Century Aluminum (NASDAQ:CENX) reported third-quarter net sales of nearly $1 billion and adjusted EBITDA of $332 million as higher aluminum prices and increased shipments followed production restarts at its Mt. Holly and Grundartangi facilities.
The company expects fourth-quarter adjusted EBITDA of $275 million to $300 million, with lower realized aluminum prices expected to offset some of the benefit from improving production. Executives also said they are advancing financing, power and permitting work for a proposed Oklahoma smelter, but plan to wait until a final investment decision before providing further guidance on shareholder returns.
Shipments Rise as Facilities Return to Capacity
Third-quarter shipments rose 33% from the prior quarter to approximately 173,500 tons, Chief Financial Officer Peter Trpkovski said. Net sales increased by $209 million sequentially, primarily because of higher shipments and realized London Metal Exchange aluminum prices.
Net income was $303 million, or $2.89 per share. Adjusted net income was $272 million, or $2.58 per share, excluding exceptional items that primarily included unrealized derivative gains and business interruption losses in Iceland.
CEO Jesse Gary said the company’s assets returned to full capacity during the quarter for the first time in more than a decade. At Mt. Holly in South Carolina, production instability following the expansion was resolved in the third quarter, and the plant is expected to return to full volume and a normalized production mix over the fourth quarter.
At Grundartangi in Iceland, the smelter returned to its full complement of production pots in July. Gary said replacement transformers will allow the company to raise amperage on Potline Two from reduced levels and restore full nameplate production over the first quarter.
At Jamalco, Century continues to address a bauxite quality issue through a revised mine plan that will take several quarters to implement. A new power turbine came online in August, allowing the operation to avoid purchases from Jamaica’s more expensive grid, Gary said.
Lower Aluminum Prices Weigh on Outlook
For the fourth quarter, Century expects a lagged LME aluminum price of $3,150 per ton, about $250 below its realized third-quarter price. The company expects pricing changes, including regional premiums, to reduce adjusted EBITDA by $35 million to $45 million sequentially.
Higher raw material costs are expected to create a further $5 million to $10 million headwind, while improved volume and sales mix should contribute $5 million to $10 million, largely from Mt. Holly. Some off-specification material from the earlier production instability will weigh on the fourth-quarter mix, Trpkovski said.
Gary described market conditions as robust, citing constrained supply following Middle East disruptions and demand from data center and power-system construction, automotive customers, aerospace and defense. He said Century will provide guidance on 2027 value-added product premiums during its fourth-quarter call.
Oklahoma Project Advances
Century and partner EGA have largely agreed on material financing terms for the Oklahoma project, Gary said, and are moving toward final documentation on a power contract. The company is also working on engineering and discussing the project with regulators and community members.
In September, Century submitted a revised environmental plan that committed the project to reducing its permitted fluoride emissions by 37%. An economic impact study published by the company projected that the smelter would increase Oklahoma’s gross domestic product by almost $1.5 billion annually. Gary said the facility would ultimately create more than 1,000 permanent direct jobs and 5,000 indirect and induced jobs.
Gary said Century expects to use its cash position first to fund its share of the project once it reaches a final investment decision. He said the company believes it is prudent to wait until then before making other capital-allocation decisions, so it can assess the size and timing of its equity requirements.
The project is also expected to benefit from an import incentive allowing qualifying primary aluminum imports at a 25% tariff rate rather than 50%, up to Century’s share of the smelter’s annual production. Gary said the company is discussing the program’s mechanics with the Department of Commerce and expects to access it quickly, potentially at the time of the investment decision.
Cash Position Strengthens
Century ended the quarter with $755 million in cash and $486 million in debt. Its cash balance rose from $390 million at the start of the quarter, aided by operating cash flow, a $94 million payment for its 2025 Section 45X tax credit, insurance proceeds and a release of working capital.
Gary said major investment programs at Mt. Holly, Grundartangi and Jamalco are complete, with approximately $125 million in investment capital spending this year not expected to recur. The company also expects further tax-credit payments and insurance recoveries.
Century retains a 6.8% interest in the TeraWulf data center being built at Hawesville. Gary said the company has the right to sell that interest to TeraWulf for $300 million after the data center begins operating, or to a third party if it can obtain a higher value. Century has no obligation to contribute additional capital, he said.
About Century Aluminum (NASDAQ:CENX)
Century Aluminum Company is a producer of primary aluminum. The company operates aluminum smelters that convert alumina into aluminum metal, supplying standard-grade and value-added products used in transportation, construction, packaging, aerospace, and other industrial applications.
Century Aluminum’s operations are located in the United States and Iceland. Its U.S. facilities include the Sebree smelter in Kentucky and the Mt. Holly smelter in South Carolina, while its Icelandic operations are based at the Grundartangi aluminum smelter.
