CLAYMONT, Del., Nov. 9, 2007 (PRIME NEWSWIRE) -- 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 at www.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 at www.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 Sept. 29, June 30, Sept. 30, Sept. 29, Sept. 30,
thousands) 2007 2007 2006 2007 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 Sept. 29, June 30, Sept. 30, Sept. 29, Sept. 30,
thousands) 2007 2007 2006 2007 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
----------------------------
Sept. 29, June 30, Sept. 30,
(Dollars in thousands) 2007 2007 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
---------------------------------- -----------------------
Sept. 29, June 30, Sept. 30, Sept. 29, Sept. 30,
2007 2007 2006 2007 2006
------------------------------------------ -----------------------
(Dollars in
thousands)
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
Expend-
itures $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
(PLTE-G)