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 CHESTERFIELD, Mo., Aug. 9 /PRNewswire/ -- Huntco Inc. (NASDAQ: HUNT), a Chesterfield-based intermediate steel processor, today announced results of operations for its first quarter of fiscal 1994 which quarter ended July 31, 1993. Net sales were $33.6 million, an increase of 20 percent in comparison to the prior year's first quarter net sales of $28.0 million. Net income for the quarter was $1.6 million, or 28 cents per share, which compares to net income before extraordinary items of $.3 million, or 6 cents per share and a net loss of $.2 million, or 5 cents per share in the prior year's first quarter.
 The company's board of directors declared a dividend of 2 cents per share for shareholders of record on Aug. 20, 1993 and payable on Aug. 31, 1993.
 B.D. Hunter, chairman of the board and chief executive officer, attributes the improvements in net sales and earnings per share to the continuing implementation of the company's long-term strategic plan evidenced most clearly by the continuing development of the company's steel processing facility in Blytheville, Ark.; most significantly the company's new slitting line which became operational during the quarter. Also positively affecting the quarterly results were rising steel prices during the quarter which reflected tight supplies and strong demand.
 The company continues to experience increasing volumes and strong gross profits on steel processing sales. Selling prices increased 7 percent and tons sold increased 20 percent in comparison to the prior year's first quarter. Notwithstanding the increase in quarterly sales, steel processing sales were lower than expected because of the company's inability to acquire steel in sufficient quantities at acceptable prices to fill all of the potential orders which were available. The company expects the tight supply situation to continue through at least its second fiscal quarter. Also affecting the comparison of the current quarter's net sales with prior year amounts were sales of $.8 million relating to the company's wire fabricating operations which were sold in December 1992. If these sales were eliminated, total steel processing sales actually increased 26 percent from prior year levels. Benefiting from rising steel prices and tight supply conditions, gross profits in the steel processing segment averaged 15 percent during the first quarter. This compares to gross profits of 9.4 percent in the prior year's first quarter.
 "We are very satisfied with these results considering the disruption caused to certain of our customers and to regional transportation by the devastating floods which have occurred in the upper midwestern states which border the inland waterway. Fortunately, none of our facilities were directly affected by the flooding and our ability to receive and ship material was largely unimpeded. The extent of the impact of the flooding on existing and potential customers of our products in the affected areas remains somewhat uncertain, but is not expected to have any significant impact on our results of operations or on our continued expansion plans," stated Hunter.
 The company believes that the July 27, 1993 International Trade Commission rulings which did not uphold the majority of the U.S. Commerce Department's dumping cases brought against foreign producers of steel products should be a net plus to its ongoing expansion strategy. Hunter stated, "While the short-term effect of these rulings could be to prevent further increases in raw material acquisition costs and could potentially cause domestic suppliers of the company's primary steel products to reverse some portion of the price increases put into effect since the beginning of calendar year 1993, the potential for increased sources of supply which could result from these rulings should benefit the company over the long term." The strategic location of the company's major processing facilities on the inland waterway system would allow it to economically access foreign produced materials if they become a more significant portion of domestic steel consumption or are available at prices below domestic manufacturers.
 Hunter indicated that net sales in the company's compressed air cylinder segment increased 6 percent from prior year levels but that operating income in this segment declined approximately $59,000, primarily reflecting higher steel prices incurred in advance of price increases to customers.
 Commenting further on the first quarter results, Hunter indicated that the company incurred net interest expense of $.5 million during the quarter as the proceeds from the initial public offering of the company's stock were not available to the company until July 7, 1993. The company expects to realize a nominal amount of net interest income in the second fiscal quarter as the company has now retired all of its long-term debt obligations except for industrial revenue bonds which total approximately $2.0 million.
 The company commenced an initial public offering of its common stock on June 30, 1993, with the sale of 3,680,000 shares of its Class A common stock. This sale resulted in proceeds to the company of $53.7 million, after underwriting discounts and expenses of the offering. The company now has 7,940,000 common shares outstanding consisting of 3,680,000 shares of Class A common stock and 4,260,000 shares of Class B common stock. Further, the company has granted stock options to employees and directors for the purchase of 426,000 Class A shares at a price of $17 per share.
 The company also announced the completion of a tender offer to repurchase certain tax-exempt bonds which had been issued in connection with the original construction of its steel processing facility located in Blytheville. Bonds in the aggregate principal amount of approximately $1.8 million were repurchased pursuant to the tender offer. This represented 95.4 percent of the total outstanding bonds. The balance of the bonds were mandatorily redeemed coincident with the company's signing of commitments to proceed with the construction of a new 60,000 square foot building and the acquisition of a new push-pull coil pickling line for its new facility in Blytheville. These commitments caused the company to exceed the limit on capital expenditures which it could incur at its Blytheville facility under the terms of the tax-exempt bond issue and resulted in the mandatory redemption of the remaining bonds. The company currently intends to amend the terms of the bonds which were repurchased as a part of the tender offer and to remarket them as taxable bonds. This transaction should be completed within the next 30 days. Assuming timely receipt of all regulatory approvals, the company anticipates that the pickling line will be operational during the fourth quarter of its current fiscal year at a total cost of between $5.0 and $6.0 million.
 The company also announced its intention to add a new, heavy-gauge, narrow-width slitting line along with additional overhead cranes and other support equipment to its steel processing facility in Madison, Ill. The addition of this equipment is intended to open new markets for the company as well as allow it to better utilize its existing slitting line which is better suited to wider slitting applications. Total expenditures for this equipment are expected to be approximately $1.5 million and the equipment should be operational in the first quarter of fiscal 1995.
 Huntco is a major, intermediate steel processor, specializing in the processing of flat rolled carbon steel and is also a leading manufacturer of compressed air cylinders.
 Consolidated Statement of Operations
 (Unaudited, amounts in thousands except per share amounts)
 For the Three Months Ended
 July 31, Percent
 1993 1992 Change
 Net sales $33,600 $27,986 20
 Cost of sales 28,416 24,992 ---
 Gross profit 5,184 2,994 73
 Selling, general and
 administrative expenses 2,112 1,579 ---
 Income from operations 3,072 1,415 117
 Net interest expense and other (448) (900) ---
 Income before income taxes and
 extraordinary item 2,624 515 410
 Provision for income taxes 1,018 246 ---
 Income before extraordinary item 1,606 269 497
 Extraordinary item, net --- (484) ---
 Net income (loss) $1,606 $(215) N/A
 Earnings per share $0.28 $(0.05) N/A
 Weighted average shares outstanding 5,815 4,500 ---
 Summary Consolidated Balance Sheet Data
 (Amounts in thousands)
 July 31, April 30,
 1993 1993
 (unaudited) (audited)
 Cash and temporary investments $16,817 $477
 Working capital 43,470 23,796
 Total assets 79,953 67,034
 Long-term debt 1,963 31,438
 Total liabilities 13,529 50,034
 Preferred stock of subsidiary --- 5,470
 Common shareholders' equity 66,424 11,530
 -0- 8/9/93
 /CONTACT: Robert J. Marischen of Huntco, 314-878-0155/

CO: Huntco Inc. ST: Missouri IN: SU: ERN

MC -- DV007 -- 0929 08/09/93 17:18 EDT
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Publication:PR Newswire
Date:Aug 9, 1993

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