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Claymont Steel Lowers Third-Quarter Earnings Expectations
10/05/2007 - An unexpectedly difficult reheat furnace restart and a resultant drop in output are prompting Claymont Steel to lower its third-quarter earnings expectations down to the range of $0.05 to $0.10 per share.
An unexpectedly difficult reheat furnace restart — plus the resultant drop in output — is prompting Claymont Steel Holdings to lower its third-quarter earnings expectations down to the range of $0.05 to $0.10 per share, well below prior estimates of $0.35 to $0.45 per share.
The company experienced unexpected challenges in August when it restarted its reheat furnace after a planned upgrade that was conducted as part of the company’s annual Plate Mill outage. The restart woes led to lower-than-planned output and shipments, which are expected to impact the company's third-quarter EBITDA by approximately $7.5 million and will also impact fourth quarter EBITDA by approximately $2.3 million.
The company's operational performance improved in September, and is expected to return to a level in line with expectations in October. Market conditions and the company's resulting order book and spreads for the quarter were all consistent with expectations, including the strengthening predicted to occur going into the fourth quarter.
"While I'm disappointed in the timing of the recovery of our reheat furnace which resulted in a 20% reduction in projected shipments in August and September, our performance in the latter part of September is very encouraging and validates the investments we made in July,” said Jeff Bradley, Chairman and CEO. “Our order book and spreads in the third quarter were very solid and we are seeing the expected strengthening as we enter the fourth quarter.
“I'm also pleased to report that we have successfully recruited Victor Clark to fill the newly created role of Vice President of Operations,” continued Bradley. “Victor most recently headed up Ipsco’s Montpelier operation, and since starting early last month has already made headway toward his key immediate goals of improving operational efficiency and eliminating the volatility in operations from which we have recently suffered.”
The company plans to announce third quarter earnings in early November.
