Exhibit 99.1
DRAFT
May 19, 2008
Contact:
Wayne E. Travers Jr.
203-378-1152 ext. 111
Wise Metals Group LLC Announces
First Quarter Results
| • | Sales increased 25% to $315.7 million driven by overseas can sheet volumes |
| • | Revolving credit line increased to $300 million to facilitate continued growth |
| • | First quarter Adjusted EBITDA increases 212% versus 2007 to $15.6 million |
BALTIMORE, Md. — Company officials announced today that consolidated shipments increased 23 percent in the first quarter of 2008 versus the first quarter of 2007, including a 46-percent increase of can sheet shipments at Wise Alloys somewhat offset by a decrease in shipments of commercial products while shipments of scrap at Wise Recycling increased 51 percent over the same period.
Overall shipments in the first quarter of 2008 totaled 208.8 million pounds compared to 169.3 million for the same period in 2007. Higher levels of can sheet volumes and shipments at Wise Recycling contributed to the increase.
The increase in can sheet shipment volumes was due to higher shipments for new foreign contract can sheet business as well as increased shipment levels for all domestic can sheet customers.
Sales increased by 25 percent to $315.7 million for the quarter ended March 31, 2008, compared to $252.5 million for the same period in 2007.
Including a $4.2 million unfavorable impact for FAS 133 (Accounting for Derivative Instruments and Hedging Activities) and a $7.5 million unfavorable adjustment for LIFO, net loss for the first quarter of 2008 was $8.3 million. This compares to a net income of approximately $3.6 million in the first quarter of 2007, which includes an $11.0 million favorable impact for FAS 133. After adjusting for FAS 133 and LIFO, net income for the first quarter of 2008 would have been $3.4 million, compared to, on the same basis, a loss of $7.5 million in the first quarter of 2007, reflecting an improvement of $10.9 million.
Adjusted EBITDA for the first quarter of 2008 was $15.6 million compared to $5.0 million for the first quarter of 2007, an increase of $10.6 million or 212%.
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Interest costs for the first quarter of 2008 of $8.7 million reflect a decrease of $0.4 million over the first quarter of 2007.
As previously announced, with a new commitment from the Retirement Systems of Alabama (RSA) for up to $100 million, Wise Metals expanded its existing $207.5 million revolving credit agreement. The new revolver currently allows for drawings up to $278 million with a Wise option to increase to $300 million. Terms of the agreement include an extension to May 2010. The lead agent bank of the newly expanded revolver remains Wachovia Capital Finance with other major financial institutions continuing as participants adding both the Employees’ Retirement System of Alabama and the Teachers’ Retirement System of Alabama.
“With our continuing partnership with the RSA, we were able to position ourselves to expand globally into a growing overseas market for aluminum beverage cans, especially can ends,” commented Wise Metals Group chairman and chief executive officer, Mr. David D’Addario.
Wise recently signed a number of long-term contracts with several global leaders in the aluminum beverage can packaging industry to supply can sheet to overseas locations. Many of these same customers also maintain leadership positions domestically.
“We have focused our manufacturing capabilities to take advantage of our leadership position in coated can stock,” added Mr. Danny Mendelson, Chief Strategic Officer. “This market is very much capacity constrained and in high demand, especially overseas. These opportunities to supply on a global basis are a direct result of our long-standing efforts to develop partnership-type relationships with our domestic can sheet customers, all of which have significant global market presence.”
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Cautionary Note Regarding Forward-Looking Statements
Certain statements made in this news release constitute forward-looking statements, within the meaning of the Private Securities Litigation Reform Act, regarding the company’s future plans, objectives, and expected performance. Statements that are not historical facts, including statements accompanied by words such as “believe,” “expect,” “estimate,” “intend,” or “plan” are intended to identify forward-looking statements and convey the uncertainty of future events or outcomes. The company cautions that any such forward-looking statements are based on assumptions that the company believes are reasonable, but are subject to a wide range of risks, and actual results may differ materially. Certain risks and uncertainties are summarized in the company’s filings with the Securities and Exchange Commission. The company takes no obligation to publicly update or revise any future looking statements to reflect the occurrence of future events or circumstances.
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Wise Metals Group LLC
Condensed Consolidated Statements of Operations
(In thousands)
(Unaudited)
| Three months ended March 31, | ||||||||
| 2008 | 2007 | |||||||
Net Sales | $ | 315,663 | $ | 252,515 | ||||
Cost of sales | 308,068 | 247,849 | ||||||
Gross profit | 7,595 | 4,666 | ||||||
Operating expenses: | ||||||||
Selling, general, and administrative | 2,919 | 3,014 | ||||||
Operating income | 4,676 | 1,652 | ||||||
Other income (expense): | ||||||||
Interest expense and fees | (8,746 | ) | (9,106 | ) | ||||
Unrealized (loss) gain on derivative instruments | (4,217 | ) | 11,019 | |||||
Net (loss) income | $ | (8,287 | ) | $ | 3,565 | |||
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Wise Metals Group LLC
Condensed Consolidated Balance Sheets
(In thousands)
| March 31, 2008 | December 31, 2007 | |||||||
| (Unaudited) | Audited | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 1,707 | $ | 1,447 | ||||
Broker deposits | 1,569 | 902 | ||||||
Accounts receivable, less allowance for doubtful accounts ($531 in 2008 and $531 in 2007) | 130,403 | 77,526 | ||||||
Inventories | 232,410 | 165,791 | ||||||
Fair value of contracts under SFAS 133 | 1,403 | 4,153 | ||||||
Other current assets | 3,192 | 3,765 | ||||||
Total current assets | 370,684 | 253,584 | ||||||
Non-current assets: | ||||||||
Property and equipment, net | 92,091 | 92,184 | ||||||
Other assets | 7,038 | 7,368 | ||||||
Goodwill | 283 | 283 | ||||||
Total non-current assets | 99,412 | 99,835 | ||||||
Total assets | $ | 470,096 | $ | 353,419 | ||||
Liabilities and members’ deficit | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 169,652 | $ | 103,235 | ||||
Current portion of long-term debt | 4,369 | 4,276 | ||||||
Borrowings under revolving credit facility | 204,795 | 147,778 | ||||||
Fair value of contracts under SFAS 133 | 1,912 | 353 | ||||||
Accrued expenses, payroll and other | 20,242 | 15,557 | ||||||
Total current liabilities | 400,970 | 271,199 | ||||||
Non-current liabilities: | ||||||||
Term loans, less current portion | 23,495 | 24,463 | ||||||
Senior notes | 150,000 | 150,000 | ||||||
Accrued pension and other post retirement obligations | 3,284 | 3,284 | ||||||
Other liabilities | 954 | 1,616 | ||||||
Total non-current liabilities | 177,733 | 179,363 | ||||||
Commitments and contingencies | — | — | ||||||
Redeemable preferred membership interest (liquidation preference of $78,750) | 77,757 | 75,828 | ||||||
Members’ deficit | ||||||||
Members’ deficit | (186,242 | ) | (176,557 | ) | ||||
Accumulated other comprehensive (loss) income | (122 | ) | 3,586 | |||||
Total members’ deficit | (186,364 | ) | (172,971 | ) | ||||
Total liabilities, redeemable preferred membership interest and members’ deficit | $ | 470,096 | $ | 353,419 | ||||
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Wise Metals Group LLC
Condensed Consolidated Statements of Cash Flows
(In Thousands)
(Unaudited)
| Three months ended March 31, | ||||||||
| 2008 | 2007 | |||||||
Cash flows from operating activities | ||||||||
Net (loss) income | $ | (8,287 | ) | $ | 3,565 | |||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation and amortization | 3,454 | 3,346 | ||||||
Amortization of deferred financing fees | 571 | 479 | ||||||
LIFO provision | 7,500 | — | ||||||
Unrealized losses (gains) on derivative instruments | 4,217 | (11,019 | ) | |||||
Changes in operating assets and liabilities: | ||||||||
Broker deposits | (667 | ) | 4,569 | |||||
Accounts receivable | (52,877 | ) | 13,183 | |||||
Inventories | (74,119 | ) | (37,811 | ) | ||||
Other current assets | 573 | 864 | ||||||
Accounts payable | 66,417 | 2,785 | ||||||
Accrued expenses, payroll and other | 697 | 3,780 | ||||||
Net cash used in operating activities | (52,521 | ) | (16,249 | ) | ||||
Cash flows from investing activities | ||||||||
Purchase of equipment | (3,361 | ) | (3,228 | ) | ||||
Net cash used in investing activities | (3,361 | ) | (3,228 | ) | ||||
Cash flows from financing activities | ||||||||
Net issuance of short-term borrowings | 57,017 | 6,644 | ||||||
Proceeds from sale-financing transaction | — | 14,950 | ||||||
Payments on long-term obligations | (875 | ) | (2,027 | ) | ||||
Net cash provided by financing activities | 56,142 | 19,567 | ||||||
Net increase in cash and cash equivalents | 260 | 90 | ||||||
Cash and cash equivalents at beginning of period | 1,447 | 2,280 | ||||||
Cash and cash equivalents at end of period | $ | 1,707 | $ | 2,370 | ||||
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Non-GAAP Financial Measures
The company uses certain non-GAAP financial measures in evaluating its performance. These include Adjusted EBITDA. Adjusted EBITDA is not intended to represent cash flows from operations as defined using GAAP and should be considered in addition to, and not as a substitute for, cash flows as a measure of liquidity or net earnings as a measure of operating performance. A reconciliation of Adjusted EBITDA to net income (loss) is set forth in the financial tables below. The company includes Adjusted EBITDA information because this measure is used by management to measure our compliance with debt covenants and by investors and note holders to evaluate our ability to service debt. Our measure of Adjusted EBITDA may not be comparable to similarly titled measures of other companies.
Reconciliation of Net Loss to Adjusted EBITDA
| Three months ended March 31, | ||||||||
| 2008 | 2007 | |||||||
Net (loss) income | $ | (8,287 | ) | $ | 3,565 | |||
Interest expense and fees | 8,746 | 9,106 | ||||||
Depreciation and amortization | 3,454 | 3,346 | ||||||
LIFO Adjustment | 7,500 | — | ||||||
Unrealized loss (gain) on derivative instruments | 4,217 | (11,019 | ) | |||||
Adjusted EBITDA | $ | 15,630 | $ | 4,998 | ||||
About Wise Metals Group
Based in Baltimore, Md., Wise Metals Group LLC includes Wise Alloys, the world’s third-leading producer of aluminum can stock for the beverage and food industries and an environmentally friendly company using recycled aluminum in the production of its can stock; Wise Recycling, one of the largest, direct-from-the-public collectors of aluminum beverage containers in the United States, operating shipping and processing locations throughout the United States that support a network of neighborhood collection centers; and Listerhill Total Maintenance Center, specializing in providing maintenance, repairs and fabrication to manufacturing and industrial plants worldwide ranging from small on-site repairs to complete turn-key maintenance.
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