Metal Management, Inc. Announces Sales of $257.7 Million, Net Income of $12.6 Million and EPS of $1.07 Per Diluted Share for the Quarter Ended December 31, 2003.Business Editors CHICAGO--(BUSINESS WIRE)--Feb. 2, 2004 Metal Management, Inc. (Nasdaq:MTLM), one of the nation's largest full service scrap metal recyclers, today announced net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight of $257.7 million, 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 (1) (as defined) of $19.0 million, and net income of $12.6 million, or $1.07 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, for its third fiscal quarter ended December December: see month. 31, 2003. Third Fiscal Quarter Highlights -- Consolidated net sales increased to $257.7 million for the quarter ended December 31, 2003, up 52.0% from $169.5 million for the quarter ended December 31, 2002. -- EBITDA (as defined) of $19.0 million for the quarter ended December 31, 2003, an increase of 138% from EBITDA (as defined) of $8.0 million for the quarter ended December 31, 2002. -- Net income of $12.6 million for the quarter ended December 31, 2003, or $1.07 per common diluted share, compared to a net loss of $0.3 million for the quarter ended December 31, 2002, or ($0.03) per common diluted share. The comparability of net income for the two quarterly periods is affected by a reduction in the company's effective tax rate in fiscal 2004 associated with lower taxes from our increasing export sales. The effective tax rate in the quarter ended December 31, 2002 was affected by an election that was made regarding the company's utilization of Net Operating Loss 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. tax benefits. This election was made in December 2002. -- Debt decreased by $21 million in the quarter ended December 31, 2003, compared to the debt level as of September September: see month. 30, 2003. Metal Management's Comments Daniel Daniel, book of the Bible Daniel, book of the Bible. It combines "court" tales, perhaps originating from the 6th cent. B.C., and a series of apocalyptic visions arising from the time of the Maccabean emergency (167–164 B.C. W. Dienst, Chairman and Chief Executive Officer, said, "Metal Management is extremely pleased to announce its results for the third fiscal quarter ended December 31, 2003. Consolidated net sales increased 52% to $257.7 million compared to the quarter ended December 31, 2002. Of even greater significance, our operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. more than tripled to $14.5 million from $4.3 million in the year ago period. Net income for the quarter ended December 31, 2003 was $12.6 million, or $1.07 per diluted share, an accomplishment for which our employees should be extremely proud." "The ferrous ferrous (fĕr`əs), iron in the +2 valence state. Containing or having to do with iron. The difference between ferrous and ferric is the number of valence electrons they contain (ferrous contains two and ferric contains three), which scrap marketplace continues to evidence remarkable strength, positively impacting both our volumes and margins. Our ferrous scrap shipments increased by about 8% to approximately 1.1 million tons for the third quarter of fiscal 2004 compared to the same period last year. The average selling price The average sales price of goods or commodities. Especially used in the retail sector and technology distribution. for our processed ferrous scrap metal shipments was $172 per gross ton in the quarter ended December 31, 2003, compared to $112 per gross ton in the quarter ended December 31, 2002." "Our processed ferrous shipments to domestic consumers were seasonally strong for the October October: see month. through December timeframe, attributable to strengthening in the manufacturing economy and a stronger demand from the consolidating steel industry in the U.S. Our third quarter volumes were up almost 6% compared to our domestic volumes in the third fiscal quarter of last year. This three-month calendar period has historically exhibited slowness in ferrous scrap purchases by the domestic steel industry." "International demand for ferrous scrap continues to be strong. The company had an increase of 15% in ferrous scrap shipments exported via ocean vessel, primarily from our Northeast yards. In our third quarter, we exported approximately 250,000 tons of ferrous scrap by vessel, up from 217,000 tons in the year ago quarter." "Debt reduction has been and will continue to be a priority for Metal Management, and our third quarter was another successful period for accomplishing that goal. EBITDA (as defined) was $19.0 million for the quarter ended December 31, 2003, more than double the EBITDA (as defined) of $8.0 million for the quarter ended December 31, 2002. As a result, the company was able to decrease debt by $21 million in the quarter ended December 31, 2003, down to $59.6 million, compared to the debt level as of September 30, 2003." Dienst concluded, "The recent changes in our organization have been very positively received both inside our company and from our industry. I sincerely appreciate the support of our employees, shareholders, consumers, trading partners and customers, and I trust through our continuing hard work, all will be rewarded." Investor Conference Call Metal Management will host its Third Quarter 2004 Conference Call and Webcast at 8:30 a.m. EST EST electroshock therapy. EST abbr. electroshock therapy (7:30 a.m. CST CST abbr. 1. Central Standard Time 2. convulsive shock treatment CST Central Standard Time Noun 1. ) on Tuesday Tuesday: see week. , February 3, 2004. The conference call can be accessed by dialing 800-901-5248 passcode METAL. International callers can dial 617-786-4512 passcode METAL. The conference call will also be accessible via the web at www.mtlm.com by following the link on the investor section. A replay of the conference call will be available by dialing 888-286-8010 passcode 92301657 (International callers can access the replay by dialing 617-801-6888) through Tuesday, February 10, 2004. About Metal Management, Inc. Metal Management is one of the largest full service metals recyclers in 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. , with approximately 40 recycling recycling, the process of recovering and reusing waste products—from household use, manufacturing, agriculture, and business—and thereby reducing their burden on the environment. facilities in 13 states. For more information about Metal Management, Inc., visit the Company's website at www.mtlm.com. All of the statements in this release, other than historical facts, 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. made in reliance upon the Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. 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. 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 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 fiscal year ended March 31, 2003, and in other periodic filings filed by the Company with the U.S. Securities and Exchange Commission, some of the factors that could affect our performance include, among other things: debt leverage on Metal Management, debt covenants that restrict our ability to engage in certain transactions, cyclicality of the metals recycling industry, commodity price fluctuations, compliance with environmental, health, safety and other regulatory requirements Regulatory requirements are part of the process of drug discovery and drug development. Regulatory requirements describe what is necessary for a new drug to be approved for marketing in any particular country. applicable to the Company, potential environmental liability, risk of deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. of relations with labor unions labor union: see union, labor. , dependence on key management, dependence on suppliers of scrap metal, concentration of customer risk, impact of export and other market conditions on the business, availability of scrap alternatives, underfunded un·der·fund tr.v. un·der·fund·ed, un·der·fund·ing, un·der·funds To provide insufficient funding for. underfunded adj → infradotado (económicamente) defined benefit pension plans, historical operating losses, and limited common stock trading history. (1) EBITDA is defined by the company to be earnings before interest, taxes, depreciation, amortization, non-cash and non-recurring income, income (loss) from joint ventures, other income (expense), and (loss) gain on debt extinguishment The destruction or cancellation of a right, a power, a contract, or an estate. Extinguishment is sometimes confused with merger, though there is a clear distinction between them. . 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 GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). net income is included in the table attached to this release. EBITDA is a measure of cash flow typically used by many investors, but is not a measure of earnings as defined under Generally Accepted Accounting Principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting , and may be defined differently by others.
METAL MANAGEMENT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share amounts)
Three months ended Nine months ended
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December 31, December 31, December 31, December 31,
2003 2002 2003 2002
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Net sales $257,715 $169,546 $714,745 $555,859
Cost of sales 222,180 150,466 617,691 483,684
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Gross profit 35,535 19,080 97,054 72,175
Operating expenses:
General and
administrative 16,570 11,117 42,372 34,715
Depreciation and
amortization 4,480 4,357 13,536 12,985
Non-cash and non-
recurring income 0 (695) 0 (695)
---------------------------------------------------
Total operating
expenses 21,050 14,779 55,908 47,005
---------------------------------------------------
Operating income 14,485 4,301 41,146 25,170
Income (loss) from
joint ventures 1,811 (80) 3,741 (158)
Interest expense (1,418) (2,775) (5,646) (8,675)
Interest and other
income (expense) (74) 711 (184) 3,547
(Loss) gain on debt
extinguishment 0 324 (363) 607
---------------------------------------------------
Income before income
taxes 14,804 2,481 38,694 20,491
Provision for income
taxes (2,231) (2,753) (11,608) (7,071)
---------------------------------------------------
Net income (loss) $12,573 $(272) $27,086 $13,420
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Earnings per share:
Basic $1.17 $(0.03) $2.57 $1.32
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Diluted $1.07 $(0.03) $2.43 $1.29
===================================================
Shares used in
computation of
earnings per share:
Basic 10,722 10,161 10,521 10,161
===================================================
Diluted 11,700 10,161 11,136 10,406
===================================================
METAL MANAGEMENT, INC.
EBITDA (AS DEFINED)
RECONCILIATION TO GAAP NET INCOME
(unaudited, in thousands)
Three months ended Nine months ended
---------------------------------------------------
December 31, December 31, December 31, December 31,
2003 2002 2003 2002
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Net income (loss) $12,573 $(272) $27,086 $13,420
Add Back:
Depreciation and
amortization 4,480 4,357 13,536 12,985
Provision for
income taxes 2,231 2,753 11,608 7,071
Non-cash and non-
recurring income 0 (695) 0 (695)
(Income) loss from
joint ventures (1,811) 80 (3,741) 158
Interest expense 1,418 2,775 5,646 8,675
Interest and other
income, net 74 (711) 184 (3,547)
Loss (gain) on debt
extinguishment 0 (324) 363 (607)
---------------------------------------------------
EBITDA (AS DEFINED) $18,965 $7,963 $54,682 $37,460
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