| | |
 | | Exhibit 99.1 |
Claymont Steel Reports 2007 Third Quarter Results
CLAYMONT, Del., Nov 9, 2007 (PrimeNewswire via COMTEX News Network) — Claymont Steel Holdings (Nasdaq:PLTE) reported third quarter revenues of $71.5 million on shipments of 83,739 tons. Average spread was up by $14 per ton from the previous quarter as decreases in scrap costs outpaced a decline in selling prices which averaged $854 per net ton for the quarter. As previously announced the Company’s results were burdened by the impact of the planned plate mill outage in July and the associated problems restarting the reheat furnace. Adjusted EBITDA of $7.0 million, net income of $1.0 million and earnings per share of $.06 were all in line with the Company’s third quarter earnings guidance issued in early October.
“Our employees have responded well to a difficult quarter as evidenced by our record breaking production and shipments in the month of October. They faced a set of unexpected challenges coming out of the planned mill outage and rallied strongly as a team to address them. Victor Clark, our new Vice President of Operations, was instrumental in providing the necessary leadership at this time,” said Chairman & CEO Jeff Bradley. “We also continued to make progress on our major sales initiatives acquiring 20 new accounts in the quarter and shipping record volumes in Custom Burning where shipments increased by more than 30% over the second quarter and are on track to increase by more than 50% for the full year.”
“I am very encouraged with the strong start in the 4th quarter as demand for our product continues to be solid. Price levels are increasing as expected and we appear to be making progress reducing the operational volatility that we have experienced so far this year. The fourth quarter should be a good spring board into next year,” Mr. Bradley added.
Gross profit of $10.0 million decreased from the previous quarter due primarily to the previously disclosed $17.1 million burden of decreased shipments, increased costs and lost production associated with the planned plate mill outage in July and related issues restarting the reheat furnace. Gross profit for the period ending on September 29, 2007 was down $26.4 million verses the same period in 2006 largely due to higher scrap costs and the aforementioned operating issues.
Selling, general and administrative costs were $0.5 million higher than the second quarter due to expenses paid for recruiting, legal and Sarbanes Oxley compliance consulting for the company. For the nine month period expenses were only slightly higher with no significant contributing factor.
The effective tax rate for the Company is estimated to be 37.3% for the third quarter 2007. During the quarter the Company continued its reinvestment plan spending $3.2 million in capital expenditures. Average net debt for the quarter remained approximately flat from the second quarter at $150.0 million. “In the fourth quarter, we expect to continue to reduce debt with the free cash the company will generate”, commented Allen Egner, Interim Chief Financial Officer.
Outlook
The fourth quarter shipments are expected to be in the range of 100,000 to 105,000 net tons as the plate mill operations improves over the third quarter operating rates. The Company is expecting earnings for the quarter to fall between $.30 and $.45 per share, burdened as previously disclosed by $2.3 million of excess cost relating to third quarter operating issues embedded in the inventory at the end of the third quarter.
Claymont has scheduled an earnings call which will take place on Friday, November 9 at 8:30 AM. Jeff Bradley, Chairman and CEO, Allen Egner, Interim CFO and Treasurer, Victor Clark, Vice President of Operations, and other senior members from the Operating Management team will discuss the results of the 3rd quarter. Persons wishing to listen to the web cast of the earnings call can do so through the investor’s relation portal of the company’s website atwww.claymontsteel.com.
About Claymont Steel
Claymont Steel manufactures and sells custom discrete steel plate in North America. Claymont’s headquarters and manufacturing facilities are located in Claymont, Delaware. More information is available atwww.claymontsteel.com.
Forward-Looking Statements
This press release contains forward-looking statements that are made pursuant to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. Statements that are not historical facts, including statements about the Company’s beliefs, expectations, future goals and similar statements, constitute forward-looking statements. These statements include,
among others, statements regarding our business outlook, anticipated financial and operating results, anticipated product demand, interest expense, gross profit margins and scrap costs, the availability of raw materials and debt reductions plans. These forward-looking statements are based on management’s beliefs and assumptions, which are based on currently available information. These assumptions could prove inaccurate. These forward-looking statements also involve a number of risks and uncertainties, which could cause actual results to differ materially from those contained in any forward-looking statements. Some of these risks and uncertainties are described in Claymont Steel’s filings with the Securities and Exchange Commission, including the information under the headings “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors in the Company’s annual report on Form 10-K, filed with the SEC on April 2, 2007. Claymont Steel undertakes no obligation to revise or update any forward-looking statements in order to reflect events or circumstances that may arise after the date of this release.
Claymont Steel Holdings, Inc.
Statement of Operations (Unaudited)
| | | | | | | | | | | | | | | | | | | | |
| | | Quarter Ended | | | 9 Months Ended | |
(Dollars in thousands) | | Sept. 29,
2007 | | | June 30,
2007 | | | Sept.30,
2006 | | | Sept. 29,
2007 | | | Sept. 30,
2006 | |
Net Sales | | $ | 71,478 | | | $ | 90,715 | | | $ | 83,984 | | | $ | 246,970 | | | $ | 247,706 | |
Cost of sales | | | 61,478 | | | | 69,776 | | | | 59,134 | | | | 195,114 | | | | 169,391 | |
| | | | | | | | | | | | | | | | | | | | |
Gross profit | | | 10,000 | | | | 20,939 | | | | 24,850 | | | | 51,856 | | | | 78,315 | |
% | | | 14 | % | | | 23 | % | | | 30 | % | | | 21 | % | | | 32 | % |
| | | | | |
Selling, General & Administrative | | | 4,771 | | | | 4,307 | | | | 6,737 | | | | 13,221 | | | | 12,930 | |
| | | | | | | | | | | | | | | | | | | | |
Income from operations | | | 5,229 | | | | 16,632 | | | | 18,113 | | | | 38,635 | | | | 65,385 | |
| | | | | |
Other income (expense): | | | | | | | | | | | | | | | | | | | | |
Interest income | | | 68 | | | | 60 | | | | 295 | | | | 530 | | | | 1,909 | |
Interest expense | | | (3,687 | ) | | | (3,390 | ) | | | (8,173 | ) | | | (37,928 | ) | | | (20,039 | ) |
Other non-operating income | | | — | | | | — | | | | — | | | | — | | | | 139 | |
| | | | | | | | | | | | | | | | | | | | |
Income before income taxes | | | 1,610 | | | | 13,302 | | | | 10,235 | | | | 1,237 | | | | 47,394 | |
Income tax expense | | | 600 | | | | 4,588 | | | | 3,848 | | | | 373 | | | | 17,782 | |
| | | | | | | | | | | | | | | | | | | | |
Net Income | | $ | 1,010 | | | $ | 8,714 | | | $ | 6,387 | | | $ | 864 | | | $ | 29,612 | |
| | | | | |
Common Stock Data: | | | | | | | | | | | | | | | | | | | | |
Net income per share: | | | | | | | | | | | | | | | | | | | | |
Basic | | $ | 0.06 | | | $ | 0.50 | | | $ | 0.57 | | | $ | 0.05 | | | $ | 2.63 | |
Diluted | | $ | 0.06 | | | $ | 0.49 | | | $ | 0.56 | | | $ | 0.05 | | | $ | 2.62 | |
| | | | | |
Weighted average shares, in thousands | | | | | | | | | | | | | | | | | | | | |
Basic | | | 17,529 | | | | 17,511 | | | | 11,260 | | | | 17,517 | | | | 11,248 | |
Diluted | | | 17,679 | | | | 17,836 | | | | 11,317 | | | | 17,676 | | | | 11,317 | |
| | | | | |
EBITDA Recap: | | | | | | | | | | | | | | | | | | | | |
Net Income | | $ | 1,010 | | | $ | 8,714 | | | $ | 6,387 | | | $ | 864 | | | $ | 29,612 | |
Depreciation & Amortization | | | 1,226 | | | | 1,026 | | | | 1,715 | | | | 3,544 | | | | 3,009 | |
Interest, net | | | 3,619 | | | | 3,330 | | | | 7,878 | | | | 37,398 | | | | 18,130 | |
Income taxes | | | 600 | | | | 4,588 | | | | 3,848 | | | | 373 | | | | 17,782 | |
| | | | | | | | | | | | | | | | | | | | |
EBITDA | | $ | 6,455 | | | $ | 17,658 | | | $ | 19,828 | | | $ | 42,179 | | | $ | 68,533 | |
Non Cash Compensation (a) | | | 587 | | | | 664 | | | | 215 | | | | 1,414 | | | | 215 | |
| | | | | | | | | | | | | | | | | | | | |
Adjusted EBITDA | | $ | 7,042 | | | $ | 18,322 | | | $ | 20,043 | | | $ | 43,593 | | | $ | 68,748 | |
Adjusted EBITDA % | | | 10 | % | | | 20 | % | | | 24 | % | | | 18 | % | | | 28 | % |
| (a) | Includes vesting of equity compensation and certain other non-cash accruals. |
Claymont Steel Holdings, Inc.
Statement of Cash Flows from Operations (Unaudited)
| | | | | | | | | | | | | | | | | | | | |
| | | Quarter Ended | | | 9 Months Ended | |
(Dollars in thousands) | | Sept. 29,
2007 | | | June 30,
2007 | | | Sept. 30,
2006 | | | Sept. 29,
2007 | | | Sept. 30,
2006 | |
Operating Activities: | | | | | | | | | | | | | | | | | | | | |
Net income (loss) | | $ | 1,010 | | | $ | 8,714 | | | $ | 6,387 | | | $ | 864 | | | $ | 29,612 | |
Adjustment to reconcile net income: | | | — | | | | — | | | | — | | | | — | | | | — | |
Depreciation & amortization | | | 1,226 | | | | 1,026 | | | | 2,725 | | | | 14,430 | | | | 5,168 | |
Deferred taxes net | | | 485 | | | | 3,999 | | | | (481 | ) | | | (345 | ) | | | (320 | ) |
Stock compensation | | | 237 | | | | 313 | | | | 215 | | | | 713 | | | | 215 | |
Changes in assets and liabilities which provided (used) cash: | | | | | | | | | | | | | | | | | | | | |
Accounts Receivable | | | 2,731 | | | | (692 | ) | | | 7,634 | | | | (5,796 | ) | | | 2,700 | |
Inventory | | | (5,994 | ) | | | (2,327 | ) | | | (2,954 | ) | | | (16,177 | ) | | | (6,557 | ) |
Prepaid Expenses | | | 1,613 | | | | (1,613 | ) | | | 86 | | | | (732 | ) | | | 218 | |
Income Taxes Receivable | | | (635 | ) | | | 47 | | | | — | | | | (873 | ) | | | — | |
Accounts Payable | | | (1,947 | ) | | | (336 | ) | | | (2,762 | ) | | | 7,350 | | | | 5,418 | |
Accrued Interest Payable | | | (2,126 | ) | | | 2,356 | | | | (2,968 | ) | | | (11,564 | ) | | | (2,734 | ) |
Accrued Taxes | | | (339 | ) | | | 535 | | | | 3,994 | | | | 197 | | | | 3,118 | |
Accrued Liabilities and Profit Sharing | | | 732 | | | | 675 | | | | 741 | | | | (218 | ) | | | (1,532 | ) |
Due to seller | | | — | | | | — | | | | (4,314 | ) | | | — | | | | (4,814 | ) |
Deferred Pension | | | — | | | | — | | | | 3 | | | | — | | | | 5 | |
Other Assets and Liabilities | | | (9 | ) | | | (426 | ) | | | (2 | ) | | | (435 | ) | | | — | |
| | | | | | | | | | | | | | | | | | | | |
Net cash provided by (used in) operating activities | | | (3,016 | ) | | | 12,271 | | | | 8,304 | | | | (12,586 | ) | | | 30,497 | |
| | | | | |
Investing Activities: | | | | | | | | | | | | | | | | | | | | |
Capital expenditures | | | (3,234 | ) | | | (2,151 | ) | | | (2,051 | ) | | | (10,355 | ) | | | (8,772 | ) |
Purchase of investment securities | | | (6,554 | ) | | | — | | | | — | | | | (22,157 | ) | | | (207,757 | ) |
Maturities of investment securities | | | 6,602 | | | | 105 | | | | — | | | | 111,995 | | | | 276,074 | |
| | | | | | | | | | | | | | | | | | | | |
Net cash provided by (used in) investing activities | | | (3,186 | ) | | | (2,046 | ) | | | (2,051 | ) | | | 79,483 | | | | 59,545 | |
| | | | | |
Financing Activities: | | | | | | | | | | | | | | | | | | | | |
Repayment under pay-in-kind note offering | | | — | | | | — | | | | 75,000 | | | | (75,000 | ) | | | 75,000 | |
Borrowings under revolving credit facility | | | — | | | | — | | | | — | | | | 48,372 | | | | — | |
Repayments under revolving credit facility, net | | | 13,544 | | | | (9,169 | ) | | | — | | | | — | | | | — | |
Borrowings under term loan A | | | — | | | | — | | | | — | | | | 20,000 | | | | — | |
Repayment of term loan A | | | (7,303 | ) | | | (1,111 | ) | | | — | | | | (9,525 | ) | | | — | |
Borrowings under senior secured notes | | | — | | | | — | | | | — | | | | 105,000 | | | | — | |
Repayment under senior secured floating rate notes | | | — | | | | — | | | | — | | | | (170,110 | ) | | | — | |
Borrowing under senior secured floating rate notes | | | — | | | | — | | | | — | | | | — | | | | (1,890 | ) |
Deferred financing fees | | | 18 | | | | 39 | | | | (3,580 | ) | | | (3,599 | ) | | | 4,272 | ) |
IPO fees and expenses | | | — | | | | 37 | | | | — | | | | 37 | | | | — | |
Dividend | | | — | | | | — | | | | (71,174 | ) | | | (855 | ) | | | (140,678 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net cash (used in) provided by financing activities | | | 6,259 | | | | (10,204 | ) | | | 246 | | | | (85,680 | ) | | | (71,840 | ) |
| | | | | |
Net Increase (Decrease) In Cash | | | 57 | | | | 21 | | | | 6,499 | | | | (18,783 | ) | | | 18,202 | |
| | | | | |
CASH - Beginning of period | | | 1,280 | | | | 1,259 | | | | 14,322 | | | | 20,120 | | | | 2,619 | |
| | | | | | | | | | | | | | | | | | | | |
CASH - End of period | | $ | 1,337 | | | $ | 1,280 | | | $ | 20,821 | | | $ | 1,337 | | | $ | 20,821 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
Supplemental Disclosures off Cash Flow: | | | | | | | | | | | | | | | | | | | | |
Cash paid during the period for: | | | | | | | | | | | | | | | | | | | | |
Interest | | | 6,437 | | | | 1,035 | | | | 11,898 | | | | 26,629 | | | | 22,976 | |
| | | | | | | | | | | | | | | | | | | | |
Income Taxes | | | — | | | | 45 | | | | 4,359 | | | | 345 | | | | 13,800 | |
| | | | | | | | | | | | | | | | | | | | |
Claymont Steel Holdings, Inc.
Balance Sheet (Unaudited)
| | | | | | | | | | | | |
| | | Quarter Ended | |
(Dollars in thousands) | | Sept. 29, 2007 | | | June 30,
2007 | | | Sept. 30,
2006 | |
CASH | | $ | 1,337 | | | $ | 1,280 | | | $ | 20,821 | |
INVESTMENT SECURITIES | | | 4,936 | | | | 4,984 | | | | — | |
ACCOUNTS RECEIVABLE | | | 46,876 | | | | 49,607 | | | | 36,045 | |
INVENTORIES | | | 56,874 | | | | 50,880 | | | | 42,509 | |
PREPAID EXPENSES | | | 1,248 | | | | 2,860 | | | | 587 | |
INCOME TAX RECEIVABLE | | | 3,842 | | | | 3,187 | | | | — | |
DEFERRED TAXES | | | 2,213 | | | | 890 | | | | 3,103 | |
OTHER ASSETS | | | 432 | | | | 426 | | | | — | |
| | | | | | | | | | | | |
TOTAL CURRENT ASSETS | | | 117,758 | | | | 114,114 | | | | 103,065 | |
| | | |
FIXED ASSETS | | | 31,949 | | | | 29,595 | | | | 21,954 | |
DEFERRED FINANCING FEES | | | 3,561 | | | | 3,579 | | | | 10,227 | |
INTANGIBLE ASSETS | | | 3,938 | | | | 4,284 | | | | 5,281 | |
DEFERRED PENSION ASSET | | | 472 | | | | 472 | | | | — | |
OTHER ASSETS | | | — | | | | — | | | | — | |
| | | | | | | | | | | | |
TOTAL ASSETS | | | 157,678 | | | | 152,044 | | | | 140,527 | |
| | | | | | | | | | | | |
LINE OF CREDIT | | | 6,667 | | | | 6,667 | | | | — | |
ACCOUNTS PAYABLE | | | 24,467 | | | | 26,414 | | | | 21,935 | |
ACCRUED INTEREST PAYABLE | | | 1,394 | | | | 3,520 | | | | 4,433 | |
ACCRUED TAXES | | | 204 | | | | 542 | | | | 4,512 | |
ACCRUED LIABILITIES | | | 3,310 | | | | 3,082 | | | | 2,838 | |
ACCRUED PROFIT SHARING | | | 2,012 | | | | 1,508 | | | | 1,776 | |
| | | | | | | | | | | | |
TOTAL CURRENT LIABILITIES | | | 38,054 | | | | 41,733 | | | | 35,494 | |
| | | |
LONG TERM DEBT | | | 157,181 | | | | 150,940 | | | | 243,763 | |
DEFERRED TAXES | | | 1,989 | | | | 181 | | | | 2,049 | |
OTHER LONG TERM LIABILITIES | | | — | | | | — | | | | 286 | |
| | | | | | | | | | | | |
TOTAL LIABILITIES | | | 197,224 | | | | 192,854 | | | | 281,592 | |
| | | |
STOCKHOLDERS EQUITY | | | (39,566 | ) | | | (40,810 | ) | | | (141,065 | ) |
| | | | | | | | | | | | |
TOTAL LIABILITIES & EQUITY | | $ | 157,658 | | | $ | 152,044 | | | $ | 140,527 | |
| | | | | | | | | | | | |
Claymont Steel Holdings, Inc.
Supplemental Statistics (Unaudited)
| | | | | | | | | | | | | | | | | |
| | | Quarter Ended | | | 9 Months Ended | |
(Dollars in thousands) | | Sept. 29,
2007 | | June 30,
2007 | | Sept. 30,
2006 | | | Sept. 29, 2007 | | Sept. 30, 2006 | |
Net ASP | | $ | 854 | | $ | 875 | | $ | 853 | | | $ | 856 | | $ | 832 | |
Shipments in net tons | | | 83,739 | | | 103,705 | | | 106,875 | (a) | | | 288,573 | | | 306,333 | (b) |
Custom Tons | | | 51,622 | | | 73,609 | | | 60,098 | | | | 99,853 | | | 185,460 | |
Standard Tons | | | 32,117 | | | 30,096 | | | 35,190 | (a) | | | 88,720 | | | 108,951 | (b) |
Notes: (a) Includes 11,587 tons of conversion. (b) Includes 11,992 tons of conversion. | | | | | | | | | | | | | | | | | |
| | | | | |
Production: | | | | | | | | | | | | | | | | | |
Slab Tons Produced | | | 106,119 | | | 121,596 | | | 95,016 | | | | 330,026 | | | 301,306 | |
Plate Tons Produced | | | 89,244 | | | 107,453 | | | 104,777 | | | | 296,111 | | | 310,917 | |
Capital Expenditures | | $ | 3,234,000 | | $ | 2,151,000 | | $ | 2,051,000 | | | $ | 10,368,000 | | $ | 8,772,000 | |
| | | | | |
Net Income | | | | | | | | | | | | $ | 864 | | | | |
+ Income Taxes | | | | | | | | | | | | | 373 | | | | |
| | | | | | | | | | | | | | | | | |
Income before taxes | | | | | | | | | | | | | 1,237 | | | | |
Add Backs Call premiums (Cash) | | | | | | | | | | | | | 12,603 | | | | |
Deferred financing fees (Non-cash) | | | | | | | | | | | | | 9,623 | | | | |
Bond discount premium (Non-cash) | | | | | | | | | | | | | 1,261 | | | | |
| | | | | | | | | | | | | | | | | |
Adjusted income before taxes | | | | | | | | | | | | | 24,724 | | | | |
Adjusted income taxes | | | | | | | | | | | | | 9,717 | | | | |
| | | | | | | | | | | | | | | | | |
Adjusted net income | | | | | | | | | | | | $ | 15,007 | | | | |
| | | | | |
Common Stock Data: | | | | | | | | | | | | | | | | | |
Adjusted Net income per share: | | | | | | | | | | | | | | | | | |
Basic | | $ | 0.06 | | $ | 0.50 | | $ | 0.57 | | | $ | 0.86 | | $ | 2.63 | |
Diluted | | $ | 0.06 | | $ | 0.49 | | $ | 0.56 | | | $ | 0.85 | | $ | 2.62 | |
| | | | | |
Weighted average shares, in thousands | | | | | | | | | | | | | | | | | |
Basic | | | 17,529 | | | 17,511 | | | 11,260 | | | | 17,517 | | | 11,248 | |
Diluted | | | 17,679 | | | 17,836 | | | 11,317 | | | | 17,676 | | | 11,317 | |
