Good afternoon, and thank you for attending today's Century Aluminum Third Quarter Earnings Call. My name is Jason, and I'll be the moderator for the call today. [Operator Instructions]. I would now like to pass the conference over to your host, Ryan.

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; Gerry Bialek, Executive Vice President and Chief Financial Officer; and Peter Trpkovski. Senior Vice President of Finance and 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 1, 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.

Thanks, Ryan, and thanks to everyone for joining. It was a busy quarter with lots to discuss, so I'll get right into it. Turning to Slide 3. Lower LME and regional premiums were the primary drivers of reduced Q3 adjusted EBITDA of $9 million. While we were able to offset a significant portion of the fall in metal prices with lower input prices, higher-than-expected Mt. Holly power costs resulted in our Q3 results falling a bit below expectations. We expect Mt. Holly energy prices to return to normal in Q4. And as we recently announced, we entered into a new power contract from Mt. Holly that will become effective on January 1. I'll provide some additional detail on the new contract in a bit. In general, the macro environment for aluminum remains complex. As you can see on Page 4, the global market remains roughly balanced, with Chinese deficits largely offsetting a small surplus in the rest of the world. Turning to China specifically, Chinese demand has benefited from strong solar and electric vehicle demand, with China Solar demand alone up around 1.5 million tonnes from last year. Recent stimulus announcements in China should drive further recovery in building and construction demand as the Chinese economy continues to recover from COVID lockdowns. Reports have also recently emerged the Chinese smelters in Yunnan will again have to curtail around 1 million tonnes of capacity due to low reservoir levels in their hydroelectric schemes. Once confirmed, this third straight season of Chinese production cuts would add to the Chinese deficit shown on Slide 4. Overall, while realized LME prices fell to average $2,155 in Q3, global updates of inventory remained below 50 days. With inventories at these historically low levels, LME should be poised to recover quickly on any positive demand recovery…

Thank you, Jesse. Let's turn to Slide 7, and I'll walk you through the results for the third quarter. Consolidated Q3 global shipments were 172,000 tonnes, down about 1% sequentially, and Realized metal prices were down nearly 6% for the quarter, with net sales at $545 million, down 5% sequentially. Looking at Q3 operating results, adjusted net loss was $14 million or $0.13 per share. This was a decrease of $29 million compared with prior quarter. The major adjusting items for the third quarter were add-backs of $22 million in unrealized losses on forward contracts $9 million in costs associated with the Jamalco equipment failure and $1 million for share-based compensation. These partially offset by a $4 million deduction for lower of cost or net realizable value on inventory. Adjusted EBITDA attributable to Century, which includes our 55% share of the Jamalco JV in Jamaica was $9 million, a decrease of $20 million from the prior quarter. Liquidity improved by $75 million compared with prior quarter to $306 million, consisting of $70 million in cash, $23 million in restricted cash and $212 million available on our credit facilities. Net debt on September 30 was $424 million, down $83 million from prior quarter. During my first year at Century, we've focused on optimizing working capital and improving liquidity and are beginning to see significant progress. I'll talk more about this in a moment when I have cash flow. Turning to Slide 8 to explain the third quarter sequential adjusted EBITDA bridge. Realized LME was $2,237 per ton, down $134 versus the prior quarter. while realized U.S. Midwest premium of $493 per ton was down $69 and realized European delivery premium of $323 per ton was up $24. These reflecting our one month to three-month lags in realized metal prices. Together, these…

Thanks, Jerry. While we find ourselves in a challenging portion of the commodity cycle with LME and delivery premiums reaching two and half-year lows in the third quarter, we remain focused on operating the business as efficiently as possible. We are proud of the progress we made on our long-term initiatives during the quarter, including the extension of the Mt. Holly power contract nearing completion of our first major capital investment at Jamalco and completion of the Grundartangi cast house early next year. We are also pleased with the continued optimization of our balance sheet, including completion of the Mt. Holly land sale and progressing working capital optimization program, leaving us well positioned with significant liquidity to continue our long-term investments during this portion of the cycle. All in all, despite a challenging macro environment, we are managing the business to continue to provide positive EBITDA and unlock additional liquidity and cash. Long-term macro trends towards decarbonization and electrification are beginning to play out and grow stronger as government stimulus funds in China and Inflation Reduction Act funds in the U.S. are beginning to be distributed. Our plants are running well in a claim production levels, leaving us well positioned to benefit as the commodity cycle improves. We look forward to your questions today. Operator?

[Operator Instructions]. Our first question is from Lucas Pipes with B. Riley Securities. Your line is now open.

Thank you, very much, Operator. Good afternoon everyone. In your final comments there in your prepared remarks, you mentioned -- I think you mentioned the IRA and the benefits for demand. But then if I understand it correctly, there are also provisions in the IR specifically for primary aluminum production. I think it's Section 45X, and it relates to credit of 10% of the production cost. And obviously, on the surface, this appears pretty material. So, I wondered if you could maybe speak to that and where that currently stands.

Lucas, thanks. Very good question. So, you're correct that aluminum is listed as a critical mineral under Section 45X of the Inflation Reduction Act. Maybe just to back up, Section 45X is a provision that, amongst other things, is intended to incentivize U.S. production of critical minerals here domestically. We're obviously very excited about the potential benefits that we might receive under Section 45X, but the U.S. Treasury Department has not yet issued guidance for the provision, given that it's a bit difficult at this point to quantify what the potential benefits might be for Century. But the Treasury Department has come out publicly and said that they expect to issue that guidance before the end of the year. So, what we intend to do is once that guidance has been released, we plan to hold a follow-up call to further discuss and quantify what those benefits might be to Century. And until we have a guidance so it's hard to provide too much more information for now.

And -- but at this point, there haven't been any I guess, it would be an accrual essentially, potentially, given that I think this credit would -- started at Jan 1, 23. You said there would be a benefit for this year, right?

Yes. The -- while we await the guidance, the provision did become effective. Obviously, the law has passed. But -- and the version did become effective January 1, 2023. But until we have that guidance, it's tough to really say more than that. But you're correct that the law itself does mention that it would apply beginning on January 1, 2023.

Yes. Really, really appreciate that. And in terms of the guidance or clarification needed. Can you elaborate on what exactly you're waiting for? And I know this can be technical, but could you maybe comment on what guidance, specifically, you're waiting for?

Sure. I'll try to keep it relatively high level since -- until we have the guidance. It's really hard to comment on what will be in the guidance. But that said, your summary was well done. Section 45X does provide for a production tax credit for critical minerals. And that production tax credit applies to what the law calls cost of production. What the law does not do is provide any guidance as to how that cost of production should be calculated. So, you can imagine a bunch of different provisions that may be included or not included in cost of production. For instance, one example might be whether depreciation is included in cost of production. So, without further guidance from the Treasury Department, after talking with our advisers, outside advisers, discussing internally with our team, we thought it was too early to record anything on our financial statements and difficult to do, again, without any guidance on what the quantum of those benefits might be. So, for now, that's where we stand. And what we intend to do is, once that guidance comes out, which, again, the Treasury Department says they expected to do before the end of the year, we'll hold a follow-up call where we can discuss that in more detail.

I really appreciate this discussion. I do have further questions, but now I'll move on to a different theme. I really appreciate that color. And when I look to kind of value-add products and the billet premium for 2024, have those negotiations started? Have they been completed? And could you maybe comment on what you would expect in terms of that billet premium in the current environment for 2024?

Sure, Lucas. Thanks. Another good question. So, both for the U.S. and, of course, as we discussed, our new Grundartangi cast house will also come online and begin producing billet early next year. We've really just started to discuss 2024 sales. The season has started a bit later this year than maybe it has in past years, which, I think, reflects probably a bit of the general market dynamic that we see. As I mentioned, there have obviously been a bunch of macro drivers that have resulted in both LME and regional delivery premiums reaching sort of two and half-year lows. But of course, until we really get very far in those discussions, it's hard to predict what 2024 premiums might be. But we'll definitely include those on our Q4 call when we give you the rest of our 2024 guidance. And I would definitely expect, definitely for the U.S., we would have those premiums set. Going forward for Europe, that market is more the quarterly market. So, you'll see us start to reflect Philippines and Europe more on a quarterly basis because it can change from quarter-to-quarter, whereas the U.S. is more of an annual market.

Got it. That's helpful. Really quickly on Mt. Holly. Good to see that contract come through. If I recall correctly, Mt. Holly is running at 75% utilization. Have there been discussions about increasing this cost of service power allocation to Mt. Holly so that the plant can run at 100%?

Yes. And actually, that's something that we negotiated as part of this contract is we do have the right to call the additional power that would be necessary in order to restart the remaining 25% of the Mt. Holly pods. So, as we monitor the market conditions, we have that option on -- within a notice period that would work with a restart to call that power. So, securing the power won't be a roadblock to restarting those pods in Mt. Holly.

And the power, would it be at the same cost of service rate? Or would there be a different tariff of sorts?

Yes. The option was in the contract, is linked to -- there was actually a few different tariff schedules that we will take power on front and center toward that contract, but the option is linked to one of those rates, that's in the rest of the Mt. Holly contract package.

All right. I really appreciate all the color and wish you and the team best of luck.

Thanks, Lucas.

Our next question is from Timna Tanners with Wolfe Research. Your line is now open.

I hope everyone can you hear me okay.

You sound great, Timna. Thanks.

Okay. Super. Just have to check. So, I had a couple of questions. I thought I would hone in on the situation in Jamalco. As far as it was interesting, it was material enough to file for insurance recovery, but I didn't -- I might have missed it. In the press release, there's an announcement about it. And wanted to know a little bit more about the incident. You said it was the second time this has happened. Do you feel like you've sufficiently addressed the situation so that won't recur?

Yes. So great question. Maybe I can provide a little more detail and just why we feel confident that we've now got it under control. So, within our refinery, in general, you'll have some steam generation, the steam-powered electrical generation units that supply energy to the plant and also regulate the steam pressure going into the refinery. And in this case, one of our steam generation units suffered a failure originally back in the May-June time period, and then we thought we had it addressed, but it recurred in the late September time period. And we dug a little further. We've brought in engineers from the manufacturer who went through machine with us and have now helped us bring it back to its normal operating status. So, given those steps, again, with the engineers from the manufacturer as well, we feel confident that, that issue is now behind us.

Okay. And then when do you think you might be able to record a recovery from your insurance company? And like so what timing and also what might the deductible look like?

Sure. We won't give specific guidance on the deductible, although it's just a small -- relatively small portion of the overall plan. So, one should not be material from a cash matching standpoint to the losses that we incurred. But that claim, we've just made it. So, we really need to engage with insurer to talk about timing for payment. You might look back to our 2018 claim for Sebree when we had an outage that stopped some power deliveries to the plant resulted in some production being lost. That recovery, I think, took about a year to actually get the cash in the door. So that might give you some guidance as what I may be here, although it's hard to say at this point.

Okay. That's helpful. And then I know there was a mention, I mean, you're going through the guidance that if the price paid At the recent levels, there would be additional EBITDA. I just want to make sure I understood those comments correctly. Is that just to say that I think I have to go back to my notes, it was an extra $15 million to $20 million of EBITDA -- and I assume that was to say that if today's LME price were sustained through the rest of the quarter. But I just wanted to clarify what was intended by those comments.

Yes. You got it almost exactly correct, Timna. Basically, we're just saying that cash prices today are about $100 higher than what our realized Q3 LME prices were. And so, if that were to sort of sustain going forward, if you go back to our sensitivities in our deck, you'll see it should have about a $10 million to $15 million quarterly impact on EBITDA going forward. So, in other words, what we're hopeful of is we have started to see some green shoots on both the demand and the supply side globally. Some of the things I talked about, we've seen really strong renewable demand in China, strong demand in China, both of which are things that should extrapolate to the rest of the world as the micro picks, situation rebounds. And then we've also seen on the supply side, additional outage in China. So, a lot of those are what drove that LME prices start to improve. And so obviously, we're hopeful that those trends continue. And if they do, there's a lot of earnings power in this business as we've shown in previous quarters.

Okay. And then just wrapping up, if I could. On the raw material side, just looking at the guidance, I know caustic has yet to fully flow through in your numbers. But do you see a lot further downside the coke and pitch? And then remind us, if you could, on Jamalco, what alumina price is breakeven for you?

Sure. So, on the coking pitch side, it's -- given the course of the past couple of years, it's hard to really set what your expectations are because we've been stuck for almost two years now, with coking pitch prices that are just materially higher than what we ever saw in any previous period. So, as they've come down, I mean coke prices are down almost 50% from where their height was but they're still well above where historical levels are. So obviously, a lot of this will have to do with the oil markets and energy markets globally and steel markets, frankly. But we continue to see them coming back down towards a normalized level. There's really no reason why they shouldn't. So, we'd expect that to continue over coming quarters, although we just wish it would happen faster than the past. Caustic as we said, last about six months, it takes longer to come through. The caustic prices have really come off substantially, and we really haven't started to see the benefit of that really flow through our results because that stand-on trends happened more recently. So, we'll start to see that more significantly starting in Q1. And then on the -- on the refinery side, we're not giving cash breakeven for any of the assets. But what I did say in my prepared remarks was, absent the power disruption that we had at Canal in the quarter would have been about breakeven for the quarter. So that could be some sense.

okay, I would the back on seen after the call.

Thanks, Timna. And then maybe just to add on for Jamalco. Obviously, we've got a lot of CapEx programs ongoing there. So, we would expect that to continue to improve over the course of 2024, but that's where we stand today.

Our next question is from John Tumazos with John Tumazos Very Independent Research. Your line is now open.

Thank you. Could you shed some light on the big dip in European power prices or the Nord Pool price -- is it more due to weaker demand slowing European economy as opposed to any increase in electricity supply?

Yes. So very good question, John. Thanks. I when you're looking at European power prices, probably the easiest common factor to look at is natural gas prices. And in Europe, obviously, that's referencing TTF. So, if you take a look at TTF over time, they obviously had very historically high levels, multiples of where it had been over history in the energy crisis that really hit late last fall, early winter. And the situation has definitely improved from that. So European natural gas storage is near capacity today. And availability is relatively strong. And so, you've seen TTF come back down significantly from the record levels that we saw last year. That said, it's still multiples above where it stood historically. And obviously, multiples above, say, where Henry Hub is here in the United States, more than 10x. So, when you look at it from that standpoint, maybe 10 times isn't the right multiple, but it's multiples above where Henry Hub is today. So, when you look at it from that standpoint, European energy prices are going to stay high, while that dynamic remains. And well, thankfully gotten better. I think there are still challenges. And you can then see that in industrial demand, where we've seen relatively subdued European economy.

In your demand supply balance, you had almost 1 million tons of excess demand in China and 1.5 million tons of demand less than output in ex China, is that demand decline mostly in Europe -- or is it more broadly spread out U.S., Europe developing world?

Yes. I think you got it about right, John, it's definitely most significantly in Europe which I would say really all regions globally has been the most challenged over this period, much better in the U.S. to be honest, although obviously not at levels that we would like to see it and that we think it could return to. So, we -- for both markets, frankly, are eager to see the cycle, go ahead and turn over because both markets remain very short on the aluminum side, and Frank gotten much shorter given the economic situation over the last several years. So, as I said, we certainly see some green shoots. Obviously, the end of the UAW strike here in the U.S. should help automotive demand going forward. It's sort of an interesting one to predict. But obviously, people saw those Use drugs coming. So, we started to see a little bit of demand impact going in even before the strike started. But now there's certainty there. We think that should help to pick up. Aerospace demand has also been very strong here in the U.S., which is a real nice tailwind for us. And then as interest rates come down, we should see some recovery in building construction as well.

If I could ask one more and I apologize. Sometimes I try to ignore Washington as the government or discussing could you explain these strategic tax credits a little more or maybe again because I hadn't been studying them. with the benefit to Century on a full year basis when they're codified, would it be closer to $1 million or $10 million or $100 million or more just give us an accrued range or order of magnitude.

Yes. Thanks, John. As I said before, until we have those regulations come out, it's very difficult to quantify exactly what will be included in cost of production. But you can go back to the law itself and see what it lays out is that a tax credit -- production tax credit equal to 10% of cost of production of these critical minerals. So, you can get a look at that. But until we have the regulations, we're not going to estimate what that credit could be.

So that could be 10% could be $0.15 a pound for your U.S. output. No problem. Thanks, John.

Our next question is from Katja Jancic with BMO.

Maybe starting with Jamalco. Can you provide any preliminary views on how we should think about CapEx for next year?

Well, in line with our normal cadence, Petra, I think we'll wait to give any 2024 guidance until our Q4 call. So yes, we'll come back to you with that in February.

Okay. And what would be -- can you just say what the maintenance CapEx typically would be?

Sorry, could you repeat that?

Sorry. If you could maybe provide what the maintenance CapEx for Jamalco would be the typical maintenance?

Yes. Again, we'll go ahead and give those numbers on our Q4 call. What we did talk about last time was that we expected basically second half 2023 CapEx for the refinery to be in the $10 million to $20 million range. What I said in my prepared remarks, we expect to be coming down on the low end of that range for the rest of the year. that includes both the maintenance CapEx and some investment CapEx, including the restoration of the high-efficiency boiler that I mentioned. So, if you're just looking for some general provisions that gives you a sense, although again way to guide for 2024 until that Q4 call.

Okay. And maybe I missed this on the European credits. Is there further credits you can monetize? Or how should we think about that?

What we did is we monetize the excess credits that we had that have been allocated to us for free. With the agreement to repurchase them before they're due in 2024. So, we've monetized what are available to us for that hurts. But I think the best way to sort of think about that going forward is to relate it to our overall working capital optimization programs. So, we do -- we will continue to have those ETS credits granted on an annual basis as part of the regulatory scheme. And so, what our intention would be to continue to optimize that working capital, namely the EUA credit continuously over time as an additional source of

Okay. And maybe just 1 more, if I may. On Mt. Holly, if you were -- if you did decide to increase operations to full capacity, what would the CapEx required be? And how long would it take you to do that?

Thanks, Katy, that's a very good question. In terms of the timing, obviously, just a couple of years ago now, we went through a restart of the continuously operating line and an additional 25% of those spots. And that took somewhere from 12 months to 18 months to do that. So that will give you a sense -- but the time frame if we were to restart the remaining pods at Mt. Holly as well. From the cost side, we're undertaking that work now. Obviously, it's a bit hard to predict based on past experience, given the cost environment that we found ourselves in over the past couple of years. So, we're actually undertaking that work, working through what the cost would be. And I think we should be in a better position to give you some better figures in Q4 or Q1.

Our next question is from Lucas Pipes with B. Riley Securities.

One of my goals for this evening is to get continuing education credits on U.S. tax law. And I really appreciate your taking all these questions. I have one more. It is a credit, right? So, it's not a deduction of U.S. federal income tax it's a credit. So, whatever the amount is, this is a cash reduction of your operating costs, correct?

Well, Lucas, I think you know I used to be a lawyer. I wasn't a tax lawyer. So, plenty of disclaimers around that, and I can't give any continuing credits directly. That said, you might imagine I have read the law -- and again, until we have that guidance, this is all very preliminary, and we can't say for sure. But what the law does provide is that for the first five years that a credit would be realized, that credit would be a direct pay for the cash credit are you going to elect to have it via cash credit, if you're not otherwise a U.S. taxpayer. -- or you don't otherwise have U.S. U.S. taxable income during the period. After the first five years, that direct pay per vision to phase out and the tax credits become tradable.

Our next question is from Timna Tanners.

Two quick follow-ups. One was that -- my team and I were kind of confused, actually, we weren't 100% clear on how to think about the impact from Jimocobeing closed -- it sounds like most of October, so if part of September was $16.9 million equipment failure. Is it going to be an increased amount into the fourth quarter and then assuming that's not going to be in your adjusted EBITDA, but just for our own calculations.

Thanks, Timna. Good question. It is in the guide what we expect for Q4 impact to be. So, it's included in that guide.

Wait, but you excluded the Jamalco equipment failure from third quarter EBITDA guidance. So, we didn't think that you would include it for the fourth quarter.

Yes, it is excluded, but the impact -- sort of calculated as we run through those results, but it is adjusted out. That's correct. As you might imagine, kind of we haven't closed the books for October event. So, it's a bit difficult to say exactly what that will be. But we do expect that at that point of view will it fully in through any deductibles, frankly, well before that. So, all of that should be recoverable dollars, which is why we decided to test it out. Does that makes sense?

Okay. But you aren't going to -- but for the fourth quarter, you'll include it and not exclude it. Is that what you're saying?

Sorry, no, no, we'll adjust it out. What -- I guess what I'm saying is dollar for dollar, it should be included under the insurance policies deductibles already have been well before that.

Okay. But the fourth quarter relative to the third quarter, would you expect at larger similar, smaller? Just not clear on the dynamics given us out for a longer period of time in October. Or do you not know?

I understand Sorry, I understand your question. I'm sorry, I understand the question now. It's a bit hard to relate it back to the previous period because the Q3 number had some impact from the June outage running through it. And it's a bit hard to sort of compare there's a few different things going on there. So, I think it's probably easier just to wait until the Q4 call will leave you the exact total what it turned out to be. But again, it should be fully covered under the insurance policy. So...

Got it. Okay. One last thing, if I could. So, the discussion is moving nonpolitical capacity makes me wonder if Ravenswood is becoming less likely to return. So, I just wanted to ask about -- any updated thoughts there? And the longer that Ravenswood out doesn't that make it also more difficult to restart?

Timna, you're showing how long you covered Century because you're referencing Ravenswood which was in West Virginia, and it's permanently curtailed back in -- yes 2008.

Sorry. You know I meant. Hawesville, I'm sorry, not Ravenswood. Yes, I'm sorry, it's Hawesville.

Yes, I know what you mean. Yes. No, I know what you mean. No, no real comment on Hawesville at all. Obviously, it's much easier to take action at an operating smelter like Mt. Holly, than it is to restart a curtailed smelter like Hawesville. And so, when we look at options going forward, I think it will be pretty consistent that you'll see us talk about Mt. Holly is the first option to add production, but it's really not a comment on the future prospect positive at all.

There are no more questions. So, I'll pass the call back over to the management team for closing remarks.

Thanks, everyone. We really appreciate the questions, and we look forward to talking to you in February for our Q4 call. Thanks.

That concludes the conference call. Thank you for your participation. You may now disconnect your lines.