Century Aluminum’s Q2 2026 Call: Executive Order Eligibility, Mount Holly Recovery Timelines Clash

Date of Call: Aug 6, 2026

Financials Results

• Revenue: Net sales for Q2 were $752 million, a $103 million increase sequentially.
• EPS: Reported net income of $2.39 per share; adjusted net income was $2.46 per share, excluding exceptional items.

Guidance:

• Q3 adjusted EBITDA expected in the range of $325 to $345 million.
• Expected 5 to 10 million dollar increase to adjusted EBITDA from lagged LME and regional premium changes vs Q2.
• Energy headwinds of 10 to 15 million dollars expected.
• OPEX expected to be flat.
• Volume and sales mix expected to improve 15 to 25 million dollars.
• Expect $20 to $25 million headwind from realized hedge settlements and $10 to $15 million tax expense.

Business Commentary:

Operational Performance and Capacity Expansion:

• Century Aluminum completed the Mount Holly expansion and the restart of Potline 2 at Grundertangi, returning all assets to full capacity by the end of July 2026.
• The company added over 150 full-time American manufacturing jobs at Mount Holly and completed the restart six months ahead of schedule at Grundertangi.
• The successful execution was due to careful planning, discipline, and workforce collaboration, despite challenges such as an unprecedented transformer failure and ramping up production.

Market Conditions and Pricing:

• The company operates in a strong market with LME prices at approximately $3,250 per ton, the U.S. Midwest premium at $1.11 per pound, and the European duty-paid premium at $500 per ton.
• Market strength is driven by limited production restarts in the Gulf, robust demand in the U.S. from sectors like power, data infrastructure, aerospace, and defense, and continued reshoring of aluminum fabrication.

Financial Performance and Outlook:

• Q2 net sales increased to $752 million, with adjusted net income of $257 million, or $2.46 per share, driven by higher LME and regional premiums and increased shipments.
• Adjusted EBITDA for Q2 was $327 million, attributed to higher LME and regional premiums and increased volume from the Mount Holly expansion.
• For Q3, adjusted EBITDA is expected to range from $325 to $345 million, reflecting anticipated increases in LME and premiums, though moderated by energy and input cost headwinds.

Cash Flow and Balance Sheet Strength:

• The company ended Q2 with $388 million in cash, having repaid $66 million in debt, resulting in a net debt of $98 million.
• Cash flow conversion is expected to strengthen in the second half as capital expenditures related to expansions are complete, and items like tax credits and insurance recoveries convert to cash.

Oklahoma Smelter Project and Policy Support:

• Progress continues on the new Oklahoma smelter project with EGA, including detailed engineering, energy contract negotiations, and financing advancements.
• President Trump's executive order provides a significant incentive, allowing imports at a reduced tariff rate of 25% for new U.S. aluminum production, which is expected to help fund Century's share of the project.

Sentiment Analysis:

Overall Tone: Positive

• Statements include 'remarkable achievement', 'strong market conditions', 'very strong cash flow', 'balance sheet has never been stronger', 'positive environment for customers', and expectations of continued global deficit and strong demand. The company highlights operational successes and favorable policy developments.

Q&A:

• Question from Nick Giles (B. Reilly Securities): Just first wanted to ask about the executive order, kind of where you'll ultimately source the metal and just how you value this benefit in terms of EBITDA and cash flow.
  Response: Will source metal from own resources and others; benefit is material, with reduced tariff rate of 25% vs 50%, impacting both EBITDA and cash flow.

• Question from Nick Giles (B. Reilly Securities): Maybe just on the project itself, I mean, would be good to get an update on the DOE grant, you know, when you would expect for us to have more information there. And then maybe just on financing sources more broadly...
  Response: DOE grant is secured and will pay out dollar for dollar for investments; financing is being pursued with multiple parties, including government sources.

• Question from Katia Janczyk (BMO Capital Markets): ...Can you talk a bit about how you're thinking about shareholder returns at this point, especially with your balance sheet being in a very good place?
  Response: Balance sheet is strong with cash exceeding total debt; priority is maintaining liquidity, funding sustaining capital, pursuing organic growth (like Oklahoma smelter), and will consider capital returns.

• Question from Katia Janczyk (BMO Capital Markets): And maybe shifting gears a little bit to Iceland, in 4Q, you're going to install the new transformers. Will that impact production volumes, or how should we think about that?
  Response: No interruption expected; once new transformers are installed in Q4, amperage will increase, returning Grundertangi to full normalized run rate.

• Question from Timna Tanners (Wells Fargo): I wanted to ask about Matt Hawley first off. You didn't mention them as a potential beneficiary of the new executive order with the 50,000 ton restart. So is that not potentially eligible or is it?...
  Response: Mount Holly is not eligible as it is fully online; the program allows imports during investment period, not after production is complete. Instability impact is in Q2 guide and will resolve in Q3, with volume recovery in Q4.

• Question from Timna Tanners (Wells Fargo): And my second question, if you could help us understand the dynamics in the new Oklahoma smelter...
  Response: Working closely with communities to address concerns; confident the smelter will pose no harm and bring substantial benefits.

• Question from Matthew Key (Texas Capital): You mentioned that you'd be completing some power capacity at Jam Malco in August. I was wondering if you could maybe help quantify the potential financial benefit there...
  Response: Benefits are twofold: full self-sufficiency in energy generation and cost savings; approximately $20 per ton benefit is a reasonable estimate, already reflected in Q3 outlook.

• Question from Nick Giles (B. Reilly Securities): I just was curious and sorry if I missed this, if you could just kind of outline some of the working capital unwind and just cash flow considerations in the second half...
  Response: Working capital built in Q2 from Mount Holly expansion and shipment timing; expect a good portion of finished goods inventory to convert to cash in Q3. Stronger cash flow conversion expected as growth CapEx ends and sustaining CapEx remains.

• Question from Nick Giles (B. Reilly Securities): ...back to oklahoma i was curious for any update that you might have on just the power contract negotiations...
  Response: Negotiations are progressing well with counterparty; complex contracts are being finalized, but no specific timeline given ahead of FID.

Contradiction Point 1

Executive Order Benefit Eligibility and Scope

Contradiction on whether the benefit applies only to new construction or also to expansions.

What are your thoughts on Wells Fargo's recent financial performance? - Timna Tanners (Wells Fargo)

2026Q2: The program appears to apply to imports during the construction phase. - Jesse Gary(CEO)

Is the Mount Holly restart eligible for the new executive order benefit, and what is the quantified impact of operational instability on Q3? - Nick Giles (B. Reilly Securities)

2026Q2: The executive order provides an opportunity for companies building new U.S. aluminum production. - Jesse Gary(CEO)

Contradiction Point 2

Mount Holly Operational Instability Impact

Contradiction on characterizing the operational impact as "not material" versus acknowledging a specific volume impact.

What are Wells Fargo's earnings call details? - Timna Tanners (Wells Fargo)

2026Q2: The instability... is not material... has some impact on Q3 volume. - Jesse Gary(CEO)

Is Mount Holly eligible for the new executive order's 50,000 tons restart, and can you quantify its instability's impact on Q3? - Timna Tanners (Wells Fargo)

2026Q2: The instability... has some impact on Q3 volume, but it is expected to be fully resolved by Q3, with a potential volume rebound in Q4. - Jesse Gary(CEO)

Contradiction Point 3

Capital Returns Timeline and Priority

Contradiction on when and how capital returns might be considered.

Katia Janczyk (BMO Capital Markets) - Katia Janczyk (BMO Capital Markets)

2026Q2: The company anticipates having ample cash... and also to consider capital returns once priorities are met. - Jesse Gary(CEO)

With a strong balance sheet and expected free cash flow, how are you approaching shareholder returns? - Matthew Key (Texas Capital)

2026Q1: After completing these near-term investments... the company will look for high-return organic investments first and then consider capital returns. - Jesse Gary(CEO)

Contradiction Point 4

DOE Grant Timing & Funding Mechanism

Contradiction on the timing and structure of the DOE grant release.

What were the key factors driving revenue growth during the quarter? - Nick Giles (B. Reilly Securities)

2026Q2: The DOE grant of $500 million is secured and will be released dollar-for-dollar as investments are made into the project... - Jesse Gary(CEO)

Can you provide an update on the DOE grant for the Oklahoma smelter, broader financing plans, and potential use of the Hawesville data center stake? - Matthew Key (Texas Capital)

2026Q1: The $500 million DOE grant will reduce the overall capital for the Oklahoma project. The full capital structure and funding plan will be detailed once the Final Investment Decision (FID) is made later this year. - Jesse Gary(CEO)

Contradiction Point 5

Grundartangi Transformer Installation and Production Recovery Timeline

The expected production recovery timeline for Grundartangi's Line 2 is significantly pushed back.

Katia Janczyk (BMO Capital Markets) - Katia Janczyk (BMO Capital Markets)

2026Q2: Once new transformers are installed in Q4, amperage will increase, returning production to the pre-interruption, normalized run rate. - Jesse Gary(CEO)

Will the Q4 Grundertangi transformer installation impact production volumes? - Unknown Analyst (Texas Capital)

20260220-2025 Q4: Line 2 is expected to restart in April (earlier than previously thought), with a full ramp... by end of July. - Jesse Gary(CEO)