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CENTURY ALUMINUM CO (CENX)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 net sales were $632.2M, up $4.1M sequentially on stronger realized U.S. Midwest premiums; diluted EPS was $0.15 and adjusted EPS $0.56, with adjusted EBITDA rising to $101.1M from $74.3M in Q2 .
  • Revenue modestly beat Street, but EPS and EBITDA missed: Revenue $632.2M vs $629.9M consensus; adjusted EPS $0.56 vs $0.84 consensus; adjusted EBITDA $101.1M vs $116.9M consensus. Bold miss on EPS and EBITDA driven by derivative losses, energy costs, and operational issues. Values retrieved from S&P Global*.
  • Management guided Q4 adjusted EBITDA to $170–$180M on higher lagged LME and regional premiums; expects insurance to offset Grundartangi line two outage (~37k tons; ~$30M EBITDA impact) though cash receipts could lag .
  • Strategic catalysts: Mt. Holly power agreement extended through 2031 enabling full restart (~50k tons; ~$25M incremental EBITDA per quarter at spot once fully ramped); received $75M Section 45X refund in October and held $220M 45X receivable at Q3-end .

What Went Well and What Went Wrong

What Went Well

  • Realized Midwest premium rose sharply to $1,425/ton (+$575 q/q), driving pricing tailwinds and $48M sequential uplift from LME/premiums despite lower volumes .
  • Adjusted EBITDA improved to $101.1M, up $26.8M q/q, reflecting premium strength and operational execution at Sebree; liquidity increased to $488.2M with cash of $151.4M .
  • Mt. Holly power extension through 2031 finalized; restart project progressing with expected incremental units beginning Q2 2026 and full run-rate by Q3 2026; management frames ~$25M additional EBITDA per quarter at spot once fully ramped .
  • “We are well positioned to reach our net debt target of $300M early in 2026… and will look to begin to return excess cash to our shareholders,” CEO Jesse Gary (considering buybacks) .

What Went Wrong

  • Operational instability at Mt. Holly reduced Q3 output (~4k tons) and added ~$10M headwind vs expectations; transformer failures at Grundartangi necessitated shutting potline 2, with restart in 11–12 months unless repairs accelerate timing .
  • Energy costs were higher in Q3 (warmer U.S. summer and LME-linked Iceland power), reducing adjusted EBITDA by ~$9M; realized hedge settlements expected to be a $10–$15M headwind to Q4 adjusted EPS .
  • EPS/EBITDA miss vs consensus, with $43.8M net exceptional items including $20.7M unrealized derivative losses, $9.7M stock comp, $6.2M loss on extinguishment of debt, and $4.2M Iceland equipment failure costs .

Financial Results

MetricQ1 2025Q2 2025Q3 2025
Net sales ($USD Millions)$633.9 $628.1 $632.2
Gross profit ($USD Millions)$60.6 $36.2 $77.3
Operating income ($USD Millions)$46.1 $20.7 $58.3
Diluted EPS ($)$0.29 $(0.05) $0.15
Adjusted EPS ($)$0.36 $0.30 $0.56
Adjusted EBITDA ($USD Millions)$78.0 $74.3 $101.1

Estimates vs Actual (Q3 2025)

MetricConsensusActualBeat/Miss
Revenue ($USD Millions)$629.9*$632.2 Beat
Primary EPS ($)$0.84*$0.56 [GetEstimates]Miss
EBITDA ($USD Millions)$116.9*$101.1 Miss

Values retrieved from S&P Global*.

Segment and Shipments

MetricQ3 2024Q2 2025Q3 2025
U.S. shipments (tonnes)97,173 94,519 90,703
U.S. aluminum sales ($USD Millions)$282.6 $324.4 $367.6
Iceland shipments (tonnes)71,582 81,222 71,739
Iceland aluminum sales ($USD Millions)$202.8 $233.7 $196.3
Total shipments (tonnes)168,755 175,741 162,442
Aluminum sales ($USD Millions)$485.4 $558.1 $563.9

Key Pricing KPIs

KPI ($/ton)Q3 2025 ActualQ4 2025 Outlook
Realized LME$2,508 $2,705 (lagged)
U.S. Midwest premium$1,425 $1,775 (lagged)
Europe duty-paid premium$193 $275

Liquidity and Balance Sheet Highlights

  • Liquidity $488.2M (cash $151.4M; borrowing availability $336.8M) at 9/30/25 .
  • Net debt $475M, with $75M Section 45X refund received in October to reduce Q4 net debt; 45X receivable $220M at Q3-end .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EBITDA ($USD Millions)Q4 2025N/A$170–$180 Raised vs Q3 actual
Realized LME ($/ton, lagged)Q4 2025N/A$2,705 (+$197 q/q) Raised
U.S. Midwest premium ($/ton, lagged)Q4 2025N/A$1,775 (+$350 q/q) Raised
Europe duty-paid premium ($/ton)Q4 2025N/A$275 (+$82 q/q) Raised
Energy costsQ4 2025N/AFlat q/q impact Maintained
Raw materials (coke, pitch, caustic)Q4 2025N/A$0–$5M headwind Slightly worse
Operating expensesQ4 2025N/A$0–$5M improvement Better
Volume/mixQ4 2025N/A+$10M (Mt. Holly back to full pot complement) Better
Grundartangi outageQ4 2025N/A−37k tons; −$30M EBITDA (insurance expected to cover) Worse (normalized)
Hedge settlementsQ4 2025N/A−$10–$15M (EPS impact) Worse
Tax expenseQ4 2025N/A~$5M (EPS impact) Worse
U.S. billet premiumsFY26N/A+$110/ton; ~$30M incremental FY26 EBITDA Raised
Q3 Adjusted EBITDAQ3 2025$115–$125 $101.1 Lower than guided

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
Section 232 tariffsQ1: +$16.2M positive impact; tariff raised to 25% . Q2: increased to 50% effective June 4 .CEO credits tariffs for enabling U.S. capacity growth; expects continued support without exclusions .Supportive policy backdrop, demand tightness continues.
Mt. Holly restartQ1: emergency energy charges $3.5M; normal ops thereafter . Q2: restart announced .Power agreement extended to 2031; ramp details; ~$25M EBITDA/quarter at spot once full run-rate .Execution progressing; capacity and EBITDA catalyst.
Grundartangi transformersQ2: transformer failure noted .Potline 2 shut; restart 11–12 months unless repair path accelerates; insurance expected to cover losses .Temporary outage; mitigation via insurance; restart planning.
Pricing (LME/premiums)Q1/Q2: Midwest premium up; pricing contributing to EBITDA .Q3 realized LME $2,508; Midwest $1,425; Q4 lagged increases guide higher EBITDA .Strengthening into Q4 on lagged pricing.
Energy costsQ1: higher energy prices pressured EBITDA .Q3 higher costs (U.S. summer, Iceland linkage) −$9M; Q4 expected flat vs Q3 .Stabilizing in Q4.
Capital allocationQ1/Q2: refinancing 6.875% notes; liquidity build .Net debt target early 2026; potential buybacks post-target .Balance sheet de-risking; shareholder returns likely post-2026.
Jamalco hurricaneN/A in Q1/Q2.Hurricane Melissa; no material damage; production resuming; no material financial impact .Operations resilient.

Management Commentary

  • “We now expect that we will see an approximately $0.05 year-over-year increase across our 2026 bill of sales, which should generate an additional $30 million of 2026 EBITDA.” — Jesse Gary .
  • “At current realized prices, we expect Q4 adjusted EBITDA in the range of $170–$180 million.” — CFO Peter Trpkovski .
  • “We are well positioned to reach our net debt target of $300 million early in 2026… and otherwise look to begin to return excess cash to our shareholders.” — Jesse Gary .
  • “Our expectations today is that our policy limits are high enough that they will cover both the property and business interruption costs of the outage… deductibles are $15 million.” — Jesse Gary on Grundartangi insurance .
  • “Once [Mt. Holly] reaches full run rate at spot prices today, the additional volume should generate about $25 million in additional EBITDA per quarter.” — Jesse Gary .

Q&A Highlights

  • Mt. Holly economics: ~$50M project cost; units begin Q2 2026; full run-rate Q3; ~$25M incremental EBITDA/quarter at spot .
  • Capital returns: management favors buybacks once net debt target reached; $75M 45X refund received, 45X receivable $220M supports balance sheet deleveraging .
  • Grundartangi outage: restart timing 11–12 months unless repairs shorten; insurance expected to cover above $15M deductible; EBITDA normalization via adjustments .
  • Tariffs/policy: Section 232 upheld; management expects no exemptions; tight inventories support Midwest premium .
  • Power hedging: Sebree power risk hedged ~20–30%; Midwest/LME exposure maintained except selective hedges for Mt. Holly returns .

Estimates Context

  • Revenue beat: $632.2M actual vs $629.9M consensus*; modest upside driven by higher realized Midwest premiums despite lower shipments [GetEstimates].
  • EPS miss: adjusted EPS $0.56 vs $0.84 consensus*, reflecting $43.8M exceptional items (unrealized derivatives $20.7M; extinguishment of debt $6.2M; stock comp $9.7M; Iceland equipment failure $4.2M), higher energy costs ($9M), and Mt. Holly instability ($10M) .
  • EBITDA miss: adjusted EBITDA $101.1M vs $116.9M consensus*, with the above drivers and volume/mix headwinds; Street likely assumed stronger volume and lower exceptional items .
    Values retrieved from S&P Global*.

Key Takeaways for Investors

  • Pricing tailwinds are accelerating into Q4 via lagged LME and Midwest premium, underpinning strong adjusted EBITDA guidance of $170–$180M .
  • Near-term volume risk from Grundartangi outage is largely mitigated by insurance; watch for timeline updates on repair vs replacement path .
  • Mt. Holly restart is a material 2026 EBITDA catalyst (~$25M/quarter at spot); power agreement de-risks execution and supports full capacity by Q3 2026 .
  • Balance sheet improving: liquidity $488M, $75M 45X cash received post-quarter, $220M receivable outstanding; net debt trajectory toward $300M by early 2026 may unlock buybacks .
  • Hedging program will weigh on Q4 EPS ($10–$15M), but operational expenses and volume/mix should improve; monitor raw material cost headwinds ($0–$5M) .
  • Billet premiums locked higher for FY26 (+$110/ton), adding ~$30M to FY26 EBITDA; strengthens medium-term margin outlook .
  • Policy backdrop remains supportive (Section 232), with tight inventories sustaining premiums; exposure maintained to metal prices except targeted hedges .