Metals USA Reports Third Quarter 2009 Results
HOUSTON, Oct. 19 /PRNewswire/ — Metals USA Holdings Corp. today announced its operating results for the quarter ended September 30, 2009. Sales revenues for the third quarter were $255.4 million compared to $617.7 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 $19.7 million for the third quarter compared to third quarter 2008 Adjusted EBITDA of $90.1 million. Third quarter 2009 net loss was $1.8 million compared to net income of $36.0 million for the same period last year.
Lourenco Goncalves, the Company’s Chairman, President and CEO stated: “We are pleased with the sequential improvement in our profitability, which is a direct consequence of the aggressive cost cutting initiatives we have implemented. Working capital continues to be a source of cash, and our balance sheet has been significantly improved.” Mr. Goncalves concluded: “We continue to work out of a much smaller inventory, and have no plans to change that as we stand prepared to benefit from the market rebound when it occurs.”
The Company had $90.0 million drawn under its asset-based credit facility (the “ABL Facility”) at September 30, 2009, with excess availability of $128.9 million. Total liquidity, defined as excess availability plus cash, was $149.0 million at September 30, 2009. Net debt of $481.0 million on September 30, 2009 was $296.5 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 $501.1 million at September 30, 2009 consisted of outstanding advances under the ABL Facility in the amount of $90.0 million, outstanding 11 1/8% Senior Secured Notes in the amount of $226.3 million, outstanding PIK Toggle Notes of $178.9 million, and $5.9 million of other long term debt. Capital expenditures were $1.3 million for the current quarter and $3.6 million year-to-date. Net cash provided by operating activities for the first nine months of 2009 was $228.4 million.
The Company recognized depreciation and amortization expenses during the quarter of $4.7 million. Interest expense for the quarter was $14.0 million, which included $3.4 million of interest on the Company’s Senior Floating Rate Toggle Notes due 2012 that was paid entirely in kind (“PIK Interest”). For the nine months ended September 30, 2009 the Company paid cash interest in the amount of $25.8 million. Operating income, the GAAP measure that we believe is most comparable to Adjusted EBITDA, was $12.7 million for the third quarter of 2009, compared to $84.4 million of operating income recorded in the same period last year.
Metals USA has scheduled a conference call for Monday, October 19, 2009 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 be available until approximately November 20, 2009. To access the replay, dial (888) 203-1112 and enter the pass code 9134869.
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 Ended Nine Months Ended
------------------ -----------------
June
September 30, 30, September 30,
------------- ---- -------------
2009 2008 2009 2009 2008
---- ---- ---- ---- ----
Revenues:
Net sales $255.4 $617.7 $267.8 $853.4 $1,699.8
Operating costs and expenses:
Cost of sales (exclusive of
operating and delivery,
and depreciation and
amortization shown below) 185.9 446.4 228.8 702.4 1,245.9
Operating and delivery 31.6 48.6 31.2 97.5 144.6
Selling, general and
administrative 20.5 33.9 22.1 66.6 96.5
Depreciation and
amortization 4.7 5.3 4.8 14.2 16.2
Gain on sale of property
and equipment - (0.9) - - (2.4)
--- ---- --- --- ----
Operating income (loss) 12.7 84.4 (19.1) (27.3) 199.0
Other (income) expense:
Interest expense 14.0 20.4 17.2 50.5 65.4
Gain on extinguishment of
debt (0.7) - (56.1) (89.1) -
Other (income) expense, net - 0.2 (0.2) (0.3) 0.2
- --- ---- ---- ---
Income (loss) before income
taxes (0.6) 63.8 20.0 11.6 133.4
Provision for income taxes 1.2 27.8 6.2 3.7 53.8
----- ----- ----- ---- -----
Net income (loss) $(1.8) $36.0 $13.8 $7.9 $79.6
===== ===== ===== ==== =====
Metals USA Holdings Corp.
Unaudited Consolidated Balance Sheets
(In millions, except share amounts)
September December
30, 31,
2009 2008
---- ----
Assets
Current assets:
Cash and cash equivalents $20.1 $166.7
Accounts receivable, net of allowance of $8.9
and $8.8, respectively 127.5 189.3
Inventories 226.0 422.6
Deferred income tax asset 22.6 23.6
Prepayments and other 3.4 6.5
--- ---
Total current assets 399.6 808.7
Property and equipment, net 187.0 190.1
Assets held for sale - 1.8
Intangible assets, net 9.6 13.6
Goodwill 49.0 49.9
Other assets, net 17.3 24.1
---- ----
Total assets $662.5 $1,088.2
====== ========
Liabilities and Stockholders' Deficit
Current liabilities:
Accounts payable $45.5 $47.2
Accrued liabilities 50.1 60.9
Current portion of long-term debt 0.1 1.6
--- ---
Total current liabilities 95.7 109.7
Long-term debt, less current portion 501.0 942.6
Deferred income tax liability 84.7 62.2
Other long-term liabilities 22.0 24.7
---- ----
Total liabilities 703.4 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 September 30, 2009 and
December 31, 2008, respectively 0.1 0.1
Additional paid-in capital 6.7 6.4
Retained deficit (46.6) (54.5)
Accumulated other comprehensive loss (1.1) (3.0)
---- ----
Total stockholders' deficit (40.9) (51.0)
----- -----
Total liabilities and stockholders'
deficit $662.5 $1,088.2
====== ========
Metals USA Holdings Corp.
Unaudited Consolidated Statements of Cash Flows
(In millions)
Nine Months
Ended
September 30,
-------------
2009 2008
---- ----
Cash flows from operating activities:
Net income $7.9 $79.6
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
(Gain) loss on sale of property and equipment - (2.4)
Provision for bad debts 2.7 2.3
Depreciation and amortization 15.9 18.2
Other (gains) losses (89.1) -
Amortization of debt issuance costs and
discounts on long-term debt 4.1 4.4
Deferred income taxes 22.5 (1.9)
Stock-based compensation 0.3 0.8
Non-cash interest on PIK option 17.6 -
Changes in operating assets and liabilities,
net of acquisitions:
Accounts receivable 59.1 (81.8)
Inventories 196.6 (152.7)
Prepayments and other 3.1 (0.6)
Accounts payable and accrued liabilities (11.0) 26.9
Other (1.3) 9.5
---- ---
Net cash provided by (used in) operating
activities 228.4 (97.7)
----- -----
Cash flows from investing activities:
Sale of assets 0.2 9.5
Purchases of assets (3.6) (8.9)
Acquisition costs, net of cash acquired (4.2) -
---- ---
Net cash provided by (used in) investing
activities (7.6) 0.6
---- ---
Cash flows from financing activities:
Borrowings on credit facility 79.0 959.5
Repayments on credit facility (357.0) (698.0)
Repayments of long-term debt (89.4) (2.3)
Deferred financing costs - (2.6)
--- ----
Net cash provided by (used in) financing
activities (367.4) 256.6
------ -----
Net (decrease) increase in cash and cash equivalents (146.6) 159.5
Cash and cash equivalents, beginning of period 166.7 13.6
----- ----
Cash and cash equivalents, end of period $20.1 $173.1
===== ======
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,
------------- -------- -------------
2009 2008 2009 2009 2008
---- ---- ---- ---- ----
Segment:
Flat Rolled and Non-Ferrous:
Net sales $115.5 $244.5 $117.6 $374.0 $695.0
Operating income (loss) $8.9 $28.0 $3.1 $9.7 $72.1
Depreciation and
amortization $1.7 $1.7 $1.8 $5.3 $5.4
EBITDA (1) $10.6 $29.7 $4.9 $15.0 $77.5
Adjusted EBITDA (2) $10.6 $29.7 $4.9 $15.0 $77.5
Shipments (3) 107 151 110 330 483
Plates and Shapes:
Net sales $115.8 $339.9 $124.8 $413.1 $915.1
Operating income (loss) $7.9 $62.4 $(17.0) $(17.8) $155.0
Depreciation and
amortization $2.5 $2.3 $2.3 $7.2 $6.9
EBITDA (1) $10.4 $64.7 $(14.7) $(10.6) $161.9
Adjusted EBITDA (2) $11.1 $64.7 $(14.7) $(9.8) $161.9
Shipments (3) 113 212 120 370 672
Building Products:
Net sales $26.1 $37.8 $27.2 $73.0 $100.3
Operating income (loss) $1.2 $1.8 $0.5 $(2.6) $(6.4)
Depreciation and
amortization (5) $0.9 $0.7 $0.6 $2.1 $2.5
EBITDA (1) $2.1 $2.5 $1.1 $(0.5) $(3.9)
Adjusted EBITDA (2) $2.3 $1.8 $1.1 $0.1 $0.2
Shipments (3) - - - - -
Corporate and other:
Net sales $(2.0) $(4.5) $(1.8) $(6.7) $(10.6)
Operating loss $(5.3) $(7.8) $(5.7) $(16.6) $(21.7)
Depreciation and
amortization $0.4 $1.1 $0.5 $1.3 $3.4
EBITDA (1) $(4.9) $(6.7) $(5.2) $(15.3) $(18.3)
Adjusted EBITDA (2) $(4.3) $(6.1) $(4.8) $(14.0) $(16.6)
Shipments (3) (4) (2) (3) (2) (6) (8)
Consolidated:
Net sales $255.4 $617.7 $267.8 $853.4 $1,699.8
Operating income (loss) $12.7 $84.4 $(19.1) $(27.3) $199.0
Depreciation and
amortization (5) $5.5 $5.8 $5.2 $15.9 $18.2
EBITDA (1) $18.2 $90.2 $(13.9) $(11.4) $217.2
Adjusted EBITDA (2) $19.7 $90.1 $(13.5) $(8.7) $223.0
Shipments (3) 218 360 228 694 1,147
(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.
Nine Months
Three Months Ended Ended
------------------ -----------
September
30, June 30, September 30,
--------- -------- -------------
2009 2008 2009 2009 2008
---- ---- ---- ---- ----
(In millions)
Operating
income (loss) $12.7 $84.4 $(19.1) $(27.3) $199.0
Depreciation
and
amortization
(1) 5.5 5.8 5.2 15.9 18.2
--- --- --- ---- ----
EBITDA 18.2 90.2 (13.9) (11.4) 217.2
Indenture defined
adjustments to
EBITDA:
Facility
closure and
severance
costs 1.1 (0.7) - 1.5 4.0
Stock
options and
grant
expense 0.1 0.3 0.1 0.3 0.9
Management
fees and
other costs
0.3 0.3 0.3 0.9 0.9
--- --- --- --- ---
Adjusted EBITDA $19.7 $90.1 $(13.5) $(8.7) $223.0
===== ===== ====== ===== ======
(1) Includes depreciation expense recorded in cost of sales for
the Building Products Group.
SOURCE Metals USA Holdings Corp.