Metalico Reports Third Quarter Results
- Total Operating Income Before Charges of $1.8 Million
- Non-Cash, After Tax Goodwill Impairment Charge of $28.6
Million
- EBITDA at $6.6 Million and Revenue of $136 Million
- Adjusted Net Income of $938,000 or $0.02 per Share
- Debt Reduction of $8.3 Million Since Beginning of Year
CRANFORD, NJ--(Marketwired - Nov 12, 2013) - Metalico, Inc.
(NYSEMKT: MEA) today announced adjusted net income of $938,000 or
$0.02 per share for the third quarter ended September 30, 2013,
excluding a non-cash goodwill impairment charge, net of related tax
benefit.
The Company reported a net loss of $27.7 million or $0.58 per
share for the third quarter compared to a net loss of $10.7 million
equivalent to $0.22 per share, both losses principally due to
non-cash after-tax impairment of intangible assets. (See Table I
for reconciliation of adjusted results to reported results.)
Notwithstanding the impact from goodwill impairment charges, the
company generated a significant increase in EBITDA along with
adjusted operating income of $1.8 million in the quarter, compared
to an adjusted operating loss of $1.3 million last year. The
improved operating results were driven by expanding gross metal
margins and continued reduction in SG&A expenses which offset
flat to declining selling prices for scrap metal products.
The company posted sales of $136 million for the September
quarter, compared to $133 million in the 2012 period. Higher
ferrous scrap metal shipments and lead product selling prices
contributed to the sales increases, partially offset by lower
non-ferrous sales pricing. Average metal margins improved due to
lower average unit costs coupled with rising unit volumes.
The company reduced SG&A expenses by $624,000 to $5.9
million, or 4.4% of sales compared to 4.9% of sales in the same
prior year period. Operating expenses exclusive of metal costs
increased by $761,000, principally for freight, repairs and
maintenance, offsetting the improvement of SG&A.
Quarterly Results
Year-over-Year
Year-over-year comparison to the third quarter of 2012 shows
higher scrap shipments, offset by 8% lower lead product
shipments.
- Sales increased 2% to $136 million from $133 million.
- The Company had adjusted operating income of $1.8 million,
versus adjusted operating loss of $1.3 million.
- Reported net loss was $27.7 million compared to reported net
loss of $10.7 million.
- Reported loss per share was $0.58, compared to loss of
$0.22.
- EBITDA (defined below) nearly doubled, to $6.6 million from
$3.5 million.
- Shipments of ferrous metals jumped 13% to 152,200 gross tons.
Non-ferrous shipments rose 4% to 45.4 million pounds.
- Lead product shipments decreased 8% to 10.4 million pounds, but
average selling price per pound rose 10% due to improved value
product mix.
The Company's Scrap Metal Recycling segment reported an adjusted
$353,000 operating income in the third quarter, compared to an
adjusted loss of $2.9 million last year.
The Lead Fabricating segment reported operating income of $1.0
million compared to $1.4 million in the prior-year period. A better
product mix and higher selling prices were offset by higher product
costs.
Sequential Comparison to Second
Quarter of 2013
- Sales rose 5% to $136 million from $130 million.
- Adjusted operating income recovered to $1.8 million
compared to a loss of $2.0 million.
- Adjusted net income was $938,000 compared to a $2.7
million loss.
- Adjusted income per share was $0.02, compared to a loss of
$0.06.
- EBITDA jumped 144% to $6.6 million from $2.7 million.
- Unit volumes rose by 12% for ferrous scrap and 3% for
non-ferrous.
- Lead product shipments fell by 11% to 10.4 million pounds
from 11.7 million.
Result Drivers in the
Period
In the quarter, Metalico's ferrous and non-ferrous recycling
business experienced relatively stable selling prices compared to
the sequential and prior-year quarters. Year-over-year selling
prices were down slightly, with ferrous pricing dropping $4 per
gross ton to $366, and non-ferrous dropping from $0.98 to $0.95 per
pound. Sequentially, ferrous pricing was virtually flat, while
non-ferrous prices rose three cents per pound to $0.95.
Lead product pricing and product mix contributed to selling
prices rising 3% sequentially and 10% year-over-year to $1.74 per
pound. However, segment volume decreased 11% sequentially and 8%
from 2012.
Carlos E. Agüero, Metalico's President and Chief Executive
Officer, said, "I am pleased that the Company returned to positive
operating income this quarter and that tight scrap supplies and
competitive buying pressures abated somewhat, resulting in improved
metal margins and EBITDA."
He continued, "We are satisfied that in light of
flat-to-declining scrap selling prices, we increased ferrous
shipments and maintained non-ferrous volumes while improving
margins, demonstrating that we achieved better discipline in buying
metal.
"Equally important, our ferrous inventory levels today are well
positioned as we enter a period of anticipated rising scrap
prices."
Agüero concluded, "We expect average realized scrap prices to
trend higher during the fourth quarter and anticipate solid
performance from the fabricated lead product subsidiary.
Furthermore, we remain optimistic about resolving pending balance
sheet maturities, managing our leverage and preserving a strong
liquidity position to operate comfortably and grow our
business."
Liquidity & Capital
Resources
The company had cash on hand of $4.6 million and availability
under its revolver of $36.1 million for combined liquidity
resources of $40.7 million, sufficient to operate its business and
for general corporate purposes.
For the nine months ended September 30, 2013, Metalico generated
$17.7 million of cash from operating activities, compared to $14.9
million through nine months of last year.
Year-to-date 2013 Metalico invested a total of $10.3 million for
equipment, capital improvements, and to acquire three scrap metal
feeder yards. In addition, since the beginning of the year, debt
balances have been reduced by $8.3 million.
Working capital at September 30, 2013 was $12.5 million, as
compared to $111 million in December. The entire outstanding
balance under the revolver and convertible Notes was re-classified
to short term liabilities as a result of an effective pending
maturity of January 23, 2014 for revolver and note holder put
rights at June 30, 2014.
The company has repurchased or committed to repurchase $12.6
million of its Notes so far this year and intends to continue
repurchasing Notes or obtaining capital to refinance its debt
before the effective maturity dates.
Business Outlook
Ferrous:
Domestic steel production has been steady this year at 76% of
reported industry capacity. Finished steel prices have been rising
of late supported by strong demand for automotive and energy
related products, although some of the demand is being met by
rising imports. After a series of scheduled and unscheduled
outages, domestic mills are coming back on line, looking to melt
scrap, build inventories and increase production.
On the scrap front, demand and prices for export are improving.
Scrap availability is already tight and expected to become more
competitive with the onset of potentially disruptive winter
weather. Consequently, given rising domestic and export demand, the
Company expects to see higher scrap selling prices and fierce
competition for supply in the months ahead.
Non-Ferrous (Including
Aluminum Deox): Pricing for aluminum, copper and other
non-ferrous metals has been flat to trending lower for most of the
year. This trend is expected to stay intact for the remainder of
the year. However, demand for metal units for export and domestic
consumers remains firm.
The Company anticipates that fourth quarter non-ferrous
shipments will be slightly below the third quarter levels and that
pricing will trend sideways until early next year.
In 2014, Metalico expects demand for aluminum, and hopefully
pricing, to increase, driven by growing demand from the automotive
sector to lower vehicle weight and improve mileage. Nickel prices
should remain subdued, lulled by low demand, under-utilization of
production capacity and record high warehouse metal
inventories.
The Company expects prices for PGM metals to gradually improve
after very mediocre performance so far this year. Sourcing and
supply is anticipated to remain quite competitive consistent with
the recent past. Minor Metal prices continued to exhibit weakness
after setting stable but lower floor pricing amidst sluggish demand
from manufacturers.
Lead
Fabricating: Metalico anticipates financial performance of
this reporting segment to remain consistent with recent past
quarters. Volume shipments should also be consistent with third
quarter, aided by favorable product mix and stable raw material
costs.
About Metalico
Metalico, Inc. is a holding company with operations in two
principal business segments: Ferrous and Non-Ferrous Scrap Metal
Recycling, including PGM and Minor Metals Recycling, and
Fabrication of Lead-Based Products. The Company operates recycling
facilities in New York, Pennsylvania, Ohio, West Virginia, New
Jersey, Texas, and Mississippi and lead fabricating plants in
Alabama, Illinois, and California. Metalico's common stock is
traded on the NYSEMKT under the symbol MEA.
Forward-looking Statements
This news release, and in particular its "Business Outlook"
section, contains "forward-looking statements" made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform
Act of 1995, such as Metalico's expectations with respect to its
results of operations for the fourth quarter of 2013, commodity
pricing, volumes, and trends. These statements may contain terms
like "expect," "anticipate," "believe," "should," "appear,"
"estimate" and other words that convey a similar meaning, or are
statements that do not relate strictly to historical or current
facts. Forward-looking statements include statements with respect
to Metalico's beliefs, plans, objectives, goals, expectations,
anticipations, assumptions, estimates, intentions, and future
performance, and involve known and unknown risks, uncertainties and
other factors, which may be beyond Metalico's control, and which
may cause Metalico's actual results, performance or achievements to
be materially different from future results, performance,
expectations or achievements expressed or implied by such
forward-looking statements. Factors that could cause such material
difference are discussed in more detail in the Company's most
recent Annual Report on Form 10-K and other filings with the
Securities and Exchange Commission. All statements other than
statements of historical fact are statements that could be
forward-looking statements. Metalico assumes no obligation to
update the information contained in this news release.
|
|
|
|
Table I - Reconciliation of adjusted net income to net
income as reported |
|
|
|
|
|
|
|
Quarter Ended |
|
|
|
|
|
Quarter Ended |
|
|
|
|
|
|
Sept. 30, 2013 |
|
|
EPS |
|
|
Sept. 30, 2012 |
|
|
EPS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income as reported |
|
$ |
(27,651 |
) |
|
$ |
(0.58 |
) |
|
$ |
(10,684 |
) |
|
$ |
(0.22 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment charges, net of tax |
|
|
28,589 |
|
|
|
0.60 |
|
|
|
8,397 |
|
|
|
0.17 |
|
Inventory adjustment, net of tax |
|
|
- |
|
|
|
- |
|
|
|
955 |
|
|
|
0.02 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income as adjusted |
|
$ |
938 |
|
|
$ |
0.02 |
|
|
$ |
(1,332 |
) |
|
$ |
(0.03 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table II - Unit Shipment Comparisons |
|
|
|
|
|
|
|
|
|
|
|
Q3 |
|
Q2 |
|
Sequential |
|
Q3 |
|
Year-over-year |
|
|
2013 |
|
2013 |
|
Change |
|
2012 |
|
Change |
|
|
|
|
|
|
|
|
|
|
|
Ferrous (gross tons) |
|
152,200 |
|
136,200 |
|
12% |
|
134,300 |
|
13% |
|
|
|
|
|
|
|
|
|
|
|
Non-Ferrous (pounds) |
|
45,436,000 |
|
44,312,000 |
|
3% |
|
43,598,000 |
|
4% |
Lead (pounds) |
|
10,361,000 |
|
11,658,000 |
|
-11% |
|
11,254,000 |
|
-8% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table III - Unit Price Comparisons (Average
non-ferrous pricing below excludes the affect of PGM and Minor
Metals.) |
|
|
|
Q3 |
|
Q2 |
|
Sequential |
|
Q3 |
|
Year-over-year |
|
|
2013 |
|
2013 |
|
Change |
|
2012 |
|
Change |
|
|
|
|
|
|
|
|
|
|
|
Ferrous (gross ton) |
|
$366 |
|
$368 |
|
1% |
|
$370 |
|
-1% |
|
|
|
|
|
|
|
|
|
|
|
Non-Ferrous (pound) |
|
$.95 |
|
$.92 |
|
3% |
|
$.98 |
|
-3% |
|
|
|
|
|
|
|
|
|
|
|
Lead (pound) |
|
$1.74 |
|
$1.69 |
|
3% |
|
$1.58 |
|
10% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
METALICO, INC. |
|
SELECTED HISTORICAL FINANCIAL DATA |
|
(UNAUDITED) |
|
($ thousands, except per share data) |
|
|
|
|
|
Three months ended |
|
|
Nine months ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
September 30, |
|
|
September 30, |
|
|
|
2013 |
|
|
2012 |
|
|
2013 |
|
|
2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
135,783 |
|
|
$ |
132,772 |
|
|
$ |
403,375 |
|
|
$ |
445,070 |
|
Costs and expenses Operating expenses |
|
|
123,613 |
|
|
|
123,163 |
|
|
|
370,669 |
|
|
|
404,329 |
|
|
Selling, general, and administrative expenses |
|
|
5,914 |
|
|
|
6,538 |
|
|
|
18,854 |
|
|
|
21,992 |
|
|
Impairment charges |
|
|
38,737 |
|
|
|
12,130 |
|
|
|
38,737 |
|
|
|
12,130 |
|
|
Gain on Acquisition |
|
|
(105 |
) |
|
|
- |
|
|
|
(105 |
) |
|
|
- |
|
|
Depreciation and amortization |
|
|
4,589 |
|
|
|
4,399 |
|
|
|
13,533 |
|
|
|
12,591 |
|
|
|
|
172,748 |
|
|
|
146,230 |
|
|
|
441,688 |
|
|
|
451,042 |
|
|
|
Operating loss |
|
|
(36,965 |
) |
|
|
(13,458 |
) |
|
|
(38,313 |
) |
|
|
(5,972 |
) |
Financial and other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(2,287 |
) |
|
|
(2,203 |
) |
|
|
(6,726 |
) |
|
|
(6,842 |
) |
|
Gain on settlement |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
4,558 |
|
|
Gain on debt extinguishment |
|
|
324 |
|
|
|
- |
|
|
|
324 |
|
|
|
63 |
|
|
Equity in income (loss) of unconsolidated investee |
|
|
42 |
|
|
|
69 |
|
|
|
(78 |
) |
|
|
(3 |
) |
|
Financial instruments fair value adjustments |
|
|
- |
|
|
|
(3 |
) |
|
|
3 |
|
|
|
179 |
|
|
Other |
|
|
352 |
|
|
|
(19 |
) |
|
|
361 |
|
|
|
16 |
|
|
|
|
(1,569 |
) |
|
|
(2,156 |
) |
|
|
(6,116 |
) |
|
|
(2,029 |
) |
|
|
Loss before income taxes |
|
|
(38,534 |
) |
|
|
(15,614 |
) |
|
|
(44,429 |
) |
|
|
(8,001 |
) |
Benefit for federal and state income taxes |
|
|
(10,835 |
) |
|
|
(4,930 |
) |
|
|
(12,769 |
) |
|
|
(2,468 |
) |
|
|
Consolidated net loss |
|
|
(27,699 |
) |
|
|
(10,684 |
) |
|
|
(31,660 |
) |
|
|
(5,533 |
) |
Net loss attributable to noncontrolling interest |
|
|
48 |
|
|
|
- |
|
|
|
98 |
|
|
|
- |
|
|
|
Net loss attributable to Metalico, Inc. |
|
$ |
(27,651 |
) |
|
$ |
(10,684 |
) |
|
$ |
(31,562 |
) |
|
$ |
(5,533 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted loss per common share |
|
$ |
(0.58 |
) |
|
$ |
(0.22 |
) |
|
$ |
(0.66 |
) |
|
$ |
(0.12 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Weighted Average Common Shares Outstanding |
|
|
48,035,117 |
|
|
|
47,563,939 |
|
|
|
47,909,811 |
|
|
|
47,539,170 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
METALICO, INC. |
SELECTED HISTORICAL FINANCIAL DATA (CONTINUED) |
(UNAUDITED) |
($ thousands, except per share data) |
|
|
|
September 30, 2013 |
|
December 31, 2012 |
Assets: |
|
|
|
|
|
|
|
Current Assets |
|
$ |
147,260 |
|
$ |
150,496 |
|
Property & Equipment, net |
|
|
100,400 |
|
|
101,580 |
|
Intangible and Other Assets |
|
|
58,328 |
|
|
99,902 |
|
|
Total Assets |
|
$ |
305,988 |
|
$ |
351,978 |
|
|
|
|
|
|
|
Liabilities
& Stockholders' Equity: |
|
|
|
|
|
|
|
Current Liabilities |
|
$ |
134,734 |
|
$ |
39,925 |
|
Debt & Other Long-Term Liabilities |
|
|
19,957 |
|
|
130,378 |
|
|
Total Liabilities |
|
|
154,691 |
|
|
170,303 |
|
Total Metalico, Inc. and Subsidiaries Equity |
|
|
150,229 |
|
|
180,509 |
|
Noncontrolling interest |
|
|
1,068 |
|
|
1,166 |
|
Total Liabilities & Equity |
|
$ |
305,988 |
|
$ |
351,978 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Financial
Information
Reconciliation of Non-GAAP EBITDA
and Net Income
When the Company uses the term "EBITDA," the Company is
referring to earnings before interest, stock-based compensation,
impairment charges, non-cash gain on settlement, income taxes,
other expense (income), equity in (gain) loss of unconsolidated
investee, depreciation and amortization, gain on debt
extinguishment and financial instruments fair value adjustments.
The Company presents EBITDA because it considers it an important
supplemental measure of the Company's performance and believes it
is frequently used by securities analysts, investors and other
interested parties in the evaluation of companies in Metalico's
industry. The Company also uses EBITDA to determine its compliance
with some of the covenants under its credit facility. EBITDA is not
a recognized term under generally accepted accounting principles in
the United States "GAAP," and has limitations as an analytical
tool. You should not consider it in isolation or as a substitute
for net income, operating income, cash flows from operating,
investing or financing activities or any other measure calculated
in accordance with GAAP. Other companies in the Company's industry
may calculate EBITDA differently from how the Company does,
limiting its usefulness as a comparative measure. EBITDA should not
be considered as a measure of discretionary cash available to the
Company to invest in the growth of its business. The following
table reconciles EBITDA to net income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2013 |
|
|
Three Months Ended September 30, 2012 |
|
|
Nine Months Ended September 30, 2013 |
|
|
Nine Months Ended September 30, 2012 |
|
|
|
(UNAUDITED) |
|
|
|
($ thousands) |
|
|
|
EBITDA |
|
$ |
6,564 |
|
|
$ |
3,457 |
|
|
$ |
14,745 |
|
|
$ |
23,514 |
|
|
Less: Interest expense |
|
|
2,287 |
|
|
|
2,203 |
|
|
|
6,726 |
|
|
|
6,842 |
|
|
|
Equity in (gain) loss of unconsolidated investee |
|
|
(42 |
) |
|
|
(69 |
) |
|
|
78 |
|
|
|
3 |
|
|
|
Impairment charges |
|
|
38,737 |
|
|
|
12,130 |
|
|
|
38,737 |
|
|
|
12,130 |
|
|
|
Gain on debt extinguishment |
|
|
(324 |
) |
|
|
- |
|
|
|
(324 |
) |
|
|
(63 |
) |
|
|
Gain on settlement - non-cash portion |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(1,017 |
) |
|
|
Stock-based compensation |
|
|
203 |
|
|
|
386 |
|
|
|
788 |
|
|
|
1,224 |
|
|
|
(Benefit) Provision for federal and state income taxes |
|
|
(10,835 |
) |
|
|
(4,930 |
) |
|
|
(12,769 |
) |
|
|
(2,468 |
) |
|
|
Depreciation and amortization |
|
|
4,589 |
|
|
|
4,399 |
|
|
|
13,533 |
|
|
|
12,591 |
|
|
|
Financial instruments fair value adjustments |
|
|
- |
|
|
|
3 |
|
|
|
(3 |
) |
|
|
(179 |
) |
|
|
Other |
|
|
(352 |
) |
|
|
19 |
|
|
|
(361 |
) |
|
|
(16 |
) |
Net (loss) income |
|
$ |
(27,699 |
) |
|
$ |
(10,684 |
) |
|
$ |
(31,660 |
) |
|
$ |
(5,533 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company disclosed segment operating income excluding
corporate overhead charges for the quarters ended September 30,
2013 and 2012. Set forth below is the reconciliation from segment
operating income, excluding corporate overhead, to segment
operating income as reported:
|
|
Segment Reporting |
($ in thousands) |
|
Quarter Ended September 30, 2013 |
|
|
|
Consolidated |
|
|
Scrap Metal Recycling |
|
|
Lead Fabrication |
|
Corporate and Other |
Operating income as reported |
|
$ |
(36,965 |
) |
|
$ |
(38,384 |
) |
|
$ |
1,040 |
|
$ |
379 |
Add: Impairment charges |
|
|
38,737 |
|
|
|
38,737 |
|
|
|
- |
|
|
- |
Operating income as adjusted |
|
$ |
1,772 |
|
|
$ |
353 |
|
|
$ |
1,040 |
|
$ |
379 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended September 30, 2012 |
|
|
|
Consolidated |
|
|
Scrap Metal Recycling |
|
|
Lead Fabrication |
|
Corporate and Other |
Operating income as reported |
|
$ |
(13,458 |
) |
|
$ |
(14,984 |
) |
|
$ |
1,417 |
|
$ |
109 |
Add: Impairment charges |
|
|
12,130 |
|
|
|
12,130 |
|
|
|
- |
|
|
- |
Operating income as adjusted |
|
$ |
(1,328 |
) |
|
$ |
(2,854 |
) |
|
$ |
1,417 |
|
$ |
109 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contact: Metalico, Inc. Carlos E. Aguero Michael J. Drury Email
Contact 186 North Avenue East Cranford, NJ 07016 (908) 497-9610 Fax:
(908) 497-1097
www.metalico.com