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Wheeling-Pittsburgh Reports 4th Quarter Results
03/17/2004 -
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Wheeling-Pittsburgh
Reports
4th Quarter Results
March 17, 2004 — Wheeling Pittsburgh Corp., the holding company of Wheeling-Pittsburgh Steel Corp., reported a net loss of $23.7 million on net sales of $237.1 million for the fourth quarter ended December 31, 2003.
Wheeling-Pittsburgh emerged from bankruptcy pursuant to a plan of reorganization that became effective on August 1, 2003. For accounting purposes, unaudited consolidated financial statements for periods after August 1, 2003 related to a new reporting entity, and comparisons to prior period performance in many respects are not directly comparable to prior periods of the old reporting entity. Among other changes, there have been substantial reductions in employment levels, changes in employee and retiree benefits, and revaluations of assets and liabilities. |
Fourth Quarter Results—The company reported a $21.0 million operating loss and net sales of $237.1 million on shipments of 542,211 tons of steel products. Shipments were lower than normal due to a scheduled 15-day outage of the No. 5 blast furnace, which was taken to assure reliability in anticipation of an improved steel market.
Steel prices averaged $437 per ton shipped, and cost of goods sold averaged $436 per ton shipped. Higher-priced raw material and fuel costs, and lower production levels due to the effect of the 15-day outage were partially offset by lower labor costs and a $7.2 million non-recurring refund related to coal miner retiree medical costs. Depreciation totaled $6.9 million on lower-valued fixed assets due to the reorganization. Interest expense totaled $6.3 million on total debt of $422.6 million.
Net loss for the fourth quarter of 2003 totaled $23.7 million ($2.49 per share).
Calendar third quarter 2003 comprised one month of the predecessor company's results, which included charges and credits related to the company's reorganization, as well as two months of the reorganized results. As a result, third quarter cost of sales and operating loss are not comparable and are not a GAAP measure. Third quarter sales were $241.1 million on shipments of 559,272 tons; this measure was not affected by the reorganization.
The company reported an operating loss of $11.1 million in the fourth quarter of 2002 on net sales of $254.4 million and shipments of 528,646 tons. The average price per ton of steel totaled $481 in the fourth quarter of 2002 and the company reported a net loss of $13.1 million.
Full Year Results—The company reported an operating loss of $33.1 million for the five months ended December 31, 2003. Net sales in the five-month period totaled $396.9 million on shipments of 912,937 tons of steel products. Steel prices averaged $435 per ton for the five-month period. The cost of sales per ton averaged $434 per ton for the five-month period reflecting higher raw material and fuel costs and lower production volumes. Depreciation expense totaled $10.5 million.
For the seven-month pre-reorganization period ending July 31, 2003, the company reported an operating loss of $71.3 million. Net sales in the seven-month period totaled $570.4 million on shipments of 1,305,046 ton of steel product. Steel prices averaged $435 per ton. Cost of sales per ton averaged $432, reflecting higher raw material and fuel costs.
Pursuant to the company's plan of reorganization from bankruptcy, it
executed a new $250 million term loan and $225 million revolving credit
facility, in addition to restructuring the then-existing debt and equity
of the company. The reorganization plan also provided $112 million in
an escrow account to finance installation of a continuous electric arc
furnace. The furnace is under construction and on schedule to melt its
first heat in
November 2004.
Management Comments and Outlook—"As expected, fourth quarter results were affected by lower prices for steel products, while higher energy and raw material costs were offset by lower employment costs and depreciation expense as a result of our Reorganization," said James G. Bradley, President and CEO of Wheeling-Pittsburgh Steel. "Recent announcements of price increases in flat rolled products, the continued strength of our order backlog, along with stronger economic growth are indications that improved pricing and demand will continue beyond the first quarter of 2004."
Mr. Bradley concluded, "Today Wheeling-Pittsburgh is truly a changed company, both financially and operationally. Our balance sheet is much improved, we have a more flexible labor force and cost structure, and we are positioning ourselves to be a world class steel manufacturer with the construction of our state-of-the-art continuous electric arc furnace. We are well positioned today to take advantage of the rising steel price environment."
Wheeling-Pittsburgh is an integrated steel company engaged in the making, processing and fabrication of steel and steel products. The company's products include hot rolled and cold rolled sheet and coated products such as galvanized, pre-painted and tin mill sheet. The company also produces a variety of steel products including roll-formed corrugated roofing, roof deck, floor deck, culvert, bridgeform and other products used primarily by the construction, highway and agricultural markets.
