Q2 2024 Century Aluminum Co Earnings Call

Ryan Crawford: Senior Vice President of Finance and Treasurer. After our prepared comments, we will take your questions. As a reminder, today's presentation is available on our website at www.centuryaluminum.com, We use our website as a means of disclosing material information about the company and for complying with Regulation FD, Turning to slide one, please take a moment to review the cautionary statements shown here with respect to forward-looking statements and non-GAAP financial measures contained in today's discussion, and with that I'll hand the call to Jesse.

And treasurer.

Senior Vice President of Finance and Treasurer.

Thanks, Brian and thanks to everyone for joining.

Jesse Gary: Thanks Ryan, and thanks to everyone for joining us today. I'll start the call today by reviewing our second quarter performance and providing some thoughts on the current market environment before turning it over to Jerry's for the detailed financial results and then taking your questions. Our team produced excellent results in the second quarter with a Justity Bidot of $34 million. Jerry will give you the full details here, but we are really pleased with the continued strong operating performance across our planes.

Speaker Change: I'll start the call today by reviewing our second quarter performance and providing some thoughts on the current market environment before turning it over to Gerry for the detailed financial results and then taking your questions.

Speaker Change: Our team produced excellent results in the second quarter with adjusted EBITDA of $34 million.

Speaker Change: Jerry will give you the full details here, but we are really pleased with the continued strong operating performance across our plants.

Jerry: Overall, improving aluminum prices, both at the LNG and regional premium level drove increased profitability in the quarter and we will continue to benefit our third quarter financial performance as a strong <unk> prices observed in the second quarter begin to roll through our lagged contractual pricing and financial results.

Jesse Gary: Overall, improving aluminum prices, both at the LME and regional premium level, drove increased profitability in the quarter and will continue to benefit our third quarter financial performance as the strong LME prices observed in the second quarter begin to roll through our lagged contractual pricing and financial results. We also reduced our outstanding debt by nearly $50 million in the quarter, driving strong liquidity of over $340 million.

Speaker Change: We also reduced our outstanding debt by nearly $50 million in the quarter driving strong liquidity of over $340 million.

Speaker Change: Turning to slide five aluminum prices rose during the second quarter as stronger global demand, especially in China drove both <unk> and regional premiums higher.

Jesse Gary: Turning to slide five, aluminum prices rose during the second quarter as stronger global demand, especially in China, drove both LME and regional premiums higher. Demandous Strength in areas relating to the green economy, especially in solar energy and other renewable energy and energy transmission in the application. More recently, aluminum prices have retreated as broad macro concerns have weighed on markets. However, over the longer term, we are confident that global trends toward electrification and lightweighting will continue to drive increased demand for aluminum.

Speaker Change: Demand was strongest in areas relating to the green economy, especially in solar energy and other renewable and energy transmission applications.

Speaker Change: More recently aluminum prices have retreated as broad macro concerns have weighed on markets.

Speaker Change: Over the longer term, we are confident that global trends towards electrification and light weighting will continue to drive increased demand for aluminum.

Jesse Gary: When paired with inventory levels that remain near historic lows and little expected, Harris, it is easy to see why aluminum markets remain in Steve Contango, and we continue to believe our assets are well placed to benefit from short aluminum markets in the U.S. and Europe. Turning to aluminum, the API rose significantly during the quarter, with Q2 prices averaging 19% higher than Q1 levels and reaching over $500 per ton in June. These prices reflect a continued tight market for alumina as production issues in Australia and China led to a lack of available spot cargoes during the quarter and drove prices higher. Aluminum prices have remained near their highs so far in the third quarter as supply remains constrained.

Speaker Change: When paired with inventory levels that remain near historic lows and little expense.

Speaker Change: It is easy to see why aluminum markets remain in steep contango and we continue to believe our assets are well placed to benefit from short aluminum markets in the U S and Europe.

Speaker Change: Turning to alumina the API rose significantly during the quarter with Q2 prices, averaging 19% higher than Q1 levels and reaching over $500 per ton in June.

Speaker Change: These prices reflect a continued tight market for alumina as production issues in Australia, and China led to a lack of available spot cargoes during the quarter and drove prices higher.

Speaker Change: Aluminum prices have remained near their highs so far in the third quarter as supply remains constrained.

Speaker Change: Given the constrained aluminum market, we were very pleased with dramatic with strong operational performance during the second quarter.

Jesse Gary: Given this constraint, the Aluminum Market, we were very pleased with Timapas' strong operational performance in the second quarter. As previously noted, Arginal Co operations make it roughly net neutral to ACI pricing as a company. When combined with our long-term commercial contracts, they are linked to the price of aluminum. Jamalco produces a targeted 1.2 million tons per annum production rate in the second quarter. Over the longer term, while we expect global alumina prices to largely follow aluminum prices, we suspect that alumina will continue to remain exposed to supply-driven volatility as refineries without a dedicated source of bauxite remain exposed to the seaborne bauxite market and supply from difficult geopolitical locations.

Speaker Change: As previously noted our <unk> operations make us roughly net neutral to API pricing, it's a company when combined with our long term commercial contracts that are linked to the price of aluminum.

Speaker Change: Jim also produced at its targeted $1 2 million tonnes per annum production rate in the second quarter.

Speaker Change: Over the longer term, while we expect global alumina prices to largely follow aluminum prices, we suspect that illumina will continue to remain exposed to supply driven volatility as refineries without a dedicated source of bauxite remain exposed to the seaborne bauxite market and supply from difficult geopolitical located.

Speaker Change: <unk>.

Speaker Change: In addition, Chinese regulators announced earlier this year, the Chinese alumina refineries would be subject to more stringent energy and emission efficiency standards.

Jesse Gary: In addition, Chinese regulators announced earlier this year that Chinese alumina refineries would be subject to more stringent energy and emission efficiency standards. We believe these actions will act to constrain Chinese aluminum production growth over the near-to-medium term.

Speaker Change: We believe these actions will act to constrained Chinese alumina production growth over the near to medium term.

Speaker Change: Turning to the global trading environment, the U S and EU government each took additional actions towards near shoring industrial and strategic mineral production during the quarter that will impact global aluminum flows and supply into our key markets in the U S and Europe.

Jesse Gary: Turning to the global trading environment, the U.S. and EU governments each took additional actions toward near-shoring industrial and strategic mineral production during the quarter that will impact global aluminum flows and supply into our key markets in the U.S. and Europe. In May, I joined President Biden at the White House, where he announced an expansion of the Section 301 tariffs on billions of dollars of Chinese goods, including many aluminum products. Similarly, in June, the EU announced additional tariffs of up to 38% on Chinese electric vehicles; in July, the U.S. announced a new knelted-in-cast requirement that ensures that aluminum that was snelted-in-cast in Russia, China, and certain other countries cannot be transformed into downstream aluminum products in Mexico in order to avoid the 10% section 232 disease.

Speaker Change: And May I joined President biting at the White House, where he announced an expansion of the section 301 tariffs on billions of dollars of Chinese goods, including many aluminum products.

Speaker Change: Similarly in June the EU announced additional tariffs of up to 38% on Chinese electric vehicles.

Speaker Change: In July the U S announced a new smelter and cast requirement that ensures that aluminum that would smelted and cast in Russia, China and certain other countries cannot be transformed into downstream aluminum products in Mexico in order to avoid the 10% section 232 duties.

Speaker Change: Finally, as we anticipated on our last call.

Jesse Gary: Finally, as we anticipated on our last call, in May, the U.S. Department of Commerce imposed significant anti-dumping duties on aluminum extrusions entering the U.S. from 14 countries, including China, Mexico, Colombia, and Vietnam. The duties, which went into effect immediately, have started to support domestic extrusion demand and, correspondingly, domestic bills of demand.

Speaker Change: In May the U S Department of Commerce, and post significant anti dumping duties on aluminum extrusion entering the U S from 14 countries, including China, Mexico, Columbia and Vietnam.

Speaker Change: The duties, which went into effect immediately have started to support domestic extrusion demand and correspondingly domestic billet demand.

Speaker Change: As a reminder, we did hold back some second half billet volumes for spot sales. This year in anticipation of improving U S market conditions, and a more constructive pricing environment.

Jesse Gary: As a reminder, we did hold back some second half billet volumes for spot sales this year in anticipation of improving U.S. market conditions and a more constructive pricing environment. We started to see some uptick here on the demand side and continue to expect this will be positive for U.S. bill of materials pricing over the balance of the year and into 2025. These trade actions, especially when viewed together with the substantial trade measures already in place in the U.S. and EU markets, including the Section 232 tariffs and the EU carbon border adjustment mechanism and other existing aluminum tariffs, show the significant value of Century's U.S. and EU-based production footprint. This allows us to provide short supply chains and better service to our customers but to also benefit from better pricing environments in these markets.

Speaker Change: We've started to see some uptick here on the demand side and continue to expect this will be positive for U S billet pricing over the balance of the year and into 2025.

Speaker Change: These trade actions, especially when viewed together with its substantial trade measures already in place in the U S and EU markets, including the section 232 tariffs in the EU carbon border adjustment mechanism and other existing aluminum tariffs show the significant value of centuries U S and EU based production footprint.

Speaker Change: This allows us to provide short supply chains and better service to our customers.

Speaker Change: But to also benefit from better pricing environments in these markets.

Speaker Change: Turning to operations, we saw a strong and stable performance across our operating locations in the second quarter.

Jesse Gary: Turning to operations, we saw strong and stable performance across our operating locations in the second quarter. In Iceland, as expected, the previously announced 20 megawatt energy curtailment was lifted during the second quarter, and Krundertagi returned to full production by quarter end. Our team did an excellent job restoring production quickly and efficiently once the power of Timna went into it. However, as we have seen at many smelters around the world, restoring production following a curtailment is not easy. I'd like to congratulate the Grutter Tongue team on a job well done.

Speaker Change: In Iceland as expected the previously announced 20 megawatt energy curtailment was lifted during the second quarter and <unk> returned to full production by quarter end.

Speaker Change: Our team did an excellent job restoring production quickly and efficiently once the power curtailment ended.

Speaker Change: As we have seen at many smelters around the world. We're starting production following a curtailment is not easy I'd like to congratulate the <unk> team on a job well done.

Speaker Change: We expect normal production levels from Gruner Tommy in Q3.

Jesse Gary: Based back at all the production levels from Greener Tummy in Q3. At the Gründer Tongue Cast House, we continue to produce trials and to qualify our new natural green billets with our key customers in Q2 and Q3. We remain very excited to begin supplying this much-needed, natural, low-carbon billet into the European market. Energy prices continue to be constructive, driven by natural gas prices near $2. Operations at Seabury and Mount Holly remain stable, which is a testament to our operating teams during these very hot summer months. At Jamalco, as previously announced, we were unfortunately impacted by Hurricane Beryl when Catapult Gory 4 made landfall near our port facilities at Rocky Point in Clarendon Parish in early July.

Speaker Change: At the <unk> cast house, we continue to produce trials and to qualify our new natural Greenville, it's with our key customers over Q2 and Q3.

Speaker Change: We remain very excited to begin supplying this much needed natural low carbon buildup into the European market.

Speaker Change: In the U S energy prices continue to be constructive driven by natural gas prices near $2.

Speaker Change: Operations at Sebree and Mt. Holly remains stable, which is a testament to our operating teams. During these very hot summer months.

Speaker Change: Yes.

Speaker Change: After Melco as previously announced we were unfortunately impacted by hurricane barrel when the catapult Cory for storm made landfall near our port facilities at Rocky point in Claire's and parish in early July.

Jesse Gary: The Hurricane Brian Henry Storm surge significant rain and high winds to both our operations and surrounding communities and we are working with local officials and cleared and other parishes to assist those in need.

Jesse Gary: The hurricane brought heavy storm surge, significant rain, and high winds to both our operations and surrounding communities, and we are working with local officials in Clarendon and other parishes to assist those in need. While we were fortunate to not suffer any significant injuries or damage to the refinery operations, we did temporarily curtail operations at the refinery as part of our standard hurricane preparation procedures. The Gemalto team did a remarkable job restoring operations once the storm had passed and the refinery had returned to full production levels.

Jesse Gary: While we were fortunate to not suffer any significant injuries or damage to the refinery operations. We did temporarily curtail operations at the refinery as part of our standard hurricane preparation procedures.

Jesse Gary: The drought the team did a remarkable job restoring operations once the storm had passed and the refinery had returned to full production levels.

Jesse Gary: Yeah.

Jesse Gary: In addition, while Jamalco's production facilities escaped significant damage, the port facility was impacted by the storm, where a portion of the alumina conveyor was damaged and is undergoing repair. While those repairs are being completed, Jamapo has secured alternative quarter arrangements to ensure continued Aluminum shipments to its customer. Finally, we made good progress on a growth project during the second quarter. However, we don't have any significant updates at this time. We continue to work diligently on evaluating each and would expect to be able to provide a further update on a third quarter call. Jerry will now watch these in the quarter and is two, three out of us. Thank you, Jesse.

Speaker Change: In addition, while <unk> production facilities escaped significant damage. The port facility was impacted by the storm, where a portion of the alumina conveyor was damaged and is undergoing repair.

Jesse Gary: While those repairs are being completed Chinalco has secured alternative quarter arrangements to ensure continued alumina shipments to its customers.

Jesse Gary: Yeah.

Jesse Gary: Finally, we made good progress on our growth projects during the second quarter, while we don't have any significant updates at this time, we continue to work diligently on evaluating each and would expect to be able to provide a further update on our third quarter call.

Jesse Gary: Gerry will now walk you through the quarter and our Q3 outlook.

Jerry: Thank you Jesse let's turn to slide seven to review second quarter results.

Jerry: Let's turn to slide seven to review the second quarter results. On a consolidated basis, second quarter global shipments were approximately 168,000 tons, slightly lower than last quarter due to typical timing fluctuations. Realized prices increased versus the prior quarter, driven by higher metal prices and regional delivery premiums, resulting in net sales of $561 million, a 15% increase sequentially. Looking at Q2 operating results, adjusted EBITDA attributable to Century was $34 million. Guess was a sequential increase of $9 million, mainly driven by higher-realized middle prices in regional premium. Adjusted net income was $1 million, or one cent per share.

Jerry: The main adjusting items were added back to $4 million for share-based compensation and $2 million for the unreliased impact of full-recontract, partially offset by a $2 million deduction for the lower of cost or net realizable value on inventory. We improved liquidity to $343 million by the end of the quarter. This is the strongest liquidity position in nearly a decade and consists of $41 million in cash and $302 million available on our credit facility. Use slide eight to explain second quarter sequential improvement in the justice debate.

Jerry: On a consolidated basis second quarter global shipments were approximately 168000 tonnes slightly lower than last quarter due to typical timing fluctuations.

Jerry: Realized prices increased versus prior quarter, driven by higher metal prices and regional delivery premiums, resulting in net sales of $561 million, a 15% increase sequentially.

Jerry: Looking at Q2, our operating results adjusted EBITDA attributable to century was $34 million.

Speaker Change: This was a sequential increase of $9 million, mainly driven by higher realized metal prices and regional premiums.

Jerry: Adjusted net income was $1 million or <unk> <unk> per share.

Jerry: Main adjusting items were add backs of $4 million for share based compensation and $2 million for the unrealized impact of forward contracts.

Jerry: Partially offset by a $2 million reduction for lower of cost or net realizable value on inventory.

Jerry: We improved liquidity to $343 million by the end of the quarter.

Jerry: This is the strongest liquidity position in nearly a decade and consists of $41 million in cash and $302 million available on our credit facility.

Jerry: Turning to slide eight to explain second quarter sequential improvement in adjusted EBITDA.

Jerry: In total, adjusted EBITDA for the second quarter was $34 million; realized LME of $2,288 per ton was up $98 versus the prior quarter, while realized US Midwest premium of $416 per ton was up $7, and European delivery premium of $284 per ton was up $61. Together, higher metal prices and regional premiums contributed an incremental $22 million compared with the prior quarter. Aluminum production costs were maxed as higher market prices increased power costs for our Iceland Smelter by $4 million.

Jerry: In total adjusted EBITDA for the second quarter was $34 million really.

Jerry: Realized <unk> of $2288 per ton was up $98 versus prior quarter, while realized U S. Midwest premium of $416 per ton was up $7 and European delivery premium of $284 per ton was up $61.

Jerry: Together higher metal prices and regional premiums contributed an incremental $22 million compared with the prior quarter.

Jerry: Aluminum production costs were mixed as higher LNG market prices increased power costs for Iceland smelter by $4 million.

Jerry: As a reminder, the power expense for our ice and smelter is mostly linked to LME prices. Realized coat prices decreased $31 per ton, and realized pitch prices decreased $35 per ton. Together, other raw material prices improved by 3 million dollars, helping offset the power headwind. The lower shipment volume was a $7 million headwind to adjusted EBITDA, decreased volume due to normal fluctuations in shipment timing. We expect these shipments in Q3, and therefore there will be no change to our full year volume expectations. As discussed last quarter, we completed the deferred pot relining activities related to the ice and power curtailment.

Jerry: As a reminder, the power expense for Iceland smelter is mostly linked to LNG prices.

Jerry: Realized coke prices decreased $31 per ton and realized pitch prices decreased $35 per ton.

Jerry: Together other raw material prices improved by $3 million, helping offset the power headwind.

Jerry: The lower shipment volume was a $7 million headwind to adjusted EBITDA.

Jerry: The decreased volume was due to normal fluctuations in shipment timing we.

Jerry: We expect these shipments in Q3, and therefore, no change to our full year volume expectations.

Jerry: As discussed last quarter, we completed the deferred realigning activities related to the ice empower curtailment. These.

Jerry: These activities drove an incremental $5 million of expense in Q2 that will not repeat.

Speaker Change: With that let's turn to slide nine for a look at cash flow.

Jerry: These activities drove an incremental $5 million of expense in Q2 that will not repeat. With that, let's turn this slide nine for a look at cash flow. We began the quarter with $93 million in cash, and Jeff DeDeBetta contributed $34 million. Capital expenditures totaled $16 million, 11 million of which relates to the completion of the Gründer Tongue Cast House project. We reduced short-term borrowings on our revolving credit facilities with both our U.S. and Iceland revolvers paid down to zero balance at quarter end, and we experienced normal working capital flows.

Jerry: We began the quarter with $93 million in cash.

Jerry: Adjusted EBITDA contributed $34 million.

Jerry: Capital expenditures totaled $16 million $11 million of which relates to the completion of the <unk> project.

Jerry: We reduced short term borrowings on our revolving credit facilities with both our U S and Iceland revolvers paid down to zero balance at quarter end.

Jerry: And we experienced normal working capital flows.

Jerry: At the end of quarter two, we had $41 million in cash. Now, turn to slide 10, and I'll give you some insight into our expectations for the third quarter. For Q3, the lagged LME price of 2440 dollars per ton is expected to be up about 153 dollars versus the Q2 realized price. The Q3-Lagged U.S. Midwest Premium is forecast to be $425 per ton, up to $10. The European delivery premium is expected at $320 per ton, or about $35 per ton versus the second quarter. Taken together, DLME and delivery premium changes are expected to increase Q3 EBITDA by approximately $30 to $40 million versus Q2.

Jerry: At the end of quarter, two we had $41 million in cash.

Jerry: Let's turn to slide 10, and I'll give you some insight into our expectations for the third quarter.

Jerry: We expect power prices to be a $5 million headwind. Collectively, we expect our key raw materials to be about flat. Previously discussed timing of shipment volume will be a quarter over quarter tailwind of approximately $10 million. Finally, we expect a headwind of about $5 million related to summer seasonality and in administrative expenses as we continue to progress on a growth project. All Factor's considered, our look for Q3HF to deep it down, is expected to be in a range of between 65 to 75 million dollars.

Jerry: For Q3, the lagged <unk> of 2000 and $440 per ton is expected to be up about $153 versus Q2 realized prices the.

Speaker Change: The Q3 lagged U S. Midwest premium is forecast to be $425 per tonne up $10 a.

Jerry: The European delivery premium is expected at $320 per ton or about $35 per ton versus the second quarter.

Speaker Change: Taken together, the <unk> and delivery premium changes are expected to increase Q3, EBITDA by approximately $30 million to $40 million versus Q2 levels.

Jerry: We expect power prices to be a $5 million headwind.

Jerry: Collectively we expect our key raw materials to be about flat.

Jerry: The previously discussed timing of shipment volume will be up quarter over quarter tailwind of approximately $10 million.

Jerry: Finally, we expect a headwind of about $5 million related to a summer seasonality and administrative expenses as we continue to progress on our growth projects.

Jerry: All factors considered our outlook for Q3 adjusted EBITDA.

Jerry: As expected to be in a range of between $65 million to $75 million the.

Jerry: The financial impact of Hurricane Beryl will be adjusted in results and is reflected as such in our Q3 Outlook, and you look forward to your questions today, and we'll now turn the call over to the outbreak.

Jerry: The financial impact of Hurricane barrel would be adjusted results and is reflected as such in our Q3 outlook.

Jerry: We look forward to your questions today, and we'll now turn the call over to the operator.

Speaker Change: Thank you if you would like to ask a question. Please press star followed by one on your telephone keypad. If for any reason you would like to remove that question. Please press star followed by two again to ask a question Press Star one as a reminder, if you are using a speaker phone. Please remember.

Operator: Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad. If for any reason you would like to remove that question, please press star followed by two. Again, to ask a question, press star one. As a reminder, if you are using a speakerphone, please remember to pick up your handset before asking your question. Our first question comes from the line of Lucas Pipes with B. Riley Securities. Lucas, your line is now open.

Operator: To take up your handset before asking your question. Our first question comes from the line of Lucas pipes with B Riley Securities Lucas. Your line is now open.

Lucas Pipes: Thank you very much operator, good afternoon, everyone.

Lucas Pipes: Thank you very much, operator, good afternoon everyone. Jesse, I wanted to get your perspective on the power markets. There's been a lot of excitement out there about the need for power and AI. We saw a very constructive PJM auction last week. Your long power at the hospital was about 500 megawatts. And so I wondered how you think about the optionality around That Power Infrastructure today and if there has been any interest from their parties.

Operator: Thank you very much.

Lucas Pipes: Jesse I I wanted to get your perspective on on the power markets.

Operator: There's been a lot of excitement out there on the need for power and in AI, we saw very constructive PJM.

Speaker Change: Auction last week.

Operator: You're a long power at harsco with about 500 megawatts and so I Wonder how you think about the optionality around.

Speaker Change: That power infrastructure today, and if there has been any interest from third party. Thank you very much.

Jesse Gary: Yes, Hi, Lucas Thanks for the question.

Jesse Gary: Yeah, hi Lucas. Thanks for the question.

Jesse Gary: Obviously.

Speaker Change: As you know are constantly looking at the power markets. Both here in the U S and Europe and really around the world.

Jesse Gary: You know, obviously, as you know, we're constantly looking at the power markets both here in the US and Europe and really around the world, watching for trends and what's going on out there. And obviously, we are aware of a lot of the city storyline around the AI build-out and, you know, really quite substantial estimates of the energy required to power all of that. With our own assets, of course, we're always looking at all alternatives, and especially with our curtailed assets, in order to figure out how we can maximize value.

Jesse Gary: Watching the trends and what's going on out there and obviously, we are aware of a lot of the pet.

Jesse Gary: Storyline around build out and.

Jesse Gary: Quite substantial estimates of energy required to power all of that.

Jesse Gary: With our own assets of course, we're always looking at all alternatives.

Jesse Gary: And especially with our curtailed assets in order to figure out how we.

Jesse Gary: Maximize value.

Jesse Gary: And so I guess what I would just say with Hosville is we continue to think it's a great option on higher aluminum prices in the future, but in the end, we'll maximize the value of that asset, and whatever form that may come in is what we'll pursue.

Speaker Change: And so I guess, what I would just say with wholesale as we continue to think it's a great option on higher aluminum prices in the future.

Jesse Gary: But in the end, we will maximize value of that asset and in whatever form that may come in is what we'll pursue.

Jesse Gary: Yeah.

Jesse Gary: Jesse I appreciate that that color.

Lucas Pipes: Jesse, I appreciate that color. That's helpful. Thank you. I'll follow up on 45X. It's been pretty quiet in terms of kind of incremental guidance from Treasury. One, have you got any update from your side, anything that you might be able to share at this point in terms of a timeline for additional guidance? And then two, there has been increased attention to the new smelter development. Are you able to move forward with that development and the absence of any kind of full clarification from Treasury on what is going to be included in 45x? Thank you very much, Sir.

Speaker Change: That's helpful. Thank you.

Lucas Pipes: Follow up on 45 X, it's been pretty pretty quiet in terms of kind of incremental guidance from treasury.

Speaker Change: One have you any.

Lucas Pipes: Any update from your side anything that you might be able to share at this point in terms of.

Speaker Change: Timeline for additional.

Lucas Pipes: Guidance.

Speaker Change: And then too right.

Speaker Change: There has been increased attention to the new smelter development and.

Speaker Change: Are you able to move forward with that development in the absence of kind of full clarification from treasury on on what it's going to be included at 45 ex Thank you very much.

Speaker Change: Sure. Thanks, Lucas, Yes, as you might imagine we continue to engage with the administration on 45 X and many of the same ways that we've talked about on previous calls.

Jesse Gary: Yeah, as you might imagine, we continue to engage with the administration on 45X in many of the same ways that we've talked about on previous calls. We think both the timing of the final final regulations as well as the inclusion of raw materials in the final calculations are very important for the U.S. industry. And so we continue to have those discussions. I don't really have an updated timeline for you at this time.

Jesse Gary: And we think both the timing of the ultimate.

Jesse Gary: The final regulations as well as the inclusion for all materials and the ultimate calculations are very important for the U S industry.

Jesse Gary: And so we continue to have those discussions I don't really have an updated timeline for you at this time.

Jesse Gary: But I would just say we continue to be very engaged, and we're very thankful to the administration for their continued engagement on this matter. I think everyone recognizes the importance of the aluminum industry in the United States and is moving forward with that.

Jesse Gary: But I would just say we continue to be very engaged and we're very thankful for the administration for their continued engagement on this matter I think I think everyone.

Jesse Gary: Recognizes the importance of the aluminum industry in the United States and moving forward with it.

Jesse Gary: That in mind.

Jesse Gary: Yeah.

Jesse Gary: Alright.

Lucas Pipes: All right, well, we'll stay tuned. Jesse, I'll try to squeeze one last one in. With the Mount Holly restart of the last 25%, can you speak a little bit to the margin profile of those incremental volumes? Would those be kind of above, below, or in line with your current EBITDA margin profile? Thank you very much.

Jesse Gary: Stay tuned.

Lucas Pipes: Jesse I'll try to squeeze one last one and with the with the Mount Polly risk.

Lucas Pipes: We start off the last 25% can you speak a little bit to the margin profile of those incremental volumes with those be kind of above below in line with your current EBITDA margin profile. Thank you very much.

Lucas Pipes: Sure.

Jesse Gary: Sure. A good question, Lucas.

Speaker Change: Question, Lucas and as I mentioned in my prepared remarks, we continue to do work on that project.

Jesse Gary: And, as I mentioned in my prepared remarks, we continue to work on that project, and we continue to monitor macro conditions as well and put all those things together in terms of looking at the timing of that restart. But to your specific question on margins, as we probably talked about in the past, those last tons, those incremental tons out of the smelter, are always the most profitable tons as you continue to spread what are really, you know, compared to other industries, pretty large fixed costs over those incremental tons and get the benefit from that from a margin perspective.

Speaker Change: And we continue to monitor macro conditions as well.

Jesse Gary: And put all of those things together in terms of looking at the timing of that restart but to your specific question on margins.

Jesse Gary: As we probably talked about in the past those last tons those incremental tons out of smelter are always the most profitable tons as you continue to spread what are really.

Jesse Gary: Compared to other industries pretty large fixed costs over those incremental tons.

Jesse Gary: And get the benefit from that from a margin perspective, so as I said in the past, it's really a project we would like to do.

Jesse Gary: So, as I said in the past, it's really a project we would like to do, and it's one that we continue to get ready for. And when the time is right, you know, we remain confident in our ability to execute that.

Jesse Gary: And it's one that we continue to get ready for and.

Jesse Gary: When the time is right we remain confident in our ability to execute that.

Jesse Gary: Chelsea I appreciate the color I'll I'll turn it over for now all the best of luck.

Lucas Pipes: Jesse, I appreciate the color. I'll turn it over for now. All the best of luck.

Jesse Gary: Thanks, a lot Lucas.

Speaker Change: Thank you for your question. Our next question comes from the line of <unk> with BMO capital.

Operator: Thank you for your question. Our next question comes from the line of Katja Jancic with BMO. Katja, your line is now open.

Operator: Your line is now open.

Katja Jancic: Hi, Thank you for taking my questions, maybe starting on Jim I'll call. There were some reports that the refinery declared force majeure or can.

Katja Jancic: Hi, thank you for taking my questions. Maybe starting with Jamal Khal, there were some reports that the refinery declared force majeure. Can you talk a bit more about that, and why would that be if the volumes or the shipments are normal?

Katja Jancic: Can you talk a bit more of that is correct and why would that be if the volumes are the shipments are normal.

Jesse Gary: Yeah, that is correct, Katja. And, of course, you declare force mature for a variety of reasons. As we said, our main port of export, which is Rocky Point, is out of commission right now, and we are running through an alternative port right now. And so the force is really related to that set up going forward. But as I said, the plant is back to full production. And we continue to have those alternative port solutions in place and to export aluminum off-cylinder.

Katja Jancic: Yes.

Speaker Change: Thats correct touch you.

Jesse Gary: And of course, you declared force majeure for variety of reasons as we've said our main port of export which is Rocky point is out of commission right now and we are running through an alternative port right now and so the force majeure really related to that setup.

Jesse Gary:

Jesse Gary: Going forward, but as I said the plant back to full production.

Jesse Gary: And we continue to have those alternative port.

Jesse Gary: Solutions in place and to and to.

Jesse Gary: Export alumina off island.

Jesse Gary: So shipments are going as normal right now.

Jesse Gary: The shipments are going on as normal right now.

Jesse Gary: Yes, we don't expect a material impact.

Jesse Gary: Yeah, we don't expect a material impact on our results or to analysis results going forward, and you can't say they're exactly as normal when they're running out of an alternative port, but we're continuing to make exports from the island.

Jesse Gary: On to our results or two to announce those results going forward.

Jesse Gary: You can't say exactly as normal when they are running out of an alternative port.

Jesse Gary: But we're continuing to make exports from the island.

Jesse Gary: Okay, and then maybe.

Katja Jancic: Okay, and then maybe, as a fallback, to Lucas. Question About Hospital. You have to look at, you know, there's obviously a lot of questions about the power. 10. Have you looked at if that would be an option from the perspective of whether the utility or your agreement with the utility would allow them? Yeah, I do.

Speaker Change: As a follow up.

Lucas Pipes: A question about hospital.

Katja Jancic: Have you looked at Theres, obviously, theres a lot of questions about the power.

Katja Jancic: And have you looked at if that would be an option from our perspective, what do utility.

Speaker Change: Our agreement with the utility allowed that.

Speaker Change: Yes, as you might recall, both Kentucky plant a fairly unique.

Jesse Gary: Yeah, as you might recall, Katja, both Kentucky plants are fairly unique. Energy Arrangements, where through a variety of inter-jurisdictional arrangements, we have access to what is essentially the wholesale markets in MISO. And so, you know, that's been a very advantageous arrangement for us, and it's provided us with a lot of flexibility over time. And so, if we look at both the future of the hospital from a variety of perspectives, we continue to think that flexibility will be advantageous for us, no matter what the outcome ultimately is.

Jesse Gary: <unk>.

Jesse Gary: Energy arrangements, where.

Jesse Gary: Through a variety of contractual arrangements, we have access to what is essentially the wholesale markets in MISO.

Jesse Gary: And so that's been a very advantaged advantageous.

Jesse Gary: Arrangement for us and it's provided us with a lot of.

Jesse Gary: Possibility overtime and so if we look at both the future of household from a variety of perspectives. We continue to think that flexibility will be advantageous for us.

Speaker Change: No matter, what the outcome ultimately yes.

Katja Jancic: Okay. Thank you very much.

Katja Jancic: Thanks Scott.

Jesse Gary: Yes.

Speaker Change: Thank you for your question. Our next question comes from the line of Timna Tanners with Wolfe Research.

Speaker Change: Your line is now open.

Speaker Change: Yes, Thank you and good afternoon.

Timna Tanners: Yeah, thank you and good afternoon. I wanted to ask a little bit more about the situation at Jamalco. Is it entirely benign, like it doesn't have impact on Q3 and are there any insurance collectibles on an issue like this, or just wondering a little more color?

Speaker Change: I wanted to ask a little bit more about the situation at Yamato is it isn't entirely benign like doesn't have an impact on Q3 and is there any insurance collectibles on an issue like this are.

Speaker Change: I'm, just wondering a little more color.

Speaker Change: Sure Yeah.

Jesse Gary: Sure, yeah. I mean, we were definitely impacted, right? That's what we said in the press release, and that's what we said on the phone call. As we said, you know, a portion of the aluminum conveyor at the port was blown away. At the plant itself, we really haven't had any impact other than sort of taking the plant down as part of our hurricane preparations and then bringing it back up. But, like I said, we're back at full production today.

Speaker Change: I mean, we are definitely impacted.

Jesse Gary: That's what we said in the press release and Thats, what we said on the phone call as I said a portion of the aluminum can bear at the port was blown away at the plant itself, we really haven't had any impact other than.

Jesse Gary: Sort of taking the plant down as part of our Hurricane preparations and then bringing it back up but like I said, we're back at full production today. So.

Speaker Change: While we of course with net would've preferred that hurricane skirted the island to the south more than it did I think so.

Speaker Change: Team has really done a good job.

Speaker Change: At work.

Speaker Change: While we get the repairs done at our court at Rocky point, and sorry for making these alternative shipment shipping arrangements work.

Speaker Change: There is there is of course, some impact and we lost some volume.

Jesse Gary: So, you know, while we, of course, would have preferred that the hurricane skirted the island to the south more than it did, I think the team has really done a good job making it work while we get the repairs done at our port at Rocky Point and sort of make these alternatives should make shipping arrangements work. You know, there is a course in Memphis. We lost some volume, and while we took the plant down for a few days, and while we brought it back up, but it's really not material overall to our financial results.

Jesse Gary: Well, we took the plant down for a few days and while we brought it back up.

Jesse Gary: But it's really not material overall to our financial results.

Speaker Change: Okay. Thank you for that and back to Mount Holly is is it fair to say that you know for here in the middle of the year and Youre still mulling it over that probably wouldnt see a restart and imminently here, but can you give us a little bit more color about what you're looking for to make that decision.

Timna Tanners: Okay, thank you for that. Back to Matt Holly, is it so to say that, you know, we're here past the middle of the year and you're still mowing it over? That probably wouldn't see a restart.

Speaker Change: Yeah, so as with any restart anywhere in the world. We look at a variety of factors whether the market is calling for that volume at the time, what the return profile is on the Capex that would go into enable the restart.

Jesse Gary: Yeah, so as with any restart anywhere in the world, we look at a variety of facts, whether the market is calling for that volume at that time, what the return profile is on the capex that would go into enabling the restart, what global aluminum prices are, what the Midwest premium is, what diabetic premiums are. And so it's, you know, really a multi-variable analysis.

Jesse Gary: What global aluminum prices are with the Midwest premium is what value added premiums are and so it's really.

Jesse Gary: Multi variable analysis.

Jesse Gary: And what we've been focused on is just bringing down.

Jesse Gary: The time to restart once we do make that decision.

Jesse Gary: And so as I talked about in previous calls ups shortening supply chains for things, we need and making sure we have the materials, making sure we can get the people, making sure we have the energy.

Jesse Gary: All of those things that we've been working on over the past few months.

Jesse Gary: And then when the time is right.

Jesse Gary: Ready to act, but I think as I said on the last call.

Jesse Gary: Kind of no matter what the decision is I don't think Youll see a lot of capex requirements from us on that project in 2024.

Speaker Change: Got it thanks, if I can.

Timna Tanners: If I could, just one high-level question. I'm just curious what you think about the broader alumina-aluminum markets. I know you had some prepared remarks on this, but it's been really baffling to see aluminum go up and straight back down, and alumina continue to march forward. And it's a great thing that you have Jamalco as a hedge now. But, I mean, how sustainable is this, or what have we seen in the past about how long this lasts? If I recall, it's not usually that long, but just wondering if there could be any action to, you know, see a change in the dynamic here that's so, you know, so unusual.

Speaker Change: One high level question, just curious what youre thinking about the broader alumina aluminum markets. I know you had some prepared remarks on this but it's been really battling this the aluminum go up and it straight back down Illumina continues to March forward and its great thing that you have that Jim Alcoa's ahead, now, but I mean, how sustainable is this or what are we seen in the past about how.

Timna Tanners: Along this last night, if I recall, its not usually that long, but just wondering if there could be any action to.

Timna Tanners: See a change in the dynamic here that that so yeah. So unusual.

Speaker Change: Yes, it's a good point.

Jesse Gary: Yeah, it's a good point. We haven't seen this relatively high alumina price compared to the aluminum price, which is somewhere in the mid 20% today on what we call an LME percentage basis. And so, you know, we do think that should be supported to the aluminum price from here. And, you know, the shortages in the aluminum market are quite real today. It is quite tight out there.

Speaker Change: We haven't seen this relatively high alumina price.

Jesse Gary: Hi.

Jesse Gary: Two aluminum price.

Speaker Change: Which is.

Jesse Gary: Somewhere in the mid 20% today.

Jesse Gary: What we would call <unk> percentage basis.

Jesse Gary: So we do think that should be supportive to the aluminum price from here.

Jesse Gary: The shortages in the aluminum market are quite real today.

Jesse Gary: It is quite tight out there and that's really what's been driving up the price and thats for some structural reasons, we've seen shutdowns in Australia, we have seen increasing regulation of alumina production in China.

Jesse Gary: And so the market is relatively tight for illumina and over time.

Jesse Gary: I said, we're in the mid 20% now the relationship of alumina to aluminum traditionally thats more in the mid teens and.

Jesse Gary: So it really is quite a high relationship and really should be supportive of the aluminum price from here.

Jesse Gary: Yeah.

Timna Tanners: Okay, that's it for me. Thanks for the facts.

Speaker Change: Okay. That's it for me thanks for the thoughts.

Timna Tanners: Great.

Dana: Thanks Dana.

Operator: Thank you for your question. At this time, there are no additional questions registered. So, as a brief reminder, it is star one on your telephone keypad.

Speaker Change: Thank you for your question at this time there are no additional questions registered so as a brief reminder, it is star one on your telephone keypad.

Operator: Okay.

Operator: Thank you for your question. Our next question comes from the line of Timna Tanners with Wolf Research. Timna, your line is now open.

Jesse Gary: And what we've been focused on is just bringing down the time to restart once we do make that decision. And so it talks about previous calls of shortening supply chains for things we need, making sure we have materials, making sure we need people, making sure we have the energy, all of those things that we've been working on over the past few months. And then when the time is right, you know, we'll be ready to act. But I think, as I said on the [inaudible]

Timna Tanners: Got it. Thanks.

Jesse Gary: And that's really what's been driving up the price. And that's for some structural reasons. You know, we've seen shutdowns in Australia.

Jesse Gary: We've seen increasing regulation of aluminum production in China. And so, the market is relatively tight for aluminum. And over time, you know, I said we're in the mid 20% now relationship of aluminum to copper. Traditionally, that's more in the mid teens. So, it really is quite a high relationship and really should be supportive of the aluminum price from here.