Birmingham Steel Corporation Reports First Quarter Results.Business Editors BIRMINGHAM Birmingham, cities, United States Birmingham (bûr`mĭnghăm') 1 City (1990 pop. 265,968), seat of Jefferson co., N central Ala., in the Jones Valley near the southern end of the Appalachian system; founded and inc. , Ala ALA aminolevulinic acid. Ala alanine. ala (a´lah) pl. a´lae [L.] a winglike process. .--(BUSINESS WIRE)--Oct. 20, 2000 Despite declining selling prices and difficult industry conditions, the Company reports continued progress in turnaround Turnaround A situation where a company that has had poor performance for an extended period of time experiences a positive reversal. Notes: A speculator may profit from a turnaround if he or she accurately anticipates the improvement of a poorly performing company. strategy Cleveland Cleveland, former county, England Cleveland, former county, NE England, created under the Local Government Act of 1972 (effective 1974). It was composed of the county boroughs of Hartlepool and Teeside and parts of the former counties of Durham and achieves cash breakeven breakeven 1. The level of output or sales necessary to cover fixed expenses. Companies in industries that have high fixed costs and, consequently, high breakevens, such as automobile and steel manufacturing, are likely to exhibit large fluctuations operations; Cartersville completes operational start-up Start-up The earliest stage of a new business venture. Birmingham Steel Corporation (NYSE NYSE See: New York Stock Exchange : BIR BIR British Institute of Radiology BIR Bureau of Internal Revenue BIR Bureau of International Recycling BIR Baculovirus IAP Repeat BIR Biomedical Imaging Resource BIR Bureau of Intelligence and Research (US State Department) ) today reported financial results for the first quarter ended September 30, 2000. The results reflected a dramatic decline in merchant product selling prices and lower shipments as a result of continued inventory reductions throughout the steel industry. For the first quarter of fiscal 2001, the Company reported a net loss of $15,029,000, or $.49 per share. The results included losses of $9,732,000, or $.32 per share, associated with the Company's SBQ SBQ Sociedade Brasileira de Quimica (Portugese) SBQ Special Bar Quality operations in Cleveland, Ohio "Cleveland" redirects here. For the Cleveland metropolitan area, see . For other uses, see Cleveland (disambiguation). Cleveland is a city in the U.S. state of Ohio and the county seat of Cuyahoga County, the most populous county in the state. , and Memphis, Tennessee For the ancient Egyptian capital, see . Memphis is a city in the southwest corner of Tennessee, and the county seat of Shelby County. Memphis rises above the Mississippi River on the 4th Chickasaw Bluff just below the mouth of the Wolf River. . On a comparable basis, in the same period of the prior fiscal year, the Company reported a loss of $15,654,000, or $.53 per share. Despite these losses, the Company reported continuing progress in turnaround efforts begun last December following a proxy contest Proxy contest A battle for the control of a firm in which a dissident group seeks, from the firm's other shareholders, the right to vote those shareholders' shares in favor of the dissident group's slate of directors. Also called proxy fights. in which shareholders elected a new management team and board of directors. A number of significant achievements occurred during the quarter, including the generation of positive cash operating results at the Cleveland facility, increased production and shipments at the new Cartersville, Georgia Cartersville is a city in Bartow County, Georgia, in the United States. It was named after Col. Farrish Carter. As of the 2000 census, the city population was 15,925. Growth is evident as the community's population rose to 21,274 as of the 2005 census. , rolling mill rolling mill: see steel. facility, and completion of the operational start-up phase at Cartersville. Also, pursuant to the Company's decision to return to its core rebar re·bar n. 1. A rod or bar used for reinforcement in concrete or asphalt pourings. 2. A group of such rods forming a grid. [re(inforcing) bar.] and merchant production facilities as a business platform, the Company announced on September 28, 2000, that it has signed a definitive agreement to sell its special bar quality (SBQ) operations in Cleveland and Memphis. Steel shipments for the first quarter of fiscal 2001 were 719,000 tons, down 9% from 787,000 tons reported for the same period a year ago. Record levels of steel imports in prior months have resulted in excessive finished product inventories throughout the industry and led to a significant decline in steel selling prices. The Company's average selling price The average sales price of goods or commodities. Especially used in the retail sector and technology distribution. for merchant products fell $26 per ton in the first quarter from the average price in the immediately preceding quarter. Results were also impacted by increased average manufacturing costs, which were primarily attributable to higher energy expenses and lower production volumes implemented by the Company to control inventory levels. John D. Correnti, Chairman and Chief Executive Officer of Birmingham Steel, commented, "Despite extremely challenging economic conditions in the domestic steel industry, Birmingham Steel continues to make progress toward a return to financial stability and profitability. However, sharp declines in merchant product selling prices in August and September negatively impacted results by $.25 per share. Except for the rapid decline in selling prices, first quarter results would have been significantly better than expectations and would have exceeded the prior quarter's financial performance." Correnti continued, "We are pleased to report ongoing improvements in production and shipments at the new Cartersville mid-section mill. Although average selling prices for Cartersville's products fell $25 per ton during the quarter, operating losses operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. at the facility declined for the fourth consecutive period. In addition, we are happy to report that the operational start-up of the new rolling mill has essentially been completed. Cartersville's shipments are now increasing at a rate of approximately 10% per month, and once the current industry inventory overhang Overhang Calculated as stock options granted, plus the remaining options to still be granted, and then divided by the total shares outstanding. Notes: A high percentage for the overhang is usually a bad thing. is corrected and pricing recovers, the Cartersville operation will be well on its way to profitability. "We are also pleased to report the attainment of cash breakeven EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become (earnings before interest, taxes, depreciation and amortization Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP metric that can be used to evaluate a company's profitability.
tr.v. re·gained, re·gain·ing, re·gains 1. To recover possession of; get back again: regain one's strength. See Synonyms at recover. 2. business which had previously been lost to competitors. As a result, operating losses have been substantially reduced." With respect to the pending sale of the Company's SBQ operations to North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. Metals ("NAM"), Correnti noted that NAM is finalizing its financing arrangements, and the targeted closing date for the transaction is December 1, 2000. Correnti commented, "We are impressed im·press 1 tr.v. im·pressed, im·press·ing, im·press·es 1. To affect strongly, often favorably: with NAM's financing strategy and business plan which were developed in consultation with Corus Consulting. We believe the transaction is a real plus for our employees in Cleveland and for the Memphis community." Correnti noted that, upon sale of the SBQ operations, Birmingham Steel expects to reduce its debt and interest expense by approximately 30%. In addition, the transaction will relieve the Company of an off-balance sheet leveraged lease obligation associated with the Memphis facility. The transaction is subject to the approval of Birmingham Steel's lenders. Commenting on the current industry environment, Correnti said, "Although business conditions have toughened, we will continue to prudently manage operations within the limits of our borrowing capacity. However, unlike many steel producers, our overall inventories are in good order." Correnti noted that during the first quarter, the Company reduced inventories by $14 million. On September 30, 2000, the Company had approximately $44.0 million of availability under its credit facilities credit facilities npl → facilidades fpl de crédito credit facilities npl → facilités fpl de paiement credit facilities , compared with $51.6 million at the end of the prior quarter. Correnti commented, "We expect pricing pressures will continue during the second fiscal quarter and through the winter months. However, we expect steel selling prices will improve as the industry inventory imbalance imbalance /im·bal·ance/ (im-bal´ans) 1. lack of balance, such as between two opposing muscles or between electrolytes in the body. 2. dysequilibrium (2). stabilizes. We will concentrate on improving margins, and will continue to curtail cur·tail tr.v. cur·tailed, cur·tail·ing, cur·tails To cut short or reduce. See Synonyms at shorten. [Middle English curtailen, to restrict production, if necessary, in order to avoid building excess inventories." Correnti concluded, "We are pleased to have a management team and workforce committed to success. Although major improvements and accomplishments continue to be realized, our work is not yet complete. We will continue to proactively respond to challenges as we continue our quest to return Birmingham Steel to profitability. Our focus remains on building value for our shareholders." Birmingham Steel operates in the mini-mill sector of the steel industry and conducts operations at facilities located across the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . The common stock of Birmingham Steel is traded on the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. under the symbol "BIR". Except for historical information, the matters described in this press release are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of the safe-harbor provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including economic conditions, market demand factors, equipment breakdowns or failures, the Company's continued compliance with its financing arrangements and its principal debt agreements, as well as other risks described from time to time in the Company's periodic and special filings with the Securities and Exchange Commission. Any forward-looking statements contained in this document speak only as of the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" , and the Company disclaims any intent or obligation to update such forward-looking statements. Refer to the risk factors in the Company's Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended June 30, 2000.
BIRMINGHAM STEEL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data; unaudited)
Three months ended
September 30,
2000 1999
Net sales $ 206,337 $ 234,763
Cost of sales:
Other than depreciation
and amortization 182,023 195,239
Depreciation and amortization 13,425 15,791
--------- ---------
Gross profit 10,889 23,733
Start-up and restructuring costs and
other unusual items 400 13,205
Selling, general and administrative expense 10,304 14,490
Interest expense, including amortization
debt issuance costs 15,540 10,429
--------- ---------
(15,355) (14,391)
Other income, net 412 977
(Loss) gain from equity investments (21) 8
Minority interest in loss of subsidiary -- 1,758
--------- ---------
Loss from continuing operations before
income taxes (14,964) (11,648)
Provision for income taxes 65 4,006
--------- ---------
Loss from continuing operations (15,029) (15,654)
Reversal of loss on disposition of
discontinued operations -- 21,420
--------- ---------
Net (loss) income $ (15,029) $ 5,766
========= =========
Weighted average shares outstanding 30,892 29,705
========= =========
Basic and diluted per share amounts:
Loss from continuing operations (0.49) (0.53)
Income from discontinued operations -- 0.72
--------- ---------
Net (loss) income $ (0.49) $ 0.19
========= =========
Dividends declared per share $ -- $ 0.025
========= =========
BIRMINGHAM STEEL CORPORATION
Consolidated Balance Sheets
(in thousands, except per share data)
September 30, June 30,
2000 2000
(Unaudited) (Audited)
ASSETS
Current assets:
Cash and cash equivalents $ 935 $ 935
Accounts receivable, net of
allowance for doubtful accounts of
$1,706 at September 30, 2000
and $1,614 at June 30, 2000 98,410 93,652
Inventories 163,486 177,835
Other 7,590 5,950
--------- ---------
Total current assets 270,421 278,372
Property, plant and equipment:
Land and buildings 299,717 299,572
Machinery and equipment 643,066 639,674
Construction in progress 15,563 15,841
--------- ---------
958,346 955,087
Less accumulated depreciation (329,510) (316,790)
--------- ---------
Net property, plant and equipment 628,836 638,297
Excess of cost over net assets acquired 15,110 15,642
Other 26,578 27,546
--------- ---------
Total non-current assets 41,688 43,188
Total assets $ 940,945 $ 959,857
========= =========
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 70,791 $ 79,535
Accrued interest payable 849 2,186
Accrued payroll expenses 7,457 10,095
Accrued operating expenses 10,620 11,485
Reserve for potential loss on purchase
commitment 7,110 8,899
Other current liabilities 22,946 23,381
Current portion of long-term debt 134 131
--------- ---------
Total current liabilities 119,907 135,712
Deferred liabilities 11,768 12,040
Reserve for potential loss on purchase
commitment 30,000 30,000
Long-term debt, less current portion 605,907 594,090
Stockholders' equity:
Preferred stock, par value $.01;
authorized: 5,000 shares -- --
Common stock, par value $.01;
authorized: 75,000 shares;
issued: 31,110 at September 30, 2000 and
31,058 at June 30, 2000 311 310
Additional paid-in capital 342,344 342,257
Treasury stock, 50 and 81 shares at
September 30, 2000 and June 30, 2000,
respectively, at cost (321) (465)
Unearned compensation (522) (667)
Retained earnings (deficiency) (168,449) (153,420)
--------- ---------
Total stockholders' equity $ 173,363 $ 188,015
--------- ---------
Total liabilities and stockholders'
equity $ 940,945 $ 959,857
========= =========
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