Century Aluminum Company (CENX) Quarterly Report (10-Q)
Century Aluminum Company’s quarterly report for the period ended March 31, 2025, shows a net loss of $34.4 million, compared to a net loss of $23.4 million in the same period last year. Revenue decreased by 14% to $444.1 million, primarily due to lower aluminum prices and reduced sales volumes. The company’s cost of goods sold increased by 12% to $434.9 million, driven by higher raw material costs and increased energy expenses. Century Aluminum’s cash and cash equivalents decreased by $14.4 million to $143.1 million, and the company had a working capital deficit of $134.1 million. The report also highlights the company’s efforts to reduce costs and improve operational efficiency, including the implementation of a cost reduction program and the optimization of its smelting operations.
Financial Performance Overview
Century Aluminum Company, a leading producer of primary aluminum, has reported its financial results for the first quarter of 2025. The company’s performance reflects both positive and challenging factors impacting the aluminum industry.
Revenue and Profit Trends
Century’s net sales increased by $3.0 million in the first quarter of 2025 compared to the previous quarter, driven by higher realized prices for aluminum and regional premiums, as well as favorable sales volume and product mix. However, this was partially offset by a decrease in third-party alumina sales.
Compared to the same period in 2024, net sales increased by a significant $144.4 million. This was primarily due to more favorable realized aluminum and regional price premiums, as well as an increase in third-party alumina sales, though these gains were partially offset by unfavorable volume and sales mix.
Gross profit decreased by $5.7 million sequentially, mainly due to higher raw material and power costs, which offset the positive impact of improved metal price realization. On a year-over-year basis, gross profit increased by $44.1 million, driven by better metal price and regional premium realization, partially offset by higher operating expenses.
Selling, general and administrative expenses decreased both sequentially and year-over-year, primarily due to lower share-based compensation costs.
Strengths and Weaknesses
A key strength for Century is the company’s acquisition of a 55% interest in the Jamalco joint venture in Jamaica. This has provided the company with a predictable, long-term supply of alumina and increased transparency and control over its supply chain. However, the Jamalco facility experienced an equipment failure in 2023 that resulted in a production loss and margin impact, though the company is working with its insurance carriers to recover these losses.
Another strength is Century’s diversified production footprint, with operations in the United States and Iceland. This geographic diversification helps mitigate risks associated with any single market or region.
A weakness highlighted in the report is the company’s reliance on volatile energy markets, particularly in Europe, where its Vlissingen facility utilizes natural gas. Adverse changes in European natural gas prices or availability could negatively impact operations at Vlissingen and, in turn, the company’s Grundartangi facility in Iceland.
The report also mentions material weaknesses in Century’s internal controls over financial reporting, specifically related to general information technology controls and business process controls. The company is actively working to remediate these issues, but they have not been fully resolved as of the end of the first quarter.
Outlook and Future Prospects
Looking ahead, Century appears cautiously optimistic about its future prospects. The company believes that cash provided from operations and financing activities will be adequate to cover its needs over the next 12 months. It has a strong liquidity position, with $339.1 million in cash, cash equivalents, and unused availability under its revolving credit facilities as of March 31, 2025.
The company has also secured up to $500 million in funding from the U.S. Department of Energy’s Office of Clean Energy Demonstrations through the Inflation Reduction Act. This funding will support the construction of a new primary aluminum smelter in the Ohio/Mississippi River Basins, which would be the first new U.S. smelter in 50 years.
However, the company’s future performance remains subject to various risks and uncertainties, including volatility in aluminum prices, energy costs, and the successful remediation of its internal control weaknesses.
Conclusion
Century Aluminum’s first-quarter 2025 results demonstrate both the challenges and opportunities facing the company. While it has benefited from improved aluminum pricing and its Jamalco acquisition, it continues to grapple with rising energy costs and internal control issues. The company’s future success will depend on its ability to navigate these factors and capitalize on its growth initiatives, such as the new smelter project. Investors and stakeholders will be closely watching the company’s progress in the coming quarters.
