per share, excluding exceptional items. Adjusted EBITDA was $101 million for the quarter, mainly driven by the increased Midwest premium price.”

OUTLOOK

* Century expects Q4 adjusted EBITDA in the range of $170 million to $180 million, with anticipated increases in both LME and Midwest premiums contributing approximately $65 million incremental EBITDA over Q3 levels. The Grundartangi Line 2 outage is expected to reduce Q4 shipments by 37,000 tons and EBITDA by $30 million, though the financial impact is expected to be covered by insurance.
* Trpkovski noted, “At current realized prices, we expect Q4 adjusted EBITDA in the range of $170 million to $180 million.”
* Management maintains its net debt target of $300 million, anticipating reaching this goal early in 2026, supported by strong EBITDA generation and the receipt of $75 million from the IRS for Section 45X in October.
* Further guidance on sustaining and investment capital spending for 2026 will be provided in February.

FINANCIAL RESULTS

* Shipments totaled approximately 162,000 tonnes, down from the prior quarter, attributed to operational instability at Mt. Holly and the Grundartangi transformer failure.
* Liquidity increased to $488 million, up $125 million quarter-over-quarter, with a cash balance of $151 million. Net debt was $475 million, up slightly from the prior quarter due to working capital build.
* The company received its fiscal year 2024 45X payment of approximately $75 million from the IRS in October.

Q&A

* Fedor Shabalin, B. Riley Securities: Asked about Mt. Holly restart EBITDA potential and CapEx. Gary responded that initial CapEx has been minimal and “the total project should be somewhere in the neighborhood of $50 million project spend,” with full run rate expected in Q3 2026 and “the additional volume should generate about $25 million in additional EBITDA per quarter.”
* Shabalin inquired about capital returns. Gary explained “there is a clear stated preference for buybacks. And so as we think about it today, that's the most likely form of capital return once we do reach those targets.”
* Katja Jancic, BMO: Asked about Grundartangi repairs and insurance coverage. Gary responded repairs could accelerate restart, but the 11-12 month timeline stands unless repairs are successful. He stated, “our policy limits are high enough that they will cover both the property and business interruption costs of the outage up to and including that 11- to 12-month time line.”
* Jancic also asked about Hawesville’s strategic review timeline and re-start inclusion. Gary indicated no fixed timeline; the review includes both sale and restart options.
* John Tumazos, Independent Research: Questioned hedging policy and contract locking for billet and premiums. Gary noted no change to hedging policy, with most U.S. billet sales for 2026 locked in at quoted prices.
* Tumazos raised concerns on tariffs and sale of the company. Gary clarified the Supreme Court case does not affect Section 232 tariffs and stated, “the company is not for sale. We are very excited about our prospects.”

SENTIMENT ANALYSIS

* Analysts expressed positive sentiment on Mt. Holly’s restart, capital allocation, and strong market conditions, but probed on risk factors tied to insurance, tariffs, and strategic reviews.
* Management tone was confident and optimistic in both prepared remarks and responses, highlighting resilience, growth initiatives, and capital discipline. Gary frequently reinforced strong market positioning and the company’s ability to capitalize on industry trends.
* Compared with the previous quarter, management’s tone remained confident, with increased emphasis on capital returns and operational resilience. Analysts’ tone was consistent, with focused questions on execution and risks.

QUARTER-OVER-QUARTER COMPARISON

* Q3 guidance for adjusted EBITDA increased from Q2’s $74 million result, with Q4 guidance substantially higher at $170 million to $180 million. Shipments declined from 176,000 tonnes in Q2 to 162,000 tonnes in Q3 due to operational disruptions.
* The Mt. Holly expansion project moved from announcement (Q2) to active progression (Q3), with hiring and capital work underway and a power agreement extension secured.
* The Grundartangi transformer failure and insurance recovery process were new challenges in Q3, replacing Sebree’s maintenance focus from Q2.
* Management’s tone grew more assertive regarding capital returns, specifically share repurchases, and emphasized strong liquidity and debt reduction progress.
* Analysts in both quarters consistently focused on restart projects, capital allocation, and industry risks, with added attention to insurance and hedging in Q3.

RISKS AND CONCERNS

* The Grundartangi transformer failure presents operational and financial risk, though management expects insurance to mitigate the impact.
* Instability at Mt. Holly affected Q3 production but was resolved by mid-October.
* The Hawesville site’s strategic review process remains open-ended, creating uncertainty around the asset’s future.
* Analysts raised questions about tariff stability and political risk; management emphasized Section 232 tariffs’ legal standing and continued government support.

FINAL TAKEAWAY

Century Aluminum delivered a strong Q3 performance, advancing key growth initiatives such as the Mt. Holly expansion and making progress on strategic projects despite operational setbacks at Grundartangi and Mt. Holly. Management projects significant EBITDA growth into Q4 and 2026, targets reaching $300 million net debt early next year, and signals a likely shift toward share buybacks as capital returns become feasible. The company remains focused on operational stability, capital discipline, and leveraging favorable market conditions to drive shareholder value.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/cenx/earnings/transcripts]

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