CHICAGO--(BUSINESS WIRE)--Feb. 6, 2008--Metal Management, Inc.
(NYSE: MM):
-- Net Sales of $582 Million
-- Net Income of $6.1 Million
-- EPS of $0.24 per diluted share
-- EBITDA(1) (as defined) of $24.5 Million
Metal Management, Inc. (NYSE: MM), one of the nation's largest
full service scrap metal recyclers, today announced results for the
third fiscal quarter ended December 31, 2007.
The company generated consolidated net sales of $582 million in
the third quarter of fiscal 2008 and net income of $6.1 million.
EBITDA (as defined) was $24.5 million and earnings per share were
$0.24 per diluted common share.
"Metal Management's 2,000 employees worked hard to deliver
profitable results in our third quarter, a period characterized by
continued aggressive competition for unprocessed scrap and
historically high ocean freight rates," said Daniel W. Dienst,
Chairman and Chief Executive Officer of Metal Management. "Revenues
increased year-over-year in the third quarter due to higher ferrous
unit shipments and prices, but earnings were compressed by declines in
material margins in our non-ferrous and stainless product lines, high
ocean freight and a tight supply of ships, higher depreciation and
amortization expense due to recent acquisitions and investment in
plant and equipment, and certain one-time charges. A tight supply of
ships resulted in the delay of five export cargos, which will be
reflected in our fourth fiscal quarter. We are currently seeing a
return to more historical spreads, moderating export freight rates and
increasing selling prices for ferrous scrap metal - all positive
factors that if sustained may contribute to strong performance for
Metal Management in future quarters."
Third Quarter Highlights
- Consolidated net sales of $582 million for the quarter ended
December 31, 2007, an increase of 11% as compared to
consolidated net sales of $524 million for the quarter ended
December 31, 2006.
- Net income was $6.1 million or $0.24 per diluted common share,
compared to net income of $15.6 million or $0.60 per diluted
common share in the same period last year.
- Metal Management's results in the quarter ended December 31,
2007 include merger expenses aggregating to $747,000 on a
pre-tax and after-tax basis, representing approximately $0.03
per diluted common share. The merger expenses were incurred in
connection with the company's previously announced agreement
to merge with Sims Group Limited.
- The Company also recorded an inventory adjustment of
approximately $2.7 million pre-tax, $1.6 million after tax, or
$0.06 per diluted common share, to reduce the carrying value
of certain specialty alloys to reflect lower market prices.
- EBITDA (as defined) of $24.5 million in the quarter ended
December 31, 2007, as compared to EBITDA (as defined) of $31.9
million for the quarter ended December 31, 2006.
- More than 1.4 million tons of metal were processed and sold or
brokered, including ferrous yard shipments of approximately
1.3 million tons and non-ferrous shipments of approximately
117 million pounds.
- The Company turned ferrous inventories approximately 11 times
and non-ferrous inventories (excluding stainless and alloy)
approximately 10 times.
- A dividend of $0.075 per share was paid to all shareholders of
record.
- As of December 31, 2007, Metal Management had 1.2 million
shares remaining under its authorized share repurchase
program. The Company may repurchase shares from time to time
in the open market before the special meeting of stockholders
relating to the Sims merger.
- As of December 31, 2007, cash and cash equivalents were
approximately $12.6 million and total debt, including
borrowings under the line of credit, were $61 million.
Year to Date (Nine Months) Highlights
- Consolidated net sales of approximately $2.0 billion for the
nine months ended December 31, 2007, a Company record for a
nine month period and an increase of 22% as compared to
consolidated net sales of approximately $1.6 billion for the
nine months ended December 31, 2006.
- Net income of $46.6 million for the nine months ended December
31, 2007, or $1.82 per common diluted share, compared to net
income of $89.5 million, or $3.40 per common diluted share for
the nine months ended December 31, 2006.
- Merger expenses and severance and other charges aggregated to
approximately $4.0 million on a pre-tax basis and $3.8 million
on an after-tax basis, representing approximately $0.15 per
diluted common share.
- EBITDA (as defined) of $117.2 million for the nine months
ended December 31, 2007, compared to EBITDA (as defined) of
$142.0 million in the nine months ended December 31, 2006.
Update on Metal Management's Pending Merger with Sims Group
Limited
As previously announced, on September 24, 2007, Metal Management's
Board of Directors unanimously approved a definitive agreement under
which Metal Management will combine with Sims Group Limited (ASX:
SGM). The transaction will create the world's largest publicly traded
recycler, Sims Metal Management, which will have an operating presence
on four continents at over 200 locations around the globe.
An amended registration statement was filed with the Securities
and Exchange Commission (SEC) on January 17, 2008, and a record date
to determine the stockholders entitled to vote at the special meeting
of January 25, 2008, has been established. The Company expects the
transaction to close by March 31, 2008, subject to the registration
statement being declared effective by the SEC, approval by Metal
Management shareholders and other customary closing conditions.
Mr. Dienst added, "We expect that this transaction will deliver
outstanding value for all Metal Management shareholders and we look
forward to the smooth and seamless integration of Sims and Metal
Management."
Investor Conference Call
Metal Management will host its Third Quarter Results Conference
Call and Webcast at 11:00 AM ET (10:00 AM CT) on February 6, 2008. The
conference call can be accessed by dialing 888-680-0878 passcode
24451997. International callers can dial 617-213-4855 passcode
24451997. The conference will also be accessible via the web at
www.mtlm.com. A replay of the call will be available by dialing
888-286-8010 passcode 28314928 through February 13, 2008.
International callers can dial 617-801-6888 passcode 28314928 for the
replay.
About Metal Management, Inc.
Metal Management is one of the largest full service metal
recyclers in the United States, with 53 recycling facilities in 17
states. For more information about Metal Management, Inc., visit the
Company's website at www.mtlm.com.
Forward Looking Statements
All of the statements in this release, other than historical
facts, are forward-looking statements made in reliance upon the Safe
Harbor Provisions of the Private Securities Litigation Reform Act of
1995. As such, they involve risks and uncertainties and are subject to
change at any time. These statements reflect our current expectations
regarding the future profitability of the Company and its
subsidiaries. As discussed in our annual report on Form 10-K for the
fiscal year ended March 31, 2007, and in other periodic filings filed
by the Company with the SEC, some of the factors that could affect our
performance include, among other things: cyclicality and
competitiveness of the metals recycling industry, commodity price
fluctuations, adequate source of supply, debt covenants that restrict
our ability to engage in certain transactions, compliance with
environmental, health, safety and other regulatory requirements
applicable to the Company, potential environmental liability, risk of
deterioration of relations with labor unions, dependence on key
management, dependence on suppliers of scrap metal, concentration of
customer risk and exposure to credit risk, impact of export and other
market conditions on the business, availability of scrap alternatives,
under funded defined benefit pension plans, and risks associated with
our pending merger with Sims.
(1) EBITDA is defined by the Company to be earnings before
interest, taxes, depreciation, amortization, merger expenses,
severance and other charges, gain (loss) on sale of fixed assets,
income from joint ventures, gain on sale of joint venture interest,
other income and stock-based compensation expense. EBITDA is presented
because management believes it provides additional information with
respect to the performance of its fundamental business activities.
Management also believes that debt holders and investors commonly use
EBITDA to analyze Company performance and to compare that performance
to the performance of other companies that may have different capital
structures. A reconciliation of EBITDA to GAAP net income is included
in the table attached to this release. EBITDA is a measure typically
used by many investors, but is not a measure of earnings as defined
under Generally Accepted Accounting Principles, and may be defined
differently by others.
METAL MANAGEMENT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
Three months ended Nine months ended
------------------- -----------------------
December December December December
31, 31, 31, 31,
2007 2006 2007 2006
--------- --------- ----------- -----------
Net sales $582,096 $523,965 $1,951,304 $1,604,585
Operating expenses:
Cost of sales (excluding
depreciation) 534,471 471,702 1,761,396 1,401,886
General and
administrative 25,597 21,913 79,067 65,560
Depreciation and
amortization 10,071 7,131 27,802 21,322
Merger expenses 747 0 3,335 0
Severance and other
charges 0 490 701 932
--------- --------- ----------- -----------
Operating income 11,210 22,729 79,003 114,885
Income from joint ventures 453 357 2,112 2,771
Interest expense (1,321) (373) (4,280) (979)
Interest and other income,
net 75 969 334 1,913
Gain on sale of joint
venture interest 0 0 0 26,362
--------- --------- ----------- -----------
Income before income taxes 10,417 23,682 77,169 144,952
Provision for income taxes 4,272 8,103 30,522 55,411
--------- --------- ----------- -----------
Net income $6,145 $15,579 $46,647 $89,541
========= ========= =========== ===========
Earnings per share:
Basic $0.24 $0.61 $1.85 $3.48
========= ========= =========== ===========
Diluted $0.24 $0.60 $1.82 $3.40
========= ========= =========== ===========
Cash dividends declared
per share $0.075 $0.075 $0.225 $0.225
========= ========= =========== ===========
Weighted average common
shares
outstanding:
Basic 25,252 25,532 25,216 25,733
========= ========= =========== ===========
Diluted 25,718 26,095 25,645 26,357
========= ========= =========== ===========
METAL MANAGEMENT, INC.
EBITDA (AS DEFINED)
RECONCILIATION TO GAAP FINANCIAL MEASURES
(unaudited, in thousands)
Three months ended Nine months ended
------------------- -------------------
December December December December
31, 2007 31, 2006 31, 2007 31, 2006
--------- --------- --------- ---------
Net income $6,145 $15,579 $46,647 $89,541
Add Back:
Depreciation and
amortization 10,071 7,131 27,802 21,322
Tax provision 4,272 8,103 30,522 55,411
Stock-based compensation
expense 2,489 1,819 6,609 4,799
Income from joint ventures (453) (357) (2,112) (2,771)
Gain on sale of joint
venture interest 0 0 0 (26,362)
Interest expense 1,321 373 4,280 979
Interest and other income,
net (75) (969) (334) (1,913)
Merger expense 747 0 3,335 0
Severance and other charges 0 490 701 932
(Gain) loss on sale of fixed
assets 0 (240) (201) 12
--------- --------- --------- ---------
EBITDA (AS DEFINED) $24,517 $31,929 $117,249 $141,950
========= ========= ========= =========
CONTACT: Metal Management, Inc.
Analysts & Investors:
Robert C. Larry, Chief Financial Officer
(312) 645-0700
or
Joele Frank, Wilkinson Brimmer Katcher
Media:
Andrew B. Siegel / James H. Golden
(212) 355-4449
SOURCE: Metal Management, Inc.
