Metals USA Reports Third Quarter 2012 Net Sales of $484 Million on 11.7% Year Over Year Shipment Growth and Announces Initiation of a Quarterly Cash Dividend

FORT LAUDERDALE, Fla., Oct. 22, 2012 /PRNewswire/ -- Metals USA Holdings Corp. (NYSE: MUSA) today reported its results for the three and nine month periods ended September 30, 2012 and announced that it is initiating a quarterly cash dividend on its common stock.

Net sales for the third quarter of 2012 were $483.7 million, compared to net sales of $492.3 million for the third quarter of 2011.  Third quarter 2012 shipments of 381,000 tons were 11.7% higher than the 341,000 tons shipped during the third quarter of 2011 and markedly above the -1.0% industry figure reported by the Metals Service Center Institute.  Net income for the third quarter of 2012 was $13.7 million, compared to net income of $16.7 million in the third quarter of 2011.  Earnings per diluted share were $0.37 in the third quarter of 2012 compared to $0.45 in the third quarter of 2011.  Third quarter 2012 results include non-recurring pre-tax expenses of $0.01 per diluted share, incurred in connection with the August 2012 secondary offering of shares of common stock by certain investment funds affiliated with Apollo Global Management LLC. 

Net sales for the first nine months of 2012 were $1,546.1 million, up 8.1% from net sales of $1,430.2 million for the first nine months of 2011.  Shipments for the first nine months of 2012 totaled 1,197,000 tons, 12.0% higher than the 1,069,000 tons shipped during the first nine months of 2011.  Net income for the first nine months of 2012 was $49.0 million, compared to net income of $50.6 million for the first nine months of 2011.  Earnings per diluted share were $1.31 for the first nine months of 2012, compared to $1.36 for the first nine months of 2011.  

Lourenco Goncalves, the Company's Chairman, President and C.E.O., stated: "Despite a third quarter characterized by a weak global business environment and no meaningful improvement in the domestic economy, Metals USA performed well and yet again delivered strong results.   Our achievement of a 12% increase in year-over-year shipments, that partially offset price weakness and related margin compression, was further evidence of our growth momentum.  We believe our high quality value-added processing and dependable service, along with our emphasis on maintaining adequate levels of inventory to serve existing and new customers while other service center companies are out of stock, are driving our continuing market share growth."

Mr. Goncalves continued: "As planned, we repositioned our working capital during the third quarter, which resulted in a decline in net debt of more than $50 million, and an increase in our liquidity to $230 million as of September 30th.  In the process, we prepared our inventory mix for a fourth quarter that we do not expect to be worse than the third quarter, other than the normal impact of slower seasonal activity around Thanksgiving and year-end holidays."

Mr. Goncalves concluded: "As Metals USA continues to serve the right customers in the right end markets, we expect to deliver another strong and profitable quarter.  In addition to further decreasing our working capital and net debt in Q4, we will also continue to execute on our growth strategy by seeking out organic growth and acquisition opportunities that emphasize our value adding attributes." 

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 $34.9 million for the third quarter of 2012 compared to $41.3 million for the third quarter of 2011, and $45.2 million for the second quarter of 2012. Adjusted EBITDA was $121.1 million for the first nine months of 2012 compared to $128.6 million for the first nine months of 2011.  As of September 30, 2012, the Company's trailing twelve month Pro Forma Adjusted EBITDA (as defined and calculated in the attached table) was $156.7 million.

Metals USA had $213.7 million drawn under its asset-based credit facility at September 30, 2012 with excess availability of $213.2 million, compared to excess availability of $163.8 million at December 31, 2011.  Net debt, a non-GAAP measure defined as total outstanding debt less cash on hand, was $436.7 million as of September 30, 2012, a decrease of $50.6 million from the second quarter of 2012.  The Company's Pro Forma Adjusted EBITDA leverage ratio as of September 30, 2012 was approximately 2.8x. 

Net cash provided by operating activities for the first nine months of 2012 was $49.8 million.  Capital expenditures were $4.8 million for the three months ended September 30, 2012 and $13.3 million for the first nine months of 2012. 

Earlier today, the Company's Board of Directors authorized the initiation of a regular annual cash dividend payable on the Company's common stock.  The dividends will be declared and paid quarterly, and the Company's Board of Directors today declared its first regular quarterly cash dividend of $0.06 per share.  The dividend will be paid on November 27, 2012 to stockholders of record as of the close of business on November 13, 2012, the record date for the dividend. 

Addressing the dividend, Mr. Goncalves commented: "Our adoption of a regular cash dividend demonstrates our continuing solid financial performance, confidence in our business, financial prospects and long-term strategy, and our commitment to maximize shareholder value.  Our financial results over the past several years demonstrate that our business model produces strong cash flows through the cycle.  Specifically, we have significantly deleveraged our balance sheet and maintained a strong liquidity position, while at the same time completing a number of accretive acquisitions and organic investments.  We will continue to operate and manage our business as usual, and we are confident that our strong free cash flow generation will allow us to continue deleveraging, execute on our disciplined growth strategy and pay cash dividends."

The declaration and payment of any future dividends will be at the discretion of the Board of Directors, subject to the Company's financial results, cash requirements, and other factors deemed relevant by the Board of Directors.  Investors are cautioned that this new dividend policy is not a guarantee that a dividend will be declared or paid in any particular period in the future. 

Conference Call and Webcast
Metals USA has scheduled a conference call for Tuesday, October 23, 2012 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 remain available for approximately 60 days thereafter.  To access the replay, dial (888) 286-8010 and enter the pass code 30098804.

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 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 Company's financial performance, plans, competitive position and market share; projections concerning revenue, profitability, raw material pricing, cash flows, earnings, sales, volumes, working capital, 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, changes in metal prices; the effect of economic conditions generally in the United States and in the regions in which the Company operates and in 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


Nine Months Ended



September 30,


June 30,


September 30,



















2012


2011


2012


2012


2011

















Net sales


$

483.7


$

492.3


$

537.1


$

1,546.1


$

1,430.2

Operating costs and expenses:
















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



372.8



379.8



414.4



1,194.3



1,092.4

Operating and delivery



49.4



44.0



51.0



151.4



131.0

Selling, general and administrative



28.4



28.3



27.8



84.0



83.0

Depreciation and amortization



5.8



5.0



5.6



16.7



15.4

Gain on sale of property and equipment



(0.1)



(0.1)



-



(0.2)



-

Operating income



27.4



35.3



38.3



99.9



108.4

Other (income) expense:
















Interest expense



9.0



9.3



9.2



27.4



27.6

Other (income) expense, net



(0.2)



0.1



-



(0.2)



0.1

Income before income taxes 



18.6



25.9



29.1



72.7



80.7

Provision for income taxes



4.9



9.2



10.1



23.7



30.1

Net income


$

13.7


$

16.7


$

19.0


$

49.0


$

50.6

















Income per share:
















Income per share - basic


$

0.37


$

0.45


$

0.51


$

1.32


$

1.37

Income per share - diluted


$

0.37


$

0.45


$

0.51


$

1.31


$

1.36

















Number of common shares 
used in the per share calculation:
















Basic



37.1



37.1



37.1



37.1



37.0

Diluted



37.4



37.3



37.4



37.4



37.3

















Net income



13.7



16.7



19.0



49.0



50.6

















   Other comprehensive income (loss):
















      Foreign currency translation adjustments



0.1



(0.3)



(0.1)



0.1



(0.3)

      Deferred hedging gains



-



-



-



-



0.1

Total other comprehensive income (loss)



0.1



(0.3)



(0.1)



0.1



(0.2)

Total comprehensive income


$

13.8


$

16.4


$

18.9


$

49.1


$

50.4

















 

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









September 30,



December 31,



2012



2011

















Assets








Current assets:








Cash


$

17.1



$

12.1

Accounts receivable, net of allowance of $5.7 and $6.9, respectively



228.6




212.2

Inventories



426.4




402.5

Deferred income tax asset



5.4




7.9

Prepayments and other



4.8




9.4

Total current assets



682.3




644.1

Property and equipment, net



250.0




247.8

Intangible assets, net



31.2




26.6

Goodwill



54.8




52.8

Other assets



11.1




13.5

Total assets


$

1,029.4



$

984.8









Liabilities and Stockholders' Equity








 Current liabilities:








Accounts payable


$

113.2



$

110.0

Accrued liabilities



38.1




29.7

Current portion of long-term debt



1.0




1.0

Total current liabilities



152.3




140.7

Long-term debt, less current portion



452.8




467.6

Deferred income tax liability



99.6




97.1

Other long-term liabilities



16.7




22.3

Total liabilities



721.4




727.7

Commitments and contingencies








Stockholders' equity:








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








outstanding at September 30, 2012 and December 31, 2011



-




-

Common stock, $0.01 par value, 140,000,000 shares authorized, 37,109,727 issued








and 37,102,523 outstanding at September 30, 2012, and 37,059,236 issued








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



0.4




0.4

Additional paid-in capital



233.2




231.3

Retained earnings



74.1




25.1

Accumulated other comprehensive income



0.4




0.3

Treasury stock, at cost - 7,204 shares at September 30, 2012 and 729 shares at December 31, 2011



(0.1)




-

Total stockholders' equity



308.0




257.1

Total liabilities and stockholders' equity


$

1,029.4



$

984.8









 

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






Nine Months Ended



September 30,



2012



2011







Cash flows from operating activities:








Net income


$

49.0



$

50.6

Adjustments to reconcile net income to net cash provided by (used in) operating activities:








        Gain on sale of property and equipment



(0.2)




-

Provision for bad debts



1.7




2.2

Depreciation and amortization



18.2




16.9

Amortization of debt issuance costs



2.5




2.1

Deferred income taxes



0.1




11.9

Stock-based compensation



1.8




1.2

Changes in operating assets and liabilities, net of acquisitions:








Accounts receivable



(16.7)




(70.9)

Inventories



(22.3)




(74.8)

Prepayments and other



4.6




5.4

Accounts payable and accrued liabilities



11.3




14.6

Other operating



(0.2)




2.2

Net cash provided by (used in) operating activities



49.8




(38.6)









Cash flows from investing activities:








Sales of assets



0.3




0.2

Purchases of assets



(13.3)




(10.1)

Acquisition costs, net of cash acquired



(17.0)




(88.1)

Net cash used in investing activities



(30.0)




(98.0)









Cash flows from financing activities:








Borrowings on credit facility



207.5




180.1

Repayments on credit facility



(221.5)




(42.7)

Repayments of long-term debt



(0.8)




(1.1)

Deferred financing costs



(0.1)




(2.9)

Exercise of stock options



0.1




-

Net cash (used in) provided by financing activities



(14.8)




133.4









Net increase (decrease) in cash



5.0




(3.2)

Cash, beginning of period



12.1




16.6

Cash, end of period


$

17.1



$

13.4









 

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












Three Months Ended 


Nine Months Ended





September 30,



June 30,


September 30,





















2012



2011



2012


2012



2011

































Segment:
































Flat Rolled and Non-Ferrous:
















Net sales



$

266.7


$

279.7


$

306.7

$

875.5


$

785.7

Operating income



$

15.5


$

20.6


$

20.6

$

54.4


$

60.8

Depreciation and amortization



$

3.4


$

2.5


$

3.2

$

9.5


$

7.5

EBITDA       (1)



$

18.9


$

23.1


$

23.8

$

63.9


$

68.3

Adjusted EBITDA       (2)



$

18.9


$

23.1


$

23.8

$

63.9


$

68.3

Shipments    (3) 




225



198



251


717



617

































Plates and Shapes:
















Net sales



$

195.6


$

191.3


$

209.7

$

615.6


$

588.1

Operating income



$

18.1


$

20.0


$

23.2

$

64.6


$

67.1

Depreciation and amortization



$

2.3


$

2.4


$

2.3

$

6.9


$

7.3

EBITDA       (1)



$

20.4


$

22.4


$

25.5

$

71.5


$

74.4

Adjusted EBITDA       (2)



$

20.4


$

22.4


$

25.5

$

71.5


$

75.0

Shipments    (3) 




159



146



167


491



461

































Building Products:
















Net sales



$

23.5


$

24.7


$

24.2

$

63.8


$

66.1

Operating income 



$

1.4


$

0.9


$

1.1

$

0.7


$

0.3

Depreciation and amortization (5)



$

0.4


$

0.5


$

0.6

$

1.5


$

1.6

EBITDA       (1)



$

1.8


$

1.4


$

1.7

$

2.2


$

1.9

Adjusted EBITDA       (2)



$

1.8


$

1.4


$

1.7

$

2.2


$

1.9

Shipments    (3) 




-



-



-


-



-

































Corporate and other:
















Net sales (4)



$

(2.1)


$

(3.4)


$

(3.5)

$

(8.8)


$

(9.7)

Operating loss



$

(7.6)


$

(6.2)


$

(6.6)

$

(19.8)


$

(19.8)

Depreciation and amortization



$

0.1


$

0.1


$

0.1

$

0.3


$

0.5

EBITDA       (1)



$

(7.5)


$

(6.1)


$

(6.5)

$

(19.5)


$

(19.3)

Adjusted EBITDA       (2)



$

(6.2)


$

(5.6)


$

(5.8)

$

(16.5)


$

(16.6)

Shipments    (3)  (4)




(3)



(3)



(5)


(11)



(9)

































Consolidated:
















Net sales



$

483.7


$

492.3


$

537.1

$

1,546.1


$

1,430.2

Operating income



$

27.4


$

35.3


$

38.3

$

99.9


$

108.4

Depreciation and amortization (5)



$

6.2


$

5.5


$

6.2

$

18.2


$

16.9

EBITDA       (1)



$

33.6


$

40.8


$

44.5

$

118.1


$

125.3

Adjusted EBITDA       (2)



$

34.9


$

41.3


$

45.2

$

121.1


$

128.6

Shipments    (3) 




381



341



413


1,197



1,069

















Product Mix: (6)
















Carbon Flat Rolled




32.1%



34.3%



34.8%


33.9%



34.8%

Mini Mill Products




11.7%



10.5%



11.5%


11.4%



10.5%

Non-Ferrous




25.6%



25.9%



24.0%


24.6%



24.0%

Plate




17.3%



17.0%



17.4%


17.5%



17.8%

Structural




13.3%



12.3%



12.3%


12.6%



12.9%

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 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 indenture 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 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 indenture governing our notes) is defined as EBITDA further adjusted to exclude certain non-cash, non-recurring and realized (or in the case of the indenture, 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, 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

Nine Months Ended


Twelve

Months Ended





September 30,


June 30,


September 30,


September 30,




















2012


2011


2012


2012


2011


2012





 (In millions) 
















Operating income

$

27.4


$

35.3


$

38.3


$

99.9


$

108.4


$

126.7

Depreciation and amortization (1)

6.2


5.5


6.2


18.2


16.9


24.6

EBITDA

33.6


40.8


44.5


118.1


125.3


151.3

Indenture defined adjustments to EBITDA:












Facility closure and severance costs

-


-


-


-


0.6


-

Non cash employee benefit expense

0.6


0.4


0.6


1.8


1.2


3.0

Secondary offering costs

0.6


-


-


0.6


-


0.6

Acquisition expenses

0.1


0.1


0.1


0.6


1.5


0.7

Adjusted EBITDA

$

34.9


$

41.3


$

45.2


$

121.1


$

128.6


$

155.6

Pro forma acquisition adjustments











1.1

Pro Forma Adjusted EBITDA











$

156.7


















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
















SOURCE Metals USA Holdings Corp.



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