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Metals USA Reports Second Quarter 2009 Results
HOUSTON, July 23 /PRNewswire/ -- Metals USA Holdings Corp. today announced its operating results for the quarter ended June 30, 2009. Sales revenues for the second quarter were $267.8 million compared to $593.1 million of sales revenues for the same period last year. Adjusted EBITDA (as defined and calculated in the attached table), a non-GAAP financial measure used by Metals USA and its creditors to monitor the performance of the business, was a negative $13.5 million for the second quarter compared to second quarter 2008 Adjusted EBITDA of $92.6 million. Second quarter 2009 net income was $13.8 million compared to net income of $39.8 million for the same period last year.
Lourenco Goncalves, the Company's Chairman, President and CEO stated: "We are pleased with the results of our continuing inventory reduction efforts. The cash generated by our actions allowed us to repay a significant portion of our outstanding debt during the first half of 2009." Mr. Goncalves added: "We believe Metals USA is well positioned to benefit from an improving environment we anticipate for the second half of the year."
The Company had $166.0 million drawn under its asset-based credit facility at June 30, 2009, with excess availability of $69.1 million. Total liquidity, defined as excess availability plus cash, was $122.6 million at June 30, 2009. Net debt of $522.3 million on June 30, 2009 was $255.2 million lower than net debt of $777.5 million on December 31, 2008 due primarily to a decrease in working capital and debt repurchases. Total debt of $575.8 million at June 30, 2009 consisted of outstanding advances under the $625 Million Asset Based Loan Facility in the amount of $166.0 million, outstanding 11 1/8% Senior Secured Notes in the amount of $226.3 million, outstanding PIK Toggle Notes of $177.5 million, and $6.0 million of other long term debt. Capital expenditures were $1.4 million for the current quarter and $2.3 million year-to-date. Net cash provided by operating activities for the first six months of 2009 was $183.0 million.
The Company recognized depreciation and amortization expenses during the quarter of $4.8 million. Interest expense for the quarter was $17.2 million, which included $3.8 million of interest on the Company's Senior Floating Rate Toggle Notes due 2012 that was paid entirely in kind ("PIK Interest"). Operating income (loss), the GAAP measure that we believe is most comparable to Adjusted EBITDA, was a loss of $19.1 million for the second quarter of 2009, compared to $83.4 million of operating income recorded in the same period last year.
Second quarter 2009 results included charges related to lower-of-cost or market adjustments (LCM) consisting of a pre-tax inventory write-down of $20.7 million, partially offset by $14.6 million of increased gross margin from previous LCM write-downs on inventory sold during the period.
Metals USA has scheduled a conference call for Friday, July 24, 2009 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 August 25, 2009. To access the replay, dial (888) 203-1112 and enter the pass code 4551786.
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 historical Form 10-Ks and Form 10-Qs which are on file with the Securities and Exchange Commission for more complete historical 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 benefit, can be found at the Company's website at www.metalsusa.com under "Investor Relations."
This press release contains certain forward-looking statements 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. These factors include, but are not limited to, those disclosed in the Company's historic periodic filings with the Securities and Exchange Commission.
- Tables follow -
Metals USA Holdings Corp.
Unaudited Consolidated Statements of Operations
(In millions)
Three Months Six Months
Ended Ended
------------- -----------
June 30, March 31, June 30,
------------ --------- -------------
2009 2008 2009 2009 2008
---- ---- ---- ---- ----
Revenues:
Net sales $267.8 $593.1 $330.2 $598.0 $1,082.1
Operating costs and expenses:
Cost of sales (exclusive
of operating and
delivery, and depreciation
and amortization shown
below) 228.8 422.9 287.7 516.5 799.5
Operating and delivery 31.2 49.5 34.7 65.9 96.0
Selling, general and
administrative 22.1 33.4 24.0 46.1 62.6
Depreciation and
amortization 4.8 5.4 4.7 9.5 10.9
Gain on sale of
property and equipment - (1.5) - - (1.5)
--- ---- --- --- ----
Operating income (loss) (19.1) 83.4 (20.9) (40.0) 114.6
Other (income) expense:
Interest expense 17.2 19.9 19.3 36.5 45.0
Other (gains) losses (56.1) - (32.3) (88.4) -
Other (income)
expense, net (0.2) 0.1 (0.1) (0.3) -
---- --- ---- ---- ---
Income (loss) before
income taxes 20.0 63.4 (7.8) 12.2 69.6
Provision (benefit) for
income taxes 6.2 23.6 (3.7) 2.5 26.0
----- ----- ----- ---- -----
Net income (loss) $13.8 $39.8 $(4.1) $9.7 $43.6
===== ===== ===== ==== =====
Metals USA Holdings Corp.
Unaudited Consolidated Balance Sheets
(In millions, except share amounts)
June 30, December 31,
2009 2008
---- ----
Assets
Current assets:
Cash and cash equivalents $53.5 $166.7
Accounts receivable, net of allowance of
$9.2 and $8.8, respectively 139.5 189.3
Inventories 232.7 422.6
Deferred income tax asset 22.6 23.6
Prepayments and other 4.5 6.5
--- ---
Total current assets 452.8 808.7
Property and equipment, net 189.0 190.1
Assets held for sale 0.9 1.8
Intangible assets, net 10.8 13.6
Goodwill 49.7 49.9
Other assets, net 18.9 24.1
---- ----
Total assets $722.1 $1,088.2
====== ========
Liabilities and Stockholders' Deficit
Current liabilities:
Accounts payable $46.0 $47.2
Accrued liabilities 42.7 60.9
Current portion of long-term debt 0.1 1.6
--- ---
Total current liabilities 88.8 109.7
Long-term debt, less current portion 575.7 942.6
Deferred income tax liability 74.9 62.2
Other long-term liabilities 21.9 24.7
---- ----
Total liabilities 761.3 1,139.2
----- -------
Commitments and contingencies
Stockholders' deficit:
Common stock, $.01 par value, 30,000,000 shares
authorized, 14,077,500 issued
and outstanding at June 30, 2009 and
December 31, 2008, respectively 0.1 0.1
Additional paid-in capital 6.6 6.4
Retained deficit (44.8) (54.5)
Accumulated other comprehensive loss (1.1) (3.0)
---- ----
Total stockholders' deficit (39.2) (51.0)
----- -----
Total liabilities and stockholders' deficit $722.1 $1,088.2
====== ========
Metals USA Holding Corp.
Unaudited Consolidated Statements of Cash Flows
(In millions)
Six Months
Ended
June 30,
--------
2009 2008
---- ----
Cash flows from operating activities:
Net income (loss) $9.7 $43.6
Adjustments to reconcile net income (loss)
to net cash provided by (used in)
operating activities:
(Gain) loss on sale of property and equipment - (1.5)
Provision for bad debts 2.1 1.3
Depreciation and amortization 10.4 12.4
Other (gains) losses (88.4) -
Amortization of debt issuance costs and
discounts on long-term debt 2.9 2.9
Deferred income taxes 13.7 (4.2)
Stock-based compensation 0.2 0.6
Non-cash interest on PIK option 13.8 -
Changes in operating assets and liabilities,
net of acquisitions:
Accounts receivable 47.7 (77.4)
Inventories 189.9 (108.1)
Prepayments and other 2.0 (0.9)
Accounts payable and accrued liabilities (18.2) 51.9
Other (2.8) 6.4
---- ---
Net cash provided by (used in)
operating activities 183.0 (73.0)
----- -----
Cash flows from investing activities:
Sale of assets - 4.3
Purchases of assets (2.3) (4.9)
Acquisition costs, net of cash acquired (4.2) -
---- -
Net cash used in investing activities (6.5) (0.6)
---- ----
Cash flows from financing activities:
Borrowings on credit facility 63.5 550.5
Repayments on credit facility (265.5) (469.5)
Repayments of long-term debt (87.7) (2.3)
Deferred financing costs - (0.3)
- ----
Net cash (used in) provided by
financing activities (289.7) 78.4
------ ----
Net (decrease) increase in cash and cash equivalents (113.2) 4.8
Cash and cash equivalents, beginning of period 166.7 13.6
----- ----
Cash and cash equivalents, end of period $53.5 $18.4
===== =====
Metals USA Holdings Corp.
Unaudited Supplemental Segment and Non-GAAP Information
(In millions, except shipments)
Three Months Six Months
Ended Ended
------------- -----------
June 30, March 31, June 30,
------------ --------- --------------
2009 2008 2009 2009 2008
---- ---- ---- ---- ----
Segment:
Flat Rolled and
Non-Ferrous:
Net sales $117.6 $234.5 $140.9 $258.5 $450.5
Operating income
(loss) $3.1 $29.2 $(2.3) $0.8 $44.1
Depreciation and
amortization $1.8 $1.9 $1.8 $3.6 $3.7
EBITDA (1) $4.9 $31.1 $(0.5) $4.4 $47.8
Adjusted EBITDA (2) $4.9 $31.1 $(0.5) $4.4 $47.8
Shipments (3) 110 164 113 223 332
Plates and Shapes:
Net sales $124.8 $325.6 $172.5 $297.3 $575.2
Operating income
(loss) $(17.0) $64.2 $(8.7) $(25.7) $92.6
Depreciation and
amortization $2.3 $2.2 $2.4 $4.7 $4.6
EBITDA (1) $(14.7) $66.4 $(6.3) $(21.0) $97.2
Adjusted EBITDA (2) $(14.7) $66.4 $(6.3) $(21.0) $97.2
Shipments (3) 120 240 137 257 460
Building Products:
Net sales $27.2 $36.4 $19.7 $46.9 $62.5
Operating income
(loss) $0.5 $(2.5) $(4.3) $(3.8) $(8.2)
Depreciation and
amortization (5) $0.6 $0.5 $0.6 $1.2 $1.8
EBITDA (1) $1.1 $(2.0) $(3.7) $(2.6) $(6.4)
Adjusted EBITDA (2) $1.1 $0.9 $(3.3) $(2.2) $(1.6)
Shipments (3) - - - - -
Corporate and other:
Net sales $(1.8) $(3.4) $(2.9) $(4.7) $(6.1)
Operating loss $(5.7) $(7.5) $(5.6) $(11.3) $(13.9)
Depreciation and
amortization $0.5 $1.2 $0.4 $0.9 $2.3
EBITDA (1) $(5.2) $(6.3) $(5.2) $(10.4) $(11.6)
Adjusted EBITDA (2) $(4.8) $(5.8) $(4.8) $(9.6) $(10.5)
Shipments (3) (4) (2) (3) (2) (4) (5)
Consolidated:
Net sales $267.8 $593.1 $330.2 $598.0 $1,082.1
Operating income
(loss) $(19.1) $83.4 $(20.9) $(40.0) $114.6
Depreciation and
Amortization (5) $5.2 $5.8 $5.2 $10.4 $12.4
EBITDA (1) $(13.9) $89.2 $(15.7) $(29.6) $127.0
Adjusted EBITDA (2) $(13.5) $92.6 $(14.9) $(28.4) $132.9
Shipments (3) 228 401 248 476 787
(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. 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) Unaudited and is 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.
EBITDA and Adjusted EBITDA Non-GAAP Measures,
Reconciliations and Explanations
EBITDA 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 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 their
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 reconcile net income to Adjusted EBITDA
to demonstrate compliance with debt covenants. Management uses Adjusted
EBITDA as a key indicator to evaluate performance of certain employees.
Three Months Ended Six Months Ended
------------------ ----------
June 30, March 31, June 30,
----------- --------- --------
2009 2008 2009 2009 2008
---- ---- ---- ---- ----
(In millions)
Operating income (loss) $(19.1) $83.4 $(20.9) $(40.0) $114.6
Depreciation and
amortization (1) 5.2 5.8 5.2 10.4 12.4
--- --- --- ---- ----
EBITDA (13.9) 89.2 (15.7) (29.6) 127.0
Indenture defined
adjustments to EBITDA:
Facility closure and
severance costs - 2.8 0.4 0.4 4.7
Stock options and
grant expense 0.1 0.3 0.1 0.2 0.6
Management fees and
other costs 0.3 0.3 0.3 0.6 0.6
--- --- --- --- ---
Adjusted EBITDA $(13.5) $92.6 $(14.9) $(28.4) $132.9
====== ===== ====== ====== ======
(1) Includes depreciation expense recorded in cost of sales for
the Building Products Group.
SOURCE Metals USA Holdings Corp.
RELATED LINKS
http://www.metalsusa.com