What changed in this filing

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Item 7. Management’s Discussion and Analysis

2022-02-25 compared with 2021-03-04 · 169 added, 143 removed, 242 unchanged (56% of the section changed)

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• our production volume.

COVID-19 Update

In response to the COVID-19 pandemic, we have taken a number of actions to protect the health and well-being of our employees and to prevent the spread of COVID-19 within our operations.

As a result, our plants have not experienced any disruption in operations as a result of the pandemic, and we continue to sell all of our metal essentially as it is cast.

The COVID-19 pandemic has disrupted the global economy and created significant volatility in the primary aluminum industry.

Such adverse impacts to the global market include the drop in the LME price for primary aluminum to $1,457 in April 2020 from $1,772 at the start of 2020.

However, we have seen some measurable improvement in the global market for primary aluminum along with an increase in the price for our product and a return to more stability in the market in which we operate in recent months.

The LME price for primary aluminum averaged $1,702 per tonne for 2020 as compared to an average of $1,792 for 2019, due in part to the impacts that COVID-19 had on the LME price during 2020.

Because we sell our product on a one- to three-month lag to current prices, our results reflect the LME price on this one to three month lag basis.

Customer demand for value-added aluminum products and, in turn, the product premium we receive for such products, also have generally returned to first quarter 2020 levels after having been negatively impacted by the COVID-19 pandemic.

Decreases in the prices of our products have also been partially offset by decreases in the prices of our key cost inputs.

We have taken actions to mitigate the financial impact of the COVID-19 pandemic, including reducing discretionary spending, optimizing working capital and deferring non-essential capital projects.

The potential future impact of the COVID-19 pandemic on our business, results of operations and financial performance is difficult to predict and will depend on future developments, and such effects could exist for an extended period of time.

See I tem 1A.

Risk Factors for additional information on the potential risks associated with the COVID-19 pandemic.

Pricing of aluminum

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plus (ii) any regional premium (e.g., the Midwest premium for metal sold in the United States ("MWP") and the European Duty Paid premium for metal sold into Europe);

plus (iii) any product premium.

plus (iii) any value-added product premium.

Each of these price components has its own drivers and variability.

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Increases or decreases in primary aluminum prices result in increases and decreases in our revenues (assuming all other factors are unchanged).

From time to time, we may seek to manage our exposure to fluctuations in the LME price of primary aluminum and/or associated regional premiums through financial instruments designed to protect our downside price risk exposure.

Information regarding financial contracts is included in Note 18.

Derivatives and risks affiliated with such financial contracts are disclosed specifically in Item 1 A.

Risk Factors .

The historic volatility of the price of aluminum is reflected in the chart below:

We have seen meaningful increases in the pricing of aluminum throughout 2021.

The average LME price for primary aluminum was $2,475 per tonne in 2021, compared to $1,702 per tonne in 2020, and $1,792 in 2019.

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The average European Duty Paid premium was $272 per tonne in 2021 compared to $126 per tonne in 2020 and $142 per tonne in 2019.

We did see a decline in LME, MWP, and European Duty Paid premium prices beginning in the first half of 2020, with the LME price for primary aluminum falling from $1,772 per tonne, MWP price of $320 per tonne, and European Duty Paid premium price of $140 per tonne as of January 2, 2020 to $1,433, $176, and $98, respectively by May 15, 2020.

There were improvements in the global markets through the second half of 2020 resulting in an increase in LME, MWP and European Duty Paid premium prices by the end of 2020, with the LME price for primary aluminum at $1,978 per tonne, MWP price at $323 per tonne and European Duty Paid premium at $150 per tonne as of December 31, 2020.

Energy, Key Supplies and Raw Materials

Our operating costs are significantly impacted by changes in the prices of the materials used in the production of aluminum, including alumina, electrical power and carbon products.

Because we sell our products based principally on the LME price for primary aluminum, regional premiums and product premiums, we are unable to pass increased production costs on to our customers.

These costs may be subject to increasing inflationary pressures, which could adversely affect our business, financial condition and results of operations.

Because we sell our products based principally on the LME price for primary aluminum, regional premiums and value-added product premiums, we are unable to pass increased production costs on to our customers.

Although we attempt to mitigate the effects of price fluctuations from time to time through the use of various fixed-price commitments, financial instruments and also by negotiating LME-based pricing in some of our raw materials and electrical power contracts, these efforts also limit our ability to take advantage of favorable changes in the market prices for primary aluminum or raw materials and may affect our financial position, results of operations and cash flows.

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As a result, the availability of these cost components at competitive prices is critical to the profitability of our operations.

The pricing under our alumina supply contracts is variable.

The pricing under our alumina supply contracts varies from contract to contract.

A major portion of our alumina requirements is indexed to the price of primary aluminum, which provides a natural hedge to one of our largest production costs.

We also purchase alumina based on a published alumina index and at fixed prices.

The alumina price is influenced by a number of factors, including global supply-demand balance and other factors outside of our control.

Various external events in the alumina markets during 2018 caused significant increases in the price of alumina resulting in the ratio of alumina prices to aluminum prices to well exceed historical levels, which persisted throughout 2018 and much of 2019.

By the end of 2019, the relationship between alumina and aluminum prices returned to historical levels following the resolution of these supply dislocations and remained stable during 2020.

The average market

alumina index price as a percentage of market LME price per tonne for 2020 was 16% compared to 19% for 2019 and 22% for 2018.

The alumina price is influenced by a number of factors, including global supply-demand balance, natural disasters and weather events, and other factors outside of our control.

The average market alumina index price as a percentage of market LME price per tonne for 2021 was 13% compared to 16% for 2020 and 19% for 2019.

Electrical power is our other largest operating cost.

Currently, our Hawesville and Sebree plants receive all of their electricity requirements under market-based power agreements.

In the U.S., market-based energy prices are driven in large part by coal, natural gas, wind, and other fuel sources, as well as weather influenced electric loads.

Extreme weather events, such as that experienced in mid-February 2021 throughout the United States, can result in power outages and/or significant increases in demand, which can result in significant increased power costs incurred in our operations.

Holly aluminum smelter is currently party to both a power agreement with a third party supplier (providing 75% of Mt.

Currently, our Hawesville and Sebree plants receive all of their electricity requirements under market-based power agreements and Grundartangi receives 30% of its electricity requirements from market-based power agreements.

Market-based energy prices are driven in large part by the price of coal, natural gas, and

other fuel sources, weather influenced reservoir or generation levels for wind, solar and hydro production and weather-influenced electric loads.

Extreme weather events, such as that experienced in mid-February 2021 throughout the United States or the low rain levels experienced in Nordic regions during winter 2021, can result in low generation, power outages and/or significant increases in demand, which may result in significant increased power costs incurred in our operations.

Prior to April 2021, our Mt.

Holly aluminum smelter was a party to both a power agreement with a third party supplier (providing 75% of Mt.

Holly's power) and with Santee Cooper (supplying 25% of Mt.

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Holly smelter with all its power needs.

Both of these power agreements were set to expire on December 31, 2020 but were extended through March 31, 2021 as we finalize a new, three-year power arrangement with Santee Cooper that is expected to be effective April 1, 2021.

It is expected that under the new power contract with Santee Cooper, 100% of Mt.

Holly's electrical power requirements will be supplied from Santee Cooper's generation at cost of service based rates.

The new contract with Santee Cooper is expected to provide sufficient energy to allow the smelter to increase its current production to 75% of Mt.

Holly's full production capacity.

If we are unable to finalize this proposed new power contract with Santee Cooper and obtain all necessary government approvals, we may choose, or be forced, to further curtail operations at the plant.

Risk Factors .

In Iceland, approximately 70% of the power requirements for our Grundartangi plant is indexed to the price of primary aluminum, which provides a natural hedge of one of our largest production costs.

Since November 2019, the price of the remaining 30% of Grundartangi’s power requirements has been linked to the market price for power in the Nord Pool power market, the trading market for power in the Nordic countries and certain other areas of Europe.

Holly plant now has a power supply agreement with Santee Cooper that runs through December 2023.

Under this power supply agreement, 100% of Mt.

Holly’s electrical power requirements are supplied from Santee Cooper’s generation at cost of service based rates.

The contract provides sufficient energy to allow the Mt.

Holly smelter to reach 75% of full production capacity upon completion of the restart project.

In Iceland, approximately 70% of the power requirements for our Grundartangi plant are indexed to the price of primary aluminum, which provides a natural hedge of one of our largest production costs.

The price of the remaining 30% of Grundartangi’s power requirements is linked to the market price for power in the Nord Pool power market, the trading market for power in the Nordic countries and certain other areas of Europe, through December 2023.

In July 2021, the contract was extended for the period January 1, 2024 through December 31, 2026 with pricing at fixed rates.

Production/Shipment Volumes

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Results of Operations

The following discussion for the year ended December 31, 2020 reflects restart activity at Hawesville and no change in production capacities at our other operating facilities.

Year Ended December 31, 2021 Compared to Year Ended December 31, 2020

Net sales (excluding alumina sales) decreased by $220.2 million for the twelve months ended December 31, 2020, compared to the same period in 2019, primarily driven by unfavorable LME and regional premium price realizations of $188.6 million and unfavorable volume and product mix of $31.6 million.

Net sales (in millions) 2021 2020

Twelve months ended December 31, $ 2,212.5 $ 1,605.1

Net sales (excluding alumina sales) increased by $603.6 million for the twelve months ended December 31, 2021, compared to the same period in 2020, primarily driven by favorable LME and regional premium price realizations of $640.9 million, partially offset by unfavorable volume and product mix of $37.4 million.

Gross profit (loss) (in millions) 2021 2020

Twelve months ended December 31, $ 124.2 $ (36.5)

Gross profit (loss) :

Gross loss increased by $12.6 million for the twelve months ended December 31, 2020, compared to the same period in 2019, primarily driven by unfavorable LME and regional premium price realizations of $188.6 million.

The increases to gross loss were offset by favorable raw material price realizations of $178.6 million.

Gross profit increased by $160.8 million for the twelve months ended December 31, 2021, compared to the same period in 2020, primarily driven by favorable LME and regional premium price realizations of $640.9 million, partially offset by unfavorable power price realizations of $251.1 million, unfavorable raw material price realizations of $99.1

million, unfavorable volume impacts of $23.7 million and increased operating costs of $108.3 million driven by higher labor and supplies costs, both primarily related to our restart projects at Mt.

Holly and Hawesville.

Selling, general and administrative expenses (in millions) 2021 2020

Twelve months ended December 31, $ 57.6 $ 43.5

Selling, general and administrative expenses:

Selling, general and administrative expenses decreased $3.9 million in 2020 compared to 2019, primarily due to decreases in compensation cost in the current year, partially offset by increases in professional fees.

Net (gain) loss on forward and derivative contracts:

Selling, general and administrative expenses increased $14.1 million in 2021 compared to 2020, primarily due to increases in share-based compensation due to fluctuations of the stock price period over period and other compensation costs.

Net loss on forward and derivative contracts (in millions) 2021 2020

Twelve months ended December 31, $ (212.4) $ (17.3)

Net loss on forward and derivative contracts:

In 2021, we recognized losses of $212.4 million primarily related to LME, MWP and Nord Pool fixed forward financial sales contracts.

The losses were primarily driven by increases in LME and MWP forward prices.

In 2020, we recognized losses of $17.3 million primarily related to LME and MWP fixed forward financial sales contracts.

The losses were primarily driven by fluctuations in forward prices.

In 2019, we had recognized gains of $12.0 million primarily related to LME and MWP fixed forward financial sales contracts.

The gains were primarily driven by decreases in the LME and MWP prices during 2019.

Derivatives to the consolidated financial statements included herein for additional information.

Income tax benefit (expense) (in millions) 2021 2020

Twelve months ended December 31, $ 30.6 $ 3.1

Income tax expense (benefit):

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We recognized a $30.6 million income tax benefit in 2021 as compared to income tax benefit of $3.1 million in 2020.

The decrease in income tax benefit year over year primarily relates to an increase in earnings of certain of our foreign entities.

The period-to-period change is primarily related to a discrete tax benefit of $49.8 million related to the recognition of certain foreign deferred tax assets.

The deferred tax asset represents the future tax benefit we expect to realize for deductible costs related to our historical investment in Nordural Helguvik ehf (“Helguvik”).

During the period, it became apparent this deferred tax asset would be realized in the foreseeable future.

As this deferred tax asset is expected to be realized prior to expiration, we have not recorded a valuation allowance.

Income Taxes to the consolidated financial statements included herein for additional information.

Year Ended December 31, 2020 Compared to Year Ended December 31, 2019

Net sales for the twelve months ended December 31, 2019 decreased $56.6 million compared to the same period in 2018, driven by lower price realizations of $249.5 million primarily resulting from decreases in the LME price offset by $136.2 million in favorable volume and product mix year over year.

Gross profit :

Gross profit for the twelve months ended December 31, 2019 decreased $1.0 million compared to the same period in 2018, driven primarily by lower price realizations of $249.5 million due to decreases in the LME.

The decrease to gross profit is offset by favorable price realizations of alumina and other raw materials of $170.7 million, power price realizations of $47.2 million, volume and product mix of $24.2 million, and operating expenses of $5.6 million.

Net sales (in millions) 2020 2019

Twelve months ended December 31, $ 1,605.1 $ 1,836.6

Gross profit (loss) (in millions) 2020 2019

Twelve months ended December 31, $ (36.5) $ (23.9)

Gross profit (loss) :

The increases to gross loss were offset by favorable raw material price realizations of $178.6 million.

Selling, general and administrative expenses (in millions) 2020 2019

Twelve months ended December 31, $ 43.5 $ 47.4

Selling, general and administrative expenses:

Selling, general and administrative expenses decreased $7.2 million in 2019 compared to 2018, primarily due to increases in compensation cost in the current year (favorable stock compensation expense in 2018, reflecting our lower stock price).

Net (gain) loss on forward and derivative contracts (in millions) 2020 2019

Twelve months ended December 31, $ (17.3) $ 12.0

Net (gain) loss on forward and derivative contracts:

In 2019, we recognized gains of $12.0 million primarily related to LME and MWP fixed forward financial sales contracts.

In 2020, we recognized losses of $17.3 million primarily related to LME, MWP and Nord Pool fixed forward financial sales contracts.

The losses were primarily driven by fluctuations in forward prices.

In 2019, we had recognized gains of $12.0 million primarily related to LME and MWP fixed forward financial sales contracts.

The gains were primarily driven by decreases in the LME and MWP prices during 2019.

In 2018, we recognized gains of $6.3 million primarily related to Nord Pool and LME fixed forward financial sales contracts which settle from November 2019 through December 2020.

These gains were primarily driven by the increase in the Nord Pool price.

Income tax expense (in millions) 2020 2019

Twelve months ended December 31, $ 3.1 $ 8.4

Income tax expense (benefit):

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Our principal sources of liquidity are available cash and cash flow from operations.

We also have access to our existing revolving credit facilities and have raised capital in the past through public equity and debt markets.

We also have access to our existing U.S.

and Iceland revolving credit facilities (collectively, the "revolving credit facilities") and have raised capital in the past through public equity and debt markets.

We regularly explore various other financing alternatives.

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As of December 31, 2021, we had cash and cash equivalents of approximately $29.0 million and unused availability under our revolving credit facilities of $70.5 million, resulting in a total liquidity position of approximately $99.5 million.

Adverse changes in the price of aluminum or our principal costs of production could materially impact our ability to generate and raise cash.

Furthermore, the COVID-19 pandemic could continue to impact the economy which may impact the price of our products as well as our ability to access capital and/or the terms under which we can do so.

In 2020, we took preemptive action to preserve our liquidity and manage our cash flow.

Such actions include reducing discretionary spending, optimizing working capital and deferring non-essential capital projects.

To preserve liquidity in light of the uncertainty in the global markets due to COVID-19, in March 2020, we drew down a total of $90.0 million under our U.S.

and Iceland revolving credit facilities.

We have since repaid $45.0 million on our U.S.

revolving credit facility.

As of December 31, 2020, the remaining outstanding borrowings on the Iceland revolving credit facility were $45.0 million.

We also effectively extended the maturities of our principal debt obligations.

On July 1, 2020, we issued $250.0 million in aggregate principal amount of our senior secured notes that will mature in 2025 (the "2025 Notes") and used the proceeds, together with cash on hand, to purchase all of our 7.5% senior secured notes that were set to mature in 2021 (the "2021 Notes").

In connection with the offering of the 2025 Notes, we also entered into Amendment No.1 to our U.S.

revolving credit facility extending the maturity date to May 16, 2023.

As the impact of the COVID-19 pandemic on the economy and our operations is fluid and constantly evolving, we will continue to assess a variety of measures to improve our financial performance and liquidity.

Risk Factors for additional information.

On April 14, 2021, we issued $250.0 million in aggregate principal amount of our 7.5% senior secured notes that will mature in 2028 (the "2028 Notes") and used a portion of the proceeds to purchase $195.9 million of our 12.0% senior secured notes due 2025 (the "2025 Notes") pursuant to a cash tender offer for the 2025 Notes.

On April 9, 2021, we issued $86.3 million in aggregate principal amount of convertible senior notes due 2028 (the "Convertible Notes").

The remaining proceeds from the issuance of the 2028 Notes and a portion of the proceeds from the issuance of the Convertible Notes were used to redeem the remaining 2025 Notes on May 14, 2021.

The remaining proceeds from the Convertible Notes offering were used to repay borrowings under our revolving credit facilities and to pay for the cost of the capped call transactions in connection with the issuance of the Convertible Notes.

With these transactions, we have effectively extended the maturities of our principal debt obligations, reduced the interest rate on these obligations, and raised additional liquidity through the issuance of the Convertible Notes.

Available Cash

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(dollars in millions)

Net cash provided by (used in) operating activities $ 42.9 $ 17.7 $ (69.1)

Net cash (used in) provided by operating activities $ (64.7) $ 42.9 $ 17.7

Net cash used in investing activities (82.6) (11.8) (38.8)

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Year Ended December 31, 2021 Compared to Year Ended December 31, 2020

Net cash used in operating activities for 2021 was $64.7 million, compared to cash provided by operating activities of $42.9 million in 2020.

The change in net cash used in operating activities was driven by increasing raw material prices, increasing power prices, higher labor costs, increases in working capital, and hedge settlements, partially offset by higher realized aluminum prices.

The increase in net cash used in investing activities during 2021 was primarily due to higher spending on capital projects during the twelve months ended December 31, 2021, driven by capital investments in the Mt.

Holly restart project.

Net cash provided by financing activities increased by $90.2 million in 2021 compared to 2020 primarily due to increased borrowings on the revolving credit facilities primarily used to fund working capital and the Mt.

Holly restart project and issuance of the Convertible Notes.

Year Ended December 31, 2020 Compared to Year December 31, 2019

Net cash provided by operating activities for 2020 was $42.9 million, compared to $17.7 million for 2019.

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Borrowings on our revolving credit facilities are available, if needed, for working capital requirements, general corporate or other purposes.

Year Ended December 31, 2019 Compared to Year Ended December 31, 2018

Net cash provided by operating activities for 2019 was $17.7 million, compared to net cash used in operating activities of $69.1 million for 2018.

The increase in net cash provided by operating activities was primarily driven by lower inventory costs and a decrease in accounts receivable due to timing of receivable collections.

The decrease in net cash used in investing activities was due to lower capital expenditures related to Hawesville restart activities and the receipt of $20.8 million from the sale of our interest in Baise Haohai Carbon Co., Ltd.

("BHH"), a former joint venture with Guangxi Qiangqiang Carbon Co., Ltd.

("GQQ") during 2019.

Net cash provided by financing activities decreased by $2.6 million during 2019 due to lower net borrowings under our U.S.

revolving credit facility, offset by proceeds from the Hawesville Term Loan.

Borrowings on our U.S.

revolving credit facility are short term in nature to fund working capital requirements and are repaid on a continuous basis.

Borrowings on our Hawesville Term Loan are required to be paid ratably over 24 months beginning in January 2020 and are used to partially finance the second phase of the Hawesville restart project.

Availability under Our Credit Facilities

revolving credit facility, dated May 2018, provides for borrowings of up to $175.0 million in the aggregate including up to $110.0 million under a letter of credit sub-facility, and also includes an uncommitted accordion feature whereby borrowers may increase the capacity of the U.S.

revolving credit facility by up to $50.0 million, subject to agreement with the lenders.

revolving credit facility, dated May 2018 (as amended, the "U.S.

revolving credit facility"), originally provided for borrowings of up to $175.0 million in the aggregate.

On December 23, 2021, we entered into a Third Amendment to our existing $175.0 million U.S.

revolving credit facility and exercised a portion of the uncommitted accordion feature in the amount of $45.0 million, increasing the maximum capacity from $175.0 million to $220.0 million, including up to $110.0 million under a letter of credit sub-facility.

revolving credit facility matures in May 2023.

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revolving credit facility reduce our borrowing availability on a dollar-for-dollar basis.

We have also entered into, through our wholly-owned subsidiary Nordural Grundartangi ehf ("Grundartangi"), a $50.0 million revolving credit facility, dated November 2013, as amended (the "Iceland revolving credit facility").

The Iceland revolving credit facility matures in November 2022.

The availability of funds under our credit facilities is limited by a specified borrowing base consisting of certain accounts receivable, inventory and qualified cash deposits which meet the lenders' eligibility criteria.

We have also entered into, through our wholly-owned subsidiary Nordural Grundartangi ehf ("Grundartangi"), a revolving credit facility, dated November 2013, as amended (the "Iceland revolving credit facility") which originally provided for borrowings of up to $50.0 million in the aggregate.

On February 4, 2022, we further amended this Iceland revolving credit facility and increased the facility amount to $80.0 million in the aggregate.

The Iceland revolving credit facility matures November 2024.

The availability of funds under our revolving credit facilities is limited by a specified borrowing base consisting of certain accounts receivable, inventory and qualified cash deposits which meet the lenders' eligibility criteria.

Increases in the price of aluminum and/or restarts of previously curtailed operations, for example, increase our borrowing base by increasing our accounts receivable and inventory balances;

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As of December 31, 2021, our U.S.

revolving credit facility had a borrowing base of $129.9 million, no outstanding borrowings, and $34.3 million in letters of credit outstanding.

Of the outstanding letters of credit, $16.2 million related to our power commitments and the remainder are primarily for the purpose of securing secured certain debt and workers’ compensation commitments.

revolving credit facility had a borrowing base of $215.2 million, $63.6 million in outstanding borrowings, and $81.1 million in letters of credit outstanding.

Of the outstanding letters of credit, $12.1 million related to our power commitments, $51.0 million are related to hedging collateral, and the remainder are primarily for the purpose of securing certain secured debt and workers’ compensation commitments.

As of December 31, 2021, our Iceland revolving credit facility had a borrowing base of $50.0 million and $50.0 million in outstanding borrowings.

As of December 31, 2020, our credit facilities had $100.6 million of net availability after consideration of our outstanding borrowings and letters of credit.

We may borrow and make repayments under our credit facilities in the ordinary course based on a number of factors, including the timing of payments from our customers and payments to our suppliers.

Our credit facilities contain customary covenants, including restrictions on mergers and acquisitions, indebtedness, affiliate transactions, liens, dividends and distributions, dispositions of collateral, investments and prepayments of indebtedness, including in the U.S.

As of December 31, 2021, our revolving credit facilities had $70.5 million of net availability after consideration of our outstanding borrowings and letters of credit.

We may borrow and make repayments under our revolving credit facilities in the ordinary course based on a number of factors, including the timing of payments from our customers and payments to our suppliers.

Our revolving credit facilities contain customary covenants, including restrictions on mergers and acquisitions, indebtedness, affiliate transactions, liens, dividends and distributions, dispositions of collateral, investments and prepayments of indebtedness, including in the U.S.

revolving credit facility, a springing financial covenant that requires us to maintain a fixed charge coverage ratio of at least 1.0 to 1.0 any time availability under the U.S.

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revolving credit facility.

Our Iceland revolving credit facility contains a covenant that requires Grundartangi to maintain a minimum equity ratio.

Our Iceland revolving credit facility contains covenants that require Grundartangi to maintain a minimum equity ratio.

As of December 31, 2021, we were in compliance with all such covenants or maintained availability above such covenant triggers.

Senior Secured Notes

We have $250.0 million aggregate principal of senior secured notes that will mature on July 1, 2025 (the "2025 Notes"), unless earlier refinanced in accordance with their terms.

Interest on the 2025 Notes is payable semi-annually on January 1 and July 1 of each year, beginning on January 1, 2021, at a rate of (i) 10.00% per annum in cash and (ii) 2.00% per annum in the form of additional notes or in cash, at Century's option.

Grundartangi Casthouse Facility

On November 2, 2021, in connection with the casthouse project at Grundartangi, we entered into an eight-year Term Facility Agreement with Arion Bank hf, to provide for borrowings up to $130.0 million (the “Casthouse Facility”).

Under the Casthouse Facility, repayments of principal amounts will be made in equal quarterly installments equal to 1.818% of the principal amount, the first payment occurring 30 months after the first drawdown by Grundartangi, with the remaining 60% of the principal amount to be paid no later than the termination date.

The Casthouse Facility shall mature 8 years following the first drawdown date.

The Casthouse Facility bears interest at a rate equal to USD LIBOR 3 month plus an applicable margin.

The Casthouse Facility is secured by a $430.0 million general bond.

As of December 31, 2021, there were no borrowings outstanding under the Casthouse Facility.

The Casthouse Facility also contains customary covenants, including restrictions on mergers and acquisitions, indebtedness, preservation of assets, and dispositions of assets and contains a covenant that requires Grundartangi to maintain a minimum equity ratio.

As of December 31, 2021, we were in compliance with all such covenants or maintained availability above such covenant triggers.

Senior Secured Notes and Convertible Senior Notes

We have $250.0 million principal of senior secured notes that mature on April 1, 2028, unless earlier refinanced in accordance with their terms.

Interest on the 2028 Notes is payable semi-annually on April 1 and October 1 of each year, beginning on October 1, 2021, at a rate of 7.5% per year.

The indenture governing the 2028 Notes contains customary covenants which may limit our ability, and the ability of certain of our subsidiaries, to:

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and (ix) effect a consolidation or merger.

We applied the net proceeds from the offering of the 2025 Notes described above, together with cash on hand, toward payment of the total consideration amount to holders whose 2021 Notes were accepted and purchased in the tender offer and to fund the redemption of any remaining 2021 Notes.

As a result, the Company's and the guarantors' obligations under the indenture governing the 2021 Notes have been fully discharged.

Hawesville Term Loan

On April 29, 2019, we entered into a term loan agreement with Glencore Ltd.

pursuant to which the Company borrowed $40.0 million.

Borrowings under the Hawesville Term Loan were used to partially finance the second phase of the Hawesville restart project.

The Hawesville Term Loan matures on December 31, 2021, and is being repaid in 24 equal monthly installments of principal that began on January 31, 2020.

The Hawesville Term Loan bears interest, due monthly, at a floating rate equal to LIBOR plus 5.375% per annum.

The Hawesville Term Loan is not secured by any collateral.

As of December 31, 2020, the outstanding balance of the Hawesville Term Loan was $20.0 million.

In April 2021, we issued $86.3 million in aggregate principal amount of Convertible Notes, unless earlier converted, repurchased or redeemed.

The principal included the full exercise of the option by the initial purchasers of the Convertible Notes to purchase $11.3 million of additional principal amount.

The Convertible Notes bear interest semi-annually in arrears on May 1 and November 1 of each year, beginning on November 1, 2021, at a rate of 2.75% per annum in cash.

We applied the net proceeds from the offering of the 2028 Notes and a portion of the net proceeds from the Convertible Notes described above toward payment of the total consideration amount to holders whose 2025 Notes were accepted and purchased in the tender offer and to fund the redemption of any remaining 2025 Notes.

Supplemental Guarantor Financial Information

The Company has filed a Registration Statement on Form S-3 (the "Universal Shelf Registration Statement") with the SEC pursuant to which the Company may, from time to time, offer an indeterminate amount of securities, which may include securities that are guaranteed by certain of the Company's subsidiaries.

As of December 31, 2021, we have not issued any debt securities pursuant to the Universal Shelf Registration Statement.

However, the securities that we may issue in the future may limit the ability of certain of our subsidiaries to pay dividends or make distributions in respect of capital stock.

"Guarantor Subsidiaries" refers to all of our material domestic subsidiaries except for Nordural US LLC, Century Aluminum Development LLC and Century Aluminum of West Virginia, Inc.

The Guarantor Subsidiaries are 100% owned by Century.

All guarantees will be full and unconditional;

all guarantees will be joint and several.

Our foreign subsidiaries, together with Nordural US LLC, Century Aluminum Development LLC and Century Aluminum of West Virginia, Inc., are collectively referred to as the "Non-Guarantor Subsidiaries".

We allocate corporate expenses or income to our subsidiaries and charge interest on certain intercompany balances.

The following summarized financial information of both the Company and the Guarantor Subsidiaries ("Guarantors") is presented on a combined basis.

Intercompany balances and transactions between the Company and the Guarantors have been eliminated and the summarized financial information does not reflect investments of the Company or the Guarantors in the Non-Guarantor Subsidiaries.

The Company’s or Guarantors’ amounts due from, amounts due to, and transactions with the Non-Guarantor Subsidiaries are disclosed below:

December 31, 2021 December 31, 2020

Current assets $ 395.3 $ 252.4

Non-current assets 935.3 972.3

Current liabilities 375.1 169.2

Non-current liabilities 556.1 483.7

Twelve months ended December 31, 2021

Net sales $ 1,413.0

Gross profit (loss) 63.2

Income (loss) before income taxes (251.7)

Net income (loss) (167.1)

As of December 31, 2021 and December 31, 2020, an intercompany receivable due to the Company and Guarantors from the Non-Guarantor Subsidiaries totaled $15.1 million and $14.6 million, respectively, and an intercompany non-current loan due to the Company from the Non-Guarantor Subsidiaries totaled $544.2 million and $554.9 million, respectively.

Contingent Commitments

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These payments are contingent based on the LME price of primary aluminum and the level of Hawesville’s operations.

Based on the LME forward market at December 31, 2020 and management’s estimate of the LME forward market beyond the quoted market period, we believe that we will not be required to make payments on the contingent obligation during the term of the agreement, which expires in 2028.

Based on the LME forward market at December 31, 2021 and current level of Hawesville's operations, we believe that we will not be required to make payments on the contingent obligation during the term of the

agreement, which expires in 2028.

There can be no assurance that circumstances will not change thus accelerating the timing of such payments.

Employee Benefit Plan Contributions

In 2013, we entered into a settlement agreement with the Pension Benefit Guaranty Corporation ("PBGC") regarding an alleged "cessation of operations" at our Ravenswood facility.

Pursuant to the terms of the agreement, we agreed to make additional contributions (above any minimum required contributions) to our defined benefit pension plans totaling approximately $17.4 million.

Under certain circumstances, in periods of lower primary aluminum prices relative to our cost of operations, we are able to defer one or more of these payments, but would then be required to provide the PBGC with acceptable security for deferred payments.

In 2013, we entered into a settlement agreement with the Pension Benefit Guarantee Corporation (the "PBGC") regarding an alleged "cessation of operations" at our Ravenswood facility (the "PBGC Settlement Agreement").

Pursuant to the terms of the PBGC Settlement Agreement, we agreed to make additional contributions (above any minimum required contributions) to our defined benefit pension plans totaling approximately $17.4 million.

Under certain circumstances, in periods of lower primary aluminum prices relative to our cost of operations, we were able to defer one or more of these payments, provided that we provide the PBGC with acceptable security for such deferred payments.

We did not make any contributions during the years ended December 31, 2021, 2020 and 2019.

We have elected to defer certain payments under the PBGC agreement and have provided the PBGC with the appropriate security.

The remaining contributions under this agreement are approximately $9.6 million.

We historically elected to defer certain payments under the PBGC Settlement Agreement and provided the PBGC with the appropriate security.

On October 1, 2021, we amended the PBGC Settlement Agreement such that we removed the deferral mechanism and agreed to contribute approximately $2.4 million per year to our defined benefit pension plans for a total of approximately $9.6 million, over the next four years beginning on November 30, 2022 and ending on November 30, 2025, subject to acceleration if certain terms and conditions are met in such amendment.

Section 232 Aluminum Tariff

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In addition to primary aluminum products, the tariffs also cover certain other semi-finished products.

All imports that directly compete with our products are covered by the tariff, with the exception of imports from Australia, Argentina, Canada, and Mexico or imports that receive a product exclusion from the Department of Commerce.

In December 2020, we announced a preliminary agreement with Santee Cooper on a new three year power agreement that is expected to be effective on April 1, 2021.

This new power contract is expected to provide sufficient energy to allow the smelter to increase its production to 75% of Mt.

Holly's full production capacity.

We anticipate spending approximately $50.0 million in 2021 to bring Mt.

Holly's annualized production capacity to 170,000 tonnes.

For certain risks related to the anticipated restart, see Item 1A.

Risk Factors .

In March 2018, we announced our intention to return our Hawesville smelter, which since 2015 had been operating at approximately 40% capacity, to full production and upgrade its existing reduction technology.

The first phase of the project,

which involved the restart of the three potlines and approximately 150,000 tonnes of production capacity that had been curtailed in 2015, was successfully completed on budget and ahead of schedule in early 2019.

The second phase of the project involves the rebuilding of the pots from the two potlines that had continued to operate past their expected life cycle and the implementation of certain new technology across all production.

These two potlines were taken out of production in February and September 2019, respectively.

The rebuild of the first of these potlines was completed in the second quarter of 2020.

With the restart of this potline, the Hawesville smelter is currently operating at approximately 80% production capacity, with total project costs to date of approximately $108.3 million.

The rebuild of the fifth and final potline and the completion of the technology upgrades is expected to be completed over the next several years, subject to market conditions.

All imports that directly compete with our products are covered by the tariff, with the exception of imports from Australia, Argentina, Canada and Mexico and imports from the European Union up to a quota limit of 18,000 metric tonnes or imports that receive a product exclusion from the Department of Commerce.

We are currently in the process of a multi-year project that began in 2018 to restart Hawesville's previously curtailed capacity and return the plant to a production level of approximately 200,000 MT per annum (80% of capacity).

As of December 31, 2021, we are finished with these efforts and are producing at approximately 80% of Hawesville’s capacity.

The rebuild of the fifth and final potline is expected to be completed over the next several years subject to market conditions.

During 2021, we initiated efforts to restart the curtailed capacity at our Mt.

Holly facility, resulting in total production of 75% of Mt.

Holly’s full capacity once the restart project is completed.

Restart work at the Mt.

Holly smelter is progressing and is expected to be completed in the second quarter of 2022, subject to market conditions.

During 2021, we announced plans for construction of a new billet casthouse at Grundartangi.

The Grundartangi casthouse project began in late 2021 and is expected to continue through the first quarter of 2024.

The Grundartangi casthouse project will be fully funded through the Casthouse Facility.

In May 2018, we temporarily curtailed one potline at our Sebree aluminum smelter due to an equipment failure.

Sebree was returned to full capacity by the end of the third quarter of 2018.

As of December 31, 2020, we received $19.9 million of insurance proceeds.

In January 2021, the claims process was concluded and a final payment of $1.4 million of insurance proceeds was received on January 21, 2021.

As of December 31, 2020, we received $19.9 million of insurance proceeds related to a policy covering the equipment failure.

In January 2021, the claims process was concluded and a final payment of $1.4 million of insurance proceeds was received.

In October 2021, Nordural Helguvik ehf ("Helguvik"), a past subsidiary of ours and owner of the former Helguvik project site which has been curtailed since 2008, filed for bankruptcy and on October 28, 2021, a district court in Iceland issued a verdict declaring bankruptcy of Helguvik.

We recognized a deferred tax asset and recorded a discrete tax benefit of $49.8 million related to the future tax benefit we expect to realize for deductible costs related to our historical investment in Helguvik.

There are no other financial statement impacts as a result of the bankruptcy filing.

In 2011, our Board of Directors approved a $60.0 million common stock repurchase program and subsequently increased this program by $70.0 million in the first quarter of 2015.

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We made no repurchases during the years ended 2021, 2020, and 2019.

As of December 31, 2020, we had $43.7 million remaining under the repurchase program authorization.

As of December 31, 2021, we had $43.7 million remaining under the repurchase program

authorization.

The repurchase program may be expanded, suspended or discontinued by our Board, in its sole discretion, at any time.

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and international markets and economies may adversely affect our liquidity, our ability to access the debt or capital markets and our financial condition.

Capital expenditures incurred for the year ended December 31, 2020 were $8.7 million, excluding expenditures of $5.6 million associated with the restart at Hawesville.

We estimate our total capital spending excluding the Mt.

Holly restart project in 2021 will be approximatel y $25.0 million , related to our ongoing investment and sustainability projects at our plants.

Capital expenditures incurred for the year ended December 31, 2021 were $28.1 million, excluding expenditures of $61.9 million associated with the restart at Mt.

We estimate our total capital spending in 2022, excluding the Mt.

Holly restart project and Grundartangi casthouse project, will be approximately $30.0 million, related to our ongoing investment and sustainability projects at our plants.

Critical Accounting Estimates

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Pension and Other Postretirement Benefit Liabilities

We sponsor several pension and other OPEB plans.

We sponsor several pension and OPEB plans.

Our liabilities under these defined benefit plans are determined using methodologies that involve several actuarial assumptions, the most significant of which are the discount rate, health care cost inflation rate and the long-term rate of return on plan assets.

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Our expected long-term rate of return on plan assets is derived from our asset allocation strategies and anticipated future long-term performance of individual asset classes.

Our analysis gives consideration to recent plan performance and historical returns;

Our analysis gives consideration to recent plan performance and historical

however, the assumptions are primarily based on long-term, prospective rates of return.

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To the extent we believe that it is more likely than not that a deferred tax asset will not be realized, a valuation allowance is established.

The amount of a valuation allowance is based upon our best estimate of our ability to realize the net deferred tax assets.

The a mount of a valuation allowance is based upon our best estimate of our ability to realize the net deferred tax assets.

We have a valuation allowance of $485.8 million recorded for all of our U.S.

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Determination as to whether and how much an asset is impaired involves significant management judgment involving highly uncertain matters, including estimating the future sales volumes, future selling prices and estimated raw material and conversion costs, alternative uses for the asset, and estimated proceeds from the disposal of the asset.

Other Contingencies

We are a defendant in several actions relating to various aspects of our business.

While it is impossible to predict the ultimate disposition of any litigation, we do not believe that any of these lawsuits, either individually or in the aggregate, will have a material adverse effect on our financial condition, results of operations or liquidity.

Commitments and Contingencies to the consolidated financial statements included herein for additional information.

Recently Issued Accounting Standards Updates

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Total $ 2,549 855 430 347 121 115 681

(1) Long-term debt includes principal repayments on our 2025 Notes, Hawesville Term Loan, Iceland Revolving Credit facility, and the IRB.

(1) Long-term debt includes principal repayments on our 2028 Notes, Convertible Notes, the Casthouse Facility and the IRB.

Payments are based on the assumption that all outstanding debt instruments will remain outstanding until their respective due dates.

For our contingent obligation, based on the LME forward market prices for primary aluminum at December 31, 2020, we believe that we will not have any payment obligations through the term of the agreement, which expires in 2028.

For our contingent obligation, based on the LME forward market prices for primary aluminum at December 31, 2021 and expected Hawesville operating levels, we believe that we will not have any payment obligations through the term of the agreement, which expires in 2028.

(2) Estimated interest payments on our long-term debt assume that all outstanding debt instruments will remain outstanding until their respective due dates.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis