Century Aluminum Company (
Q4 2011 Earnings Call
February 23, 2012 5:00 pm ET
Shelly Harrison – Vice President and Treasurer
Michael A. Bless – President and Chief Executive Officer
Kuni Chen – CRT Capital Group
Brett Levy – Jefferies & Company
Sandeep SM – Goldman Sachs
Timna Tanners – Bank of America Merrill Lynch
Tim Hayes – Davenport & Company
Bridget Freas – Morningstar
Frank Duplak – Prudential
Paul Massoud – Stifel Nicolaus
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Ladies and gentlemen, good afternoon. Thank you for standing by, and welcome to the Fourth Quarter 2011 Earnings Call. At this time, all lines are in a listen-only mode. Later, there will be an opportunity for your questions and instructions will be given at that time. (Operator Instructions) And as a reminder, this conference is being recorded.
I would now like to turn the conference over to our host, Ms. Shelly Harrison. Please go ahead.
Thank you, Tom. Good afternoon, everyone and welcome to the conference call. Before we begin, I would like to remind you that today’s discussion will contain forward-looking statements related to future events and expectations, including our expected future financial performance, results of operations and financial condition.
These forward-looking statements involve important known and unknown risks and uncertainties, which could cause our actual results to differ materially from those expressed in our forward-looking statements. Please review the forward-looking statements disclosure in today’s slides and press release for a full discussion of these risks and uncertainties.
In addition, we’ve included some non-GAAP financial measures in our discussion. Reconciliations to the most comparable GAAP financial measures can be found in the appendix to today’s presentation and on our website at www.centuryaluminum.com.
I’d now like to introduce Mike Bless, Century’s President and Chief Executive Officer.
Michael A. Bless
Thanks very much, Shelly. If we could turn to slide 4 please, we’ll go into a quick review of 2011 and the last couple months. And just a couple of minutes Shelly is going to come back on and take you through our review of the macro environment. So, I won’t be repetitive there.
I guess, I could just suffice to say in summary now at this point, we’re prepared for the volatile conditions in the marketplace to continue for some reason over a period of time, and we’re going to continue to manage the company in that context.
Okay. Let’s take a quick review of 2011. At Hawesville starting off, as you recall we restarted line 5 in February of this past year. As we’ve discussed that (inaudible) plant got away from us a few months into this process upon assessment, we’ve confirmed as we talked you about the past that the issues where primarily related to the management and leadership in the plant. As we’ve looked through the causes we found no purely technical reasons as to what happened in the plant.
Due to the upset conditions in the plant, our safety performance there also fell below our normal standards and again, as we talked to you about in the past, it took us longer than we initially expected to diagnose the problems in the plant and to get the systemic fixes into place, which we’ve now done.
When all was said and done just a bottom line for you, the upset conditions in the plant last year cost us $50 million in last profits. This is a combination on the one hand of unabsorbed fixed costs, did in lower volume and number two, due to higher spending both on materials and outside contractors.
As I said, we think we’ve now got back to a stable condition in the plant. Importantly, we’ve got a terrific management team in place to manage the plant for the long-term. We’ve got a very talented plant manager in place. Dave Whitmore has been at the plant for years. He has been in a variety of positions there. We’ve got great confidence in him. He has filled all the key supervisory and general management positions at this point, and we think we’ve got a great opportunity to improve Hawesville and make the plant more productive and valuable.
The biggest issue at Hawesville as it is at Mt. Holly as well, and I’ll talk about this all later in my comments is power and this will be a key focus area for us in 2012.
Okay. Moving to Mt. Holly, the plant had another good year, this past year in 2011, couple operational issues over the summer are now well passed this and cleared. Mike who serves has been in the plant manager position now for about a year and a half. We think he is doing an outstanding job. Again, we’ll talk about the powers used at Mt. Holley in just a moment.
Grundartangi had a terrific year with record production and very good improvement I should say, over the last couple of years on the plant safety performance. I’ll talk a more about that later in my comments. We’ve got a great management team there as well. Gunnar Gudlaugsson and his team are working very well together. And on this basic Grundartangi, we have the confidence to go forward and invest in expansion of that plant. And I’ll talk about that again in a couple of moments.
Moving on to Ravenswood, we’ve spent quite a bit of time especially in the latter part of the year on the potential restart process. The situation is a complex one, and its now at our reasonably sensitive stage, and I’ll give you a bit more detail in just a few moments.
At Helguvik, the project team continued with modest site and engineering work, obviously the major effort over the year was the arbitration process with one of the two power providers we’ll talk with you about that in the past. We did the panel’s findings in December. The results were favorable to us and again, I’ll give you a bit more detail on importantly what the next steps are there in just a moment. We had an active year on capital management, and as you may remember back in the second quarter, we redeemed the remaining $47 million of convertible notes.