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Metals USA Reports Record 2nd Quarter Results
07/15/2008 - Metals USA Holdings announces net income of $39.8 million on net sales of $593.1 million for the second quarter, and net income of $43.6 million on net sales of $1082.1 million for the six months ended June 30, 2008.
Metals USA Holdings Corp. announced net income of $39.8 million on net sales of $593.1 million for the second quarter, and net income of $43.6 million on net sales of $1082.1 million for the six months ended June 30, 2008. The record-breaking second-quarter results exceeded the company’s previous record results, which were posted in the second quarter of 2004.
Second Quarter Results—The $39.8 million net income reflects a $28.1 million increase compared to net income of $11.7 million for the second quarter of 2007. The $593.1 million net sales reflects a $112.2 million increase from the $480.9 million recorded during the second quarter of 2007.
Adjusted EBITDA was $92.6 million, a 104% increase from the $45.5 million recorded in the second quarter of 2007 and more than 60% higher than the company's previous record posted for the second quarter of 2004.
Operating income was $83.4 million, $44.0 million higher than the same period last year.
Interest expense for the quarter was $19.9 million, and the company recognized depreciation and amortization expenses of $5.8 million for the quarter.
Management Comments—“Despite the slowdown in the economy and historically low shipments from the service center industry this year, Metals USA produced our best quarter ever,” said Lourenco Goncalves, the company's Chairman, President and CEO, commenting on the record quarter. “We believe such a strong accomplishment was a direct result of our ability to gain market share and, at the same time, achieve price increases down the chain."
The company had $361.5 million drawn under its ABL credit facility at June 30, 2008, with excess availability of $148.3 million. Net debt of $918.5 million on June 30, 2008 was $74.8 million higher than net debt of $843.7 million on December 31, 2007 due primarily to an increase in working capital.
Capital expenditures were $2.1 million for the quarter and $4.9 million year-to-date. Net cash used in operating activities for first six months of 2008 was $73.0 million. Net income for the period was $43.6 million, which included non-cash costs of approximately $8.9 million. Additionally, changes in operating assets and liabilities resulted in a cash outflow of $125.5 million for the period, an amount that the company said was primarily attributable to increases in inventories and accounts receivable, partially offset by an increase in accounts payable.
On July 1, 2008, Metals USA Inc. exercised its option under its Loan and Security Agreement, as amended, to increase the ABL facility by $100.0 million, increasing the total commitment from $525.0 million to $625.0 million. All other existing terms under the ABL facility remain unchanged. Metals USA paid customary fees related to the exercise of the option to increase the ABL facility. The company had $364.5 million drawn under its ABL facility at July 1, 2008 with excess borrowing availability of $209.8 million and excess uncollateralized availability of $35.5 million. The expansion was undertaken to support growth objectives and future working capital needs of the Company as metal prices have increased significantly over the past several quarters.
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.
