METS USA : Metals USA Reports Third Quarter 2011 EPS of $0.45 on Revenues of $492 Million
10/20/2011| 05:10pm US/Eastern
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FORT LAUDERDALE, Fla., Oct. 20, 2011 /PRNewswire/ -- Metals USA Holdings Corp. (NYSE: MUSA) today reported its results for the three and nine months ended September 30, 2011.
Net sales for the third quarter of 2011 were $492.3 million, up 43% from net sales of $345.3 million for the third quarter of 2010. Net income for the third quarter of 2011 was $16.7 million compared to net income of $5.8 million for the third quarter of 2010. Earnings per diluted share ("EPS") were $0.45 in the third quarter of 2011 compared to $0.16 for the third quarter of 2010.
Net sales for the first nine months of 2011 were $1,430.2 million, up 48% from net sales of $968.2 million for the first nine months of 2010. Net income for the first nine months of 2011 was $50.6 million compared to net income of $8.4 million for the nine months ended September 30, 2010. EPS was $1.36 in the first nine months of 2011 compared to $0.26 for the first nine months of 2010.
Metal shipments were 340,600 tons for the third quarter of 2011, up 25% from metal shipments of 272,600 tons in the third quarter of 2010. Metal shipments for the first nine months of 2011 were 1,069,000 tons, up 35% compared to metal shipments of 791,600 tons for the first nine months of 2010. Toll processed tonnage was 36,900 tons during the third quarter of 2011 compared to 15,500 tons for the third quarter of 2010. Toll processed tonnage was 123,600 tons during the first nine months of 2011 compared to 36,000 tons for the first nine months of 2010.
Lourenco Goncalves, the Company's Chairman, President and C.E.O., stated: "Our third quarter results confirm we are succeeding with our plan to make Metals USA the most efficient company in the service center industry. We operate with a mentality to constantly go after profitable business, regardless of the economic headwinds, and have shifted our business to support markets that are doing well. Growth in automotive, energy, lawn and garden, heavy equipment, and agriculture, to name a few, have all contributed to offset end-markets that continue to struggle with recession overhang, such as non-residential construction."
Mr. Goncalves added: "We continue to build our business on all fronts. Each of our acquired companies is delivering strong results and averaging up our EBITDA margin, as planned. Equally important, we continue to successfully exploit opportunities to gain market share as they present themselves."
Mr. Goncalves concluded: "Business conditions during the last three months were stable and consistent with earlier quarters this year. Inventories throughout the supply chain remain modest and mill lead times are not extended. At this time we see no issues, beyond seasonal patterns, that suggest fourth quarter demand for Metals USA will change appreciably from recent quarters."
Adjusted EBITDA (as defined and calculated in the accompanying table), a non-GAAP financial measure used by Metals USA and its lenders to evaluate the performance of the business, was $41.3 million for the third quarter of 2011, up 70% from the Company's Adjusted EBITDA of $24.3 million for the third quarter of 2010. For the first nine months of 2011 Adjusted EBITDA was $128.6 million compared to $68.2 million for the first nine months of 2010.
Metals USA had $243.4 million drawn under its asset-based credit facility at September 30, 2011, with excess availability of $177.3 million. Net debt, defined as total outstanding debt less cash, increased by $2.8 million during the quarter to $471.2 million as of September 30, 2011. Net cash used in operating activities for third quarter of 2011 was $38.6 million. Capital expenditures were $6.4 million for the three months ended September 30, 2011 and $10.1 million for the first nine months of 2011.
Conference Call and Webcast
Metals USA has scheduled a conference call for Friday, October 21, 2011 at 10 a.m. Eastern Time. Anyone interested in hearing the call live may gain access via the Company's website. A replay of the call will be available approximately two hours after the live broadcast ends and will be available until approximately December 21, 2011. To access the replay, dial (888) 286-8010 and enter the pass code 42745704.
About Metals USA
Metals USA provides a wide range of products and services in the heavy carbon steel, flat-rolled steel, non-ferrous metals, and building products markets. For more information, visit the Company's website at www.metalsusa.com. The information contained in this release is limited and the Company encourages interested parties to read the Company's annual reports on Form 10-K, its quarterly reports on Form 10-Q and its other reports, statements and materials filed with the Securities and Exchange Commission for more complete information about the Company. Additionally, copies of the Company's filings with the Securities and Exchange Commission, together with press releases and other information investors may find of interest, can be found at the Company's website at www.metalsusa.com under "Investor Relations."
CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS
This press release contains certain forward-looking statements within the meaning of the federal securities laws which involve known and unknown risks, uncertainties or other factors not under the Company's control which may cause the actual results, performance or achievement of the Company to be materially different from the results, performance or other expectations implied by these forward-looking statements. Such statements include, but are not limited to, statements concerning the future performance of the Company, statements concerning the Company's plans, competitive position and market share, projections concerning revenue, profitability, cash flows, earnings, sales, volumes, balance sheet strength, debt or other financial and operational measures; projected working capital needs; demand trends for the Company's products or its markets; pricing trends for metal and finished goods and the impact of pricing changes; anticipated capital expenditures; anticipated improvements and efficiencies in costs, operations, sales, inventory management, sourcing and the supply chain; projected timing, results, benefits, costs, charges and expenditures related to acquisitions or divestitures; the ability to operate profitably and generate cash in the current economic environment, the ability to capture and maintain margins and market share and to develop or take advantage of future opportunities, new products, services and markets; expectations for Company and customer inventories and customer orders; expectations for the economy and markets or improvements therein; expectations for improving earnings, margins or shareholder value; and other non-historical matters. Factors that could cause the Company's results to differ materially from actual results or current expectations include, but are not limited to, changes in metal prices, the effect of economic conditions generally in the United States, internationally and in the regions in which the Company operates and within major product markets, including a prolonged or substantial economic downturn; the effect of consolidation or other actions of our suppliers; disruptions in our sources of supply; increased competition and the other factors detailed in the Company's annual report on Form 10-K under the caption "Risk Factors" and other reports filed with the Securities and Exchange Commission. In addition, these statements are based on a number of assumptions that are subject to change. This press release speaks only as of the date hereof and the Company disclaims any duty to update the information herein.
-Tables follow -
Metals USA Holdings Corp.
Unaudited Consolidated Statements of Operations
(In millions, except per share data)
Three Months Ended Nine Months Ended
------------------ -----------------
June
September 30, 30, September 30,
------------- ----- -------------
2011 2010 2011 2011 2010
---- ---- ---- ---- ----
Revenues:
Net sales $492.3 $345.3 $505.6 $1,430.2 $968.2
Operating costs and
expenses:
Cost of sales
(exclusive of
operating and
delivery, 379.8 268.9 382.9 1,092.4 744.5
and depreciation and
amortization shown
below)
Operating and delivery 44.0 33.5 45.9 131.0 97.7
Selling, general and
administrative 28.3 19.6 27.9 83.0 60.4
Depreciation and
amortization 5.0 4.4 5.6 15.4 13.4
Gain on sale of
property and equipment (0.1) - - - (0.1)
Advisory agreement
termination charge - - - - 3.3
--- --- --- --- ---
Operating income 35.3 18.9 43.3 108.4 49.0
Other expense:
Interest expense 9.3 8.7 9.3 27.6 29.9
Loss on extinguishment
of debt - - - - 3.5
Other expense, net 0.1 - - 0.1 -
--- --- --- --- ---
Income before income
taxes 25.9 10.2 34.0 80.7 15.6
Provision for income
taxes 9.2 4.4 12.5 30.1 7.2
Net income $16.7 $5.8 $21.5 $50.6 $8.4
===== ==== ===== ===== ====
Income per share:
Income per share -
basic $0.45 $0.16 $0.58 $1.37 $0.26
Income per share -
diluted $0.45 $0.16 $0.57 $1.36 $0.26
Number of common shares
used in the per share
calculation:
Basic 37.1 37.0 37.0 37.0 32.7
Diluted 37.3 37.3 37.3 37.3 33.0
Metals USA Holdings Corp.
Unaudited Consolidated Balance Sheets
(In millions, except share amounts)
September December
30, 31,
2011 2010
---- ----
Assets
Current assets:
Cash $13.4 $16.6
Accounts receivable, net of allowance
of $6.7 and $5.9, respectively 235.2 149.3
Inventories 383.7 290.8
Deferred income tax asset 9.2 12.0
Prepayments and other 4.5 9.8
--- ---
Total current assets 646.0 478.5
Property and equipment, net 241.4 198.8
Intangible assets, net 27.2 7.4
Goodwill 53.6 47.3
Other assets, net 14.4 13.5
---- ----
Total assets $982.6 $745.5
====== ======
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $94.8 $66.6
Accrued liabilities 40.4 30.6
Current portion of long-term debt 1.0 1.1
--- ---
Total current liabilities 136.2 98.3
Long-term debt, less current portion 483.6 345.4
Deferred income tax liability 97.6 88.5
Other long-term liabilities 22.5 22.2
---- ----
Total liabilities 739.9 554.4
----- -----
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value,
10,000,000 shares authorized, none
issued or
outstanding at September 30, 2011 and
December 31, 2010 - -
Common stock, $.01 par value,
140,000,000 shares authorized,
37,059,236
issued and 37,058,507 outstanding at
September 30, 2011, and 37,024,842
issued and outstanding at December 31,
2010 0.4 0.4
Additional paid-in capital 231.0 229.8
Retained earnings (accumulated deficit) 11.1 (39.5)
Accumulated other comprehensive income 0.2 0.4
Total stockholders' equity 242.7 191.1
----- -----
Total liabilities and stockholders'
equity $982.6 $745.5
====== ======
Metals USA Holdings Corp.
Unaudited Consolidated Statements of Cash Flows
(In millions)
Nine Months Ended
September 30,
-------------
2011 2010
---- ----
Cash flows from operating
activities:
Net income $50.6 $8.4
Adjustments to reconcile net
income to net cash used in
operating activities:
Gain on sale of property and
equipment - (0.1)
Provision for bad debts 2.2 1.3
Depreciation and amortization 16.9 14.9
Loss on extinguishment of
debt - 3.5
Amortization of debt issuance
costs and discounts on long-
term debt 2.1 2.9
Deferred income taxes 11.9 1.5
Stock-based compensation 1.2 0.7
Excess tax benefit from
stock-based compensation - (0.1)
Non-cash interest on PIK
option - 6.2
Cash payment of interest on
PIK option - (23.2)
Advisory agreement
termination charge - 3.3
Changes in operating assets
and liabilities, net of
acquisitions:
Accounts receivable (70.9) (32.8)
Inventories (74.8) (43.2)
Prepayments and other 5.4 2.2
Accounts payable and accrued
liabilities 14.6 5.2
Other 2.2 1.6
--- ---
Net cash used in operating
activities (38.6) (47.7)
----- -----
Cash flows from investing
activities:
Sales of assets 0.2 0.2
Purchases of assets (10.1) (2.2)
Acquisition costs, net of
cash acquired (88.1) (19.0)
Net cash used in investing
activities (98.0) (21.0)
----- -----
Cash flows from financing
activities:
Borrowings on credit facility 180.1 60.0
Repayments on credit facility (42.7) (59.5)
Repayments of long-term debt (1.1) (146.7)
Deferred financing costs (2.9) -
Excess tax benefit from
stock-based compensation - 0.1
Net proceeds from initial
public stock offering - 221.2
Net cash provided by
financing activities 133.4 75.1
----- ----
Net (decrease) increase in
cash (3.2) 6.4
Cash, beginning of period 16.6 6.0
Cash, end of period $13.4 $12.4
===== =====
Metals USA Holdings Corp.
Unaudited Supplemental Segment and Non-GAAP Information
(In millions, except shipments)
Nine Months
Three Months Ended Ended
------------------ ------------
June
September 30, 30, September 30,
------------- ----- -------------
2011 2010 2011 2011 2010
---- ---- ---- ---- ----
Segment:
Flat Rolled
and Non-
Ferrous:
Net sales $279.7 $180.1 $277.5 $785.7 $509.1
Operating
income $20.6 $12.1 $23.1 $60.8 $36.2
Depreciation
and
amortization $2.5 $1.7 $2.8 $7.5 $5.2
EBITDA
(1) $23.1 $13.8 $25.9 $68.3 $41.4
Adjusted
EBITDA
(2) $23.1 $13.8 $25.9 $68.3 $41.4
Shipments
(3) 198 138 212 617 418
Plates and
Shapes:
Net sales $191.3 $144.4 $206.6 $588.1 $402.8
Operating
income $20.0 $9.7 $25.1 $67.1 $30.2
Depreciation
and
amortization $2.4 $2.3 $2.6 $7.3 $7.0
EBITDA
(1) $22.4 $12.0 $27.7 $74.4 $37.2
Adjusted
EBITDA
(2) $22.4 $12.0 $27.7 $75.0 $37.2
Shipments
(3) 146 137 152 461 380
Building
Products:
Net sales $24.7 $23.2 $25.2 $66.1 $63.7
Operating
income $0.9 $1.2 $1.2 $0.3 $0.1
Depreciation
and
amortization
(5) $0.5 $0.6 $0.5 $1.6 $1.8
EBITDA
(1) $1.4 $1.8 $1.7 $1.9 $1.9
Adjusted
EBITDA
(2) $1.4 $1.8 $1.7 $1.9 $1.9
Shipments
(3) - - - - -
Corporate
and other:
Net sales
(4) $(3.4) $(2.4) $(3.7) $(9.7) $(7.4)
Operating
loss $(6.2) $(4.1) $(6.1) $(19.8) $(17.5)
Depreciation
and
amortization $0.1 $0.3 $0.2 $0.5 $0.9
EBITDA
(1) $(6.1) $(3.8) $(5.9) $(19.3) $(16.6)
Adjusted
EBITDA
(2) $(5.6) $(3.3) $(5.3) $(16.6) $(12.3)
Shipments
(3) (4) (3) (2) (4) (9) (6)
Consolidated:
Net sales $492.3 $345.3 $505.6 $1,430.2 $968.2
Operating
income $35.3 $18.9 $43.3 $108.4 $49.0
Depreciation
and
amortization
(5) $5.5 $4.9 $6.1 $16.9 $14.9
EBITDA
(1) $40.8 $23.8 $49.4 $125.3 $63.9
Adjusted
EBITDA
(2) $41.3 $24.3 $50.0 $128.6 $68.2
Shipments
(3) 341 273 360 1,069 792
Product
Mix: (6)
Carbon Flat
Rolled 34.3% 34.0% 34.4% 34.8% 35.2%
Mini Mill
Products 10.5% 12.6% 10.3% 10.5% 10.9%
Non-
Ferrous 25.9% 21.4% 24.7% 24.0% 22.2%
Plate 17.0% 18.7% 17.6% 17.8% 18.0%
Structural 12.3% 13.3% 13.0% 12.9% 13.7%
---- ---- ---- ---- ----
Total 100.0% 100.0% 100.0% 100.0% 100.0%
===== ===== ===== ===== =====
(1) EBITDA is the summation of operating income (loss) and
depreciation and amortization. We believe that EBITDA is
commonly used as a measure of performance for companies in
our industry and is frequently used by analysts, investors,
lenders and other interested parties to evaluate a
company's financial performance and its ability to incur
and service debt. EBITDA should not be considered as a
measure of financial performance under accounting
principles generally accepted in the United States of
America. The items excluded from EBITDA are significant
components in understanding and assessing financial
performance. EBITDA should not be considered in isolation
or as an alternative to net income, cash flows generated by
operating, investing or financing activities or other
financial statement data presented in the consolidated
financial statements as an indicator of operating
performance or a measure of liquidity.
(2) Adjusted EBITDA, as contemplated by our credit
documents, is used by our lenders for debt covenant
compliance purposes. Adjusted EBITDA is EBITDA adjusted to
eliminate management fees to related parties, one-time,
non-recurring charges related to the use of purchase
accounting, and other non-cash income or expenses, which
are more particularly defined in our credit documents and
the indentures governing our notes.
(3) Expressed in thousands of tons. Not a meaningful
measure for Building Products.
(4) Negative net sales and shipment information represent
the elimination of intercompany transactions.
(5) Includes depreciation expense recorded in cost of
sales.
(6) Based on net sales by product line excluding Building
Products.
EBITDA and Adjusted EBITDA Non-GAAP Measures, Reconciliations and
Explanations
EBITDA is the summation of operating income (loss) and depreciation and
amortization. EBITDA also represents net income before interest, income
taxes, depreciation and amortization. Adjusted EBITDA (as defined by the
loan and security agreement governing the ABL facility and the indentures
governing our notes) is defined as EBITDA further adjusted to exclude
certain non-cash, non-recurring and realized (or in the case of the
indentures, expected) future cost savings directly related to prior
acquisitions. EBITDA and Adjusted EBITDA are not defined terms under
accounting principles generally accepted in the United Sates of America
("GAAP"). Neither EBITDA nor Adjusted EBITDA should be considered an
alternative to operating income or net income as a measure of operating
results or an alternative to cash flow as a measure of liquidity.
There are material limitations associated with making the adjustments to our
earnings to calculate EBITDA and Adjusted EBITDA and using these non-GAAP
financial measures as compared to the most directly comparable GAAP
financial measures. For instance, EBITDA and Adjusted EBITDA do not
include:
* interest expense, and because we have borrowed money in order to finance
our operations, interest expense is a necessary element of our costs and
ability to generate revenue;
* depreciation and amortization expense, and because we use capital assets,
depreciation and amortization expense is a necessary element of our costs
and ability to generate revenue; and
* income tax expense, and because the payment of taxes is part of our
operations, tax expense is a necessary element of our costs and ability to
operate.
We present EBITDA because we consider it an important supplemental measure
of our performance and believe it is frequently used by our investors and
other interested parties, as well as by our management, in the evaluation
of companies in our industry, many of which present EBITDA when reporting
their results. In addition, EBITDA provides additional information used by
our management and board of directors to facilitate internal comparisons to
historical operating performance of prior periods. Further, management
believes EBITDA facilitates our operating performance comparisons from
period to period because it excludes potential differences caused by
variations in capital structure (affecting interest expense), tax positions
(such as the impact of changes in effective tax rates or net operating
losses) and the age and book depreciation of facilities and equipment
(affecting depreciation expense).
We believe that the inclusion of supplemental adjustments to EBITDA applied
in presenting Adjusted EBITDA are appropriate to provide additional
information to investors about the performance of the business, and we are
required to present Adjusted EBITDA to demonstrate compliance with our debt
covenants. Management uses Adjusted EBITDA as a key indicator to evaluate
performance of certain employees.
Pro Forma Adjusted EBITDA is defined as Adjusted EBITDA (as discussed above)
with additions for the Adjusted EBITDA of our recent acquisitions, as
though we owned those businesses for the twelve-month period ended
September 30, 2011. Adjusted EBITDA on a Pro Forma Basis, as defined by
our credit agreements, is a non-GAAP measure used in the calculation of
our Consolidated Total Debt Ratio, as defined by the indenture governing
our notes.
Twelve Months
Three Months Ended Nine Months Ended Ended
------------------ ----------------- -------------
June
September 30, 30, September 30, September 30,
------------- ----- ------------- -------------
2011 2010 2011 2011 2010 2011
---- ---- ---- ---- ---- ----
(In millions)
Operating
income $35.3 $18.9 $43.3 $108.4 $49.0 $119.6
Depreciation
and
amortization
(1) 5.5 4.9 6.1 16.9 14.9 21.8
--- --- --- ---- ---- ----
EBITDA 40.8 23.8 49.4 125.3 63.9 141.4
Indenture defined
adjustments to
EBITDA:
Facility
closure and
severance
costs - - - 0.6 - 0.6
Stock options
and grant
expense 0.4 0.5 0.4 1.2 0.7 1.7
Advisory
agreement fees
and other
costs - - - - 3.6 0.2
Acquisition
expenses 0.1 - 0.2 1.5 - 1.5
--- --- --- --- --- ---
Adjusted EBITDA $41.3 $24.3 $50.0 $128.6 $68.2 $145.4
===== ===== ===== ====== =====
Pro forma acquisition
adjustments 3.7
Pro forma Adjusted
EBITDA $149.1
======
(1) Includes depreciation expense recorded in cost of sales for the
Building Products Group.
SOURCE Metals USA Holdings Corp.
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