CENTURY ALUMINUM CO 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. This Management’s Discussion and Analysis ("MD&A") provides information that management believes is relevant to an assessment and understanding of the consolidated financial condition and results of operations of Century Aluminum Company and its subsidiaries (collectively, "Century," the "Company," "our" and "we") and should be read in conjunction with the accompanying consolidated financial statements and related notes thereto. This MD&A contains "forward-looking statements" - see "Forward-Looking Statements" above. Overview We are a global producer of primary aluminum and alumina with production facilities in the United States, Iceland and Jamaica. Our primary aluminum smelters are concentrated in the U.S. and Iceland, while in Jamaica we maintain a 55% joint venture interest in the Jamalco alumina refinery, from which we off-take a proportionate amount of alumina production. We intend for the majority of our Jamalco off-take to be consumed internally at our primary aluminum smelters in a vertical integration model. We also own a carbon anode production facility located in the Netherlands ("Vlissingen"). Carbon anodes are consumed in the production of primary aluminum. Vlissingen supplies carbon anodes to our aluminum smelter in Iceland. Each of our aluminum smelters in the United States produces anodes at on-site facilities. The key determinants of our results of operations and cash flows from operations are as follows: • the price of primary aluminum, which is based on the London Metal Exchange ("LME"), plus any regional premiums and value-added product premiums; • the cost of goods sold, the principal components of which are electrical power, alumina, carbon products, labor and other controllable costs, which in aggregate represent more than 78% of our cost of goods sold; and • our production volume and product mix. Recent Developments New Smelter Project On January 26, 2026, we announced that we had entered into a joint development agreement with Emirates Global Aluminium ("EGA") to build the first new primary aluminum smelter in the United States since our Mt. Holly facility came online in 1980. Under the joint development agreement, EGA will own 60 percent of the joint venture, with Century Aluminum owning the remaining 40 percent. The new plant, to be built in Inola, Oklahoma, is expected to produce 750,000 tonnes of aluminum per year, more than doubling current U.S. production of primary aluminum. Construction of the project is expected to start by the end of 2026, subject to the completion of detailed engineering work, completion of negotiations with Public Service Company of Oklahoma on a competitive long-term power supply agreement and the negotiation of a definitive joint venture agreement with EGA. Sale of Hawesville On February 2, 2026, we completed the sale of our Hawesville, Kentucky facility to an affiliate of Terawulf, Inc. for $200.0 million in cash and a 6.8% non-dilutive minority equity interest in the Terawulf affiliate that intends to develop and own a high-performance computing/artificial intelligence data center on the site. A large portion of the proceeds are intended to be deployed to expand our domestic primary aluminum production capacity through the restart of the last potline at our Mt. Holly facility and investments in our new smelter project. Grundartangi Equipment Failure In October 2025, our Grundartangi smelter was forced to temporarily cease production at one of its two potlines due to a failure of a transformer unit. As a result, production at the smelter has been temporarily reduced by approximately two-thirds. Grundartangi’s other potline remains unaffected and in full production. We expect that losses arising from this event, less applicable deductibles, will be covered under our insurance policies. As of March 31, 2026, we have received $37.0 million in insurance recoveries related to the equipment failure. In April 2026, we received an additional $46.1 million in insurance recoveries and expect to receive additional recoveries as our insurance carriers process our claims. We restarted production of the idled potline in the second half of April 2026, with a return to near full production currently expected by the end of July 2026. 28 Table of Contents Section 232 Aluminum Tariffs In March 2018, the U.S. implemented a 10% tariff on imported primary aluminum products into the U.S. These tariffs are intended to protect U.S. national security and incentivize primary aluminum production in the U.S., reducing reliance on imports and ensuring that domestic producers, like Century, can supply all the aluminum necessary for critical industries and national defense. 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. In February 2025, President Trump issued a new Presidential Proclamation directing the tariff rate on imported primary aluminum to be increased from 10% to 25% and for all existing country exemptions or product exclusion to be ended, in each case effective March 12, 2025. Then, in May 2025, President Trump again increased tariffs on primary aluminum from 25% to 50%, effective June 4, 2025. Since the implementation of these changes to the Section 232 tariff program, the LME and Midwest premium has increased to historically high levels, which has had a material positive impact on our financial position and results of operations. U.S. Department of Energy Award On January 10, 2025, the Company entered into a Cooperative Agreement with the U.S. Department of Energy's ("DOE") Office of Clean Energy Demonstrations for up to $500 million in Bipartisan Infrastructure Law and Inflation Reduction Act funding to build a new aluminum smelter as part of the Industrial Demonstrations Program. With the help of this funding, we intend to construct, own, and operate the new aluminum smelter together with EGA in Inola, Oklahoma. Jamalco Equipment Failure In June 2023, Jamalco experienced a power disruption caused by damage to its power generation unit. The equipment failure resulted in a loss of production at Jamalco of approximately 84,000 tonnes for the year ended December 31, 2023. The impact of the equipment failure on gross margin was approximately $30.4 million. Despite returning the equipment to full capacity as of the end of October 2023, we continued to see some inefficiencies into the first quarter of 2024. We are engaged with our insurance carriers in connection with the equipment failure to determine the specific amount of coverage available to us, including any applicable deductibles. Pricing of Aluminum The overall price of primary aluminum consists of three components: (i) the base commodity price, which is based on quoted prices on the LME; 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 ("EDPP")); plus (iii) any value-added product premium. Each of these price components has its own drivers and variability. The price of aluminum is influenced by a number of factors, including global supply-demand balance, inventory levels, speculative activities by market participants, production activities by producers, geopolitical and economic conditions, including tariffs, as well as production costs in major production regions. These factors can be highly variable and difficult to predict, which can lead to significant volatility in the price of aluminum. Increases or decreases in primary aluminum prices result in variability in our revenues and profitability (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 limit our downside price risk. Information regarding financial contracts is included in Note 11. 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, 2025. 29 Table of Contents We saw an increase in the pricing of aluminum through the first quarter of 2026 attributable to increases in the LME, MWP and EDPP. The LME and MWP prices have recently been at historically high levels and may change rapidly based on factors beyond our control, including changes in tariff policies, changes in supply in the U.S market, geopolitical events, and other factors. The following table summarizes the average price for primary aluminum per tonne for the three months ended March 31, 2026 and 2025. Three months ended ($ per tonne) March 31, 2026 March 31, 2025 Average LME $ 3,191 $ 2,631 Average MWP 2,294 729 Average EDPP 390 289 Restatement of Prior Period Results As noted in the Company's Form 10-K for the fiscal year ending December 31, 2025, as filed with the SEC on March 3, 2026, the Company has restated the comparative financial statements including the Consolidated Statement of Operations, Consolidated Balance Sheets, and Consolidated Statement of Stockholders' Equity for the three months ended March 31, 2025 and applicable footnotes. The restatement reflects a change related to the consolidation of the Company's Jamalco joint venture whereby the Company previously used the proportionate method of consolidation for certain of Jamalco's net assets versus the full consolidation method. The change in consolidation method did not have any impact on our net income attributable to Century stockholders for the periods that were restated. See Note 1. General , for additional information. 30 Table of Contents Results of Operations Quarter ended Three months ended Sequential Year-to-date March 31, 2026 December 31, 2025 March 31, 2026 March 31, 2025 Net sales Related parties $ 305.9 $ 299.6 $ 305.9 $ 378.7 Other customers 343.3 334.1 343.3 255.2 Total net sales 649.2 633.7 649.2 633.9 Gross profit 118.8 90.6 118.8 57.3 Selling, general and administrative expenses 25.8 35.5 25.8 12.5 Net loss on forward and derivative contracts - nonaffiliates (65.3) (43.5) (65.3) (5.4) Loss on early extinguishment of debt — (1.5) — — Gain on the sale of Hawesville (287.9) — (287.9) — Gain on insurance proceeds - net 33.0 — 33.0 — Income tax benefit (expense) (1.8) 12.3 (1.8) (1.6) Net income 327.0 (3.1) 327.0 22.4 Net loss attributable to noncontrolling interests (10.5) (4.9) (10.5) (7.3) Net income attributable to Century stockholders 337.5 1.8 337.5 29.7 Shipment volume is a key determinant of our financial results. Fluctuations in production and shipment volumes, other than through acquisitions or expansions, are generally small period over period. Any adverse changes in the conditions that affect shipment volumes could have a material adverse effect on our results of operations and cash flows. SHIPMENTS - PRIMARY ALUMINUM (1) United States Iceland Total Tonnes Sales $ (in millions) Tonnes Sales $ (in millions) Tonnes Sales $ (in millions) 2026 1 st Quarter 93,668 $ 494.3 29,197 $ 87.3 122,865 $ 581.6 2025 4 th Quarter 91,885 $ 413.1 48,372 $ 138.3 140,257 $ 551.4 1 st Quarter 94,601 306.6 74,071 217.3 168,672 $ 523.9 (1) Excludes scrap aluminum sales, purchased aluminum and alumina sales. Net sales Net sales increased by $15.5 million for the three months ended March 31, 2026, compared to the three months ended December 31, 2025, primarily driven by an increase in the LME and in realized regional price premiums of $76.6 million attributable primarily to increase in the Midwest premium, partially offset by unfavorable volume and sales mix of $53.9 million related to lower sales from reduced production as a result of the Grundartangi equipment failure. Net sales increased by $15.3 million for the three months ended March 31, 2026, compared to the three months ended March 31, 2025, primarily driven by favorable realized LME and regional price premiums of $193.7 million, unfavorable volume and sales mix of $142.5 million and a decrease in third-party alumina sales of $36.8 million. 31 Table of Contents Gross profit Gross profit increased by $28.2 million for the three months ended March 31, 2026, compared to the three months ended December 31, 2025, primarily attributable to an increase in the LME and in realized regional price premiums of $76.6 million driven by increases in the Midwest premium, lower operating costs of $6.2 million attributable to annual employee benefits, partially offset by unfavorable power price realization of $35.7 million due to extreme winter weather in the United States in the current period, unfavorable raw material price realization of $21.8 million and unfavorable volume and sales mix of $6.5 million attributable to lower sales from reduced production as a result of the Grundartangi equipment failure. Gross profit increased by $61.5 million for the three months ended March 31, 2026, compared to the three months ended March 31, 2025, primarily due to favorable metal price realization of $193.7 million, partially offset by unfavorable raw material price realization of $41.1 million, unfavorable volume and sales mix $47.2 million attributable to lower sales from reduced production as a result of the Grundartangi equipment failure, higher power price realization of $39.5 million due to extreme winter weather in the United States in the current period, and higher other operating costs of $4.8 million related to the Mt. Holly restart. Selling, general and administrative expenses Selling, general and administrative expenses decreased by $9.7 million for the three months ended March 31, 2026, compared to the three months ended December 31, 2025, primarily driven by decreased share-based compensation costs, partially offset by increased professional services and annual incentive compensation during the period. Selling, general and administrative expenses increased by $13.3 million for the three months ended March 31, 2026, compared to the three months ended March 31, 2025, primarily driven by increased share-based compensation costs attributable to higher share price, increased professional services, and higher annual incentive compensation during the period. Net loss on forward and derivative contracts - nonaffiliates Net loss on forward and derivative contracts - nonaffiliates increased by $21.8 million for the three months ended March 31, 2026, compared to the three months ended December 31, 2025. The difference was primarily driven by an increase in the forward prices related to MWP and LME hedges. Net loss on forward and derivative contracts - nonaffiliates increased by $59.9 million f or the three months ended March 31, 2026 as compared to the three months ended March 31, 2025. The difference was primarily driven by increase in volume of and fluctuations in the forward prices related to MWP, LME, and Indiana Hub hedges. Loss on early extinguishment of debt Loss on early extinguishment of debt was $1.5 million for the three months ended December 31, 2025 due to the redemption of our Grundartangi Casthouse Facility. There was no loss on extinguishment of debt in 2026. Gain on sale of Hawesville Gain on sale of Hawesville was $287.9 million for the three months ended March 31, 2026 from our sale completed February 2, 2026. See Note 4. Sale of Hawesville to the consolidated financial statements included herein for additional information. Gain on insurance proceeds - net Gain on insurance proceeds net was $33.0 million attributable entirely to our insurance claim on the Grundartangi equipment failure. See Note 13. Commitments and Contingencies to the consolidated financial statements included herein for additional information. Income tax (expense) benefit Income tax expense was $1.8 million for the three months ended March 31, 2026, compared to a benefit of $12.3 million for the three months ended December 31, 2025. The change from benefit to expense was primarily driven by changes in the jurisdictional mix of earnings on a quarter-over-quarter basis. 32 Table of Contents Income tax expense decreased $0.2 million for the three months ended March 31, 2026, compared to the three months ended March 31, 2025. The decrease was primarily driven by changes in the jurisdictional mix of earnings on a year-over-year basis. See Note 5. Income Taxes to the consolidated financial statements included herein for additional information. Liquidity and Capital Resources Liquidity Our principal sources of liquidity are available cash and cash flows from operations. We also have access to our existing U.S. and Iceland revolving credit facilities as well as our Vlissingen Credit Facility maturing December 2, 2026 (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. Our principal uses of cash include the funding of operating costs (including post-retirement benefits), debt service requirements, capital expenditures, investments in our growth activities and in related businesses, working capital and other general corporate requirements. 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, 2026, we had cash and cash equivalents of approximately $244.1 million and unused availability under our credit facilities of $278.8 million , after consideration of our outstanding borrowings and letters of credit. As of March 31, 2026, we additionally had restricted cash of $89.5 million from the sale of Hawesville, of which $88.1 million represents funds that are restricted to be used on capital expenditures or otherwise invested in our business. Our available cash and cash equivalents, restricted cash from the sale of Hawesville, and unused availability under our revolving credit facilities comprise our liquidity position, which was $611.0 million as of March 31, 2026. 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. 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. 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; 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. 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. 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. revolving credit facility is less than or equal to $25.0 million, or 10% of the borrowing base but not less than $17.9 million. We intend to maintain availability to comply with these levels any time we would not meet the ratio, which could limit our ability to access the full amount of our availability under our U.S revolving credit facility. Our Iceland revolving credit facility contains covenants that require Grundartangi to maintain a minimum equity ratio. The dividend and distribution limitations are applicable to certain of our subsidiaries only in the case of an event of default or failure to comply with certain financial covenants. As of March 31, 2026, we and our subsidiaries were in compliance with all such covenants or maintained availability abo ve such covenant triggers. In connection with our sale of the Hawesville facility, on February 2, 2026, we terminated the letter of credit in the amount of $8.1 million under our U.S. Credit Facility, effectively prepaying the Industrial Revenue Bonds. See Note 12. Debt to the consolidated financial statements included herein for additional information on our debt. Available Cash Our available cash and cash equivalents balance at March 31, 2026 was $244.1 million, excluding restricted cash of $89.5 million, of which $88.1 million represents funds that are restricted to be used on capital expenditures or otherwise invested in our business as described above, compared to $134.2 million at December 31, 2025. 33 Table of Contents Sources and Uses of Cash Our statements of cash flows are summarized below: Three months ended March 31, (in millions) 2026 2025 Net cash provided by operating activities $ 68.4 $ 72.3 Net cash provided by (used in) investing activities 130.2 (21.2) Net cash used in financing activities (0.6) (39.1) Change in cash, cash equivalents and restricted cash $ 198.0 $ 12.0 Net cash provided by operating activities were relatively consistent for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 primarily due to changes in inventories attributable to lower production from the Grundartangi equipment failure and higher outstanding receipts at current period end driven by higher sales prices, offset by insurance proceeds received for the Grundartangi equipment failure. The change in net cash provided by in investing activities during the three months ended March 31, 2026 compared to the three months ended March 31, 2025 was primarily due to proceeds received from the sale of Hawesville and insurance proceeds received related to transformer property damage at Grundartangi, partially offset by an increase in capital expenditures due to the Mt. Holly restart. The decrease in net cash used in financing activities during the three months ended March 31, 2026 compared to the three months ended March 31, 2025 was primarily due to lower net repayments on our revolving credit facilities, partially offset by defeasance of the Hawesville Industrial Revenue Bonds and payment of withholding taxes on share-based compensation. Share Repurchase Program 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. Under the program, Century is authorized to repurchase up to $130.0 million of our outstanding shares of common stock, from time to time, on the open market at prevailing market prices, in block trades or otherwise. The timing and amount of any shares repurchased will be determined by our management based on its evaluation of market conditions, the trading price of our common stock and other factors. We made no repurchases during the three months ended March 31, 2026 or during the years ended 2025, 2024, and 2023. As of March 31, 2026, 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. Capital Resources and Commitments We intend to finance our future capital expenditures from available cash, cash flows from operations and if necessary, borrowing under our existing revolving credit facilities. 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. 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. On January 10, 2025, the Company entered into a Cooperative Agreement with the DOE’s Office of Clean Energy Demonstrations for up to $500 million in IRA funding. With the help of this funding, we intend to construct, own and operate together with EGA in Inola, Oklahoma. Capital expenditures paid for the three months ended March 31, 2026 were $74.8 million. We estimate our total capital spending in 2026 will be approximately $170 to $180 million, related to our ongoing investment and sustainability projects at our plants. This amount includes $70 to $80 million related to repairs at Grundartangi that we expect to be reimbursed by insurance, approximately $50 million representing investments related to the restart of operations at Mt. Holly and approximately $25 to $30 million representing investments in our Jamalco facility. 34 Table of Contents Our material contractual obligations consist of purchase obligations under long-term alumina and power contracts, debt and related interest payments and operating leases. See Note 12. Debt and Note 13. Commitments and Contingencies to the accompanying consolidated financial statements for additional information regarding future maturities of debt and obligations under power contracts. We have certain legal commitments, including obligations related to retiree medical benefits, pension contributions, power supply contracts, and labor agreements. These include a settlement agreement for retiree medical benefits requiring annual payments, and power supply arrangements with terms extending through 2028. Additionally, we have contingent obligations based on the LME price of primary aluminum and the level of Hawesville's operations, which are currently offset by a derivative asset. We are also 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 13. Commitments and Contingencies to the consolidated financial statements included herein for additional information. 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 March 31, 2026, 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. "Guarantor Subsidiaries" refers to all of our material domestic subsidiaries except for Nordural US LLC, Century Aluminum Development LLC, Century Aluminum of West Virginia, Inc. and Century Aluminum Jamaica Holdings, 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, Century Aluminum of West Virginia, Inc. and Century Aluminum Jamaica Holdings, 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: March 31, 2026 December 31, 2025 Current assets $ 888.7 $ 646.0 Non-current assets 961.8 833.7 Current liabilities 318.4 268.2 Non-current liabilities 619.6 607.6 Three months ended March 31, 2026 Net sales $ 591.9 Gross profit 192.4 Gain on sale of Hawesville 287.9 Income before income taxes 381.1 Net income 337.5 As of March 31, 2026 and December 31, 2025, an intercompany receivable due to the Company and Guarantors from the Non-Guarantor Subsidiaries totaled $80.3 million and $72.9 million, respectively, and an intercompany non-current loan due to the Company from the Non-Guarantor Subsidiaries totaled $519.2 million and $509.4 million, respectively. 35 Table of Contents Critical Accounting Estimates The following is an update to the information provided in Part II, Item 7 - "Critical Accounting Estimates" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025. Valuation of Interest in Raylan Data Holdings LLC We measured, as a single unit of account at fair value, (i) our minority interest (the "Minority Interest") in Raylan Data Holdings LLC ("Raylan") and (ii) our right to require the majority holder of Raylan to purchase the Minority Interest starting on the first anniversary of the data center’s commencement of operations at Hawesville. The initial fair value measurement of these types of investments involves significant estimation uncertainty due to the reliance on subjective assumptions and unobservable inputs. The asset will be accounted for using the equity method, and, as such, the initial fair value will be adjusted at the end of each reporting period to reflect our share of earnings or losses in Raylan. Therefore, the asset is not remeasured at fair value in subsequent periods; changes in fair value are reported in earnings as they occur. See Part I, Item I "Financial Statements" in Note 10. Fair Value Measurements for additional information regarding the valuation techniques and the significant unobservable inputs used in the initial measurement.