Wheeling-Pittsburgh Corporation Announces First Quarter 2007 Results
WHEELING, W.Va., May 10 /PRNewswire-FirstCall/ — Wheeling-Pittsburgh Corporation , the holding company of Wheeling-Pittsburgh Steel Corporation, today reported its financial results for the quarter ended March 31, 2007.
For the first quarter of 2007, the Company reported an operating loss of $52.9 million and a net loss of $59.9 million, or $(3.92) per basic and diluted share. This compares to an operating loss of $0.1 million and a net loss of $2.1 million for first quarter of 2006, or $(0.15) per basic and diluted share.
Steel shipments for the first quarter of 2007 totaled 603,893 tons or $659 per ton versus 620,668 tons or $680 per ton for the first quarter of 2006 (excluding non-steel product revenue). Net sales for the first quarter of 2007 totaled $397.7 million as compared to net sales of $437.0 million for the first quarter of 2006. Net sales for the first quarter of 2006 included $14.8 million from the sale of coke to the company’s joint venture partner. The decrease in net sales versus the year ago quarter was due to a decrease in the volume of steel products sold and average steel product selling price drop of $21 per ton, reflecting the remnants of the service center inventory overhang condition, as well as the absence of coke revenue in the first quarter 2007 due to the deconsolidation of the Mountain State Carbon joint venture effective January 1, 2007.
Cost of sales for the first quarter of 2007 totaled $416.3 million as compared to cost of sales of $408.1 million for the first quarter of 2006. Cost of sales for the first quarter of 2006 included the cost of coke sold of $13.2 million and was reduced by an insurance recovery of $7.3 million related to a prior year claim.
Cost of sales of steel products sold during the first quarter of 2007 totaled $416.3 million, or $689 per ton versus $402.2 million or $648 per ton during the first quarter of 2006. The overall increase of $14.1 million resulted principally from a per ton increase of $41, offset by a decrease in the volume of steel products sold. The increase in the per ton cost of steel products resulted principally from lower steelmaking production levels as well as changes in the cost of certain raw materials including scrap, pig iron and zinc. Natural gas cost during the first quarter of 2007 was lower than the first quarter of 2006. Severance costs accrued in the first quarter 2007 results for the salaried workforce reduction initiative amounted to $1.4 million within cost of goods sold and $2.5 million within selling, general and administrative expenses.
James P. Bouchard, Chairman and CEO commented that “The Company’s first quarter results were significantly impacted by a very low January production level which was a result of the anemic order book inherited in December 2006. The loss, while a bit higher than expected, includes approximately $4 million in accruals for a salary workforce reduction implemented in March. The eventual reduction of over 90 salaried employees represents an important step in improving the cost competitiveness of Wheeling-Pitt as it is expected to save approximately $9.0 million on an annualized basis.
The mission of the new management team is to remedy the difficult production, supply chain and selling problems of the Company. We continue to work diligently to rectify these problems in order to improve the operational and financial performance of the Company. The issues are complex and extensive and will take time to resolve. On the commercial side, we are making progress through a significant improvement in the order book.
The proposed combination with Esmark has entered the review process with the Securities and Exchange Commission and we anticipate that the closing of the transaction will occur this summer.”
Management will conduct a live call tomorrow, May 11 at 11 a.m. ET to review the Company’s financial results and business prospects. Individuals wishing to participate can join the conference call by dialing 800-289-0533 or 913-981-5525. A replay will be available until May 17, 2007 by dialing 888- 203-1112 or 719-457-0820, and using the pass code 8658746. The call can also be accessed via the Internet live or as a replay through http://www.investorcalendar.com/.
This release contains certain projections or other forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities-Exchange Act regarding future events or the future financial performance of Wheeling-Pittsburgh Corporation that involve risks and uncertainties. Forward-looking statements reflect the current views of management and are subject to a number of risks and uncertainties that could cause actual results to differ materially from actual future events or results. These risks and uncertainties include, among others, factors relating to (1) the Company’s potential inability to generate sufficient operating cash flow to service or refinance its indebtedness; (2) concerns relating to financial covenants and other restrictions contained in its credit agreements; (3) intense competition, dependence on suppliers of raw materials and cyclical demand for steel products; (4) the risk that the businesses of the Company and Esmark will not be integrated successfully or such integration may be more difficult, time-consuming or costly than expected; (5) the ability of the combined companies to realize the expected benefits from the proposed combination, including expected operating efficiencies, synergies, cost savings and increased productivity, and the timing of realization of any such benefits; (6) lower than expected operating results for the Company; (7) the risk of unexpected consequences resulting from the combination of the Company and Esmark; and (8) certain other risks identified in section “Item 1A – Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2006, and other reports and filings with the SEC, which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statements. In addition, any forward-looking statements represent Wheeling-Pittsburgh Corporation’s views only as of today and should not be relied upon as representing the Company’s views as of any subsequent date. While Wheeling-Pittsburgh Corporation may elect to update forward-looking statements from time to time, the company specifically disclaims any obligation to do so.
About Wheeling-Pittsburgh:
Wheeling-Pittsburgh is a steel company engaged in the making, processing and fabrication of steel and steel products using both integrated and electric arc furnace technology. The Company manufactures and sells hot rolled, cold rolled, galvanized, pre-painted and tin mill sheet products. The Company also produces a variety of steel products including roll formed corrugated roofing, roof deck, floor deck, bridgeform and other products used primarily by the construction, highway and agricultural markets.
The Company’s condensed consolidated statements of operations and condensed consolidated balance sheets are attached.
WHEELING-PITTSBURGH CORPORATION AND SUBSIDIARIES Condensed Consolidated Statements of Operations (Unaudited) (Dollars in thousands, except per share amounts) Quarter Ended March 31, 2007 2006 Revenues: Net sales, including sales to affiliates of $59,485 and $94,674 $397,721 $436,978 Cost and expenses: Cost of sales, including cost of sales to affiliates of $64,400 and $92,682, excluding depreciation and amortization expense 416,272 408,118 Depreciation and amortization expense 9,556 8,307 Selling, general and administrative expense 24,784 20,650 Total cost and expenses 450,612 437,075 Operating loss (52,891) (97) Interest expense and other financing costs (9,532) (6,151) Other income 2,527 2,816 Loss before income taxes (59,896) (3,432) Income tax provision (benefit) – – Loss before minority interest (59,896) (3,432) Minority interest – 1,322 Net loss $(59,896) $(2,110) Loss per share: Basic $(3.92) $(0.15) Diluted $(3.92) $(0.15) Weighted average shares (in thousands): Basic 15,287 14,516 Diluted 15,287 14,516 Shipment – tons 603,893 620,668 Production – tons 564,281 661,411 Note: The condensed consolidated statements of operations for the quarter ended March 31, 2007 and the condensed consolidated balance sheet at March 31, 2007 do not include Mountain State Carbon, LLC. WHEELING-PITTSBURGH CORPORATION AND SUBSIDIARIES Condensed Consolidated Balance Sheets (Dollars in thousands) (Unaudited) March 31, December 31, 2007 2006 Assets Current assets: Cash and cash equivalents $4,735 $21,842 Accounts receivables, less allowance for doubtful accounts of $3,035 and $2,882 202,827 138,513 Inventories 233,041 212,221 Prepaid expenses and deferred charges 9,427 27,911 Total current assets 450,030 400,487 Investment in and advances to affiliated companies 124,892 53,585 Property, plant and equipment, less accumulated depreciation of $109,119 and $114,813 449,990 626,210 Deferred income tax benefits 32,227 30,537 Restricted cash – 2,163 Other intangible assets, less accumulated amortization of $2,145 and $2,136 246 255 Deferred charges and other assets 8,147 9,308 Total assets $1,065,532 $1,122,545 Liabilities Current liabilities: Accounts payable, including book overdrafts of $8,524 and $13,842 $133,331 $99,536 Short-term debt 169,400 110,000 Payroll and employee benefits payable 43,950 34,766 Accrued income and other taxes 8,189 10,333 Deferred income taxes payable 32,227 30,537 Accrued interest and other liabilities 23,370 10,257 Long-term debt due in one year 6,871 32,119 Total current liabilities 417,338 327,548 Long-term debt 235,856 254,961 Convertible debt, net of discount of $9,849 40,151 – Employee benefits 122,721 121,953 Other liabilities 12,582 25,600 Total liabilities 828,648 730,062 Minority interest in consolidated subsidiary – 106,290 Stockholders’ equity Preferred stock – $.001 par value; 20,000,000 shares authorized; no shares issued or outstanding – – Common stock – $.01 par value; 80,000,000 shares authorized; 15,305,551 and 15,274,796 issued; 15,298,885 and 15,268,130 shares outstanding 153 153 Additional paid-in capital 301,423 289,903 Accumulated deficit (64,055) (4,159) Treasury stock, 6,666 shares, at cost (100) (100) Accumulated other comprehensive (loss) income (537) 396 Total stockholders’ equity 236,884 286,193 Total liabilities and stockholders’ equity $1,065,532 $1,122,545
Wheeling-Pittsburgh Steel Corporation
CONTACT: Media and Financial Community, Dennis Halpin, +1-304-234-2421
Web site: http://www.wpsc.com/
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