Ladies and gentlemen, thank you for standing by. Welcome to the Century Aluminum Company First Quarter 2018 Earnings Conference. At this time, all participants are in a listen-only mode. Later we’ll conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, this conference is being recorded. I’d now like to turn the conference over to our host Finance Manager for Century Aluminum, Mr. Peter Trpkovski. Please go ahead, sir.

Thank you very much, operator. Good afternoon, everyone, and welcome to the conference call. I’m joined here today by Mike Bless, Century’s President and Chief Executive Officer; and Shelly Harrison, Senior Vice President of Finance and our Treasurer. After our prepared comments, we’ll 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. If I take a look at Slide 2, please take a moment to review the cautionary statement shown here with respect to forward-looking statements and non-GAAP financial measures contained in today’s discussion. With that, I’ll hand the call to Mike.

Thanks very much, Pete. And thanks to all of you for joining us this afternoon as always, if we could turn Slide 4 please. I’ll give a quick rundown on the last couple months, they’ve obviously been busy ones. And most importantly, as I’ll note in a couple moments, we had a very good quarter in the operations. Safety performance was acceptable and we had a generally stable process and good efficiencies across the department at each of the plants. Financial results for the quarter came in just as we had expected. As we had forecast, realized higher metal prices were significantly more than offset by raw material price increases. Carbon costs were up as expected and the same is true for the higher alumina costs and material purchased back when the market was high, as you will recall in the late months of 2017. This will actually go the other way in the second quarter results as the normalized prices that we saw at the beginning of the year go through our P&L. Of course, the markets move meaningfully since then and I'll comment on that in just a couple minutes. Against that higher alumina price, we captured only a portion of the higher metal price in the first quarter, and that's of course, due to the fact that most of our sales contracts, in fact virtually all of our sales contacts are priced on two-month lag. We will see close to that full amount in the second quarter, and Shelly in just a couple minutes will provide you all the detail on the various price movements both from Q4 to Q1 that we are reporting today. And then she will also give you some estimates on those same movements from Q1 to Q2. The alumina price did develop…

Thanks Mike. If we can move Slide 5 please, I’ll take you through the current state of the global aluminum market. The cash LME price averaged $2,159 per ton in Q1, which reflects a 3% increase over Q4. The LME price on a two-month lag basis was up quarter-over-quarter 2%, and averaged $2,129 per ton. As Mike discussed, there has been a lot of news driving significant volatility in our markets over the past couple months. As a result, aluminum prices have seen over a $600 per ton range just in the month of April, averaged $2,250 per tom for the month and are currently sitting right above that level. In the first quarter, regional premiums averaged approximately $14.04 per pound in the U.S. and $168 per ton in Europe. However, spot premiums are significantly up and are currently, approximately $0.22 per pound in the U.S. and $240 per ton in Europe. In the first quarter 2018, global aluminum demand grew at a rate of 4% as compared to the year-ago quarter. We saw about 5% year-over-year demand growths in China, about 3% growth in Europe, and around 3% growth in North America as well. Global production growth was flat in Q1 versus the same period last year. This is driven by the winter heating season – total capacity cuts in China. However, despite these actions, China still added a net 3.8 million metric tons of smelting capacity during 2018. On March 23, the U.S. implemented a 10% tariff on all primary aluminum imports into the United States in order to stop flood of foreign metal that has been destroying the U.S. aluminum industry and threatening our nation's national security. These tariffs are now in place and working as intended. The U.S. government has issued temporary exemptions from the tariffs to Canada, Mexico, the European Union, Australia, Argentina, and Brazil, while negotiates quarters with these [indiscernible] to restrain imports, prevent transshipment, and protect the national security. It announced on Tuesday, that it already reached agreements in principle on quotas with Australia, Argentina, and Brazil and agreed with South Korea that its aluminum imports will be subject to the tariffs in full. It is clear that the U.S. administration understand the importance of having an effective tariff structure and the administration officials have reiterated that any permanent exemption will be subject to quotas to ensure that tariff regime remains effective and protecting U.S. National Security and causing U.S. production to start. With that, I will turn it back to Mike.

Okay, Pete. Thanks very much. If we can turn to Slide 6 please, just a couple comments on the operations, and then I'll turn it over to Shelly to go through the quarter. As I said, we're pleased with the performance in the operations during the quarter. And when you just go, I will give a couple comments. Safety there, you see a slight downturn through the plans, obviously disappointed to see that I would note there that’s a simply a reflection of the one incremental incidents at each of those plants Q1 over Q4. More importantly, we're making great progress toward the continuous and long-term improvement of the safety environment across the Company, a couple examples, one at Grundartangi that currently going through a multiyear reinvigoration of an already very fine safety culture and processes. At Hawesville, we've got an appropriate and significant focus on the safety environment during the restart process there. You've got a really complex environment in that plant with a continuing operation existing side by side with a complex restart project. As you can see production was good across most plants, Hawesville last a couple cells in January during – as you recall a bad snap of very cold weather, but those cells came very quickly back into service and so you want to see that again in Q2. Production metric is excellent, stable and favorable across the Board as I said earlier. Moving down to controllable cost performance, generally it was good across the plants. Of course the major mover during the quarter as we expected was raw materials and we also had an impact of the cold weather on power prices in January. As you recall, we talked about each of these factors and the expected impact on the first quarter results when…

Thanks Mike. Let’s turn to Slide 7. I’ll take you through the high-level results for the first quarter. On a consolidated basis, global shipments were essentially flat quarter-over-quarter. The realized prices were up 5%, reflecting higher lagged LME prices and premium as well as some improvement in product mix. Looking at operating results, adjusted EBITDA was $22 million this quarter and we had an adjusted net loss of $0.04 per share. In Q1, our only adjusting items related to a lower cost of market inventory adjustment which was a non-cash benefit of $3 million in our reported results. Turning to liquidity. Our cash balance decreased to $131 million, as a result of a significant working capital build in Q1. The working capital investment was primarily driven by an increase in direct sales to end used customer with longer payment term. Okay, let’s go to Slide 8, and I can walk you through our Q-to-Q Bridge of adjusted EBITDA. During Q1, we generated $22 million of EBITDA, as compared to $60 million in Q4. As expected, the $38 million decrease was driven by $47 million and higher raw material prices, as well as $6 million in higher U.S. power costs, primarily as a result of that cold snap that we talked about on our last call. These raw material and power price increases were partially offset by $18 million benefit from higher LME prices and premium. The $6 million increase in other operating costs was primarily driven by higher labor costs which over half related to Grundartangi as Mike discussed. Alumina costs for Q1 were based on realize undelivered price of $435 per ton, which was in line with the three months lagged index price of $445 a ton. As expected this was up significantly from the Q4 realized price of…

Thanks very much Shelly and we appreciate again everybody’s attention today and now we look forward to taking your questions.

[Operator Instructions] And we’ll go first go to the line of Novid Rassouli with Cowen and Company. Please go ahead.

Hey, guys. Thanks for taking my questions.

Hey, Novid.

Hey Mike. So you mentioned that you don't believe the current environment for alumina prices will persist, I just wanted to see we’ve had some developments on that front given the Norsk Hydro call. I just wanted to see – what are your expectations for when you think is most reasonable for prices to trend back to the lower levels before all the started?

Well, that’s a great question. I wish I had a better sense of the answer that the time is going to be all. All I can point to Novid is a couple things. One is, as you know it's fallen from its high, so it peaked about 700 and came down a good chunk, and guys it was sometime last week at this point maybe five or six or seven trading days ago or posting days ago I suppose one should say for the index. And that was at least market participants, Novid that was due to the more accommodative perhaps is the right words coming out of both the individual involved, obviously the majority owner ultimately [indiscernible] in the U.S. government relating to the sanctions. We think that the real bottom out of that when there is a positive development on Alunorte. Because if you remember the price as I said in my comments, the price that as we expected come down to where we started out and it have been in the mid 300s, and it was kind of sitting there for some period of time, couple months and then it rocketed right up to, if I recall just shy of 500, like 480, 490 guys, 480 right on the Alunorte development. We were talking about this. It’s kind of difficult to believe that announcement on Alunorte was only eight weeks ago. So it’s reasonably fresh. And so we think other than sanctions, of course we had two issues as I said. And other than Alunorte the price goes back into the mid $300. So I guess that's what we would be looking for. We look for some positive developments for Alunorte. That because the price was up $150 give or take. And then the rest of the ride up was a reaction to the sanctions. I wish I could answer your question better. I would say fundamentally we remain convinced that price goes back at a $2,200, $2,300 LME environment as we've been saying for the last couple weeks goes back into the mid $300 where it belongs.

Right and you generally realize kind of your alumina prices on a three month lag. I just want to see if given a spike in the dislocation that we're seeing stream volatility. Is there any reason to believe that there would be a change in lags and how that pricing will flow through your P&L and how you realize that?

That's really good question

Yes, it can change a little bit from quarter-to-quarter just based on the old shipments and inventory levels. But on average three months is now going to be good reference point.

Yes, just speaking from an operational standpoint, it’s an excellent question. I’ll cut it into two operational and pricing. From an operational standpoint, all else being equal of course with not to liquidity and working balance sheet. We would probably prefer – we would prefer in the times where supply lines are tight. If we can pick up a cargo or two that we otherwise wouldn't have had on hand at any of our plans we probably do that. As I said, looking months-and-months, and months-and-months ahead we’ll find from our physical supply standpoint. So include a couple days more alumina inventory on hand causes distortion in that three months. I think as Shelly said it would be marginal. Otherwise as we're looking to replace cargoes, we and other people are looking at Chinese material for example that trade a discount to the posted price that you see everyday and so that’s the only other factor there, again whether at the margin that makes much of a difference, I couldn't say at this point in time. So that’s a long winded way of saying probably not.

Sure. And the $47 million, what was the portion of that? That was alumina?

Of the movement quarter-to-quarter?

Yes.

Okay, part of the alumina, 17 from…

Closer to 40 alumina.

40, okay, 35 and 12. 35 alumina, 12 carbon.

Okay. And Mike, I just want to sure, I think I heard in your initial comment, you said, you mentioned about taking alternative measures if prices remain elevated. I just wanted to see was that about alumina, did I hear that correctly and what measures would those be?

I am not sure what’s – was it specifically related to the Hawesville restart program?

It might have been. I might have misheard you though. But as far as just alumina procurement as far as the restarts at Hawesville nothing is at risk of not being able to actually procure for all those restarts?

Absolutely correct.

Okay. I agree. Thanks so much.

Thank you.

We will next go to the line of Jeremy Kliewer with Deutsche Bank. Please go ahead.

Good evening.

Hi, Jeremy.

I know you mentioned that, Q2 call you’ll kind of give some more guidelines on the Hawesville restart. But I was just wondering, what has been freed up or how have you found I guess the ability to expedite it by whatever three to six months – time was a big issue?

It was just again charting out, literally I wish you could say I was in the plant for a couple days last week and they’ve got a literally every cell in the plant again charted out by the nine steps starting with digging SPL out of the cell, it’s been curtailed and ending with putting a pot on that and power, and so it was simply – we never like to either internally or certainly to our investors get ahead of ourselves. And so what we told you guys last time was what we – board on, the last time we met with our board about a month and a half ago and it was simply rolling up our sleeves and with a view towards – and as I said we believe in this environment every incremental ton adds value to our shareowners. And so with a view towards getting those tons on as fast as possible, it was simply – it’s simply doing the work to see how quickly we could get those cells back on line. There was no sort of single bottleneck that went away or a project that we preferred or anything like that. There was no big bang there.

Okay. Thank you for the color. And then Shelly gave us some great color on EBITDA kind of expectations in the upcoming quarter. So I was wondering if you could kind of give the same kind of bridge or outlook for working cap for the rest of the year. Is there going to be a big drag on cash flow or is it going to be a source of cash towards the end of the year, give any kind of color there that would be great?

Let me give little color on – it’s tough to really give any sort of forecasting given that you got to make an assumption about prices going into inventory, but a couple things to know. The first quarter we had to take bills and inventory related to receivables. That was due to selling more to direct customers of longer term. We should be through that. That shouldn’t recur. That’s was just building in the new contracts for 2018. That said in the second half year, we are going to build some working capital for lines [indiscernible] and the other lines restart with some additional inventory will have to build that. They got some offsetting factors in and then it’s really just a matter of what your raw material pricing does.

Let me just if I may also make a comment, it should be obvious and I believe we've talked about it before on the direct sales. So as you know our strategy has been over the last couple years to drive more value added sales and we've succeeded in doing that. Our strategy from a distribution standpoint is the commodity products to go through third-party intermediaries traders, marketers. It’s a standard product and there's nothing custom that needs to be done in terms of touching the customer. That's the cheapest way to go to market. And we believe that because that's what our customers tell us that on the value added products they want to buy from us directly. It's more of bespoke sale, their custom alloys and different – its alleys perform in our customers plans in different ways. And so we want to go direct because our customer wants us to go direct. because our customer wants us to go direct. The payment terms that we get from our trade – main trader or purchaser of our standard products are very, very short, they pass very quickly in a matter of couple days. Our direct customers pay on the industry standard terms 30 to 40 days, and so that's the difference there. As you would expect, the IRR of that investment i.e. the incremental margin that we get by going direct and not to trade around the value added products divided by that investment in working capital, is it very attractive IRR, or else we wouldn't be doing it. But just wanted to believe the point that we're not simply investing in working capital – to invest in working capital, there is a high unlevered IR financial return by doing that, plus of course, as I said, we're servicing the customer how they want to be serviced.

Great. Thank you for the color.

Thanks. Yes, you bet.

We’ll next go to the line of David Gagliano with BMO Capital Markets. Please go ahead.

Hi, thanks for taking my questions. First one, just on the timing on the Hawesville stage, obviously it's been a pulled forward a bit, but just wondering and you also mentioned could be stopped at a time. What’s the next day or week or whatever that we should be thinking about in terms of go or no go decision? And what alumina price do you need to see or expect to continue to push forward with the stage restart here?

Yes, that’s a good question David. In terms of – I’ll answer the last question first and then I might ask you for some clarification on the first part of the question. As we told you last time, let me just isolates on that for you. We told you line 5, the first line to be restarted as an incremental EBITDA – the incremental investment existing that has been changed. As I said, we’re at least on budget or better than budget on the entire program not just line 5. And at the time that we told you basis commodity prices at the spot price of ton and that incremental EBITDA of $25 million now. Spot prices today that number is lower of course because increase in alumina has overshadowed the increase in the Midwest transaction price. But is still nicely positive, just to isolate your question at the current metal price, alumina would have to go into the mid 700s, for there to be no incremental EBITDA and bringing line five. And so right now six months return – pardon me, six months simple payback that we told you about you about last time looks probably more like than a 11 to 12 month simple back even as spot prices today with alumina priced at 640, again that 640 would have to go mid 700 for it to go to a zero incremental EBITDA. So I think that hopefully answers your second question. We got some room. I think those number show the attractive nature of the product because once alumina goes back into the below 500, below 400, current metal prices, you start talking about the simple payback in a mater of just a couple months. And the same math applies for the full three line restart. Can you ask your first, David I apologize, your first question again – the first part of your question again because I didn’t quite follow it?

Sure. I was trying to say if there is any sort of day that you need to make a decision and not on line 5, but the other I guess the other two lines and...

I sorry David.

That’s okay, and also – but related to that you just mentioned one other thing. And I think I heard you correctly. Are the economic are the same for the other two lines? Or you just mentioned for line 5, is that correct?

Yes. The prorate to what we gave you last time, I feel – I just gave you now for the line 5 – for the first line, line 5 absolutely. On the first part, I now understand I apologize. There is really no day, there is no like big bang day where we have to make large committeemen, the biggest commitment we make here is to order some of the long lead time materials and the capital bricks and collective bars, but you're not talking about a significant force commitment. But otherwise literally I wish you could be more than welcome to come to the plan. It's just labor, both internal labor and takings sales et cetera and we building sales internally and then external contractors things like yanking superstructures and getting them straightened all the process in at nine step process about which I which I summarized in the again chart. And so there's really not – there is truly not a big bang, we could – it would be a terrible thing to have to do if the market really, really out sideways obviously we're watching it closely. But it's not an exaggeration we really could stop the project at any given time that having been said, our intention is and sort of the false answer is to proceed a pace. We think we're going to – our investors are going to get paid if we do that.

Okay. That’s helpful. Thank you. Then just switching gears for a second, earlier I thought I heard Shelly mentioned $20 million of cash, spending that will be capitalized related to Hawesville restarting in the second quarter that will be capitalized. I think you said, are you still planning to account for about $95 million of the start up costs in operating expenses or have you decided to capitalize these…?

Yes, that’s a great question David, and the answer is, with very near certainty we were near at the end of our analysis, but we're going to be capitalizing as the industry convention as we've discussed before through our research, we've determined where the last live, cook quite a primary aluminum company to distill expense part rebuilt and in fact under international standards as we've done our research it's not even permitted he must capitalize appreciate of the economic like of the cell. So at least for the restarted it has gone underscore that for you hit it perfectly for that $95 million are intend again we not 100% of the way there, yet but we're very close to 100% of the way there and that’s why Shelly talked about it as she did is it to capitalize. We not yet even consider David at all changing our treatment for our carbon normally line activities this is where we're basically rebuilding basically rebuilding the entire reduction department of all five lines, all 560 cells and that’s why we think it makes sense and the accounting experts think it makes sense to capitalize that effort. It just wouldn't be right to too expensive in a number of ways. Going forward and we’ll have to study the situation in terms of the normal path reline expensing but for now no change there. But you one more time you put it perfectly that $95 million of which $20 million as Shelly said will be spent in the second quarter for all intensive purposes it will be capitalized.

Okay, thanks for clarifying. And then one last quick one, Shelly, thanks for the Bridge to the second quarter, obviously clearing it up and spelling it out. I'm just rounded out any other movers in the second quarter we need to be thinking about for example incremental carving costs, power prices declining that kind of thing?

No the other thing that I would mention is we talked about that cold snap and that we had in January that cost is about $6 million in the first quarter as we wouldn’t anticipate something like that recurring in the second quarter, other than that no major movers.

Carbon looks pretty flat David that's been – as you well know then the other one – the last couple of quarters, so showing is the big movers and as she said we did eat a couple million bucks more than a couple million bucks in Q1 due to that cold and seems to happen every four years or so. And thus far that hasn't repeated unless we have some strange weather or some strange transmission problems in the Midwest grid, that shouldn’t repeat in Q2.

Perfect. That’s helpful. Thank you.

Thanks.

[Operator Instructions] We’ll now go to the line of David Lipschitz with Macquarie. Please go ahead.

Good afternoon, everybody. Quick question with the whole – cell situation, are you impacted any way from that in terms of alumina and any protection if they were [indiscernible] come back in October?

I mean other than the index price being where it is, obviously we are very impacted by that, but otherwise we did from time to time like a lot of people in the industry just given its size, take alumina from the - refinery in Ireland, that we saw refinery, it’s an excellent plant. And as you'd expect it – when we took cargos from – it would go to Grundartangi plant in Iceland. But other than that from a physical supply standpoint now and I’m trying to think of any sort of down line. I guess the answer is really no, again other than the obvious impact on the price.

Okay. And a quick follow-up, I just want to make sure I got it straight. When you said that second quarter EBITDA – did you say it is going to be around $45 million or is that excluding like the add back of the tower that you guys hit with in the first quarter – add to that or just want to make sure that – would you give us guidance for the second quarter?

Yes. So walking from the Q1, $22 million of EBITDA in the first quarter, we got $15 million benefit from the lagged alumina price and then another roughly $25 million from prices – LME and regional premiums. That $15 million and $25 million gets you $40 million on top of the $22 million for this quarter. So you are in the low to mid 60.

She has just given you a bridge. Remember, that’s in all these – she has given you a price changes, I should say realized price changes, important to understand realized quarter-to-quarter.

Okay. That’s Helpful. I just want to make sure I heard it right. Thanks.

Thanks David.

Thank you. And we are going to return to the line of Novid Rassouli with Cowen and Company. Please go ahead.

Thanks for taking my follow-up. I just wanted to touch on Slide 5, it looks like based on the figures you guys are expecting a deficit of about 1.2 million tons for aluminum in fiscal 2018, is that correct?

Yes. According to the market expert, that is correct. This considers restarts such as ourselves that we’ve announced and any supply changes in China or the Western World.

Yes. That's one thing I just wanted to ask. I think there's kind of an expected 4 million tons of new capacity expected to come on line in China this year. I just wanted to see if that number includes – what kind of level of new capacity for China that number includes if you guys have that off the top of your heads?

I can't verify the 4 million, it’s a couple million definitely. Let’s see we're working out of base of – it’s got to be between three and four and they're just given the growth rates and production off the base of the 17 base. I can't precise that number, but you're in the right zip code.

Got it. Great, thank you.

Sure. End of Q&A

It does exhaust our questions in queue at this time. Please continue.

We thank you as always for joining us and look forward to talking with you when we report results for the second quarter. Good evening.