California Steel Industries Reports First Quarter 2001 Results

Apr 23, 2001, 01:00 ET from California Steel Industries, Inc.

    FONTANA, Calif., April 23 /PRNewswire Interactive News Release/ -- Today
 California Steel Industries, Inc. ("CSI") reported its operating and financial
 results for the first quarter ended March 31, 2001.
     Results for first quarter 2001 were a net loss of $1.9 million on revenues
 of $153.4 million.  Despite a difficult business environment that has been
 unprecedented in the Company's history, CSI generated an EBITDA of
 $8.3 million for first quarter 2001.  Total debt was reduced from $239 million
 on December 31, 2000 to $229 million at March 31, 2001.  Excess availability
 under the Company's revolving credit facility increased from $21 million at
 fiscal year-end 2000 to over $33 million at March 31, 2001.
     Lourenco Goncalves, President and CEO stated, "This quarter's results
 represent the first net loss we have posted since CSI ramped up production in
 1986.  This is concrete evidence to conclude that the economic environment,
 not only here on the West Coast, but all over the U.S., is suffering severely.
 We are facing a 'perfect storm' where simultaneous negative forces such as
 weak demand, low prices due to irrational domestic competition, astronomically
 high natural gas costs and electricity availability are beyond our control.
 What can be controlled is being controlled: our inventory has been reduced,
 our liquidity has improved and our productivity has increased."
     Sales volume of 414,731 tons represents a 46,000 ton decline when compared
 with the same quarter last year.  However, first quarter sales volume was
 approximately 10% higher than fourth quarter 2000.  CSI's average sales price
 of $368 per ton for first quarter 2001 was $36 lower than first quarter 2000
 and $33 lower than the fourth quarter 2000 average.  Sales volumes for the
 quarter were as follows (net tons):
 
                           1Q2001              1Q2000
      Hot Rolled          182,091             198,111
      Cold Rolled          62,855              77,427
      Galvanized          141,711             155,110
      Pipe                 28,074              30,729
      Total               414,731             461,377
 
     Average slab consumption cost of $209 per net ton for first quarter 2001
 increased by approximately $24 when compared to the first quarter of 2000.
 When compared to the fourth quarter of 2000, slab consumption cost dropped
 approximately $11 per ton.
     Production costs increased for the quarter as the result of higher utility
 costs.  First, natural gas average unit price was 275% higher in first quarter
 2001 than first quarter 2000.  Higher natural gas prices increased CSI's first
 quarter production costs by approximately $5.2 million over the same quarter a
 year ago.  CSI is currently pursuing a fixed price long-term contract for
 natural gas in order to eliminate the volatility of natural gas prices on
 CSI's earnings.
     Second, the average unit price CSI paid for electricity in the first
 quarter rose by approximately 25% when compared to the average price paid
 during the first quarter of 2000.  This higher electricity price increased
 CSI's first quarter production costs by approximately $725,000.
     In 1998, the State of California partially deregulated the electricity
 market.  Starting in the summer of 2000, the availability of electricity was
 significantly impaired as a consequence of high spot prices for electricity,
 increasing debt burdens of electricity utility companies, and a lack of
 available electricity to meet demand.  However, unit prices for electricity
 passed through to end-users were not materially affected because the laws
 enacting deregulation fixed the price utilities companies could charge
 consumers.
     CSI has been an "interruptable" purchaser of electricity since 1987.  The
 power crisis in California forced CSI to interrupt production 14 times during
 the month of January.  On January 26, 2001, the California Public Utilities
 Commission effectively suspended the interruptible program.  Since then CSI
 has not had to interrupt its operations.  Since December 31, 2000, the
 California Public Utilities Commission has approved two electricity rate
 increases.  In January, CSI's rate was increased by approximately $0.01 per
 kilowatt-hour.  In April, an additional 42% increase was approved.  As of this
 date no definitive rate schedule has been published for the April increase.
     Effective June 3rd CSI will alter its production schedule to mitigate the
 effect of these rate increases to the extent it does not affect production
 volumes.  The altered production schedule will be in place during the entire
 summer season.
     To preserve liquidity, CSI reduced slab purchases and inventory levels.
 Slab inventory decreased from 580,000 tons at December 31, 2000 to 470,000
 tons at March 31, 2001. Capital expenditures for the first quarter 2001 were
 limited to $4.3 million and CSI will limit fiscal 2001 capital spending to
 $20 million.  Total outstanding debt of $229 million as of March 31, 2001 was
 $10 million lower than total outstanding debt as of December 31, 2000.  Excess
 availability under CSI's revolving credit agreement exceeded $33 million.  CSI
 believes it has sufficient availability of capital to support normal cash flow
 requirements for year 2001.
     During the month of March, CSI amended certain terms and conditions
 contained in its Revolving Credit Agreement.  Specifically, the existing fixed
 charge coverage ratio test at March 31, 2001, June 30, 2001 and September 30,
 2001 was replaced by a minimum cumulative EBITDA requirement.  Additionally,
 the pricing grid was changed from a range of 70 to 100 basis points to a range
 of 100 to 230 basis points.  CSI remains in compliance with all terms and
 conditions contained in its credit agreement and bond indenture.
 
     First quarter figures (in thousands) are as follows:
 
                                               (Unaudited)
                                            Three months ended
                                       03/31/2001        03/31/2000
      Billed Net Tons                     414.7              461.4
      Net Sales Revenue                $153,378           $187,709
      Cost of Sales                    $148,271           $147,722
      SG&A                             $  6,359          $  10,078
      Operating Income (Loss)          $ (1,252)         $  29,909
      Interest Expense, net            $  4,527          $   4,297
      Income (Loss) Before Tax         $ (3,884)         $  25,965
      Net Income (Loss)                $ (1,939)         $  15,438
      Deprec & Amort                   $  7,487          $   6,844
      EBITDA                           $  8,294          $  37,101
 
     This release may contain forward-looking statements relating to future
 financial results.  Actual results may differ materially as a result of
 factors over which the Company has no control.  These risk factors and
 additional information are included in the Company's reports filed with the
 Securities and Exchange Commission.
 
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SOURCE California Steel Industries, Inc.
    FONTANA, Calif., April 23 /PRNewswire Interactive News Release/ -- Today
 California Steel Industries, Inc. ("CSI") reported its operating and financial
 results for the first quarter ended March 31, 2001.
     Results for first quarter 2001 were a net loss of $1.9 million on revenues
 of $153.4 million.  Despite a difficult business environment that has been
 unprecedented in the Company's history, CSI generated an EBITDA of
 $8.3 million for first quarter 2001.  Total debt was reduced from $239 million
 on December 31, 2000 to $229 million at March 31, 2001.  Excess availability
 under the Company's revolving credit facility increased from $21 million at
 fiscal year-end 2000 to over $33 million at March 31, 2001.
     Lourenco Goncalves, President and CEO stated, "This quarter's results
 represent the first net loss we have posted since CSI ramped up production in
 1986.  This is concrete evidence to conclude that the economic environment,
 not only here on the West Coast, but all over the U.S., is suffering severely.
 We are facing a 'perfect storm' where simultaneous negative forces such as
 weak demand, low prices due to irrational domestic competition, astronomically
 high natural gas costs and electricity availability are beyond our control.
 What can be controlled is being controlled: our inventory has been reduced,
 our liquidity has improved and our productivity has increased."
     Sales volume of 414,731 tons represents a 46,000 ton decline when compared
 with the same quarter last year.  However, first quarter sales volume was
 approximately 10% higher than fourth quarter 2000.  CSI's average sales price
 of $368 per ton for first quarter 2001 was $36 lower than first quarter 2000
 and $33 lower than the fourth quarter 2000 average.  Sales volumes for the
 quarter were as follows (net tons):
 
                           1Q2001              1Q2000
      Hot Rolled          182,091             198,111
      Cold Rolled          62,855              77,427
      Galvanized          141,711             155,110
      Pipe                 28,074              30,729
      Total               414,731             461,377
 
     Average slab consumption cost of $209 per net ton for first quarter 2001
 increased by approximately $24 when compared to the first quarter of 2000.
 When compared to the fourth quarter of 2000, slab consumption cost dropped
 approximately $11 per ton.
     Production costs increased for the quarter as the result of higher utility
 costs.  First, natural gas average unit price was 275% higher in first quarter
 2001 than first quarter 2000.  Higher natural gas prices increased CSI's first
 quarter production costs by approximately $5.2 million over the same quarter a
 year ago.  CSI is currently pursuing a fixed price long-term contract for
 natural gas in order to eliminate the volatility of natural gas prices on
 CSI's earnings.
     Second, the average unit price CSI paid for electricity in the first
 quarter rose by approximately 25% when compared to the average price paid
 during the first quarter of 2000.  This higher electricity price increased
 CSI's first quarter production costs by approximately $725,000.
     In 1998, the State of California partially deregulated the electricity
 market.  Starting in the summer of 2000, the availability of electricity was
 significantly impaired as a consequence of high spot prices for electricity,
 increasing debt burdens of electricity utility companies, and a lack of
 available electricity to meet demand.  However, unit prices for electricity
 passed through to end-users were not materially affected because the laws
 enacting deregulation fixed the price utilities companies could charge
 consumers.
     CSI has been an "interruptable" purchaser of electricity since 1987.  The
 power crisis in California forced CSI to interrupt production 14 times during
 the month of January.  On January 26, 2001, the California Public Utilities
 Commission effectively suspended the interruptible program.  Since then CSI
 has not had to interrupt its operations.  Since December 31, 2000, the
 California Public Utilities Commission has approved two electricity rate
 increases.  In January, CSI's rate was increased by approximately $0.01 per
 kilowatt-hour.  In April, an additional 42% increase was approved.  As of this
 date no definitive rate schedule has been published for the April increase.
     Effective June 3rd CSI will alter its production schedule to mitigate the
 effect of these rate increases to the extent it does not affect production
 volumes.  The altered production schedule will be in place during the entire
 summer season.
     To preserve liquidity, CSI reduced slab purchases and inventory levels.
 Slab inventory decreased from 580,000 tons at December 31, 2000 to 470,000
 tons at March 31, 2001. Capital expenditures for the first quarter 2001 were
 limited to $4.3 million and CSI will limit fiscal 2001 capital spending to
 $20 million.  Total outstanding debt of $229 million as of March 31, 2001 was
 $10 million lower than total outstanding debt as of December 31, 2000.  Excess
 availability under CSI's revolving credit agreement exceeded $33 million.  CSI
 believes it has sufficient availability of capital to support normal cash flow
 requirements for year 2001.
     During the month of March, CSI amended certain terms and conditions
 contained in its Revolving Credit Agreement.  Specifically, the existing fixed
 charge coverage ratio test at March 31, 2001, June 30, 2001 and September 30,
 2001 was replaced by a minimum cumulative EBITDA requirement.  Additionally,
 the pricing grid was changed from a range of 70 to 100 basis points to a range
 of 100 to 230 basis points.  CSI remains in compliance with all terms and
 conditions contained in its credit agreement and bond indenture.
 
     First quarter figures (in thousands) are as follows:
 
                                               (Unaudited)
                                            Three months ended
                                       03/31/2001        03/31/2000
      Billed Net Tons                     414.7              461.4
      Net Sales Revenue                $153,378           $187,709
      Cost of Sales                    $148,271           $147,722
      SG&A                             $  6,359          $  10,078
      Operating Income (Loss)          $ (1,252)         $  29,909
      Interest Expense, net            $  4,527          $   4,297
      Income (Loss) Before Tax         $ (3,884)         $  25,965
      Net Income (Loss)                $ (1,939)         $  15,438
      Deprec & Amort                   $  7,487          $   6,844
      EBITDA                           $  8,294          $  37,101
 
     This release may contain forward-looking statements relating to future
 financial results.  Actual results may differ materially as a result of
 factors over which the Company has no control.  These risk factors and
 additional information are included in the Company's reports filed with the
 Securities and Exchange Commission.
 
                      MAKE YOUR OPINION COUNT - Click Here
                http://tbutton.prnewswire.com/prn/11690X81171265
 
 SOURCE  California Steel Industries, Inc.