Ladies and gentlemen, thank you for standing by and welcome to the First Quarter 2020 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to our host, Peter Trpkovski. Please go ahead.

Thank you very much, Grace. Good afternoon, everyone, and welcome to the conference call. I'm joined today by Mike Bless, Century's President and Chief Executive Officer; Craig Conti, Executive Vice President and Chief Financial Officer; and Shelly Harrison, our 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, 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 1 of today's presentation, 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 over to Mike.

Thanks very much, Pete and thanks as usual, to all of you for joining us this afternoon. Before we get started, I do need to report some truly tragic news. It's obviously very well known within the Century family and within our broader community. If you've had a chance to look at the press release since it was sent out an hour ago, you've seen we suffered a fatality in the anode manufacturing plant at Sebree in the early hours at the 8th of April. This was really devastating to all of us at Century, and it was especially painful given our collective and passionate commitment to keeping each other safe. We're redoubling our efforts to ensure that a similar event never comes close to happening again, and we're sharing our learnings within the company and with others in the industry. Our late colleague's family is and will remain firmly in our thoughts and in our prayers. And with that, if you please turn to Page 3, let me just give you a quick overview of the current situation. As usual, Craig will provide you some detail in a moment, and you'll see that the first quarter financial performance came in quite strong. This is evidence to us that industry conditions before the health crisis were favorable and actually improving. You'll also see that our cost structure resulted in excellent profit and in good cash flow conversion, and this was before the recent further cost reduction actions that we put in, in March. All this gives us confidence that we've gone into this period in very good shape. I'll give you some detail on our response to the pandemic in just a moment. As we reported a couple of weeks ago, all our plants continue to operate normally. And given…

Thanks Mike. If we can move on to Slide 6, please, I'll take you through the current state of the global aluminum market. The cash LME price averaged $1,690 per ton in the first quarter, which is down approximately 4% or $64 per ton from the fourth quarter of '19. As COVID-19 continues to weigh heavily on the global economy, we have seen aluminum prices fall significantly from a high of about $1,811 per ton in late January to a low about $1,421 per ton in the month of April. For the month of April, the average price is approximately $1,460 per ton, and the current three month LME price is hovering around $1,500 per ton. In the first quarter, regional premiums averaged approximately $0.136 per pound in the US, down 14% quarter-over-quarter, and $147 per ton in Europe, which was actually an increase of 8% from the prior quarter. Current spot prices are around $0.085 per pound in the US Midwest and $100 per ton in Europe. As Mike said earlier, we had already seen a trend of falling input costs from our key raw materials pre-pandemic. From the end of 2018 to the end of 2019, aluminum prices were down about 8%, but our key inputs of alumina, power and carbon prices were down approximately 30% each during the same period. Since then, as a result of the health crisis, aluminum prices have fallen a further 17%, but our key raw materials have continued to decline as well. The alumina price index and the Indiana Hub, which is the hub most closely representing power prices for our Kentucky smelters, have fallen 17% and 16%, respectively, during the same period, and coke prices have declined 4%. We have seen an immediate impact to demand around the world from COVID-19. In the first quarter of 2020, global aluminum demand was down about 8% as compared to the first quarter of 2019. We saw demand contraction in the world, ex China, at 7% and 10% demand contraction in China. Global production was up 2% in the first quarter year-over-year. We saw 3% production growth in the world, excluding China, and 2% production growth in China year-over-year. Recent market developments have shown positive trends for demand recovery with several OEMs and other downstream manufacturers announcing production restarts or plans to do so in the near term. And with that, I'll hand the call over to Craig.

Thanks, Pete. Let's turn to Slide 7, and I'll take you through the results for the first quarter. On a consolidated basis, global shipments were essentially flat quarter-over-quarter, and realized prices were down 3% primarily as a result of lower lagged regional premiums. Looking at operating results, adjusted EBITDA was 28 million this quarter, and we had an adjusted net profit of 1 million or $0.01 per share. In Q1, the primary adjusting items were 12.1 million for the net realizable value of inventory and 8.3 million for unrealized gains on foreign contracts. Our liquidity remains strong with over 200 million of funds available via a mix of cash on hand and credit facilities. As Mike mentioned earlier, we proactively drew down 90 million on our revolving credit facilities via a partial borrowing on each of our US and Icelandic agreements. While we do not have a foreseeable need for the funds, we secured them out of an abundance of caution in this uncertain and volatile environment. Okay. Let's go to Slide 8, and I can walk you through our quarter-to-quarter bridge of adjusted EBITDA. As we forecast on our last call, realized LME was about flat with Q4, and the decrease in regional premiums was more than offset by a decrease in realized alumina. The Q1 realized alumina price of $290 per ton was down $35 per ton from Q4 levels, while realized Midwest and European premiums were down $65 per ton and $15 per ton, respectively. Domestic power prices continually dropped throughout the majority of the first quarter and generated a 10% or about $3 per megawatt hour savings versus Q4. As we discussed previously, approximately 30% of our Icelandic power pricing is now based on the Nord Pool index, and Q1 marked the first full quarter where…

Thank you. [Operator Instructions] And our first question is from the line of Lucas Pipes. Please state your company, followed by your question.

Hey, good afternoon everybody.

Hi, Lucas.

So on the breakeven price that you just laid out, first, that's very good to hear. I wanted to ask what sort of kind of other assumptions may be baked into that. So for example, on the Midwest premium or added value, could you disclose what sort of levels would be included in that breakeven level? And then I assume the breakeven is at the asset level. So kind of what sort of other cash considerations, working capital, overhead, et cetera, should we consider on top of that?

Lucas, it's Mike. Let us help you. So the assumption is incorrect. That $1,550 is at the corporate level. It's after all plant costs. It's after all corporate SG&A. It's all after all interest expense. It's after everything. It's net-net, bottom line, where you should expect to see just change in cash every quarter, to be very pedantic about it, change based on an LME either above or below $1,550. So it's after everything. The premiums and our – as Craig said, they're on Slide 10 there. So the Midwest, for example, as he said, is the spot price. We just tried to use today's prices. And last, product premiums are our salespeople's best estimates based on discussions with customers as exactly where we are today. I mean, as you know, the only change there – take a step back, as you know, most of our sales are contracted a year in advance. So those premiums, to a great, great majority, were locked a year ago, nine months ago, but locked before the beginning of the year for the full year. The only change in the weighted average product premiums is, as I said, we have had some customer's request that a certain portion of their volume, small, but a portion of their volumes moves for a period of time from value-added products, billets and such, and thus, we've supplemented that with production of standard products. Go ahead, Craig.

And one other thing, Lucas, to make this maybe a little more user friendly, in the appendix on Page 17, we broke out the regional premium, and then we did the value added premium, but to make it, again, user friendly as we did it in overall tons, right. So if you use – to look into the second half cash costs, you would take what we did on Page 10. Those were the assumptions. And then to break that out between the US and Iceland overall tons, you could use the guide on Page 17.

Very, very helpful, I appreciate all of the color on this. I wanted to maybe switch over to the industry side, and then I'll go back in queue, potentially some more questions. But in terms of the overall supply response, what's your outlook? There's been a lot of talk that yet again, you're not seeing much curtailments on the aluminum side and structural to the industry probably, but what's your take? Where do you see supply potentially coming offline? And how much do you think would need to come offline to balance this market here?

Well, to balance the mark – I'll take the – if you don't mind, it's Mike again. Let me get the last part of your question first. That's a tough one right now because you've really got to make the assumption of where demand goes. I mean to balance the market at this point in time you would need millions and millions of tons to come off if you assume that demand would never snap back to any significant or any meaningful degree. But to answer the first part of your question, you're quite right. We haven't seen much of a supply response yet. You've seen small pockets here and there, but they – they're – I mean each one, of course, is important to the persons impacted by those, but they're a rounding error when you're talking about the global or even non-China total supply at this point in time. I think the answer – regrettably, I'm not going to give you much more of an answer than you already could have, quite frankly, answered yourself, which is if the current conditions do start to improve here, if over the next month or two, and people begin to see that there's some legs to this restart of the downstream customers, i.e., the folks who matter most, i.e. that take the product, our guess is you probably won't see much of a supplier response. It is what it is. You are seeing some in pockets of the world. There are rumors of some more in China. But if it's a transitory thing here, a reasonably transitory thing, you may not see much more supply response. If it does look like this thing is going to be, to use and overuse term lower for longer, our view is that you might start to see some folks make some more structural or long-term decisions. I'm sorry to give you what sounds like and probably is a non-answer. It will be a better discussion when we talk to you in three months because it will either have started to turn up or it won't have.

No, it's a very helpful answer. In fact, I appreciate the color. And best of luck and everybody stay healthy.

Thank you for your questions and same to you.

Thank you. And next, we'll go to the line of John Tumazos. Please state your company, followed by your question.

So it's John Tumazos Very Independent Research. Condolences on the loss of your teammate, and congrats on –

Thank you, John. I appreciate you saying that. I can't tell you – it's really made a tremendous impact on our folks. So I appreciate you saying that.

So we feel it, too. It felt – made us feel terrible, I cover Vale when they lost all those people last year.

It's just– I mean I don't want to still use all those melodramatic words, but it really is – you know what to me made the greatest impression was how the ownership – how folks, especially at that plant, felt and reacted to this and took accountability and ownership for it. It just – it was quite extraordinary. But I appreciate it, John. You've been around as long as I have, so you've seen a couple of these. This was the first one in the history of the company – in the modern history of the company, quite frankly, on the smelting side. So it's – it doesn't make it any easier –

Congratulations on just producing in the first quarter through all those trouble. And it looks like an almost normal income statement in the most abnormal of conditions.

Thank you, John. It was a good quarter. And frankly, the other companies that we've looked at and the other companies that I'm personally affiliated with, the first quarter, trading conditions were pretty good. Now that's a different world, of course, but it does give us some confidence. What gives us more confidence, again, is the cost side. We can't dictate the revenue side, as you're well aware, but we feel pretty good about where we are on the cost side right now. And you see that in the breakeven level and in the guidance that Craig gave you for the second quarter. And it hopefully will give folks a pretty good view of what the company looks like for the next nine to 12 months, even if things don't improve from here. As unrealistic as that might sound, it just gives you a sense, hopefully.

Even as Century is doing well relative to many companies so far in this crisis, I think there's an understanding that China has increased their aluminum output in the first quarter, but their vehicle sales fell 42%. Alcoa said on their call that they think the Chinese built two million tons of inventories, which is 10% of the market, unheard of. We know you're in good shape, but if you went to – if you asked Washington for bailout money in terms of the loans that are intended for airlines or other worse-affected industries or a larger than 10% tariff or a restoration of the Canadian tariff, you'd probably get it or get some of it. Even though you're in good shape, will you be seeking some of those helps?

That's great, John. So let me take all of those three. We, as you would hope, looked long and hard at every part of the program that was passed by the Congress. Regrettably, we are sort of one of those that don't fit, unfortunately, in any of the programs that have been rolled out thus far. We just – either in terms of our size or taking by both the letter and, I would say, spirit, in my opinion, here of the legislation and as it's being implemented by Treasury and others, SBA, et cetera, we just don't fit there. But we're continuing to look at it. There's some recent stuff that's come out that might change that answer a little bit. But thus far, we've studied all of it, but we have not applied under any of those programs. On your second and third question, which go to the entire relief, i.e., the 10% on non-exempted metal, both product and country exempt non-exemptions and Canada specifically. I mean you can assume that we've made our opinions known. You know us, and we're not shy about that. And as I said, as you would expect, this issue, both in respect of the efficacy of the entire program, given where we are today, given the fact that metal continues to flow unimpeded from even non-exempted regions, number one; and number two, the Canadian problem, which is its start. I mean the data are available. You can see it. You can go on the DOC website and – pardon me, the Commerce Department website and see it. So yes, we've made – we've discussed all that with the relevant folks.

Thank you and good luck.

Thank you very much John. I appreciate those comments, I really do – we really do.

Thank you. And I have no further questions in queue at this time.

Okay. I'll give it a second just to see if anyone wishes to change his or her mind? Okay. With that, we appreciate very much your time and attention this afternoon, and we'll look forward to providing you updates as we move forward, certainly talking to you no later than, of course, when we report second quarter earnings. Take care, everybody, and stay safe.

Ladies and gentlemen, that does conclude your conference for today. Thank you for your participation and for using AT&T Executive Teleconference service. You may now disconnect.