California Steel Reports 4th Quarter, Full Year 2008 Results
02/27/2009 - California Steel Industries reports a net loss of $76.1 million on net sales of $269.5 million for the fourth quarter and net income of $13.3 million on record net sales of $1.51 billion for the year 2008.
California Steel Industries, Inc. reported a net loss of $76.1 million on net sales of $269.5 million for the fourth quarter and net income of $13.3 million on record net sales of $1.51 billion for the year 2008.
Fourth Quarter Results—The $76.1 million net loss compares to a net loss of $12.2 million in the year-ago fourth quarter. Results include $135 million for the write down of inventory to market value, as the company’s inventory values are carried at the lower of cost or market (LCM).
Net sales of $269.5 million reflect a 9% decrease compared to net sales of $297.0 million in last year’s fourth quarter. Shipments of 193,094 net tons reflect a 53% decrease compared to shipment levels of 413,143 net tons in the year-ago fourth quarter. The company's average sales price was almost twice as high when compared to fourth quarter of 2007.
Full Year Results—Net income of $13.3 million compares to a net loss of $906,000 in 2007. Results include $957,000 for the write down of inventory to market value.
Record net sales of $1.51 billion were 18% higher than net sales of $1.28 billion in 2007. Net sales were buoyed by sales prices that increased significantly during the first nine months of the year, with continued increases realized in fourth-quarter sales prices of electric resistance welded (ERW) pipe. Sales tonnage of ERW pipe for 2008 also achieved record results, and a 17% increase over 2007 tonnage.
Total tons billed, excluding scrap, for 2008 are 1.44 million net tons, down 16% from 2007, while the average sales price was 41% higher than in 2007.
Management Comments—"The past year was a year of extremes, not just for CSI but for the entire steel industry,” said Vicente Wright, President and CEO. “We had high expectations during the first half of the year, with strong global steel market conditions. Conversely, third quarter brought about declining conditions that ultimately resulted in a nightmare of a market in fourth quarter, which continues today,” he noted.
“The combination of conditions during the year supported increased steel prices in the U.S., but also drove international prices for slab to record levels, impacting our overall results,” added Wright.
The balance under the company's Revolving Credit Agreement was zero as of December 31, 2008, with availability of over $109 million. The company has a cash balance as of December 31, 2008 of $10.9 million.
California Steel Industries is the largest producer of flat rolled steel products in the western United States (the 11 states located west of the Rocky Mountains) based on tonnage billed, with a broad range of products, including hot rolled, cold rolled, and galvanized sheet and electric resistant welded pipe. Located in Fontana, Calif., the company has about 1000 employees.
