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Metalico Reports Higher Revenue and Lower Third Quarter Operating Income CRANFORD, NJ--(MARKET WIRE)--Nov 7, 2008 -- Metalico, Inc. (AMEX:MEA - News) today reported its
results for the Third Quarter of 2008, including increases
in revenues but
a decrease in operating income over the comparable period
for 2007 and a
significant reduction in debt. Highlights of the Third Quarter include:
-- Sales increased by 182% to $288 million in 2008, compared to $102
million in the prior year's Third Quarter.
-- Operating income decreased by 36.2% to $6.7 million, compared to
operating income of $10.5 million for the quarter ended September 30, 2007.
-- EBITDA (as defined below) decreased by 15.9% to $10.6 million,
compared to $12.6 million in the Third Quarter of 2007.
-- Net income for the quarter ended September 30, 2008 was $9.7 million
or $.25 per share (on a diluted basis) after the effects of accounting
treatment under SFAS No. 150 described below, compared to net income of
$5.3 million or $.17 per share (on a diluted basis) in the Third Quarter of
2007.
-- Metalico's outstanding debt decreased by $37.2 million to a total of
$186.3 million as of September 30, 2008 from $223.5 million at June 30,
2008.
SFAS No. 150 If not for the effect of SFAS No. 150, the Company earned $1.4 million or $.06 per share in the Third Quarter. Actual results include non-cash, non-tax-affected accounting adjustments for financial instruments the Company entered into during the Second Quarter. The adjustment increased fully diluted net income for the quarter by $8.3 million or $.19 per share to $9.7 million and $.25 per share. The total long-term liability under SFAS No. 150 was $4.3 million as of September 30, 2008. Operating Results Metalico's Scrap Metal segment experienced quarter-over-quarter unit volume increases of approximately 68.2% for ferrous and 70.2% for non-ferrous metals, and 729% for Platinum Group Metals (PGMs). The Company also achieved sequential quarter-over-quarter unit volume increases of 4.5% for ferrous, 3.9% for non-ferrous metals, and 21.5% for PGMs as measured in pounds of PGM containing material. The Lead Fabricating volume decreased by 6.2% quarter-over-quarter, and increased 3.9% over the June 2008 quarter. Ferrous metal prices saw an increase of 92.8% quarter-over-quarter. Selling prices for non-ferrous fell by 5.6% quarter-over-quarter. Prices for PGM materials rose 12.1%. Excluding corporate overhead charges in the current year period, the Company's Scrap Metal segment experienced a 20.8% increase in operating income in the Third Quarter of 2008 over the Third Quarter of 2007 from $7.2 million to $8.7 million. The Lead Fabricating segment was negatively impacted by lower selling prices, experiencing an operating loss of $0.8 million in this year's Third Quarter compared to operating income of $5.0 million in the prior-year period. Commenting on the results for the quarter, Carlos E. Agüero, Metalico's President and Chief Executive Officer, said, "Although sales increased significantly in the quarter, operating income came in below the 2007 period due mostly to a $10 million loss resulting from the sale of unhedged platinum group metals as we previously disclosed in a recent 8-K filing with the Securities and Exchange Commission." He added, "Late in the Third Quarter we began to see the adverse impact of the sudden crisis in the financial markets and the consequent rapid impact on the steel and metals manufacturing and recycling industries. In this economic environment, our focus is to make very prudent use of our financial resources. "We have acted proactively to reduce our metal buying prices and inventory levels in the face of rapidly declining demand. We have also taken and continue to take steps to reduce our cost structure, including manpower reductions throughout the system." Balance Sheet Metalico ended the quarter in a liquid and strong working capital position with net working capital of $112.5 million, including $18.1 million in cash. Additional borrowing availability under its revolving credit facility was $77.8 million and scheduled debt maturity over the next twelve months is $7.9 million. As of November 6, 2008, the Company had approximately $47 million in cash after making its quarterly interest payments and still had no borrowings outstanding under its revolving credit facility, resulting in aggregate liquidity of approximately $110 million. Most of Metalico's debt is issued to institutional holders. The earliest maturity of any of the Company's long-term institutional debt is just under five years away. The notes issued by Metalico on May 1 of this year are convertible to common stock at a rate of $14 per share and do not contain any reset provision allowing for a repricing of the stock conversion rate unless, under certain circumstances, the Company issues new securities at, or convertible to new shares at, a lower price. The Company currently has no plans or intention to issue any such securities. The earliest the Company could receive a mandatory put of the convertible notes is June 30, 2014. Metalico's total debt decreased to $186.3 million as of September 30, 2008 from $223.5 million at June 30, 2008, a reduction of $37.2 million, resulting largely from reduction of inventories and collection of receivables. Shareholders' equity increased by 5.9% or $10 million to $179.6 million as of September 30, 2008, from $169.6 million as of June 30, 2008. Outlook and Update While Metalico continues to be optimistic about the long-term prospects for metals consumption and recycling, the near term market environment has weakened significantly and the Company stated it cannot predict when the industry could see improvements. Metalico expects to experience deteriorating operating performance during the remainder of the year due to the following trends.
-- Ferrous metal prices for all grades of scrap have dropped considerably
and demand for the rest of the quarter is expected to be anemic.
-- Non-ferrous prices have generally been dropping and demand for
products is sluggish. Most items appear to be moving but are priced
unfavorably for recyclers by consumers, compared to recent norms.
-- Average PGM prices dropped by more than 50% during the Third Quarter
but appear to be finding a trading range and some price stability, although
at much lower prices than earlier in the year. Lower platinum prices are
negatively impacting unit volumes as suppliers appear to be holding back
saleable metals in hopes of stronger precious metal pricing in the future.
-- Average lead prices and unit volumes are anticipated to be lower due
to normal seasonal factors coupled with the impact of poor credit
availability and economic weakness.
-- Offsetting the weak commodity metal prices, at some point, will be the
swift reduction in supplies of primary metals brought about by numerous
shutdowns, slowdowns and delays initiated and planned by the mining
industry. Additionally, when and if the U.S. currency weakens from the
impact of massive monetary stimulus, metal prices should rebound somewhat
since most commodity transactions are denominated in U.S. dollars.Metalico operates in the highly cyclical and volatile commodity metals universe, made even more difficult by volatile and unpredictable economic and capital market conditions. The Company's core business strategy emphasizes diversification and growth of the ferrous, non-ferrous and PGM Metal recycling business through acquisitions or new facility expansion and development in existing and new geographic markets. Metalico, Inc. is a rapidly growing holding company with operations in two principal business segments: ferrous, non-ferrous and PGM metal recycling, and fabrication of lead-based products. The Company operates twenty recycling facilities in New York, Pennsylvania, Ohio, West Virginia, New Jersey, Texas, and Mississippi and five lead fabricating plants in Alabama, Illinois, Nevada, and California. Metalico's common stock is traded on the American Stock Exchange under the symbol MEA. The Company defines EBITDA as earnings before interest, income taxes, depreciation, amortization, other income and expense, financial instruments fair value adjustment, stock based compensation, and discontinued operations. EBITDA is considered non-GAAP financial information and a reconciliation of net income to EBITDA is included in the attached financial tables. Forward-looking Statements This news release, and in particular its "Outlook and Update" section, contains "forward-looking statements" made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, such as Metalico's expectations with respect to its results of operations for the fourth quarter of 2008, commodity pricing, volumes, and trends. These statements may contain terms like "expect," "anticipate," "believe," "appear," "estimate" and other words that convey a similar meaning, or are statements that do not relate strictly to historical or current facts. Forward-looking statements include statements with respect to Metalico's beliefs, plans, objectives, goals, expectations, anticipations, assumptions, estimates, intentions, and future performance, and involve known and unknown risks, uncertainties and other factors, which may be beyond Metalico's control, and which may cause Metalico's actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Factors that could cause such material differences include without limitation items like volatile supply and demand conditions impacting prices and volumes in the markets for both Metalico's products and the raw materials it purchases, global economic conditions, global political conditions, unsettled credit markets, availability of capital, governmental regulations and environmental matters, changes in accounting pronouncements or treatments, competition, seasonality, energy supplies, transportation issues, and the creditworthiness of suppliers or customers, and are discussed in more detail in the Company's most recent Annual Report on Form 10-K and other filings with the Securities and Exchange Commission. All statements other than statements of historical fact are statements that could be forward-looking statements. Metalico assumes no obligation to update the information contained in this news release.
METALICO, INC.
SELECTED HISTORICAL FINANCIAL DATA
(UNAUDITED)
($ thousands, except per share data)
Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
Selected Income September September September September
Statement Data 30, 2008 30, 2007 30, 2008 30, 2007
---------- ---------- ---------- ----------
Revenue $ 288,043 $ 102,127 $ 753,653 $ 220,644
---------- ---------- ---------- ----------
Costs and expenses:
Operating expenses 274,397 84,215 672,337 180,934
Selling, general &
administrative
expenses 3,592 5,782 22,550 13,683
Depreciation &
amortization 3,305 1,667 8,826 4,149
---------- ---------- ---------- ----------
281,694 91,664 703,713 198,766
---------- ---------- ---------- ----------
Operating income 6,749 10,463 49,940 21,878
---------- ---------- ---------- ----------
Interest expense (5,001) (2,426) (12,441) (3,515)
Financial instruments
fair value adjustments 8,283 - 485 -
Other income (56) 146 117 441
---------- ---------- ---------- ----------
3,226 (2,280) (11,839) (3,074)
---------- ---------- ---------- ----------
Income from continuing
operations before
income taxes and
minority interest 9,975 8,183 38,101 18,804
Provision for income
taxes 270 2,945 13,836 6,846
---------- ---------- ---------- ----------
Income from continuing
operations before
minority interest 9,705 5,238 24,265 11,958
Minority interest 2 107 412 239
---------- ---------- ---------- ----------
Income from continuing
operations 9,707 5,345 24,677 12,197
Income (loss) from
discontinued operations (43) (5) (833) (3)
---------- ---------- ---------- ----------
Net income $ 9,664 $ 5,340 $ 23,844 $ 12,194
========== ========== ========== ==========
Diluted earnings per
common share:
Net income $ 0.25 $ 0.17 $ 0.66 $ 0.43
========== ========== ========== ==========
Diluted weighted average
common shares
outstanding: 43,679,145 31,890,886 39,141,880 28,570,460
========== ========== ========== ==========
METALICO, INC.
SELECTED HISTORIAL FINANCIAL DATA (CONTINUED)
(UNAUDITED)
($ thousands, except per share data)
September 30, December 31,
2008 2007
-------------- --------------
Assets:
Current assets $ 165,505 $ 103,291
Property, plant & equipment, net 80,799 44,708
Intangible and other assets 188,679 121,571
-------------- --------------
Total Assets $ 434,983 $ 269,570
============== ==============
Liabilities & Stockholders' Equity:
Current liabilities $ 53,030 $ 41,471
Debt & other long term liabilities 198,343 96,309
-------------- --------------
Total liabilities 251,373 137,780
Minority interest - 7,773
Redeemable common stock 4,000 -
Stockholders' equity 179,610 124,017
-------------- --------------
Total liabilities & Stockholders'
Equity $ 434,983 $ 269,570
============== ==============Non-GAAP Financial Information Reconciliation of Non-GAAP EBITDA and Net Income When the Company uses the term "EBITDA," the Company is referring to earnings before interest, income taxes, depreciation, amortization, stock based compensation, financial instruments fair value adjustments and discontinued operations. The Company presents EBITDA because it considers it an important supplemental measure of the Company's performance and believes it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in Metalico's industry. The Company also uses EBITDA to determine its compliance with some of the covenants under its credit facility. EBITDA is not a recognized term under generally accepted accounting principles in the United States ("GAAP"), and has limitations as an analytical tool. You should not consider it in isolation or as a substitute for net income, operating income, cash flows from operating, investing or financing activities or any other measure calculated in accordance with GAAP. Other companies in the Company's industry may calculate EBITDA differently from how the Company does, limiting its usefulness as a comparative measure. EBITDA should not be considered as a measure of discretionary cash available to the Company to invest in the growth of its business. The following table reconciles EBITDA to net income:
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
September September September September
30, 2008 30, 2007 30, 2008 30, 2007
----------- ------------ ----------- ------------
(UNAUDITED)
($ thousands)
EBITDA $ 10,583 $ 12,585 $ 60,544 $ 27,127
Less: Interest expense 5,001 2,426 12,441 3,515
Stock based
compensation 583 202 1,249 420
Provision (credit) for
federal and state
income taxes 270 2,945 13,836 6,846
Depreciation and
amortization 3,305 1,667 8,826 4,149
Financial instruments
fair value adjustments (8,283) - (485) -
Discontinued
operations, net 43 5 833 3
----------- ------------ ----------- ------------
Net income $ 9,664 $ 5,340 $ 23,844 $ 12,194
=========== ============ =========== ============Contact: Contact:
Metalico, Inc.
Carlos E. Agüero
Michael J. Drury
Email Contact
186 North Avenue East
Cranford, NJ 07016
(908) 497-9610
FAX: (908) 497-1097
http://www.metalico.com
Source: Metalico, Inc.
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