Century Aluminum Reports Robust Q4 2024 Performance Amid Market Strength
Century Aluminum Company (NASDAQ: CENX) delivered a solid Q4 2024 performance, fueled by rising aluminum prices and favorable market conditions. The company reported adjusted EBITDA of $82 million, bringing full-year 2024 EBITDA to $245 million. CEO Jesse Gary attributed the strong results to higher aluminum prices, lower energy costs, and a financial settlement from an alumina supplier.
Management Highlights and Market Outlook
CEO Jesse Gary emphasized robust market fundamentals in 2025, with aluminum prices surpassing $2,700 per tonne and the Midwest Premium trading near $0.39. He projected a global aluminum deficit of over 600,000 tonnes due to constrained supply and growing demand. CFO Jerry Bialek reported Q4 net sales of $631 million and an adjusted net income of $46 million, translating to $0.49 per share.
Century Aluminum’s liquidity stood at $245 million, including $33 million in cash. A key announcement was the increase in U.S. Section 232 tariffs from 10% to 25%, which is expected to boost the Midwest Premium and drive profitability in Q2 2025 and beyond. CEO Gary noted, “Each $1.00 increase in the Midwest Premium equates to an additional $9 million of EBITDA annually.”
Operational Updates and Investment Plans
Jamalco refinery reached its highest January production levels since acquisition, although Century Aluminum implemented a 5% workforce reduction at the facility to enhance efficiency and cut labor costs. Looking ahead, Q1 2025 adjusted EBITDA is expected to range between $75 million and $85 million, with full-year shipments projected at 700,000 tonnes.
For 2025, sustaining capital expenditures (CapEx) are estimated at $45 million to $50 million, while investment CapEx for operational efficiency projects is projected at $25 million to $30 million. The company expects Midwest Premium prices to rise significantly in Q2 following the new tariff structure’s implementation in March.
Financial and Market Performance
In Q4 2024, Century Aluminum saw a $92 million sequential increase in net sales, driven by higher aluminum prices and sales volumes. Realized LME aluminum prices stood at $2,462 per tonne, with Midwest Premium at $436 per tonne. Liquidity decreased compared to Q3 due to working capital adjustments in alumina sourcing.
Q4 shipments totaled 167,000 tonnes, slightly lower than Q3 due to year-end cutoff timing. The company also recognized a $12 million financial settlement from an alumina supplier’s force majeure event, while costs from spot alumina purchases are expected to impact Q1 2025 results.
Key Analyst Takeaways and Future Prospects
During the earnings call, analysts probed the company’s growth potential, particularly regarding Midwest Premium increases and capacity restarts at Mt. Holly and Hawesville.
- Nick Giles (B Riley): Inquired about the impact of Midwest Premium on earnings. CEO Gary suggested a potential $0.20 to $0.25 upside, reaching the $0.45 to $0.50 range.
- Katja Jancic (BMO Capital Markets): Asked about Mt. Holly restart costs and timeline. CEO Gary estimated a nine-month timeline from the decision to restart.
- Timna Tanners (Wolf Research): Questioned Hawesville’s progress. CEO Gary noted continued strong interest and ongoing due diligence.
Quarter-Over-Quarter Analysis
- Adjusted EBITDA fell from $104 million in Q3 to $82 million in Q4, reflecting year-end shipment timing and operational expenses.
- Liquidity declined from $279 million in Q3 to $245 million, impacted by working capital adjustments.
- Analysts in Q4 focused more on forward-looking elements, including the effect of Section 232 tariffs and capacity restarts, compared to Q3’s focus on operational stability.
Potential Risks and Challenges
While Century Aluminum is positioned for growth, certain risks remain:
- Operational disruptions at Mt. Holly: Increased costs in Q4, though management expects improvements.
- Energy costs: Anticipated seasonal increases, posing a potential $15 million EBITDA headwind in Q1 2025.
- Alumina sourcing: Force majeure events highlighted supply chain vulnerabilities.
- Capacity restart feasibility: Analysts questioned the timing and cost implications of ramping up production at Mt. Holly and Hawesville.
Century Aluminum’s Q4 2024 results demonstrated strong market momentum and strategic execution. With aluminum prices on the rise, tariff adjustments favoring domestic producers, and capacity expansion plans in motion, the company is well-positioned for increased profitability in 2025. Investors and analysts will closely monitor the execution of these plans, particularly around capacity restarts and the sustained impact of market dynamics.
