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Keystone Reports Third Quarter 2010 Results
11/05/2010 - Keystone Consolidated Industries, Inc. reported net income of $2.3 million, or $0.19 per diluted share, in the third quarter of 2010 as compared to net income of $5.9 million, or $0.48 per diluted share, in the third quarter of 2009.
Keystone Consolidated Industries, Inc. reported net income of $2.3 million, or $0.19 per diluted share, in the third quarter of 2010 as compared to net income of $5.9 million, or $0.48 per diluted share, in the third quarter of 2009.
Keystone’s profitability declined compared to last year’s third quarter as the favorable impact of higher overall average selling prices was more than offset by an increase in the company’s ferrous scrap costs, thus decreasing our margins.
The company’s Q3 operating income before pension and other postretirement benefit (OPEB) is $1.6 million compared to $9.7 million last year.
The company’s total sales volume was 156,000 tons vs. 146,000 tons last year, and its average per-ton selling prices were $723 compared to $686 a year ago. Average per-ton ferrous scrap cost for the third quarter of 2010 was $307 vs. $230 in 2009.
Operating income before pension and OPEB for the third quarter of 2010 decreased significantly primarily due to a decrease in the margin between selling prices and consumed scrap costs.
Other items affecting the comparability of Keystone’s operating performance before pension and OPEB include:
- Increased utility costs at the company’s largest manufacturing facility during 2010
- Bad debt expense of $728,000 during the third quarter of 2009 primarily due to the Chapter 11 proceedings of one of Keystone’s customers as compared to a nominal amount of bad debt expense during the third quarter of 2010
- A credit related to a revision in the estimate of previously accrued employee incentive compensation during the third quarter of 2010 due to decreased profitability as compared to an increase in accrued employee incentive compensation during the third quarter of 2009 due to increased profitability
- A $3.5 million decrease in the company’s LIFO reserve and cost of goods sold during the third quarter of 2009 as compared to a $2.2 million increase in its LIFO reserve and cost of goods sold during the third quarter of 2010.
Primarily due to a $58 million increase in Keystone’s pension plans’ assets during 2009, the company currently expects to record a defined benefit pension credit of $4.9 million during 2010 as compared to the $5.9 million defined benefit pension expense recorded during 2009. Accordingly, Keystone recorded a defined benefit pension credit of $1.2 million during the third quarter of 2010 as compared to the $1.5 million expense recorded during the third quarter of 2009.
Keystone Consolidated Industries, Inc. is headquartered in Dallas, Texas. The company is a leading manufacturer of steel fabricated wire products, industrial wire, and wire rod. It also manufactures wire mesh, coiled rebar, steel bar and other products. Its products are used in the agricultural, industrial, cold drawn, construction, transportation, original equipment manufacturer, and retail consumer markets.
