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Century Aluminum’s Cash Flows Improved In 4Q14

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Century Aluminum’s cash flows

In the last part of this series, we discussed how working capital contributed $10 million to Century Aluminum’s (CENX) cash flows. In this part, we’ll analyze its cash flows in more detail.

Alcoa (AA) delivered record cash flows in its fourth quarter results. Currently, it forms 3.30% of the Materials Select Sector SPDR ETF (XLB). Allegheny Technologies Inc. (ATI) forms 0.55% of XLB.

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Positive cash flows

The above chart shows Century Aluminum’s fourth quarter cash flows. As you can see, it’s closing cash balance increased by $30 million. This was despite the acquisition of the Mt. Holly smelter. There was outgoing cash of $54 million as a result of the Mt. Holly acquisition.

Constellium N.V. (CSTM) acquired Wise Metals last year. However, its leverage ratios got worse after that acquisition.

EBITDA

The biggest contributor to Century Aluminum’s fourth quarter cash flows was its earnings. Century Aluminum’s adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) was $92 million in the fourth quarter.

Century Aluminum also received a tax refund in Iceland. Taxes had a positive impact of $8 million on its fourth quarter cash flows. Century Aluminum expects a refund of $6 million in 4Q15 as well.

Century Aluminum incurred $17 million towards capital expenditure, or capex, in the fourth quarter. Out of this, $8 million went into normal maintenance capex. Century Aluminum also allocated $8 million towards growth capex. This was largely towards upgrades at its plants at Grundartangi and Sebree.

Century Aluminum is doing capacity expansion at Grundartangi. It’s also investing in value added-product lines. It plans to make several investments in 2015 as well. We’ll discuss this in the next part of this series.

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