Adjusted EBITDA Growth and Strong Q1 Profitability
Adjusted EBITDA of $231 million in Q1, up $60 million sequentially (approx. +35.1%) driven by higher LME and regional premiums, improved operating expenses and favorable sales mix.
Century Aluminum
· CENX
May 7th, 2026
Summary
- Earnings Call Date:
- 2026-05-07
- Change Since:
- -26.54%
- Next Earnings Date:
- 2026-08-06
Earnings Call Sentiment
PositiveThe call conveyed a broadly positive outlook: strong Q1 operating and financial performance (notably adjusted EBITDA growth, higher realized prices, improved cash and reduced net debt), successful progress on Mt. Holly expansion and Grundartangi restart, and a supportive market backdrop due to Middle East disruptions that widen the global deficit. Near-term headwinds include higher energy and raw material costs, insurance reimbursement timing, Jamalco bauxite quality issues, and temporary production constraints tied to equipment and contractual lags. Management provided constructive Q2 guidance and highlighted material upside if current spot prices roll through in later quarters.
Company Guidance
Management guided Q2 realized LME of $3,175/ton, a lagged U.S. Midwest premium of $2,450/ton and a European duty‑paid premium of $485/ton, and expects Q2 adjusted EBITDA of $315–335 million (up about $85–95M vs. Q1’s $231M), noting incremental Mt. Holly and Grundartangi tons are included in Q2 but full run‑rate won’t be realized until Q3; Mt. Holly will ramp to ~230,000 metric tons (adding >125 full‑time jobs and boosting U.S. primary production nearly 10%) by end‑June, Grundartangi Line 2 pots were restarted April 23 with all pots to be restored by end‑July (transformers in Q4), and management highlighted a 2026 global aluminum deficit of ~1.4 million tons; Q1 metrics: ~123,000 tons shipped, net sales $649M, net income $338M ($3.23/sh), adjusted net income $171M ($1.63/sh), adjusted EBITDA $231M, cash $332M, net debt $220M (<$300M target), Q1 CapEx $76M (≈$71M on Mt. Holly/Grundartangi/TG4) with similar Q2 CapEx expected, $198M of accrued 45X tax credits receivable (with ~$94M expected soon), and $83M of insurance recoveries received to date (Q1 claims trailed recoveries by $38M; $46M advance received in April).
Higher Realized Prices and Regional Premiums
Realized LME of $2,900/ton (up ~$285 QoQ, ~+10.9%), U.S. Midwest premium of $2,200/ton (up ~$420 QoQ, ~+23.6%) and European premium of $310/ton (up ~$80 QoQ, ~+34.8%), contributing ~ $85 million of benefit vs prior quarter.
Strong Cash Position and Net Debt Reduction
Cash balance of $332 million (includes Hawesville proceeds) and net debt reduced to $220 million, achieving the company's target of < $300 million and providing liquidity for growth and capital allocation.
Mt. Holly Expansion Progress and Impact
Mt. Holly expansion is on schedule (first pots started ~3 weeks ago), will raise Mt. Holly production to ~230,000 metric tons, add over 125 full-time U.S. manufacturing jobs and increase total U.S. primary aluminum production by nearly 10%; management expects the project to fully repay its capital cost by end of 2026.
Grundartangi Restart Advancing
Potline 2 restart at Grundartangi began April 23 and is on schedule to restore all pots by end of July; anticipated production from this restart is included in Q2 and full-year guidance.
Q2 Outlook and Near-Term Upside
Q2 guidance for adjusted EBITDA of $315 million to $335 million based on lagged realized prices (expected realized LME $3,175/ton, U.S. Midwest premium $2,450/ton, European duty paid premium $485/ton). Management notes current spot levels could add materially (Pete estimated an incremental ~$70–75 million from spot vs. the Q2 guide and suggested a potential ~$400 million quarterly run rate if spot rolled through).
Progress on Large-Scale Oklahoma Smelter Project
Oklahoma smelter with EGA advancing engineering, power and financing discussions; planned capacity of 750,000 metric tons (would more than double U.S. aluminum production) and expected to benefit from DOE support (confirmatory discussions on a $500 million grant).
Operational Performance Across Assets
Smelters delivered excellent Q1 operating performance: strong quarters at Grundartangi, Mt. Holly and Sebree; Sebree overcame winter storm energy impacts; Jamalco progressing on steam turbine TG4 commissioning.
Tax Credits and Insurance Recoveries
45X tax credits receivable of $198 million (expecting ~$94 million for 2025 soon). Insurance recoveries totaled $83 million to date with a $46 million advance received in April to help cash flow timing.
Operator
Hello, everyone. Thank you for joining us, and welcome to Century Aluminum Company First Quarter 2026 Earnings Conference Call. [Operator Instructions] I will now hand the conference over to Chad Grigg, Vice President, Finance and Treasurer. Please go ahead.
Chad Rigg
Thank you, operator. Good afternoon, everyone, and welcome to the first quarter conference call. I'm joined here today by Jesse Gary, Century's President and Chief Executive Officer; and Peter Trpkovski, Executive Vice President and Chief Financial Officer. After our prepared comments, we will take your questions. As a reminder, today's presentation is available on our website at www.centuryaluminum.com. We use our website as a means of disclosing material information about the company and for complying with Regulation FD. Turning to Slide 2. Please take a moment to review the cautionary statements with respect to forward-looking statements and non-GAAP financial measures in today's discussion.
And with that, I'll hand the call to Jesse.
Jesse Gary
Thanks, Chad, and thanks to everyone for joining. I'll start today with a discussion of the dynamic global aluminum market and the opportunities that we see for Century going forward to provide secure supply chains into the U.S. and European markets. I'll then review our first quarter operational performance, including the excellent progress we made on our Mt. Holly expansion project and the restart of Potline 2 at Grundartangi. Pete will then walk you through our Q1 results and Q2 outlook before I conclude the call with the latest on our new Oklahoma smelter project with EGA. Just befor...
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