Metals USA Reports First Quarter 2012 EPS Of $0.44 On 22% Sales Growth

FORT LAUDERDALE, Fla., April 18, 2012 /PRNewswire/ -- Metals USA Holdings Corp. (NYSE: MUSA) today reported its results for the three months ended March 31, 2012.

Net sales for the first quarter of 2012 were $525.3 million, up 22% from net sales of $432.3 million recorded for the first quarter of 2011.  Net income for the first quarter of 2012 was $16.3 million, compared to first quarter 2011 net income of $12.4 million.   Earnings per diluted share ("EPS") were $0.44 in the first quarter of 2012, a number 33% higher than EPS of $0.33 recorded for the first quarter 2011.  

Metal shipments were 403,000 tons for the first quarter of 2012, up 10% from metal shipments of 368,000 tons in the first quarter of 2011.  Toll processed tonnage was 40,000 tons during the first quarter of 2012 compared to 45,000 tons for the first quarter of 2011. 

Lourenco Goncalves, the Company's Chairman, President and C.E.O., stated: "As we expected and stated on our last quarterly conference call, Q1 2012 was indeed more profitable than Q4 2011.  Sequentially from the previous quarter, shipments increased 23%, revenues increased 15% and net income increased 16%.  Our performance is a clear indication that Metals USA's cost-efficient, customer-focused business model is not only benefiting from, but outperforming, the current economic recovery."

Mr. Goncalves concluded: "Demand improved in Q1 across most sectors we serve, in particular automotive, aerospace, and oil & gas field services.  Based on our current order book and committed business, we expect this trend to continue in the second quarter."

Adjusted EBITDA (as defined and calculated in the attached table), a non-GAAP financial measure used by Metals USA and its lenders to evaluate the performance of the business, was $41.0 million for the first quarter of 2012, up 10% from the Company's Adjusted EBITDA of $37.3 million for the first quarter of 2011.  At March 31, 2012, the Company's trailing twelve month pro forma Adjusted EBITDA was $169.3 million.

Metals USA had $257.5 million drawn under its ABL Facility at March 31, 2012 with excess availability of $182.1 million, compared to $163.8 million at December 31, 2011.  Net debt, a non-GAAP measure defined as total outstanding debt less cash on hand, increased by $26.6 million during the quarter, and was $483.1 million as of March 31, 2012.  The change in net debt was due primarily to the acquisition of Gregor Technologies and increased accounts receivable resulting from increased sales.  Net cash used in operating activities for the first quarter of 2012 was $5.0 million.  Capital expenditures were $4.5 million for the three months ended March 31, 2012. 

On March 12, 2012, Metals USA announced the acquisition of Gregor Technologies, Metals USA's fourth acquisition since its IPO in April 2010.  The integration of Gregor Technologies to Metals USA's footprint enhances Metals USA's position and market share within important sectors, such as aerospace, defense, homeland security and office equipment.  Gregor's high value-added processing capabilities and ability to earn an enhanced margin over metal make Gregor Technologies a perfect fit to Metals USA's growth strategy, which is based on averaging up the EBITDA margin of Metals USA.

Conference Call and Webcast

Metals USA has scheduled a conference call for Thursday, April 19, 2012 at 11 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 June 20, 2012.  To access the replay, dial (888) 286-8010 and enter the pass code 95743477.

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 report 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 law 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 acquired businesses, the integration of the acquired businesses into the Company's operations, anticipated synergies, statements concerning the Company's plans, competitive position and market share, projections concerning revenue, profitability, raw material pricing, 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 or other raw materials 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, unanticipated liabilities associated with the acquired businesses, the loss of key customers of the acquired businesses, changes in metal prices, the effect of economic conditions generally in the United States and in the regions in which the Company and the acquired businesses operate and international economies 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 this date and the Company disclaims any duty to update the information herein.

-Tables follow -

 

Metals USA Holdings Corp.
Unaudited Consolidated Statements of Operations
and Comprehensive Income
(In millions, except per share amounts)



Three Months Ended



March 31,


December 31,













2012


2011


2011









































Revenues:










Net sales


$

525.3


$

432.3


$

455.7

Operating costs and expenses:










Cost of sales (exclusive of operating and delivery,
and depreciation and amortization shown below) 



407.1



329.7



353.3

Operating and delivery



51.0



41.1



44.7

Selling, general and administrative



27.8



26.8



25.1

Depreciation and amortization



5.3



4.8



5.8

Loss (gain) on sale of property and equipment



(0.1)



0.1



-

Operating income



34.2



29.8



26.8

Other expense:










Interest expense



9.2



9.0



9.0

Income before income taxes 



25.0



20.8



17.8

Provision for income taxes



8.7



8.4



3.8

Net income


$

16.3


$

12.4


$

14.0











   Other comprehensive income:










      Foreign currency translation adjustments



0.1



0.1



0.1

      Deferred hedging gains



-



0.1



-

Total comprehensive income


$

16.4


$

12.6


$

14.1











Income per share:










Income per share - basic


$

0.44


$

0.34


$

0.38

Income per share - diluted


$

0.44


$

0.33


$

0.37











Number of common shares used in the per share calculation:










Basic



37.1



37.0



37.1

Diluted



37.4



37.3



37.3

 

Metals USA Holdings Corp.
Unaudited Consolidated Balance Sheets
(In millions, except share amounts)



March 31,



December 31,



2012



2011

















Assets








Current assets:








Cash


$

15.1



$

12.1

Accounts receivable, net of allowance of $6.1 and $6.9, respectively



244.9




212.2

Inventories



420.4




402.5

Deferred income tax asset



4.0




7.9

Prepayments and other



6.2




9.4

Total current assets



690.6




644.1

Property and equipment, net



250.3




247.8

Intangible assets, net



34.2




26.6

Goodwill



55.9




52.8

Other assets



12.8




13.5

Total assets


$

1,043.8



$

984.8









Liabilities and Stockholders' Equity








Current liabilities:








Accounts payable


$

116.8



$

110.0

Accrued liabilities



40.0




29.7

Current portion of long-term debt



1.0




1.0

Total current liabilities



157.8




140.7

Long-term debt, less current portion



497.2




467.6

Deferred income tax liability



96.4




97.1

Other long-term liabilities



18.3




22.3

Total liabilities



769.7




727.7

Commitments and contingencies








Stockholders' equity:








Preferred stock, $0.01 par value, 10,000,000 shares authorized, none issued or








outstanding at March 31, 2012 and December 31, 2011



-




-

Common stock, $0.01 par value, 140,000,000 shares authorized, 37,059,236 issued








and 37,058,507 outstanding at March 31, 2012 and December 31, 2011



0.4




0.4

Additional paid-in capital



231.9




231.3

Retained earnings



41.4




25.1

Accumulated other comprehensive income



0.4




0.3

Total stockholders' equity



274.1




257.1

Total liabilities and stockholders' equity


$

1,043.8



$

984.8

 

Metals USA Holding Corp.
Unaudited Consolidated Statements of Cash Flows
(In millions)



Three Months Ended



March 31,



2012



2011







Cash flows from operating activities:








Net income


$

16.3



$

12.4

Adjustments to reconcile net income to net cash used in operating activities:








        Loss (gain) on sale of property and equipment



(0.1)




0.1

Provision for bad debts



0.6




0.7

Depreciation and amortization



5.8




5.3

Amortization of debt issuance costs



0.8




0.7

Deferred income taxes



0.1




3.4

Stock-based compensation



0.6




0.4

Changes in operating assets and liabilities, net of acquisitions:








Accounts receivable



(31.9)




(54.6)

Inventories



(17.1)




(29.4)

Prepayments and other



3.2




0.5

Accounts payable and accrued liabilities



16.4




13.9

Other operating



0.3




0.2

Net cash used in operating activities



(5.0)




(46.4)









Cash flows from investing activities:








Sales of assets



-




0.1

Purchases of assets



(4.5)




(2.0)

Acquisition costs, net of cash acquired



(17.0)




(88.8)

Net cash used in investing activities



(21.5)




(90.7)









Cash flows from financing activities:








Borrowings on credit facility



93.1




133.4

Repayments on credit facility



(63.3)




-

Repayments of long-term debt



(0.2)




(0.1)

Deferred financing costs



(0.1)




(0.7)

Net cash provided by financing activities



29.5




132.6









Net increase (decrease) in cash



3.0




(4.5)

Cash, beginning of period



12.1




16.6

Cash, end of period


$

15.1



$

12.1

 

Metals USA Holdings Corp.
Unaudited Supplemental Segment and Non-GAAP Information
(In millions, except shipments)



Three Months Ended 




March 31,


December 31,












2012


2011


2011


















Segment:
















Flat Rolled and Non-Ferrous:








Net sales


$ 302.1


$ 228.5


$            261.0


Operating income


$   18.3


$   17.1


$              17.3


Depreciation and amortization


$     2.9


$     2.2


$                3.4


EBITDA       (1)


$   21.2


$   19.3


$              20.7


Adjusted EBITDA       (2)


$   21.2


$   19.3


$              20.7


Shipments    (3) 


241


207


195


















Plates and Shapes:








Net sales


$ 210.3


$ 190.2


$            177.8


Operating income


$   23.3


$   22.0


$              15.9


Depreciation and amortization


$     2.3


$     2.3


$                 2.3


EBITDA       (1)


$   25.6


$   24.3


$              18.2


Adjusted EBITDA       (2)


$   25.6


$   24.9


$              18.2


Shipments    (3) 


165


163


135


















Building Products:








Net sales


$   16.1


$   16.2


$              19.7


Operating income (loss)


$   (1.8)


$   (1.8)


$               (1.0)


Depreciation and amortization (5)


$     0.5


$     0.6


$                0.6


EBITDA       (1)


$   (1.3)


$   (1.2)


$               (0.4)


Adjusted EBITDA       (2)


$   (1.3)


$   (1.2)


$               (0.4)


Shipments    (3) 


-


-


-


















Corporate and other:








Net sales (4)


$   (3.2)


$   (2.6)


$               (2.8)


Operating loss


$   (5.6)


$   (7.5)


$               (5.4)


Depreciation and amortization


$     0.1


$     0.2


$                0.1


EBITDA       (1)


$   (5.5)


$   (7.3)


$               (5.3)


Adjusted EBITDA       (2)


$   (4.5)


$   (5.7)


$               (4.0)


Shipments    (3)  (4)


(3)


(2)


(3)


















Consolidated:








Net sales


$ 525.3


$ 432.3


$            455.7


Operating income


$   34.2


$   29.8


$              26.8


Depreciation and amortization (5)


$     5.8


$     5.3


$                6.4


EBITDA       (1)


$   40.0


$   35.1


$              33.2


Adjusted EBITDA       (2)


$   41.0


$   37.3


$              34.5


Shipments    (3) 


403


368


327










Product Mix: (6)








Carbon Flat Rolled


34.7%


35.7%


34.8%


Mini Mill Products


11.1%


10.7%


10.4%


Non-Ferrous


24.3%


21.1%


25.5%


Plate


17.7%


19.0%


17.0%


Structural


12.2%


13.5%


12.3%


Total


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 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, Adjusted EBITDA and Pro Forma 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 March 31, 2012.  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.    







Three Months Ended


Twelve Months Ended






March 31,


December 31,


March 31,



















2012


2011


2011


2012







 (In millions) 















Operating income

$    34.2


$    29.8


$                   26.8


$     139.6



Depreciation and amortization (1)

5.8


5.3


6.4


23.8



EBITDA

40.0


35.1


33.2


163.4



Indenture defined adjustments to EBITDA:










Facility closure and severance costs

-


0.6


-


-



Non cash employee benefit expense

0.6


0.4


1.2


2.6



Acquisition expenses

0.4


1.2


0.1


0.8



Adjusted EBITDA

$    41.0


$    37.3


$                   34.5


$     166.8



Pro forma acquisition adjustments







2.5



Pro Forma Adjusted EBITDA







$     169.3

















  (1)   Includes depreciation expense recorded in cost of sales for the Building Products Group.



 

SOURCE Metals USA Holdings Corp.



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