Keystone Reports 3rd Quarter Results
11/07/2008 - Keystone Consolidated Industries reports net income of $24.0 million on net sales of $183 million for the third quarter of 2008.
Keystone Consolidated Industries, Inc. reported net income of $24.0 million on net sales of $183 million for the third quarter of 2008.
The $24.0 million net income ($1.98 per diluted share) compares favorably to net income of $19.8 million ($1.98 per diluted share) in the third quarter of 2007. The company said the increase in net income was due primarily to the net effects of increased selling prices and shipment volumes in 2008, higher costs for ferrous scrap, energy and employee incentive compensation in 2008, a lower pension credit in 2008, and a $9.0 million gain on cancellation of debt in 2007.
Keystone noted that it measures its overall operating performance using operating income before net pension and OPEB expense or credits because the amount of its net periodic defined benefit pension and other postretirement benefit ("OPEB") expense or credits are unrelated to ongoing operating activities.
For the third quarter, operating income before pension and OPEB was significantly higher than operating income before pension and OPEB for the year-ago third quarter. The company said the increase was due primarily to the net effects of the following factors:
- Higher average per-ton product selling prices resulting from price increases Keystone implemented to offset increased costs for ferrous scrap as well as increased demand for domestic wire rod and industrial wire.
- Higher shipment volumes, primarily due to lower quantities of import product available for sale and higher prices for import products as well as the weak U.S. dollar.
- Decreased costs for zinc.
- Cost savings of approximately $500,000 in 2008, resulting from a reduction-in-force at Keystone's largest manufacturing facility during the first quarter of 2008.
- Increased costs for ferrous scrap and energy.
- Higher costs for certain excise taxes as a result of the expiration of certain exemptions.
- Increased employee incentive compensation accruals as a result of increased profitability.
- Increased costs for workers compensation and personal injury claims under the company’s general liability insurance.
The 2008 pension credit is lower than the pension credit for 2007 due to the component of the pension credit related to the expected return on plan assets; Keystone's plans' assets decreased $19.5 million during 2007.
Headquartered in Dallas, Texas, Keystone Consolidated Industries is a leading manufacturer of steel fabricated wire products, industrial wire, billets and wire rod. Keystone also manufactures wire mesh, coiled rebar and steel bar. The company's products are used in the agricultural, industrial, cold drawn, construction, transportation, original equipment manufacturer and retail consumer markets.
