ALJ Announces 1st Quarter Earnings, Repurchase of Preferred Shares
02/16/2011 - ALJ, the parent company of Kentucky Electric Steel, reported net income of $662,510 on net sales of $32.674 million for the fiscal first quarter ended December 31, 2010.
ALJ, the parent company of Kentucky Electric Steel, reported net income of $662,510 on net sales of $32.674 million for the fiscal first quarter ended December 31, 2010.
The $662,510 net profit ($0.01 per share) compares to a net loss of $153,106 ($0.00 per share) for the year-ago first quarter. Net sales of $32.674 million compare to net sales of $21.027 million in the year-ago first quarter.
“The first quarter of our fiscal year — which corresponds to the fourth calendar quarter — is typically a tough one in the steel industry due to declining shipments related to customer holiday shutdowns,” commented John Scheel, ALJ’s Chief Executive Officer. “We saw that once again this year. The comparative results of this and the last two year's quarterly results are, however, more revealing about the overall situation than might first be noticed.
“The fourth calendar quarter of 2008 saw the recession start for us and, as a result, our quarterly revenue dropped from $40 million in 2008 to $21 million in 2009 and it has now rebounded to about $33 million in 2010,” continued Scheel. “Net income, which was negative in both the 2008 and 2009 quarters has become strong and positive.
“The recovery is not about the higher scrap prices or the higher steel prices, which are detrimental to producer and consumer alike. Rather, we are seeing improved demand across almost all product lines as the economy continues its recovery.”
ALJ also announced that it repurchased 69,400 shares of its 4% Series A Preferred Stock, plus accrued dividends thereon for an aggregate consideration of $277,600. The repurchased stock had a face value of $277,600 plus accrued dividends of approximately $147,941. ALJ will realize a savings of $147,941 in connection with the Stock Repurchase. The Stock Repurchase was effected pursuant to stock repurchase agreements between ALJ and the holders of the Repurchased Stock dated February 15, 2011. A portion of ALJ’s Series A Preferred Stock, including 59,244 shares of Repurchased Stock, is held by certain affiliated parties. Terms of the Stock Repurchase were approved by the independent members of the Board of Directors of ALJ.
Regarding the Stock Repurchase, Jess Ravich, ALJ’s Chairman of the Board, stated “We continue to utilize our resources to reduce the Company’s outstanding liabilities to improve our balance sheet and create value for our shareholders.”
ALJ is the parent company of KES Acquisition Co., which does business as Kentucky Electric Steel, the owner and operator of a steel minimill near Ashland, Ky., producing both merchant bar quality (MBQ) flats, and special bar quality (SBQ) steel flats.
