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Wheeling-Pittsburgh Reports 2006 Results

03/19/2007 -  

March 19, 2007 — Wheeling-Pittsburgh Corp., the holding company of Wheeling-Pittsburgh Steel Corp., reported a net loss of $18.1 million on net sales of $357.1 million for the fourth quarter, and net income of $6.5 million on net sales of $1,770.8 million for the year ended December 31, 2006.

In recent weeks, Wheeling-Pittsburgh Steel has been in a discussion with its short- and long-term lenders as well as the Emergency Steel Loan Guarantee Board (Loan Board) to approve the merger transaction, approve a $50 million convertible note intended to provide Wheeling-Pitt with the liquidity it requires to manage its business in the normal course until the anticipated merger, and support the company with the covenant relief necessary for the merger to happen. This effort has been successful, and the long-term lenders and the Loan Board have agreed to a series of covenant waivers and modifications, and approval of the merger transaction.

The $50-million convertible note has been arranged with a group of Wheeling-Pittsburgh and Esmark shareholders and investors, including Chairman and CEO James P. Bouchard, and Vice Chairman & President Craig T. Bouchard.

“I am extremely pleased that Wheeling-Pitt and Esmark have executed merger agreements and that we have reached an agreement to amend the existing financial covenants of Wheeling-Pitt’s term loan,” Craig Bouchard said.

“Clearly, the company’s 2006 results were a disappointment. We began our jobs of turning this company around on December 4. We have reconstructed the management corps at the company and they are doing their jobs well,” James Bouchard said. “We will convert this company into the most efficient downstream steel production and distribution company in the United States.”

Fourth Quarter Results—The $18.1 million net loss ($(1.20) per basic and diluted share) compares with a net loss of $23.4 million ($(1.61) per basic share and diluted share) in the fourth quarter of 2005

Net sales totaled $357.1 million, as compared to net sales of $370.9 million for the fourth quarter of 2005. Net sales of steel products totaled $332.3 million on steel shipments of 431,325 tons ($770 per ton), which compares to net sales of steel products for the fourth quarter of 2005 that totaled $356.0 million on steel shipments of 527,336 ($675 per ton).

Cost of sales totaled $340.9 million, as compared to cost of sales of $365.6 million for the fourth quarter of 2005. Cost of sales for steel products sold totaled $325.3 million ($754 per ton). Cost of sales for steel products sold in the fourth quarter of 2005 totaled $354.8 million ($673 per ton).

Full Year Results—For 2006, the Company reported a net income of $6.5 million, or $0.44 per basic and diluted share. This compares to a net loss of $33.8 million for 2005, or $(2.37) per basic share and diluted share.

Net sales totaled $1,770.8 million, as compared to net sales of $1,560.5 million for 2005. Net sales of steel products totaled $1,700.4 million on steel shipments of 2,329,667 tons ($730 per ton), which compares to net sales of steel products for 2005 that totaled $1,484.7 million on steel shipments of 2,164,404 tons ($686 per ton). The increase in net sales can be attributed to an increase in the volume of steel products sold and an increase in the average selling price of steel products of $44 per ton, offset by a decrease in raw material sales.

Cost of sales totaled $1,621.8 million, as compared to cost of sales of $1,479.5 million for 2005. Cost of sales for steel products sold totaled $1,575.3 million ($676 per ton), which compares to cost of sales for steel products sold in 2005 of $1,434.3 million ($663 per ton). The increase in the cost of steel products sold of $141.0 million ($13 per ton), resulted principally from an increase in volume, an increase in the cost of certain raw materials, largely zinc, and an increase in payroll-related costs.

Wheeling-Pittsburgh is a steel company engaged in the making, processing and fabrication of steel and steel products using both integrated and electric arc furnace technology. The company manufactures and sells hot rolled, cold rolled, galvanized, pre-painted and tin mill sheet products. The company also produces a variety of steel products including roll formed corrugated roofing, roof deck, floor deck, bridgeform and other products used primarily by the construction, highway and agricultural markets.