Metal Management (NASDAQ:MTLM)
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Metal Management, Inc. (Nasdaq:MTLM), one of the
nation's largest full service scrap metal recyclers, today announced
results for the fiscal year and fourth quarter period ended March 31,
2006.
For the 2006 fiscal year, the Company generated consolidated net
sales of $1.6 billion and net income of $60.3 million, or $2.35 per
diluted common share. EBITDA(1) (as defined) was $114.6 million in
fiscal 2006.
For the fourth quarter ended March 31, 2006, the Company generated
consolidated net sales of $434.1 million and net income of $22.6
million, or $0.86 per diluted common share. EBITDA (as defined) was
$37.8 million in the fourth fiscal quarter.
"Fiscal 2006 was an outstanding year for Metal Management in which
our commitment to financial and operational discipline allowed us to
significantly enhance value for our shareholders," said Daniel W.
Dienst, Chairman, Chief Executive Officer and President of Metal
Management. "Our steady performance, despite challenging ferrous
market conditions, is a validation of our business model and a
testament to the hard work of Metal Management's 1,700 dedicated
employees throughout the country."
Fiscal Year Highlights
-- Consolidated net sales were $1.6 billion for the fiscal year
ended March 31, 2006 compared to $1.7 billion for the fiscal
year ended March 31, 2005.
-- Net income was $60.3 million, or $2.35 per diluted common
share, compared to net income of $92.3 million, or $3.74 per
common diluted share in fiscal 2005.
-- EBITDA (as defined) was $114.6 million compared to EBITDA (as
defined) of $167.1 million in the prior year.
-- Metal Management concluded fiscal 2006 with no borrowings
under its line of credit and a cash and short-term investment
position of $73.8 million after funding the acquisition of
Morris Recycling.
-- Dividends of $0.075 per share were paid in each fiscal
quarter, returning more than $7.6 million to the Company's
shareholders.
-- Shipments for the fiscal year ended March 31, 2006 were 4.4
million tons of ferrous metals and 487 million pounds of
nonferrous metals.
-- The Company turned ferrous inventories approximately 14 times
and nonferrous inventories (excluding stainless and alloy)
approximately 18 times.
-- Norman R. Bobins, President and Chief Executive Officer of
LaSalle Bank, was appointed to Metal Management's Board of
Directors. Kevin P. McGuinness retired from active board
service to become Director Emeritus after serving as a
Director on Metal Management's Board since 2001.
Fourth Quarter Highlights
-- Consolidated net sales were $434.1 million for the quarter
ended March 31, 2006 compared to net sales of $462.2 million
for the quarter ended March 31, 2005.
-- Net income of $22.6 million represented an increase of over
39% over net income of $16.2 million in the same period last
year.
-- EBITDA (as defined) of $37.8 million increased 20% compared to
EBITDA (as defined) of $31.5 million in the fourth quarter of
fiscal 2005.
-- Earnings per common diluted share were $0.86, compared to
$0.64 per common diluted share in the fourth quarter of fiscal
2005.
-- Shipments in the fourth quarter ended March 31, 2006 were 1.2
million tons of ferrous metals and 131 million pounds of
nonferrous metals.
-- The Company turned ferrous inventories approximately 15 times
and nonferrous inventories (excluding stainless and alloy)
approximately 18 times.
"The fourth quarter was a solid finish to our fiscal year," said
Mr. Dienst. "Nonferrous pricing remained strong and, despite
considerable volatility and more recent price increases, ferrous
prices at the end of March were in line with December 2005 prices. By
rapidly turning our inventories to mitigate risk and leveraging our
operational flexibility and distribution assets to take advantage of
more favorable domestic markets, we delivered strong unit shipments in
the fourth quarter that led to both year-over-year and sequential
improvements in our quarterly net income and earnings per share."
Update on the Acquisition in Mississippi
As previously announced on March 1, 2006, Metal Management
acquired substantially all of the assets of Morris Recycling, Inc.
Morris Recycling has 10 facilities including a shredding plant
adjacent to the Mississippi River and processes approximately 240,000
tons of ferrous metals and 32 million pounds of nonferrous metals
annually.
Mr. Dienst noted, "Morris Recycling is highly complementary to
Metal Management and the transaction demonstrates the success of our
disciplined acquisition strategy. As expected, the integration
proceeded seamlessly and Morris, now known as Metal Management
Mississippi, contributed to Metal Management's profitability during
the last month of our fourth fiscal quarter. I would like to express
my gratitude to our Metal Management Mississippi team that has quickly
embraced the Metal Management culture."
Current Outlook
Mr. Dienst continued, "Our success in fiscal 2006, a year in which
average ferrous selling prices declined considerably early in fiscal
2006 from record highs in the prior year, confirms that prudent
capital investment can generate significant returns. In their first
year of operation, our state-of-the-art induction sorting machines
("ISS") and Gamma-Tech metal analyzers helped us achieve higher
margins and improve metal recovery rates, significantly contributing
to Metal Management's strong financial performance. Accordingly, we
are continuing our aggressive capital expenditure program and we
expect that our total capital expenditures in fiscal 2007 will be
between $65 and $75 million. At our Newark facility, a new
mega-shredder is planned, a new stevedoring crane is already in
operation, and we expect that these and other infrastructure
investments will further enhance Metal Management's productivity and
provide a sustainable competitive advantage."
In conclusion, Mr. Dienst stated, "As always, we are proud of
Metal Management's outstanding performance and thank our employees,
consumers, customers and trading partners for their continued support.
Our focus on operational excellence and financial discipline
continues. We are confident that our 1,700 employees, many of whom are
themselves shareholders, will continue to build on Metal Management's
culture of success and create additional shareholder value in the
quarters and years ahead."
Investor Conference Call
Metal Management will host its Fourth Quarter and Year-End Results
Conference Call and Webcast at 11:00 am ET (10:00 am CT) on May 25,
2006. The conference call can be accessed by dialing 866-800-8651
passcode 14472635. International callers can dial 617-614-2704
passcode 14472635. The conference will also be accessible via the web
at www.mtlm.com. A replay of the call will be available by dialing
888-286-8010 passcode 62426119 through June 1, 2006. International
callers can dial 617-801-6888 passcode 62426119 for the replay.
About Metal Management, Inc.
Metal Management is one of the largest full service metal
recyclers in the United States, with approximately 50 recycling
facilities in 16 states. For more information about Metal Management,
Inc., visit the Company's website at www.mtlm.com.
Forward Looking Statements
All of the statements in this release, other than historical
facts, are forward-looking statements made in reliance upon the Safe
Harbor Provisions of the Private Securities Litigation Reform Act of
1995. As such, they involve risks and uncertainties and are subject to
change at any time. These statements reflect our current expectations
regarding the future profitability of the Company and its
subsidiaries. As discussed in our annual report on Form 10-K for the
fiscal year ended March 31, 2006, and in other periodic filings filed
by the Company with the U.S. Securities and Exchange Commission, some
of the factors that could affect our performance include, among other
things: cyclicality and competitiveness of the metals recycling
industry, commodity price fluctuations, debt covenants that restrict
our ability to engage in certain transactions, compliance with
environmental, health, safety and other regulatory requirements
applicable to the Company, potential environmental liability, risk of
deterioration of relations with labor unions, dependence on key
management, dependence on suppliers of scrap metal, concentration of
customer risk and exposure to credit risk, impact of export and other
market conditions on the business, availability of scrap alternatives,
under funded defined benefit pension plans, and the implementation of
a significant IT consolidation in fiscal 2007 and 2008.
(1) EBITDA is defined by the Company to be earnings before
interest, taxes, depreciation, amortization, asset impairment and
severance charges, gain (loss) on sale of fixed assets, income from
joint ventures, other income (expense), stock-based compensation
expense, and (loss) gain on debt extinguishment. EBITDA is presented
because management believes it provides additional information with
respect to the performance of its fundamental business activities.
Management also believes that debt holders and investors commonly use
EBITDA to analyze Company performance and to compare that performance
to the performance of other companies that may have different capital
structures. A reconciliation of EBITDA to GAAP net income is included
in the table attached to this release. EBITDA is a measure typically
used by many investors, but is not a measure of earnings as defined
under Generally Accepted Accounting Principles, and may be defined
differently by others.
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METAL MANAGEMENT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Three Three
months months
Year ended Year ended ended ended
March 31, March 31, March 31, March 31,
2006 2005 2006 2005
----------- ----------- ---------- ----------
Net sales $1,589,126 $1,701,958 $434,101 $462,222
Operating expenses:
Cost of sales
(excluding
depreciation) 1,400,285 1,460,614 374,874 409,558
General and
administrative
expense 81,576 79,816 22,865 22,866
Depreciation and
amortization expense 19,192 18,634 5,324 4,738
Asset impairment and
severance charges 1,306 0 311 0
----------- ----------- ---------- ----------
Operating income 86,767 142,894 30,727 25,060
Income from joint
ventures 9,716 14,200 3,250 2,352
Interest expense (1,578) (3,298) (402) (415)
Interest and other
income, net 1,891 257 458 231
Loss on debt
extinguishment 0 (1,653) 0 0
----------- ----------- ---------- ----------
Income before income
taxes 96,796 152,400 34,033 27,228
Provision for income
taxes 36,532 60,150 11,482 11,038
----------- ----------- ---------- ----------
Net income $60,264 $92,250 $22,551 $16,190
=========== =========== ========== ==========
Basic earnings per share $2.45 $3.96 $0.90 $0.68
=========== =========== ========== ==========
Diluted earnings per
share $2.35 $3.74 $0.86 $0.64
=========== =========== ========== ==========
Cash dividends declared
per share $0.30 $0.15 $0.075 $0.075
=========== =========== ========== ==========
Weighted average common
shares outstanding 24,579 23,279 25,035 23,862
=========== =========== ========== ==========
Weighted average diluted
common shares
outstanding 25,670 24,659 26,088 25,294
=========== =========== ========== ==========
METAL MANAGEMENT, INC.
EBITDA (AS DEFINED)
RECONCILIATION TO GAAP FINANCIAL MEASURES
(in thousands)
Three Three
months months
Year ended Year ended ended ended
March 31, March 31, March 31, March 31,
2006 2005 2006 2005
----------- ----------- ---------- ----------
Net income $60,264 $92,250 $22,551 $16,190
Add Back:
Depreciation and
amortization 19,192 18,634 5,324 4,738
Tax provision 36,532 60,150 11,482 11,038
Asset impairment and
severance charges 1,306 0 311 0
Stock-based
compensation expense 7,230 4,823 1,685 1,524
Income from joint
ventures (9,716) (14,200) (3,250) (2,352)
Interest expense 1,578 3,298 402 415
Interest and other
income, net (1,891) (257) (458) (231)
Loss (gain) on sale of
fixed assets 93 747 (208) 213
Loss on debt
extinguishment 0 1,653 0 0
----------- ----------- ---------- ----------
EBITDA (AS DEFINED) $114,588 $167,098 $37,839 $31,535
=========== =========== ========== ==========
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