Metals USA Reports 1st Quarter 2010 Results
04/27/2010 - Metals USA reported operating income of $12.7 million on sales revenues of $287.9 million for the three months ended March 31, 2010.
Metals USA Holdings Corp. reported operating income of $12.7 million on sales revenues of $287.9 million for the three months ended March 31, 2010.
The $12.7 million operating income compares to an operating loss of $20.9 million recorded for the year-ago first quarter, while the $287.9 million sales revenues compared to sales revenues of $330.2 million for the first quarter of 2009.
Metal shipments of 249,000 tons compare to shipments of 248,000 tons in the first quarter of 2009. The quarter ended with net income of $0.1 million, exceeding previously issued guidance for a net loss of $(1.2) to $(0.4) million.
Adjusted EBITDA was $18.2, exceeding the company’s first quarter 2009 Adjusted EBITDA of negative $14.9 million. Interest expense for the quarter was $11.7 million, which included $3.1 million of interest on the company's Senior Floating Rate Toggle Notes due 2012 that was paid entirely in kind. The company recognized depreciation and amortization expenses during the quarter of $4.6 million.
"Market conditions continue to improve, as we see increases in customer inquiries and order volumes,” said Lourenco Goncalves, the Company's Chairman, President and CEO. “Raw material prices continue to rise and metal prices are following."
"Our first quarter results prove the effectiveness of our efforts to work out of smaller inventories,” added Goncalves. “Also important, our previous cost reduction efforts were a decisive component of our improved performance this quarter. We will continue to manage our inventory and drive profitability.”
The company had $84.0 million drawn under its asset-based credit facility at March 31, 2010, with excess availability of $155.8 million which was up from $122.9 million at December 31, 2009. Net debt increased by $13.0 million during the quarter to $475.3 million on March 31, 2010 due primarily to an increase in working capital.
During the first quarter the company used net cash of $9.6 million in operating activities, an increased its working capital as it experienced an environment of modestly increasing prices and slowly recovering end-market demand. Increases of $25.1 million in the accounts receivable balance and $7.7 million in inventory value were the primary contributors to operating cash outflows for the quarter.
Inventory tonnage at March 31, 2010 was equal to inventory tonnage at December 31, 2009. Capital expenditures were $0.5 million for the quarter.
On April 9, 2010, the company completed its initial public offering of 11,426,315 common shares at a price of $21.00 per share, and stock began trading that day on the NYSE. On April 14, 2010, the company announced redemption of all of its Senior Floating Rate Toggle Notes due 2012 with the IPO proceeds. The IPO proceeds and the company's receipt of a Federal tax refund of approximately $15.0 million on April 13th would have effectively reduced the company's net debt and increased total liquidity as of March 31 by approximately $230.0 million and $63.0 million, respectively.
Metals USA provides a wide range of products and services in the heavy carbon steel, flat-rolled steel, non-ferrous metals, and building products markets.
