Good afternoon. Thank you for attending today's Century Aluminum Company First Quarter 2023 Earnings Conference Call. All lines will be muted during the presentation portion of the call with an opportunity for question and answers at the end. [Operator Instructions] I would now like to pass the conference over to our host, Peter Trpkovski, Vice President of Finance and Investor Relations with Century Aluminum, you may proceed.

Thank you, operator. Good afternoon, everyone, and welcome to the conference call. I'm joined here today by Jesse Gary, Century's President and Chief Executive Officer; Jerry Bialek, Executive Vice President and Chief Financial 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. Turning to slide one, 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. And with that, I'll hand the call to Jesse.

Thanks Pete and thanks to everyone for joining. I'll start today by quickly reviewing our strong first quarter financial performance before turning to a brief summary of market conditions. Jerry will then take you through the financial results and I'll finish with a discussion of our exciting new acquisition of a controlling interest in the Jamalco alumina refinery and bauxite mines. Turning to slide three, market conditions for aluminum improved in the first quarter with both LME prices and regional premiums increasing from Q4 levels, driven by further supply side reductions in Europe and China. At the same time, input costs largely decreased quarter-over-quarter with US power prices falling most significantly. These improving market conditions paired with strong operating results drove Q1 adjusted EBITDA of $24 million, which is an improvement of approximately $36 million over Q4. These good results were enabled by a tremendous effort by our operators across our locations. Safe and stable operations are a core requirement for success at Century and I'd like to commend all of my colleagues for their excellent operating performance they delivered in Q1. This begins first and foremost with health and safety, which is our most important priority here at Century. While we continue to strive towards our ultimate goal of an injury-free environment, I'm pleased to report a continued reduction in total recordable incidents from 2021 levels when we first implemented our new safety initiatives. We still have room for improvement and will remain dedicated towards reaching our ultimate goal. Finally, I'd like to welcome all of our new colleagues at Jamalco to the Century team. On May 2nd, we closed our acquisition of a 55% stake in the Jamalco alumina refinery and bauxite mines located in Clarendon, Jamaica where we now become the operating partner. Century has long been…

Thank you, Jesse. Let's turn to slide six and I'll walk you through the results for the first quarter. On a consolidated basis, Q1 global shipments were 181,000 tons, supported by higher plant utilization levels and sell-through of finished goods. Realized metal prices improve to help deliver net sales for the quarter of $552 million, a 4% increase sequentially. Looking at Q1 operating results, adjusted EBITDA was $24 million, an improvement of $36 million sequentially. Adjusted net loss was $11.3 million or $0.11 per share. This was an improvement of $20 million compared with prior quarter. In Q1, the major adjusting items were $47.8 million for the unrealized impacts of forward contracts, partially offset by $25.6 million for lower of cost or net realizable value on inventory, and $5.4 million of capacity charges due to the curtailment of Hawesville, the latter of which were reduced to zero by the end of this month. Liquidity remained strong at $241 million at the end of the quarter, consisting of $30 million in cash and $211 million available on our credit facilities. Turning to slide seven to further explain the $36 million sequential improvement in adjusted EBITDA. Realized lagged LME prices were slightly better than anticipated in the outlook we provided during our last call. First quarter realized LME was $2,350 per ton, up $42 versus prior quarter, while realized US Midwest premiums of $573 per ton were up $104. Realized European delivery premiums of $290 per ton were down $209, reflecting a full three months' lag. Together, these factors contributed a $3 million benefit in the quarter. Realized alumina cost was $390 per ton, $10 lower on a sequential basis. Realized coke prices decreased 5% while realized pitch prices increased 10% in line with expectations. Together, alumina and other raw material costs…

Thanks Jerry. Turning to slide 10. I'll walk you through the key details from our exciting Jamalco acquisition, which closed last week. This transaction is highly strategic for Century as it secures the long-term supply of high-quality alumina and bauxite for our smelters and achieves increased transparency in our alumina purchases. This will create a more balanced, consistent, and robust operational footprint and better position us to deliver strong performance through commodity cycles. Jamalco was originally built by Alcoa and went through a series of major investment and expansion programs in the late 2000 to bring it to its current nameplate capacity of 1.4 million tons. The refinery operates as a joint venture with the remaining 45% stake owned by the Government of Jamaica through its holding company Clarendon Alumina Production Limited. We are very pleased to have both as partners at Jamalco. We've long identified Jamalco as a strategic asset for Century given the high quality of its alumina, long term access to domestic bauxite, and excellent workforce. Its strategic location in the Atlantic Basin is in close proximity to all of Century's operating locations, providing short and secure supply lines and low logistics costs to each of Century's smelters. Jamalco also has existing mining and exploratory licenses to provide sufficient high-quality bauxite for over 30 years of nameplate refinery production providing a clear runway for long-term operations of the refinery. Perhaps most importantly, Jamalco has a very experienced and talented workforce that shares Century's cultural focus on operating safe and sustainable facilities with first-class environmental stewardship and community engagement. The refinery has recently been through some difficult times, but it's well on its way to regaining its full potential. In August 2021, a fire broke out in the plant's powerhouse which halted production of alumina for about a…

We will now begin the Q&A session. [Operator Instructions] The first question is from the line of Lucas Pipes with B. Riley. You may proceed.

Thank you very much operator. Good afternoon everyone and congratulations on the announcement regarding Jamalco. And I do have a few more questions on that and thank you for the detail already on the call. But my first question is, why now? Is there anything that has changed in your view of the strategic landscape that makes vertical integration more attractive today than maybe in the past? Thank you very much.

Thanks Lucas, it's Jesse. This is something that we've been looking at and talking about for quite a while now and being backward integration up into the alumina and bauxite supply chain, and -- but we've been patient and waiting for the right opportunity to arise. In Jamalco we found an asset that we knew well. As I mentioned, we've long been the largest customer there and we're very familiar with the high quality of the alumina that they produce. Also fits well within our footprint, so we can take and have taken Jamalco alumina to all of our operating smelters, it works well in all of them and we also found an asset that has high potential. We know it has long operated in the second quartile and had sort of an exogenous event that created at part times and -- but given the sort of unique acquisition structure, we were able to set up here, we're really able to get our arms around the asset and feel very confident that we can put it back into the second quartile. And then ultimately, just derisk Century from another exogenous risk of high alumina prices over the long term. So, it fits with what we've always said on M&A that we'd like to find assets that fit those factors and we'll also be opportunistic and look for the right opportunity. And for those reasons, we felt like this was the right time at Jamalco.

Very helpful. Thank you for that. And my follow-up question is on some of the points you just raised. Putting the asset back into the second quartile, could you comment on what sort of capital may still be necessary in addition to what you outlined for the second quarter? I think that's $20 million to $30 million of working capital and then more broadly, you mentioned that the asset will be accretive to your financial metrics. I think you said Q3, and I wondered if you could hone in on what the incremental improvements are that drive that accretion in Q3 versus Q2. Thank you very much.

Yes, sure. So, I'll just start with the second question first and then I'll get to your CapEx question. So, most of the beneficial gains will come in two factors. One, as we continue to ramp up the volume over the back half, these will occur both from capital projects that we will implement but also continued operational improvements that come with the restart of the second digester and the stabilization of operations at the site. And so as we add that volume along with it will come lower cost as we spread our fixed costs over that additional volume, but also a variety of operational improvement programs, which will further push the cost down. So, it's really twofold, both volume and cost savings on the incremental benefits. On the CapEx side, we did mention that we expect about $10 million to $20 million over the back half of this year. And go forward, there'll be a number of capital projects remaining for the 2024 to 2026 timeframe and we'll come back and give you additional guidance there as we go into the back half of the year.

Got it. I appreciate that color. I'll turn it over for now. Thank you very much.

Thanks Lucas.

Thank you. The next question is from the line of Timna Tanners with Wolfe Research. You may proceed.

Hey good afternoon.

Hey Timna.

I wanted to ask about some items I didn't hear you mentioned. First off we had in our notes, $28.5 million from the sale of land from Mt. Holly, so did that -- is that going to appear in the second quarter or am I missing something there?

No. Thanks Timna. Yes, that transaction continues to move forward. There is a little bit of zoning issues that are going on with the sale. Just normal process and so we now expect that will close in the second half, but it should be the rest of the metrics for that transaction should be the same.

Okay. Thanks. Land sale closure second half. And then the other question is just going back to Hawesville. I was just reading some of the news and you -- it was late June where you said it was closing for nine to 12 months and you have some positive commentary on the market environment and lower Kentucky energy prices, so just wanted updated thoughts on the future of Hawesville?

Yes. Sure, it's a great question. And as we mentioned when we curtailed that we did curtail it in a very controlled manner and we continue to maintain the site as necessary in order to enable a restart. That restart decision obviously, the decision that we will look at in the context of the totality of the circumstances. So, for Hawesville specifically, we're talking about main drivers being a prolonged period of power prices at historical levels and then an aluminum price that can maintain levels to justify the restart expenses required, and the cost -- and also the costs required to bring that plant back to full capacity. So while we have seen conditions improve, we're continuing to wait to see the volatility reduce in both of those components and then ultimately just finding a level that will drive those long-term burden of returns that we need to undertake the expense. One item just to note is that on the holding costs there. Sorry, Timna, just one item to note on the holding costs there. We do expect that the existing power capacity that was purchased last year for this facility, those costs will now roll off, so that's about $2 million a month for Hawesville that will roll off.

Okay. Thanks. So, in other words, there is no specific commitment or requirement to restart and you're waiting for more accommodating power prices and then aluminum prices, is that what you're saying?

That's a good summary, Timna. Yes, it's a holistic decision. We need everything to align, it's something that we'd really like to do, but we just need to wait for the right market conditions in order to move that forward.

Understood. And then if I could just a follow-up lastly on the last line of questioning around Jamalco. I guess that the thing that makes me nervous is whenever you get something for a $1 you wonder okay what's along with that. And so just was there any specific commitment given to the Jamaican government or anything that we should be aware of in terms of the amount of CapEx anything else that we should be thinking about in terms of cash requirements going forward? And thanks again for all the detail.

No, it's a fair question, Timna. And just as a reminder to start, we did not purchase our 55% interest from the Jamaican Government. We purchased that from Noble, who is the former owners and -- but the Jamaican Government does on the other 45% of the asset. Yes, just to your question about the $1, it was really unique set of circumstances that enabled this to happen. So, just give maybe a little bit more color. We've, as you might imagine, as a major customers of that facility, we've been watching the financial situation there closely and post-fire, they had a difficult period with some long timeframes in order to rebuild the facility and get it restarted after 2021. And as they started to enter into once they restarted that last year in 2022 they started a single digester as you know with these sorts of assets, it really is important to get them back to full production in order to bring the cost structure down. But they found themselves in a situation where they couldn't fund the additional monies that we needed to restart the second digester, and so we worked out a situation where we we're able to provide some interim funding. But as you might imagine, before we agreed to put the funding in we wanted to be sure that there was a return there for ourselves, and so we're able to negotiate this option structure, which gave us a few months to watch the second digester come up, and make sure that we're comfortable with the rest of the due diligence around the asset and then have the right to exercise that option for a $1. And so that's really the sort of reasoning around that dollar structure and some of that interim funding, you'll see that's a part of the $10 million to $20 million that Jerry mentioned that will be contributing as part of the working capital build. It came in the form of a prepaid for alumina and so some of that will then be reflected in that $10 million to $20 million in working capital build going forward. But just to your ultimate question, no obligations on the CapEx side. Although we are excited about those projects, we think they're very good projects and no sort of liabilities assume, there's no debt at the asset or anything like that. So it is what it looks like, and we're really excited about the asset.

Thanks again.

Yes.

Thank you. The next question is from the line of John Tumazos with John Tumazos Very Independent Research. You may proceed.

Hey John.

Thank you. Staying with Jamalco, are you going to have any on-balance sheet liabilities assumed for reclamation, post-employment costs, or other issues, and can you give us some guidance as to those amounts?

Yes, sure. Sure, John. And so all of the liabilities assumed are what I would call ordinary course liabilities for alumina refinery. So, as you mentioned, there are reclamation liabilities associated with the bauxite mining and ultimately some of the residual storage areas. But the great part about this asset is that it does have significant mine life left. So, we view it as a very long-term asset and has over 30 years of mine life left of high quality bauxite with their existing mining licenses. So, we think this is an asset that we will be operating especially given its place in the second quartile on the cost curve for a very long time.

There might be consolidated liability we see after closing be more like $50 million or $100 million?

Yes, we'll give you the exact detail when we come to the back half of the year here after we work through all the accounting, but it's more towards the -- your first assumption than your latter assumption. Still running to the final accounting on that, but that's good news.

[Indiscernible] You have the right to buy all the output? Thank you.

Sorry, John, could you just repeat the question?

You have the right to buy 100% of the output?

The Jamalco structured is an unincorporated joint venture where each of the partners takes their share of the output at cost and so we take our 55% of the output and cap takes there 45%.

Thank you.

Thanks John.

Thank you. The next question is from the line of Katja Jancic with BMO Capital Markets. You may proceed.

Hi, thank you for taking my question. Just first a little bit of clarification. You said the $10 million to $20 million in working capital, that's considered what was pre-funding for the second digester?

Yes, a portion of that was part of a prepayment for alumina which will now be delivered in the second quarter and will be part of that $10 million to $20 million in working capital build.

And how much was the total pre-funding? Can you provide that number?

We're not disclosing that but it is within the $10 million to $20 million and the rest of that $10 million to $20 million is represents a buildup in inventory payables and receivables as the production has increased at the facility.

Okay. Then on slide 17, you typically provide your sensitivities and it's clear that it doesn't include Jamalco. But can you provide any direction as to how the contracts, how the sensitivities especially for alumina are going to change going forward?

Yes, sure. Katja, no problem. So, for Q2 and given there's sort of an existing cargo mix and sales coming out of Jamalco, our internal mix will stay roughly the same as what you see on page 17. As we integrate and take our share of the Jamalco production going forward, what you'll see is our mix will change towards roughly half LME linked and half of Jamalco's production cost and that sort of our 50% share of Jamalco is about 650,000 tons of alumina, which is roughly half of our requirements. And so that gives you a sense, and we'll give you some additional detail there going forward, but hopefully that roughly balanced half LME percentage, half Jamalco production costs will be pretty close.

And can you provide the information about the production cost is right now?

No, we don't break down production costs by an asset-by-individual asset level, but we'll talk. We will provide some sort of additional input on the Q3 call as to what -- how Jamalco is integrated into the system just given the transaction closed last week, need a lot more time to give the specifics there.

Okay. Thank you very much.

Thanks Katja.

Thank you. The next question is a follow-up from Lucas with B. Riley. You may proceed.

Thank you very much. Just a few quick follow-ups. First one is on slide nine, OpEx other head of $10 million to $5 million in Q2, can you remind us what that headwind is and is it a one-off or would it repeat or stay in the segments through the end of the year? Thank you.

Hey, Lucas, it's Jerry. As I said in my prepared remarks that the $5 million to $10 million is made up of maintenance cycles. We had some wage inflation there and we've also had some seasonal labor. If you think back to the fourth quarter of last year, we did a fair amount of cost cutting and we've had some efficiencies that flow through the fourth quarter into the first quarter. We're now approaching a cycle where we're going to invest a little bit of additional OpEx just to help us through the summer months and manage the seasonality the difficult timeframe during stability is an important aspect in that timeframe and so we will put a little bit of seasonal labor in there as well.

Got it. So, we shouldn't expect a reversal in Q3, but maybe in Q4?

Correct.

That's helpful. And then back to Timna's questions on cost, two-part question. The first is what is your sense for restart costs for Hawesville, how much capital could be required? And then second part, would you hedge possible output with price mechanisms as you did in the past, I think the market was somewhat skeptical of that approach, but would appreciate your thoughts on that matter today? Thank you.

Thanks Lucas. Yes, we'll obviously once we make the decision to restart we'll give additional detail probably on both those questions at that time. Obviously, both of those are specific to the exact operating environment that you find yourself in when you make that restart decision. But maybe to give you a little bit of context, when we last started lines at Hawesville back in 2018, you'll remember there was about $25 million per potlines that we brought back on. That if you remember that time those lines have been down and required full relines of the cells, which is much more capital intensive and then the manner in which it would be restart at this time. Because all of those cells were recently realigned from the more recent restart, when we restart the next time around we will have significantly less relining costs. And so I would expect those restart costs to be significantly lower than that $25 million for potline, but we'll give you additional detail once we actually make the decision.

Thank you. [Operator Instructions] There are no further questions waiting in queue. I would like to turn the call back over to Jesse Gary for concluding remarks.

Thanks everybody for dialing into the call this quarter and we look forward to talking to you on the third quarter call. Thanks.

This concludes today's conference call. Thank you all for your participation. You may now disconnect your lines.