Oregon Steel Mills, Inc. Announces First Quarter Results.PORTLAND Portland, town, England Portland, town (1991 pop. 12,945), Dorset, S England. It is on the Isle of Portland, a small rocky peninsula. Portland stone has been used in St. Paul's Cathedral and other important London buildings. Lobsters and crabs are harvested. , Ore. -- Oregon Oregon, city, United States Oregon, city (1990 pop. 18,334), Lucas co., NW Ohio, a suburb adjacent to Toledo, on Lake Erie; inc. 1958. It is a port with railroad-owned and -operated docks. The city has industries producing oil, chemicals, and metal products. Steel Mills, Inc. (NYSE NYSE See: New York Stock Exchange :OS): Highlights: --Sales were a record $355 million, up 20 percent from the first quarter of 2005 on 399,500 tons (Transparent Optical Networking Services) A marketing term for providing dark fiber to a customer. The customer is responsible for generating the transmission signal and interpreting it at the other end. See dark fiber. of shipments --Operating income was $58.7 million, second highest in the Company's history --Earnings before interest, taxes, depreciation and amortization was $70.3 million, compared to $62.7 million in the first quarter of 2005 --Net income was $33.4 million ($.93 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) Oregon Steel Mills, Inc. (NYSE:OS) today reported first quarter net income of $33.4 million ($.93 per diluted share on 35.9 million shares) compared to a net income of $28.4 million ($.79 per diluted share on 35.7 million shares) for the first quarter of 2005. Sales for the first quarter of 2006 were $355.3 million, a quarterly Company record. This compares to 2005 first quarter sales of $296 million. Average sales price per ton in the first quarter of 2006 was $889, also a quarterly record, compared to $856 in the first quarter of 2005. Overall shipments for the first quarter of 2006 were 399,500 tons compared to 2005 first quarter shipments of 345,700 tons. The increase in shipments are primarily due to increased shipments of plate, welded and seamless See seamless integration. pipe and structural tubing products partially offset by lower shipments of rail and rod and bar products. The Company's seamless pipe mill, which was idled in November November: see month. of 2003, was restarted in December December: see month. of 2005 and shipped 14,000 tons of seamless casing during the first quarter of 2006. The increases in sales and average sales price were primarily due to higher shipments of plate and welded and seamless pipe products (the Company's highest selling priced products) and higher average selling prices The average sales price of goods or commodities. Especially used in the retail sector and technology distribution. for rail products, partially offset by lower average selling prices for plate, ERW ERW Explosive Remnants of War ERW Erwachsen (German: adults) ERW Equal Rights Washington (LGBT advocacy organization in Washington State, USA) ERW Electric Resistance Weld pipe and structural tubing products. 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. for the first quarter of 2006 was $58.7 million (an average of $147 per ton). This compares to operating income for the first quarter of 2005 of $54.6 million (an average of $158 per ton). 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.
A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: as a percentage of sales declined from 18.4 percent in the first quarter of 2005 to 16.5 percent in the first quarter of 2006. This change was due in part to a decline in margins for plate and ERW pipe products, primarily as a result of lower average selling prices. LIQUIDITY At March 31, 2006, the Company had $201.7 million of cash, cash equivalents and short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. investments. Total debt outstanding, net of cash, cash equivalents and short-term investments was $108.3 million at March 31, 2006 compared to $132.1 million at December 31, 2005. During the first quarter of 2006, the Company incurred capital expenditures of $20 million and depreciation and amortization of $10.9 million. For all of 2006, the Company anticipates that capital expenditures and depreciation and amortization will be approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $89 million and $46 million, respectively. At March 31, 2006, inventories were $260.8 million. This compares to $301.5 million at December 31, 2005. The decrease in inventory is primarily due to reductions of semi-finished inventory at the Company's Oregon Steel Division and scrap inventory at the Company's Rocky Mountain Steel ("RMSM RMSM Revised Minimum Standard Model (World Bank) RMSM Royal Military School of Music (UK) RMSM Royal Marine School of Music (Portsmouth, UK) ") Division both in terms of quantities and average cost per ton. 2006 OUTLOOK For 2006, the Company expects to ship approximately 1.8 million tons of products and generate approximately $1.57 billion in sales. In the Oregon Steel Division the product mix is expected to consist of approximately 545,000 tons of plate and coil, 340,000 tons of welded pipe and 82,000 tons of structural tubing. The RMSM Division expects to ship approximately 400,000 tons of rail, 330,000 tons of rod and bar products and 85,000 tons of seamless pipe. Expected second quarter of 2006 shipments, in tons, as compared to previous quarters are as follows:
Forecast Actual Actual
Q2 2006 Q1 2006 Q2 2005
-------- -------- --------
Oregon Steel Division:
Plate and coil 216,000 184,800 148,500
Welded pipe(1) 43,000 62,300 66,900
Structural tubing 22,000 18,400 13,700
Less shipment to affiliates (78,000) (48,300) (36,300)
-------- -------- --------
203,000 217,200 192,800
--------------------------
RMSM Division:
Rail 98,000 93,300 103,200
Rod and bar 84,000 75,000 83,600
Seamless pipe 23,000 14,000 0
-------- -------- --------
205,000 182,300 186,800
-------- -------- --------
Total 408,000 399,500 379,600
==========================
(1) Includes large diameter line pipe, ERW line pipe and ERW casing.
The Company's operating income in the second quarter of 2006 will be negatively impacted by a $3.6 million charge ($.06 per diluted share) related to cancellation cancellation (See: cancel) CANCELLATION. Its general acceptation, is the act of crossing a writing; it is used sometimes to signify the manual operation of tearing or destroying the instrument itself. Hyde v. Hyde, 1 Eq. Cas. Abr. 409; Rob. and buyout Buyout The purchase of a company or a controlling interest of a corporation's shares. Notes: A leveraged buyout is accomplished with borrowed money or by issuing more stock. costs of a contract to supply oxygen to the now closed melt shop at the Company's Portland mill. Annual costs associated with this take or pay contract, which extended into the year 2011, were approximately $1.8 million per year. Jim Declusin, the Company's President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. stated, "Despite the charge related to the oxygen contract buyout, due to continued strength in most of our product lines, we expect operating income in the second quarter of 2006 to be higher than the first quarter of 2006. Looking into the second half of the year, we see our product mix shifting to higher priced, higher margin products, more heavily weighted to the energy markets. As a result of this change in product mix and continued expected demand for our non-energy related products, we anticipate that we will ship approximately 1 million tons in the second half of 2006 and that our operating income will be up significantly from that realized in the first half of 2006." 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. Forward-looking statements in this release are made pursuant to 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. Such forward-looking statements are subject to risks and uncertainties and actual results could differ materially from those projected. Such risks and uncertainties include, but are not limited to, general business and economic conditions; competitive products and pricing, as well as fluctuations in demand; cost and availability of raw materials; potential equipment malfunction mal·func·tion v. 1. To fail to function. 2. To function improperly. n. 1. Failure to function. 2. Faulty or abnormal functioning. ; contract cancellations and plant construction and repair delays. For more detailed information, please review the discussion of risks, which may cause results to differ materially, in the Company's most recently filed 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. , Form 10-Q Form 10-Q See 10-Q. and other SEC reports. These forward-looking statements should not be relied upon as representing the Company's views as of any subsequent date and the Company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise, after the date they are made. ANNUAL MEETING Our 2006 Annual Meeting will be held on Thursday Thursday: see week. , April 27, 2006 at 8:00 a.m. Pacific Time, at the Heathman Hotel, 1001 S.W. Broadway Broadway, famous thoroughfare in New York City. It extends from Bowling Green near the foot of Manhattan island N to 262d St. in the Bronx. Throughout its length Broadway is chiefly a commercial street. in Portland, Oregon 97205. CONFERENCE CALL WEBCAST On Friday Friday: see Sabbath; week. Friday young Indian rescued by Crusoe and kept as servant and companion. [Br. Lit.: Robinson Crusoe] See : Servant , April 28, 2006 at 8:00 a.m. PT (11:00 a.m. ET), the Company will hold a conference call to discuss the results of the first quarter. You are invited to listen to a live broadcast of the Company's conference call over the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the , accessible at www.osm.com on the Investor Relations' page. Oregon Steel Mills, Inc. is organized into two divisions. The Oregon Steel Division produces steel plate, coil, welded pipe and structural tubing from plants located in Portland, Oregon and Camrose, Alberta Camrose, a small Canadian city, is situated in Central Alberta, amidst some of the richest farmland in the prairies. It is a relatively small city which originally grew up along a railroad and now grows along Highway 13. , 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 . The Rocky Mountain Steel Mills Division, located in Pueblo, Colorado The City of Pueblo (IPA: /'sɪti əv 'pwɛbloʊ/) is a Home Rule Municipality that is the county seat of Pueblo County, Colorado, USA. , produces steel rail, rod, bar, and tubular tubular /tu·bu·lar/ (too´bu-lar) 1. shaped like a tube. 2. of or pertaining to a tubule. tubular 1. pertaining to renal tubules. 2. pertaining to fallopian tube. products.
Oregon Steel Mills, Inc. and Subsidiary Companies
Condensed Consolidated Income Statements (1)
(In thousands, except tonnage and per share amounts)
(Unaudited)
Three Months Ended
March 31,
2006 2005
-------- --------
Sales $355,288 $295,965
Cost of sales 275,432 223,430
Selling, general and administrative expenses 21,288 18,053
Gain on sales of assets (168) (87)
-------- --------
Operating income 58,736 54,569
Interest expense (6,987) (8,642)
Other income, net 1,726 1,505
Minority interest (998) (3,076)
-------- --------
Income before income taxes 52,477 44,356
Income tax expense (19,126) (16,006)
-------- --------
Net income $ 33,351 $ 28,350
======== ========
Basic earnings per share $ .93 $ .80
Diluted earnings per share $ .93 $ .79
Basic weighted average shares outstanding 35,718 35,398
Diluted weighted average shares outstanding 35,866 35,676
Operating income per ton $ 147.02 $ 157.85
Operating margin 16.5% 18.4%
Depreciation and amortization $ 10,850 $ 9,731
EBITDA (see attached table) $ 70,314 $ 62,729
Total tonnage sold:
Oregon Steel Division
Plate and coil 136,500 112,400
Structural tubing 18,400 14,800
Welded pipe 62,300 30,300
-------- --------
217,200 157,500
-------- --------
Rocky Mountain Steel Mills Division
Rail 93,300 101,800
Rod and bar 75,000 86,400
Seamless pipe 14,000 0
-------- --------
182,300 188,200
-------- --------
Total Company 399,500 345,700
======== ========
Sales:
Oregon Steel Division $219,371 $172,138
Rocky Mountain Steel Mills Division 135,917 123,827
-------- --------
Total Company $355,288 $295,965
======== ========
Operating Income:
Oregon Steel Division $ 38,599 $ 36,155
Rocky Mountain Steel Division 20,137 18,414
-------- --------
Total Company $ 58,736 $ 54,569
======== ========
Average selling price per ton:
Oregon Steel Division $ 1,010 $ 1,093
Rocky Mountain Steel Mills Division $ 746 $ 658
Total Company $ 889 $ 856
(1) Certain reclassifications have been made in prior years' periods
to conform to the current period presentations. Such
reclassifications do not affect results of operations as
previously reported.
Oregon Steel Mills, Inc. and Subsidiary Companies
Condensed Consolidated Balance Sheets(1)
(In thousands)
(Unaudited)
March 31, December 31,
2006 2005
-------------------------
Current assets:
Cash and cash equivalents $ 84,996 $ 74,965
Short-term investments 116,675 103,300
Trade accounts receivable, net 166,407 138,456
Inventories 260,796 301,546
Deferred taxes and other current assets 16,671 17,753
----------- -----------
645,545 636,020
Property, plant and equipment, net 511,298 499,122
Goodwill 4,458 4,458
Intangibles, net 30,415 30,456
Other assets 5,254 5,824
----------- -----------
Total assets $ 1,196,970 $ 1,175,880
=========== ===========
Current liabilities $ 144,284 $ 167,634
Long-term debt 307,956 308,337
Deferred taxes 50,678 43,133
Other liabilities 95,132 92,507
----------- -----------
598,050 611,611
Minority interest 12,867 11,869
Stockholders' equity 586,053 552,400
----------- -----------
Total liabilities and stockholders'
equity $ 1,196,970 $ 1,175,880
=========== ===========
(1) Certain reclassifications have been made in prior years' periods
to conform to the current period presentations.
Oregon Steel Mills, Inc. and Subsidiary Companies
Calculation of EBITDA
(In thousands)
(Unaudited)
Three Months
Ended
March 31,
----------------
2006 2005
----------------
Net income $33,351 $28,350
Income tax expense 19,126 16,006
----------------
Pre-tax income $52,477 $44,356
Add back:
Interest expense 8,262 8,924
Interest capitalized (1,275) (282)
Depreciation 10,811 9,691
Amortization 39 40
----------------
EBITDA $70,314 $62,729
================
EBITDA is a non-generally accepted accounting principles ("GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ") measure. The Company believes that EBITDA is useful to investors because it is a basis upon which we assess our financial performance, it provides useful information regarding our ability to service our debt and because it is a commonly used financial analysis tool for measuring and comparing companies in several areas of liquidity, operating performance and leverage. The Company believes EBITDA, excluding the effects of special items, is useful to investors because the Company believes the excluded items are nonrecurring Non`re`cur´ring a. 1. Nonrecurrent; as, the costs of a layoff are considered as a nonrecurring expense s>. . Therefore, the Company believes this financial measure is more useful to investors when comparing the reported results to previous periods. |
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