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Schuff International Announces Financial Results for Third Quarter 2008

October 17, 2008

Schuff International, Inc. (OTC:SHFK), a family of companies providing fully integrated steel construction services, today reported financial results for the third quarter ended September 30, 2008.

Third Quarter 2008 Results:

Revenues for the third quarter ended September 30, 2008 were $180.7 million, a decrease of 17 percent over record year-ago revenues of $217.9 million. The decline in year-over-year revenues resulted primarily from the reduction in the number of major casino projects in Las Vegas compared with the previous year and general softness in the commercial construction end market. Schuff benefited from strength in the Gulf Coast oil and gas and petrochemical markets, new construction projects for the U.S. government, and continued demand in its Pacific segment, particularly related to healthcare and education.

Gross profit as a percentage of revenue was 23.9 percent for the period ended September 30, 2008, compared with 23.8 percent for the year-ago period.

Operating income for the quarter was $25.7 million, down 29.0 percent from $36.2 million in the second quarter of 2007. Operating margin decreased to 14.2 percent from 16.6 percent in the year-ago period. The year-over-year decline in operating profit and margin resulted primarily from the completion of a large project in the Southwest region, which contributed approximately $15 million of additional operating profit in the period ended September 30, 2007.

Net income for the quarter was $16.3 million, or $1.71 per diluted share, versus $21.8 million, or $2.28 per diluted share, a year ago.

Schuff International’s backlog was $453.5 million ($272.6 million under contracts or purchase orders and $180.9 million under letters of intent) at September 30, 2008 compared with $588.3 million at June 30, 2008 ($263.3 million under contracts or purchase orders and $325.0 million under letters of intent). Approximately $151.5 million, representing 33.4% of the company’s backlog at September 30, 2008, was attributable to five contracts, letters of intent, notices to proceed or purchase orders. In the quarter ended September 30, 2008, one project valued at $120 million was cancelled.

Nine Months 2008 Results:

Revenues for the nine months ended September 30, 2008 were $523.9 million, a decrease of 4.0 percent over year-ago revenues of $546.0 million. Year-over-year revenue performance resulted primarily from strength in the Gulf Coast oil and gas and petrochemical markets, new construction projects for the U.S. government, and continued demand in its Pacific segment, particularly related to healthcare and education.

Gross profit as a percentage of revenue was 22.8 percent for the nine months ended September 30, 2008, compared with 20.9 percent for the year-ago period.

Operating income for the nine months of 2008 was $72.2 million, down 2.8 percent from $74.2 million for the nine months of 2007. Operating margin increased to 13.8 percent from 13.6 percent in the year-ago period.

Net income for the nine months ended September 30, 2008 was $44.8 million, or $4.72 per diluted share, versus $43.8 million, or $4.64 per diluted share, a year ago.

“I’m pleased with Schuff International’s performance for the third quarter and nine months of 2008, especially when compared with record revenue and profitability results for the same periods in 2007,” said Scott A. Schuff, president and CEO. “Our backlog, though down somewhat sequentially, remains good, which offers revenue visibility for the remainder of 2008 and into 2009. Although we expect the Las Vegas market to remain slow for the foreseeable future, we continue to be encouraged by new projects in our Pacific segment, as well as strength in the Gulf Coast oil and gas and petrochemical markets. In addition, our recent purchase of the steel fabrication facility in Eloy, Arizona will give us additional capacity to support regional and end-market growth in the Southwest.”

About Schuff International, Inc.:

Schuff International, Inc. (OTC:SHFK) and its family of steel companies is the largest steel fabrication and erection company in the United States. The 32-year-old company is experiencing record growth with major projects in progress throughout the country. Schuff offers integrated steel construction services from a single source. Professional services include design-build, design-assist, engineering, BIM participation, 3D steel modeling/detailing, fabrication, advanced field erection, joist and joist girder manufacturing, project management, and single-source steel management systems. Major market segments include industrial, public works, bridges, health care, gaming and hospitality, convention centers, stadiums, mixed-use and retail, transportation, and international projects. Schuff International, Inc., which is headquartered in Phoenix, Ariz., owns and operates nine steel fabrication plants and two steel joist manufacturing plants. Companies include Schuff Steel Company located in Arizona, Nevada and California; Schuff Steel-Midwest Division located in Overland Park, Kan., Ottawa, Kan., Chicago, Ill. and Denver, Colo.; Schuff Steel-Gulf Coast, Inc., located in Houston, Texas; Schuff Steel-Atlantic, Inc., located in Orlando, Fla., Albany, Ga. and Atlanta, Ga.; Schuff Steel Management Company-Southwest, Inc., located in Gilbert, Ariz.; and Quincy Joist Company located in Quincy, Fla. and Buckeye, Ariz. Schuff employs approximately 2,000 people throughout the country. For more information, visit www.schuff.com.

Certain statements in this news release may contain forward-looking information within the meaning of the Private Securities Litigation Reform Act of 1995, and are subject to the safe harbor created by those rules. All statements, other than statements of fact, included in this release, including, without limitation, statements regarding potential future plans and objectives of the company are forward-looking statements that involve risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. These risks and uncertainties, some of which are beyond the control of the company, include, but are not limited to, the company’s ability to successfully and timely complete construction projects; the company’s ability to convert backlog into revenue; the potential delay, suspension, termination, or reduction in scope of a construction project; the continuing validity of the underlying assumptions and estimates of total forecasted project revenues, costs and profits and project schedules; the outcomes of pending or future litigation, arbitration or other dispute resolution proceedings; the availability of borrowed funds on terms acceptable to the company; the ability to retain certain members of management; the ability to obtain surety bonds to secure its performance under certain construction contracts; possible labor disputes or work stoppages within the construction industry; the ability of project owners to obtain and/or continue to maintain financing for projects; possible changes or developments in domestic and worldwide financial, political and social circumstances; and actions taken or not taken by third parties, including the company’s customers, suppliers, business partners, and competitors and legislative, regulatory, judicial and other governmental authorities and officials. The company cautions that these forward-looking statements are further qualified by other factors. The company undertakes no obligation to publicly update or revise any statements in this release, whether as a result of new information, future events or otherwise.

  SCHUFF INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)  Three months ended   Nine months ended September 30        September 30 2008      2007      2008      2007 --------- --------- --------- --------- (in thousands, except per share data)  Revenues                       $180,711  $217,882  $523,866  $545,996 Cost of revenues                137,460   165,916   404,616   431,991 --------- --------- --------- --------- Gross profit                  43,251    51,966   119,250   114,005  General and administrative expenses                        17,544    15,775    47,085    39,798 --------- --------- --------- --------- Operating income              25,707    36,191    72,165    74,207 Interest expense                 (1,156)   (2,128)   (3,583)   (6,314) Other income                        100       231       712       834 --------- --------- --------- --------- Income before income taxes    24,651    34,294    69,294    68,727 Income tax provision             (8,355)  (12,537)  (24,487)  (24,956) --------- --------- --------- --------- Net income                  $ 16,296  $ 21,757  $ 44,807  $ 43,771 ========= ========= ========= =========  Income per share: Basic                          $   2.26  $   3.04  $   6.24  $   6.13 ========= ========= ========= ========= Diluted                        $   1.71  $   2.28  $   4.72  $   4.64 ========= ========= ========= =========  Weighted average shares used in computation: Basic                             7,216     7,168     7,185     7,135 ========= ========= ========= ========= Diluted                           9,718     9,670     9,687     9,641 ========= ========= ========= ========= 

  SCHUFF INTERNATIONAL, INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED)  September December 30       31 2008      2007 --------- ---------  (in thousands) Assets Current assets: Cash and cash equivalents                          $ 29,500  $ 38,979 Restricted funds on deposit                             706       140 Receivables                                         176,683   158,849 Costs and recognized earnings in excess of billings on uncompleted contracts                   23,883    18,091 Inventories                                          26,955    21,201 Income tax receivable                                    95         - Deferred tax asset                                      761       711 Prepaid expenses and other current assets             1,154     1,356 --------- --------- Total current assets                                259,737   239,327  Property and equipment, net                          55,257    35,299 Goodwill, net                                        17,115    17,115 Other assets                                          5,244     5,295 --------- --------- $337,353  $297,036 ========= ========= Liabilities and stockholders' equity Current liabilities: Accounts payable                                   $ 42,986  $ 47,458 Accrued payroll and employee benefits                21,010    12,845 Accrued interest                                        759       435 Other current liabilities                             8,639     7,766 Income tax payable                                        -     7,590 Billings in excess of costs and recognized earnings on uncompleted contracts                   51,415    49,342 Current portion of long-term debt                  3,650     3,605 --------- --------- Total current liabilities                           128,459   129,041  Long-term debt                                       43,851    48,262 Deferred income taxes                                 2,258     2,257 Other liabilities                                       309       318 --------- --------- 174,877   179,878 --------- ---------  Stockholders' equity: Preferred stock, $.001 par value - authorized 1,000,000 shares; none issued                            -         - Common stock, $.001 par value - 20,000,000 shares authorized; 7,534,057 and 7,533,557 issued and 7,216,267 and 7,168,091 outstanding, respectively        7         7 Additional paid-in capital                           18,054    17,083 Accumulated earnings                                146,483   101,676 Treasury stock - 317,790 and 365,466 shares, respectively, at cost                            (2,068)   (1,608) --------- --------- Total stockholders' equity                          162,476   117,158 --------- --------- $337,353  $297,036 ========= ========= 

  SCHUFF INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)  Nine months ended September 30 2008      2007 --------- --------- (in thousands) Operating activities Net income                                         $ 44,807  $ 43,771 Adjustment to reconcile net income to net cash provided by operating activities: Depreciation and amortization                         4,114     3,279 Loss from extinguishment of debt                         62        45 Loss (gain) on disposal of property and equipment        14        26 Deferred income taxes                                   (49)      577 Stock compensation                                       12         - Compensation expense - restricted stock grant         1,289       202 Changes in working capital components: Cash held in escrow/restricted funds on deposit        (777)      (87) Receivables                                         (17,834)  (77,383) Income taxes receivable/payable                      (7,685)    8,470 Costs and recognized earnings in excess of billings on uncompleted contracts                   (5,792)   (7,867) Inventories                                          (5,754)   (4,914) Prepaid expenses and other assets                       202       (75) Accounts payable                                     (4,472)   15,428 Accrued payroll and employee benefits                 8,165    14,043 Accrued interest                                        324       (83) Other current liabilities                               873     3,425 Billings in excess of costs and recognized earnings on uncompleted contracts                    2,073    11,714 Other liabilities                                        (9)       27 --------- --------- Net cash provided by operating activities            19,563    10,598  Investing activities Acquisition of property and equipment               (23,781)   (5,768) Proceeds from disposals of property and equipment        56        75 Decrease in other assets                               (334)     (820) --------- --------- Net cash used in investing activities               (24,059)   (6,513)  Financing activities Proceeds from revolving line of credit and long- term borrowings                                      1,873     7,000 Principal payments on revolving line of credit and long-term debt                                      (6,029)  (20,212) Proceeds from issuance of common stock                    -        34 Purchase of treasury stock                             (789)     (699) Payment of debt issue costs                             (38)      (89) --------- --------- Net cash used in financing activities                (4,983)  (13,966) --------- ---------  Decrease in cash and cash equivalents                (9,479)   (9,881) Cash and cash equivalents at beginning of period     38,979    13,531 --------- --------- Cash and cash equivalents at end of period         $ 29,500  $  3,650 ========= =========  Supplemental Disclosures of Cash Flow Information: Cash paid during the period for: Interest                                    $  2,898  $  5,816 Income taxes                                $ 32,221  $ 15,961  Non-cash investing and financing activities: Acquisition of property and equipment and assumption of debt                         $      -  $  4,627 




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