What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-08-09 compared with 2022-05-02 · 99 added, 87 removed, 175 unchanged (52% of the section changed)

8 unchanged sentences

Recent Developments

On February 16, 2022, we detected a cyber incursion affecting some of the servers supporting our global operations.

The Company took immediate action by shutting down all impacted information systems and activating the Company's internal response procedures and mobilizing both internal resources and third-party experts to address the situation as quickly as possible.

We have since fully restored all of our information systems and rectified all impacts of the incursion.

We are still quantifying the expected total financial statement impact of the cyber incursion, both with respect to costs incurred in response and impacts to production, but we do not expect the impact to be material to the financial statements.

Hawesville temporary curtailment

On June 22, 2022, we announced that we would temporarily idle our Hawesville smelter, as a direct result of historically high energy costs and declining LME prices.

As part of this action, we issued a notice to most of the employees at the facility pursuant to the Worker Adjustment and Retraining Notification (“WARN”) Act regarding our intentions to temporarily curtail Hawesville plant operations by no later than August 20, 2022.

We have since fully curtailed production at the facility and expect to continue to maintain the plant with the intention of restarting operations when market conditions permit, including energy prices returning to more normalized levels and aluminum prices maintaining levels that can support the on-going costs and capital expenditures necessary to restart and operate the plant.

As the curtailment represents a significant adverse change in the extent and manner in which the Hawesville smelter will be used, we accordingly evaluated the Hawesville asset group for recoverability.

As the carrying value of the Hawesville asset group was determined to not be recoverable based on the estimated undiscounted cash flows expected to be generated over the life of the asset group, an impairment charge of $159.4 million was recognized to write down the asset group to its estimated fair value.

We also recognized $8.2 million of expense during the second quarter related to accrual of payouts to employees for wages and severance, triggered by our issuance of the WARN notice.

Pricing of aluminum

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Derivatives and risks associated with such financial contracts are disclosed specifically in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

We saw meaningful increases in the pricing of aluminum throughout 2021, which has continued through the first quarter of 2022.

The average LME price for primary aluminum was $3,267 per tonne for the first quarter of 2022 compared to $2,475 per tonne in 2021, and $1,702 per tonne in 2020.

The average MWP price was $794 per tonne for the first quarter of 2022, compared to $581 per tonne in 2021, and $267 per tonne in 2020.

The average EDPP price was $489 per tonne for the first quarter of 2022 compared to $272 per tonne in 2021, and $126 per tonne in 2020.

We have seen a decline in the pricing of aluminum in the second quarter of 2022, when compared to the aluminum prices that were generally increasing throughout 2021 and during the first quarter of 2022.

The average LME price for primary aluminum was $2,882 per tonne for the second quarter of 2022, compared to $3,267 per tonne in the first quarter of 2022, $2,475 per tonne in 2021, and $1,702 per tonne in 2020.

The average MWP price was $805 per tonne for the second quarter of 2022, compared to $794 per tonne for the first quarter of 2022, $581 per tonne in 2021, and $267 per tonne in 2020.

average EDPP price was $604 per tonne for the second quarter of 2022, compared to $489 per tonne for the first quarter of 2022, $272 per tonne in 2021, and $126 per tonne in 2020.

Cyber incursion

On February 16, 2022, we detected a cyber incursion affecting some of the servers supporting our global operations.

The Company took immediate action by shutting down all impacted information systems and activating the Company's internal response procedures and quickly restored all of our information systems and rectified all impacts of the incursion.

The total financial statement impact of the cyber incursion, both with respect to costs incurred in response and impacts to production, is not material.

Results of Operations

In accordance with the recently adopted amendments to Item 303 of Regulation S-K, management has revised its comparison of interim periods to compare the results of the most recent quarter against the results of the immediately preceding quarter.

We believe that, due to the non-seasonal nature of our business, this sequential presentation is more useful in identifying current business trends, provides a more meaningful analysis and aligns the discussion with how management reviews the results of the Company.

The Company will continue to present a comparison of the most recent year-to-date period and the corresponding year-to-date period of the preceding fiscal year.

The following discussion for the three months ended March 31, 2022 reflects no change in production capacities at our operating facilities.

The following discussion for the three and six months ended June 30, 2022 reflects no change in production capacities at our operating facilities.

Our net sales are impacted primarily by the LME price for aluminum, regional and value-added premiums, and the volume and product mix of aluminum we ship during the period.

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Risk Factors - Increases in energy costs adversely affect our business, financial position, results of operations and liquidity” in our Annual Report on Form 10-K for the year ended December 31, 2021.

Our power costs at our Kentucky plants are impacted by capacity demand charges, which are determined based on available power generating capacity in MISO, from which we purchase our energy.

Power costs at our Kentucky plants are impacted by capacity demand charges, which are determined based on available power generating capacity in MISO, from which we purchase energy.

The price of such capacity is set by auction in April.

Because the clearing price of the 2022-23 auction was higher than in the prior period, capacity demand charges with respect to power usage for our Hawesville and Sebree facilities will be increased during the twelve month period commencing June 1, 2022.

The expected combined capacity demand costs for these two facilities are expected to be approximately $11.5 million per quarter after June 1, 2022, as compared to average combined capacity demand costs for these two facilities of $0.4 million per quarter for the four quarters ended March 31, 2022.

Our expected capacity demand costs for power are expected to be approximately $11.5 million per quarter after June 1, 2022 (notwithstanding the curtailment at Hawesville), in addition to the market price of power used .

The recent increase in energy costs have adversely affected our business, and are expected to continue to adversely affect our business over the near term until power prices return to more normalized levels and/or LME prices improve.

Increased domestic energy costs have resulted in the curtailment of our Hawesville facility as described above.

In Europe, increased energy prices affect both our Grundartangi operations (a portion of our power is linked to the Nord Pool power market) and our Vlissengen facility in the Netherlands, which utilizes natural gas to produce anodes used in our Grundartangi operations.

The energy market in Europe is materially dependent upon imported natural gas from Russia, and the threat of Russia further reducing or terminating natural gas supply to Europe creates uncertainty with respect to the price and availability of natural gas, which could adversely affect operations at Vlissingen, and in turn operations at Grundartangi, if we are not able to source an alternative supply of anodes.

In general, our results reflect the market cost of alumina on an approximately three-month lag reflecting the terms of our alumina contracts and inventory levels.

Quarter ended

Three months ended

March 31, 2022 December 31, 2021 March 31, 2022 March 31, 2021

Quarter ended Six months ended

Sequential Year-to-date

June 30, 2022 March 31, 2022 June 30, 2022 June 30, 2021

(in millions, except per share data)

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(in millions)

1st Quarter 134,953 $ 494.8 76,458 $ 247.5 211,411 $ 742.3

4th Quarter 121,549 $ 411.8 79,412 $ 238.9 200,961 $ 650.7

1st Quarter 116,437 $ 275.6 79,260 $ 164.2 195,697 $ 439.8

139,630 $ 564.8 74,454 $ 273.2 214,084 $ 838.0

134,953 $ 494.8 76,458 $ 247.5 211,411 $ 742.3

112,792 $ 314.0 78,102 $ 180.1 190,894 $ 494.1

116,437 $ 275.6 79,260 $ 164.2 195,697 $ 439.8

(1) Excludes scrap aluminum and alumina sales.

Quarter ended

Three months ended

(in millions) March 31, 2022 December 31, 2021 March 31, 2022 March 31, 2021

Quarter ended Six months ended

Sequential Year-to-date

(in millions) June 30, 2022 March 31, 2022 June 30, 2022 June 30, 2021

Net sales $ 856.6 $ 753.6 $ 1,610.2 $ 972.0

Net sales (excluding alumina sales) increased by $100.7 million for the three months ended March 31, 2022, compared to the three months ended December 31, 2021, primarily driven by favorable volume and sales mix of $64.7 million as well as favorable LME price realizations of $36.8 million.

Net sales (excluding alumina sales) increased by $315.9 million for the three months ended March 31, 2022, compared to the same period in 2021, primarily driven by favorable LME and regional premium price realizations of $246.0 million as well as favorable volume and sales mix of $69.9 million.

Quarter ended

Three months ended

(in millions) March 31, 2022 December 31, 2021 March 31, 2022 March 31, 2021

Net sales (excluding alumina sales) increased by $89.3 million for the three months ended June 30, 2022, compared to the three months ended March 31, 2022, primarily driven by favorable LME and premium price realizations of $92.9 million and favorable volume of $5.7 million, offset by unfavorable sales mix of $9.4 million.

Net sales (excluding alumina sales) increased by $638.2 million for the six months ended June 30, 2022, compared to the six months ended June 30, 2021, primarily driven by favorable LME and premium price realizations of $512.0 million and favorable volume of $130.2 million.

Quarter ended Six months ended

Sequential Year-to-date

(in millions) June 30, 2022 March 31, 2022 June 30, 2022 June 30, 2021

Gross profit (loss) $ 15.9 $ 93.2 $ 109.1 $ 0.2

Gross profit increased by $23.8 million for the three months ended March 31, 2022, compared to the three months ended December 31, 2021, primarily driven by favorable LME and regional premium price realizations of $36.0 million as well as favorable volume and sales mix of $33.1 million, partially offset by unfavorable raw material price realizations of $43.7 million, and increased operating costs.

Gross profit increased by $113.9 million for the three months ended March 31, 2022, compared to the same period in 2021, primarily driven by favorable LME and regional premium price realizations of $246.0 million and favorable volume and sales mix impacts of $14.2 million, partially offset by unfavorable raw material price realizations of $81.3 million, unfavorable power price realizations of $63.2 million, and increased operating costs.

Quarter ended

Three months ended

(in millions) March 31, 2022 December 31, 2021 March 31, 2022 March 31, 2021

Gross profit decreased by $77.4 million for the three months ended June 30, 2022, compared to the three months ended March 31, 2022, primarily driven by unfavorable raw material price realization of $69.4 million, unfavorable power price realization of $58.3 million, unfavorable sales mix of $8.4 million, and increased operating costs of $39.3 million, partially offset by favorable metal price realization of $92.9 million and favorable volume of $1.3 million.

Gross profit increased by $108.9 million for the six months ended June 30, 2022 compared to the six months ended June 30, 2021, primarily driven by favorable metal price realization of $512.0 million, favorable sales mix of $39.1 million, and favorable volume of $26.3 million, offset by unfavorable raw material price realization of $225.0 million, unfavorable power price realization of $192.0 million, and increased operating costs of $56.0 million.

Quarter ended Six months ended

Sequential Year-to-date

(in millions) June 30, 2022 March 31, 2022 June 30, 2022 June 30, 2021

Asset impairment charge $ 159.4 $ — $ 159.4 $ —

An asset impairment charge of $159.4 million was recognized in the period ended June 30, 2022 as a result of the temporary curtailment of the Hawesville facility, announced during June 2022.

As the curtailment represents a significant adverse change in the extent and manner in which Hawesville will be used, we accordingly evaluated the Hawesville asset group for recoverability which resulted in the recognized impairment charge of $159.4 million.

Quarter ended Six months ended

Sequential Year-to-date

(in millions) June 30, 2022 March 31, 2022 June 30, 2022 June 30, 2021

Selling, general and administrative expenses $ 5.8 $ 11.7 $ 17.5 $ 24.8

Selling, general and administrative expenses decreased by $6.9 million for the three months ended March 31, 2022 compared to the three months ended December 31, 2021, primarily driven by a reduction in share-based compensation costs following retirements and other departures amongst our executive team during the current period.

Selling, general and administrative expenses decreased by $4.4 million for the three months ended March 31, 2022 compared to the same period in 2021, primarily driven by a reduction in share-based compensation costs following retirements and other departures amongst our executive team during the current period.

Quarter ended

Three months ended

(in millions) March 31, 2022 December 31, 2021 March 31, 2022 March 31, 2021

Selling, general and administrative expenses decreased by $5.9 million for the three months ended June 30, 2022, compared to the three months ended March 31, 2022, primarily driven by a reduction in share-based compensation costs resulting from the reduction the Company's stock price quarter over quarter.

Selling, general and administrative expenses decreased by $7.3 million for the six months ended June 30, 2022, compared to the six months ended June 30, 2021, primarily driven by a reduction in share-based compensation costs during 2022 resulting from the reduction the Company's stock price quarter over quarter.

Quarter ended Six months ended

Sequential Year-to-date

(in millions) June 30, 2022 March 31, 2022 June 30, 2022 June 30, 2021

Net gain (loss) on forward and derivative contracts $ 231.8 $ (56.7) $ 175.1 $ (162.5)

Net gain (loss) on forward and derivative contracts decreased by $83.5 million from a gain of $26.8 million for the three months ended December 31, 2021 to a loss of $56.7 million for the three months ended March 31, 2022, primarily driven by increases in LME and MWP forward prices, partially offset by gains on Nord Pool derivative contracts due to Nord Pool power price increases.

For the three months ended March 31, 2022, net loss on forward and derivative contracts decreased by $41.4 million compared to the same period in 2021 primarily due to a decrease in total volume hedged as well as gains on Nord Pool derivative contracts due to Nord Pool power price increases.

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

Quarter ended

Three months ended

(in millions) March 31, 2022 December 31, 2021 March 31, 2022 March 31, 2021

Net gain (loss) on forward and derivative contracts increased by $288.5 million from a loss of $56.7 million for the three months ended March 31, 2022 to a gain of $231.8 million for the three months ended June 30, 2022, primarily driven by decreases in LME and MWP forward prices, and increased gains on Nord Pool derivative contracts due to Nord Pool power forward price increases.

Net gain (loss) on forward and derivative contracts increased by $337.6 million from a loss of $162.5 million for the six months ended June 30, 2021 to a gain of $175.1 million for the six months ended June 30, 2022, primarily driven by decreases in LME and MWP forward prices, and increased gains on Nord Pool derivative contracts due to Nord Pool power forward price increases.

Quarter ended Six months ended

Sequential Year-to-date

(in millions) June 30, 2022 March 31, 2022 June 30, 2022 June 30, 2021

Income tax benefit (expense) $ (42.3) $ (1.7) $ (44.0) $ 50.6

For the three months ended March 31, 2022, income tax expense decreased by $11.5 million compared to the three months ended December 31, 2021, primarily driven by net losses from our consolidated U.S.

results, which were driven by net loss on forward and derivative contracts recognized during the current quarter.

We recognized a $1.7 million income tax expense for the three months ended March 31, 2022 as compared to income tax benefit of $2.3 million in the same period in 2021 primarily driven by improved operational results from both U.S.

and foreign operations during the current quarter .

For the three months ended June 30, 2022, income tax expense increased by $40.6 million compared to the three months ended March 31, 2022, primarily driven by improved operating results at Grundartangi and favorable LME price realization.

For the six months ended June 30, 2022, income tax expense increased by $94.6 million compared to the six months ended June 30, 2021, primarily driven by favorable LME price realization.

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

6 unchanged sentences

We believe that cash provided from operations and financing activities will be adequate to cover our operations and business needs over the next twelve months.

As of March 31, 2022, we had cash and cash equivalents of approximately $26.6 million and unused availability under our revolving credit facilities of $127.7 million, resulting in a total liquidity position of approximately $154.3 million.

As of June 30, 2022, we had cash and cash equivalents of approximately $30.0 million and unused availability under our revolving credit facilities of $195.6 million, resulting in a total liquidity position of approximately $225.6 million.

Available Cash

Our available cash and cash equivalents balance at March 31, 2022 was $26.6 million compared to $29.0 million at December 31, 2021.

Our available cash and cash equivalents balance at June 30, 2022 was $30.0 million compared to $29.0 million at December 31, 2021.

Sources and Uses of Cash

Our statements of cash flows are summarized below:

Three months ended March 31,

Six months ended June 30,

(in millions)

3 unchanged sentences

Change in cash, cash equivalents and restricted cash $ (8.2) $ (74.1)

The change from net cash used in operating activities during the three months ended March 31, 2021 to net cash provided by operating activities during the three months ended March 31, 2022 was primarily driven by net income during the current quarter, partially offset by changes in working capital.

The change from net cash used in operating activities during the six months ended June 30, 2021 to net cash provided by operating activities during the six months ended June 30, 2022 was primarily driven by net income during the first half of 2022, partially offset by changes in working capital.

The changes in working capital are primarily attributable to timing of receivable collections, timing of raw material receipts, and pricing increases.

The increase in net cash used in investing activities was primarily due to higher spending on capital projects during the three months ended March 31, 2022, driven by capital investments in the Mt.

The increase in net cash used in investing activities was primarily due to higher spending on capital projects during the six months ended June 30, 2022, driven by capital investments in the Mt.

Holly restart project and the Grundartangi casthouse project.

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

revolving credit facility"), provides for borrowings of up to $220.0 million in the aggregate including up to $110.0 million under a letter of credit sub-facility.

revolving credit facility matures in May 2023.

revolving credit facility"), previously provided for borrowings of up to $220.0 million, including up to $110.0 million under a letter of credit sub-facility.

In June 2022, we entered into a Fourth Amendment to our existing $220.0 million U.S.

revolving credit facility, increasing the maximum capacity from $220.0 million to $250.0 million, including up to $150.0 million under a letter of credit sub-facility.

revolving credit facility matures in June 2027.

Any letters of credit issued and outstanding under the U.S.

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decreases in the price of aluminum and/or curtailments of production capacity would decrease our borrowing base by reducing our accounts receivable and inventory balances.

As of March 31, 2022, our U.S.

We are still evaluating the impact of the Hawesville curtailment on the borrowing base.

As of June 30, 2022, our U.S.

revolving credit facility had a borrowing base of $250.0 million, $15.0 million in borrowings and $84.4 million in letters of credit outstanding.

Of the outstanding letters of credit, $12.3 million are related to our power commitments, $71.2 million are related to hedging collateral, and the remainder are primarily for the purpose of securing certain debt and workers’ compensation commitments.

As of March 31, 2022, our Iceland revolving credit facility had a borrowing base of $80.0 million and $35.0 million in outstanding borrowings.

As of March 31, 2022, our credit facilities had $127.7 million of net availability after consideration of our outstanding borrowings and letters of credit.

Of the outstanding letters of credit, $49.1 million are related to our power commitments, $15.4 million are related to hedging collateral, and the remainder

are primarily for the purpose of securing certain debt and workers’ compensation commitments.

As of June 30, 2022, our Iceland revolving credit facility had a borrowing base of $80.0 million and $35.0 million in outstanding borrowings.

As of June 30, 2022, our credit facilities had $195.6 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.

4 unchanged sentences

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

As of March 31, 2022, we were in compliance with all such covenants or maintained availability above such covenant triggers.

As of June 30, 2022, we were in compliance with all such covenants or maintained availability above such covenant triggers.

Grundartangi Casthouse Facility

1 unchanged sentence

Under the Casthouse Facility, repayments of principal amounts will be made in equal quarterly installments equal to 1.739% of the principal amount, the first payment occurring in July 2024, with the remaining 60% of the principal amount to be paid no later than the termination date.

The Casthouse Facility shall mature in December 2029.

The Casthouse Facility will mature in December 2029.

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

As of March 31, 2022 there were $40.0 million in borrowings outstanding under the Casthouse Facility.

As of June 30, 2022 there were $40.0 million in 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 March 31, 2022, we were in compliance with all such covenants.

As of June 30, 2022, we were in compliance with all such covenants.

Senior Notes and Convertible Senior Notes

16 unchanged sentences

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 March 31, 2022, we have not issued any debt securities pursuant to the Universal Shelf Registration Statement.

As of June 30, 2022, we have not issued any debt securities pursuant to the Universal Shelf Registration Statement.

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

8 unchanged sentences

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

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Current assets $ 398.9 $ 395.3

2 unchanged sentences

Non-current liabilities 508.3 556.1

Three Months Ended

March 31, 2022

Six months ended June 30, 2022

Net sales $ 1,089.5

2 unchanged sentences

Net income (loss) 55.1

As of March 31, 2022 and December 31, 2021, an intercompany receivable due to the Company and Guarantors from the Non-Guarantors totaled $10.2 million and $15.1 million, respectively, and an intercompany non-current loan due to the Company from the Non-Guarantors totaled $485.0 million and $544.2 million, respectively.

As of June 30, 2022 and December 31, 2021, an intercompany receivable due to the Company and Guarantors from the Non-Guarantors totaled $14.2 million and $15.1 million, respectively, and an intercompany non-current loan due to the Company from the Non-Guarantors totaled $488.6 million and $544.2 million, respectively.

Contingent Commitments

1 unchanged sentence

This contingent obligation consists of the aggregate payments made to Big Rivers by the third party on CAKY’s behalf in excess of the agreed upon base amount under the long-term cost-based power contract with Kenergy.

As of March 31, 2022, the principal and accrued interest for the contingent obligation was $28.4 million, which was fully offset by a derivative asset.

We may be required to make installment

payments for the contingent obligation in the future.

As of June 30, 2022, the principal and accrued interest for the contingent obligation was $28.8 million, which was fully offset by a derivative asset.

We may be required to make installment payments for the contingent obligation in the future.

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

As of March 31, 2022, the LME forward market prices exceeded the threshold for payment, however, based on the 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.

As of June 30, 2022, based on the LME forward market prices and our expected level of Hawesville 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.

3 unchanged sentences

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 for the three months ended March 31, 2022, and 2021.

We did not make any contributions for the three months ended June 30, 2022, and 2021.

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

9 unchanged sentences

Imports that receive a product exclusion from the Department of Commerce may also enter the US duty free.

We implemented 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).

We finished these efforts in late 2021 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.

In July 2022, the International Trade Commission (ITC) initiated a review of the Section 301 and 232 duties as required by law every four years.

The process will conclude no later than March 15, 2023.

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.

Holly facility.

The project was completed during the second quarter of 2022, resulting in total production of 75% of Mt.

Holly’s full capacity.

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

6 unchanged sentences

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

As of March 31, 2022, we had $43.7 million remaining under the repurchase program authorization.

As of June 30, 2022, 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.

1 unchanged sentence

("CAWV") filed a class action complaint for declaratory judgment against the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union ("USW"), the USW’s local and certain CAWV retirees, individually and as class representatives ("CAWV Retirees"), seeking a declaration of CAWV’s rights to modify/terminate retiree medical benefits.

Later in November 2009, the

USW and representatives of a retiree class filed a separate suit against CAWV, Century Aluminum Company, Century Aluminum Master Welfare Benefit Plan, and various John Does with respect to the foregoing.

Later in November 2009, the USW and representatives of a retiree class filed a separate suit against CAWV, Century Aluminum Company, Century Aluminum Master Welfare Benefit Plan, and various John Does with respect to the foregoing.

On August 18, 2017, the District Court for the Southern District of West Virginia approved a settlement agreement in respect of these actions, pursuant to which, CAWV agreed to make payments into a trust for the benefit of the CAWV Retirees in the aggregate amount of $23.0 million over the course of ten years.

Upon approval of the settlement, we paid $5.0 million to the aforementioned trust in September 2017 and agreed to pay the remaining amounts under the settlement agreement in annual increments of $2.0 million for nine years.

At March 31, 2022, we had $2.0 million in other current liabilities and $6.3 million in other liabilities related to this agreement.

At June 30, 2022, we had $2.0 million in other current liabilities and $6.5 million in other liabilities related to this agreement.

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.

See Note 1 1 .

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

2 unchanged sentences

For major investment projects we would likely seek financing from various capital and loan markets and may potentially pursue the formation of strategic alliances.

We may be unable, however, to issue additional debt or equity securities, or enter into other financing arrangements on attractive terms, or at all, due to a number of factors including a lack of demand, unfavorable pricing, poor economic conditions, unfavorable interest rates, or our financial condition or credit rating at the time.

financial condition or credit rating at the time.

Future uncertainty in the U.S.

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 three months ended March 31, 2022 were $5.4 million, excluding expenditures of $10.2 million associated with the restart project at Mt.

Capital expenditures incurred for the six months ended June 30, 2022 were $11.5 million, excluding expenditures of $15.8 million associated with the restart project at Mt.

Holly and $15.2 million associated with the Grundartangi casthouse project.

2 unchanged sentences

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-Q

Item 2. Management’s Discussion and Analysis