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Metals USA Reports 3rd Quarter Results
10/21/2008 - Metals USA Holdings reports net income of $36.0 million on net sales of $617.7 million for the third quarter, and net income of $79.6 million on net sales of $1699.8 million for the nine months ended September 30, 2008.
Metals USA Holdings Corp. announced net income of $36.0 million on net sales of $617.7 million for the third quarter, and net income of $79.6 million on net sales of $1699.8 million for the nine months ended September 30, 2008.
Third Quarter Results—The $36.0 million net income represents a $39.4-million increase as compared to a net loss of $3.4 million recorded for the third quarter 2007. The $617.7 million net sales represent a $148.1-million increase from net sales of $469.6 million recorded during the third quarter 2007. Adjusted EBITDA was $90.1 million, a 150% increase from the $36.1 million recorded in the third quarter 2007.
The company recognized depreciation and amortization expenses during the quarter of $5.3 million. Operating income was $84.4 million for the third quarter, $55.2 million higher than the same period last year. Interest expense for the quarter was $20.4 million.
Nine Month Results—The $79.6 million net income compares to net income of $12.1 million in the comparable year-ago period. Net sales of $1699.8 million compare to net sales of $1413.1 million in the comparable year-ago period. Adjusted EBITDA was $223.0 million, which compares to adjusted EBITDA of $116.3 million in the first nine months of 2007.
Management Comments—"Market conditions during the third quarter remained favorable for us,” said Lourenco Goncalves, the company's Chairman, President and CEO. “Demand continued to be healthy and our margins remained relatively unchanged from our record-breaking second quarter. As a consequence, we are reporting great third quarter results with a record year-to-date adjusted EBITDA of $223 million.
“We began to reposition our inventory well in advance of recent market dislocation, which has proven prudent in the current environment, and have taken several steps to ensure continued access to financial liquidity," added Goncalves.
Financial Position—The company announced on September 26th that it made a permitted election under the indenture governing its $300 million Senior Floating Rate Toggle Notes due 2012 to pay all interest under the Notes that is due on January 1, 2009, for the interest period beginning on October 1, 2008, and ending on December 31, 2008, entirely in kind (PIK Interest).
The company had $542.0 million drawn under its asset based loan facility (ABL Facility) at September 30, 2008, with excess availability of $61.5 million. Cash balances were $173.1 million at quarter-end, reflecting the deposit into short term money market accounts invested in government securities of the company's draw of over $160 million of its excess borrowing capacity under its ABL Facility. Between the company's cash on hand and its excess availability, Metals USA had $234.6 million of liquidity at September 30, 2008.
Net debt of $944.7 million on September 30, 2008 was $101.0 million higher than net debt of $843.7 million on December 31, 2007, due primarily to an increase in working capital. Capital expenditures were $4.0 million for the quarter and $8.9 million year-to-date. Net cash used in operating activities for first nine months of 2008 was $97.7 million.
Net debt of $944.7 million on September 30, 2008 was $101.0 million higher than net debt of $843.7 million on December 31, 2007, due primarily to an increase in working capital. Capital expenditures were $4.0 million for the quarter and $8.9 million year-to-date. Net cash used in operating activities for first nine months of 2008 was $97.7 million.
Net income for the period ($79.6 million) included non-cash costs of approximately $21.4 million. Additionally, changes in operating assets and liabilities resulted in a cash outflow of $198.7 million for the period, an amount that was primarily attributable to increases in inventories and accounts receivable, partially offset by an increase in accounts payable.
