Novamerican Steel Inc. Reports Third Quarter Results.Business Editors MONTREAL--(BUSINESS WIRE)--Sept. 27, 2000 Novamerican Steel Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :TONS) announced today its financial results for the third quarter ended August 26, 2000. (All amounts are in U.S. dollars).
SUMMARY OF FINANCIAL HIGHLIGHTS
(in thousands of U.S. dollars, except per share and tons data)
QUARTER ENDED
------------------------------------------
August 26, 2000 August 28, 1999 Change
------------------------------------------
Net sales $ 116,286 $ 102,369 13.6%
Gross margin 21.8% 22.7% -4.0%
Net income $ 3,003 $ 3,679 -18.4%
Net income per share $ 0.31 $ 0.38 -18.4%
Tons sold 190,087 180,159 5.5%
Tons processed 207,708 114,281 81.8%
------------ ------------
397,795 294,440 35.1%
============ ============
NINE MONTHS ENDED
------------------------------------------
August 26, 2000 August 28, 1999 Change
------------------------------------------
Net sales $ 362,085 $ 306,990 17.9%
Gross margin 21.6% 21.7% -0.5%
Net income $ 10,242 $ 9,457 8.3%
Net income per share $ 1.06 $ 0.98 8.3%
Tons sold 588,944 546,022 7.9%
Tons processed 460,061 232,619 97.8%
---------------- --------------
1,049,005 778,641 34.7%
================ ==============
THIRD QUARTER RESULTS Sales for the third quarter increased by $ 13.9 million, or 13.6%, to $ 116.3 million from $ 102.4 million for the same period in 1999. Sales for the nine months ended August 26, 2000 increased by $ 54.1 million, or 17.9%, to $ 362.1 million from $ 307.0 million for the same period in 1999. Tons sold and processed in the third quarter of 2000 increased by 103,355 tons, or 35.1% to 397,795 tons from 294,440 in the third quarter 1999. Tons processed in the third quarter of 2000 increased by 93,427 tons or 81.8% to 207,708 tons from 114,281 in the third quarter 1999. Tons sold and processed for the nine months ended August 26, 2000 increased by 270,364 tons, or 34.7% to 1,049,005 tons from 778,641 for the same period in 1999. Tons processed for the nine months ended August 26, 2000 increased by 227,447 tons or 97.8% to 460,061 tons from 232,619 for the same period in 1999 due mainly to the inclusion of Nova Steel Processing Centre ("NSPC NSPC National Standard Plumbing Code ") for the full nine months in 2000 compared with seven months in 1999. The gross margin for the third quarter decreased to 21.8% from 22.7% for the same quarter of 1999. The gross margin for the nine months ended August 26, 2000 decreased to 21.6% from 21.7% for the same period in 1999. Net income for the third quarter decreased by $ 0.7 million, to $ 3.0 million, or $ 0.31 per share, from $ 3.7 million, or $ 0.38 per share for the same period in 1999. Net income for the nine months ended August 26, 2000 increased by $ 0.7 million, to $ 10.2 million, or $ 1.06 per share, from $ 9.5 million, or $ 0.98 per share for the first nine months of 1999.
Novamerican Steel Inc. - Consolidated Financial Statements
(unaudited)
CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME
(in accordance with U.S. GAAP, in thousands of U.S. dollars,
except per share and tons data)
Three months ended Nine months ended
--------------------- ---------------------
August 26, August 28, August 26, August 28,
2000 1999 2000 1999
---------- ---------- ---------- ----------
$ $ $ $
Net sales 116,286 102,369 362,085 306,990
Cost of sales 90,919 79,170 283,841 240,271
---------- ---------- ---------- ----------
Gross margin 25,367 23,199 78,244 66,719
---------- ---------- ---------- ----------
Operating expenses
Plant 7,835 6,436 23,457 18,470
Delivery 3,615 3,225 11,284 9,982
Selling 2,997 2,627 9,168 7,896
Administrative and
general 4,343 3,626 13,109 10,820
---------- ---------- ---------- ----------
18,790 15,914 57,018 47,168
---------- ---------- ---------- ----------
Operating income 6,577 7,285 21,226 19,550
---------- ---------- ---------- ----------
Interest expense 1,786 1,297 4,650 4,036
Unrealized loss (gain)
on foreign exchange
contracts (12) (122) - 262
Share in income of a
joint venture (161) (187) (540) (531)
---------- ---------- ---------- ----------
1,613 988 4,110 3,767
---------- ---------- ---------- ----------
Income before income
taxes and minority
interest 4,964 6,297 17,116 15,783
Income taxes 1,948 2,486 6,686 6,064
---------- ---------- ---------- ----------
Income before minority
interest 3,016 3,811 10,430 9,719
Minority interest (13) (132) (188) (262)
---------- ---------- ---------- ----------
Net income 3,003 3,679 10,242 9,457
========== ========== ========== ==========
Net income per share $ 0.31 $ 0.38 $ 1.06 $ 0.98
========== ========== ========== ==========
Weighted average number
of shares
outstanding 9,700,000 9,700,000 9,700,000 9,700,000
========== ========== ========== ==========
Comprehensive income
Net income 3,003 3,679 10,242 9,457
Other comprehensive
income 901 1,018 (67) 1,546
---------- ---------- ---------- ----------
3,904 4,697 10,176 11,003
========== ========== ========== ==========
Tons sold 190,087 180,159 588,944 546,022
Tons processed 207,708 114,281 460,061 232,619
---------- ---------- ---------- ----------
397,795 294,440 1,049,005 778,641
========== ========== ========== ==========
Effective August 26, 2000, the Company has changed its accounting policy for its method of inventory valuation from the last-in, first-out last-in, first-out n. A method of inventory accounting in which the most recently acquired items are assumed to have been the first sold. In a period of rising prices, this method yields a lower ending inventory, a higher cost of goods sold, a lower (LIFO (Last In-First Out) A queueing method in which the next item to be retrieved is the item most recently placed in the queue. Contrast with FIFO. LIFO - stack ) method to the average cost method for its wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. , United Steel & Aluminum Corporation. Management believes the newly adopted accounting principle is preferable in the circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or because under the current economic environment of low inflation, the average cost method will result in a better measurement of operating results and is also the accounting method used by the Company's other subsidiaries as well as in the industry in which the Company operates. This change in accounting policy has no impact on the Consolidated Financial Statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge for the period ended August 26, 2000 except for a reclassification Reclassification The process of changing the class of mutual funds once certain requirements have been met. These requirements are generally placed on load mutual funds. Reclassification is not considered to be a taxable event. on the Consolidated Balance Sheet consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm. of $255,000 from long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. Deferred income taxes to Income taxes payable.
Novamerican Steel Inc. - Consolidated Financial Statements
(unaudited)
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(in accordance with U.S. GAAP, in thousands of U.S. dollars,
except share data)
Accumu-
lated
Total
Common Shares Other Compre- Share-
--------------- Retained hensive holders'
Number Amount Earnings Income Equity
--------- ------ -------- ------- --------
$ $ $ $
Balance at
November 27,
1999 9,700,000 28,404 57,645 (3,637) 82,412
Net income 10,242 10,242
Changes in
cumulative
translation
adjustment - - - (67) (67)
--------- ------ -------- ------- --------
Balance at
August 26,
2000 9,700,000 28,404 67,887 (3,704) 92,587
========= ====== ======== ======= ========
Novamerican Steel Inc. - Consolidated Financial Statements
(unaudited)
CONSOLIDATED STATEMENT OF CASH FLOWS
(in accordance with U.S. GAAP, in thousands of U.S. dollars)
Three months ended Nine months ended
--------------------- ---------------------
August 26, August 28, August 26, August 28,
2000 1999 2000 1999
---------- ---------- ---------- ----------
$ $ $ $
CASH FLOWS FROM
OPERATING ACTIVITIES
Net income 3,003 3,679 10,242 9,458
Adjustments to reconcile
net income to net
cash from (used for)
operating activities
Depreciation and
amortization 1,397 1,068 4,000 2,962
Share in income of
a joint venture (161) (187) (540) (531)
Deferred income taxes 353 150 736 223
Minority interest 13 132 188 262
Gain on disposal of
property and equipment 4 (93) (10) (120)
Unrealized loss (gain)
on foreign exchange
contracts (12) (122) - 262
Changes in working capital
Accounts receivable 6,134 2,099 (3,669) (3,583)
Inventories (2,753) 354 (29,786) 9,948
Prepaid expenses and
other (168) 224 (246) 240
Accounts payable and
accrued liabilities (9,724) (3,474) (8,744) (10,566)
Income taxes payable (228) 130 (2,692) 915
---------- ---------- ---------- ----------
Net cash from (used for)
operating activities (2,141) 3,960 (30,522) 9,470
---------- ---------- ---------- ----------
CASH FLOWS FROM INVESTING
ACTIVITIES
Distribution from a
joint venture 197 210 554 493
Additions to property
and equipment (7,290) (1,586) (19,941) (6,210)
Proceeds from disposal
of property and equipment 15 151 29 178
Other 149 (86) (34) 498
---------- ---------- ---------- ----------
Net cash used for
investing activities (6,930) (1,311) (19,393) (5,041)
---------- ---------- ---------- ----------
CASH FLOWS FROM FINANCING
ACTIVITIES
Variation in bank
indebtedness 5,517 (2,022) 35,418 (5,388)
Proceeds from long-term
debt 3,485 43 12,554 8,489
Repayment on long-term
debt (467) (391) (3,307) (5,234)
---------- ---------- ---------- ----------
Net cash from (used for)
financing activities 8,535 (2,370) 44,665 (2,133)
---------- ---------- ---------- ----------
Effect of exchange rate
changes on cash and
cash equivalents 4 (36) 8 6
---------- ---------- ---------- ----------
Net increase (decrease)
in cash and cash
equivalents (532) 243 (5,241) 2,302
Cash and cash equivalents,
beginning of period 1,275 2,282 5,984 223
---------- ---------- ---------- ----------
Cash and cash equivalents,
end of period 743 2,525 743 2,525
========== ========== ========== ==========
SUPPLEMENTAL DISCLOSURE
OF CASH FLOW INFORMATION
Interest paid 2,513 1,191 5,418 3,807
========== ========== ========== ==========
Income taxes paid 1,121 2,324 8,077 5,781
========== ========== ========== ==========
Novamerican Steel Inc. - Consolidated Financial Statements
(unaudited)
CONSOLIDATED BALANCE SHEETS
(in accordance with U.S. GAAP, in thousands of U.S. dollars)
August 26, August 28,
2000 1999
---------- ----------
$ $
ASSETS
Current assets
Cash and cash equivalents 743 2,525
Accounts receivable 74,340 61,272
Inventories 99,078 62,008
Income taxes recoverable - -
Prepaid expenses and other 851 399
---------- ----------
175,012 126,204
Investment in a joint venture 2,904 2,815
Property and equipment 68,597 51,256
Goodwill, net of accumulated amortization 11,429 11,747
Other assets 755 528
---------- ----------
258,697 192,550
========== ==========
LIABILITIES
Current liabilities
Current portion of long-term debt 2,681 1,406
Bank indebtedness 35,768 3,702
Accounts payable and accrued liabilities 60,559 47,057
Income taxes payable 21 549
Deferred income taxes 776 1,732
---------- ----------
99,804 54,446
Long-term debt 58,314 54,652
Deferred income taxes 5,203 4,268
Minority interest 2,785 2,469
---------- ----------
166,108 115,835
---------- ----------
SHAREHOLDERS' EQUITY
Share capital 28,404 28,404
Retained earnings 67,890 52,769
Accumulated other comprehensive income (3,704) (4,458)
---------- ----------
92,590 76,715
---------- ----------
258,697 192,550
========== ==========
OPERATIONS Despite strong demand and increases in tons sold, the excess supply in the market put pressure on pricing and on margins which resulted in lower net earnings in the third quarter 2000 compared to 1999. Although all divisions reported profitable third quarter results, the Company's processing operations were particularly strong in growth and profitability. NEW AND PLANNED FACILITIES Construction of the BethNova Tube facility in Indiana Indiana, state, United States Indiana, midwestern state in the N central United States. It is bordered by Lake Michigan and the state of Michigan (N), Ohio (E), Kentucky, across the Ohio R. (S), and Illinois (W). , a joint venture with Bethlehem Steel The Bethlehem Steel Corporation (1857–2003), based in Bethlehem, Pennsylvania, once was the second largest steel producer in the United States (after Pittsburgh, Pennsylvania-based US Steel). , began during the third quarter of 2000. Tube production is planned to start at the end of the first quarter of 2001. Construction of the Philadelphia Philadelphia, ancient cities Philadelphia, name of several ancient cities. One was in Lydia, W Asia Minor (now W Turkey). At the foot of Mt. Tmolus and near the location of modern Alaşehir, it was founded in the 2d cent. B.C. tube mill and processing facility is complete and management expects to commence tube production in October October: see month. of 2000. At NSPC, the Company's most recent startup (STARTing UP) "At startup" means when the computer is first turned on or when a program is first loaded. See Startup folder. , the second slitter slitter see teat slitter. was commissioned in early September September: see month. 2000. Management expects this equipment to process in excess of 100,000 tons during its first twelve months. OUTLOOK Management believes that the prevailing weak pricing for carbon flat-rolled product in the North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. market will continue into the fourth quarter as steel service centers reduce their inventories in order to be in a buying position. COMPANY DESCRIPTION Novamerican Steel Inc., based in Montreal Montreal (mŏn'trēôl`), Fr. Montréal (môNrāäl`), city (1991 pop. 1,017,666), S Que., Canada, on Montreal island, surrounded by St. Lawrence River and Rivière des Prairies. , Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of with twelve operating locations in Canada and nine operating locations 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. , processes and distributes carbon steel, stainless steel, stainless, n a steel that contains a minimum of 12% chromium and approximately 0.5% carbon to resist corrosion. steel and aluminum products, including carbon steel tubing for structural and automotive markets. FORWARD-LOOKING for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. (SAFE HARBOUR) STATEMENTS Except for historical information contained herein, the matters set forth 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. that involve risks and uncertainties including, but not limited to, product demand, competition, regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. approvals, the effect of economic conditions and technological difficulties and other risks detailed in the Company's filings with the U.S. Securities and Exchange Commission. |
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