Metalico posts sales of $169 million in third quarter

Metalico, Inc. reported net income of $5.1 million for the third quarter, equivalent to $0.11 per diluted share, increases of 13 percent and 10 percent, respectively, above the comparable results for the prior year.

The company posted sales of $169 million for the quarter ended September 30, as compared to $137 million in the 2010 period, when it reported net income of $4.5 million, or $0.10 per share. Operating income in the third quarter was negatively impacted by scrap metal cost pressures and fell to $6.5 million compared to $9.1 million (as adjusted for insurance recovery) in the prior year.

The company’s ferrous and nonferrous recycling business continues to perform profitably, but with lower metal margins. Operating income suffered from scrap purchase prices rising faster than related selling prices. Competitive pressures are being driven by a stagnant to declining supply of scrap being pursued by more prospective acquirers. Year to date, metals recycling contributed 73 percent of operating income on 59 percent of consolidated revenues.

PGM recycling has been impacted by restricted supply and volatile pricing. The result is fewer units purchased and tighter operating margins, which contributed to segment income dropping by 21 percent from last year. Molybdenum selling prices were falling throughout the quarter while average inventory costs dropped more slowly, which impacted margins.

Lead commodity prices also fell during the period but a change in Metalico’s product mix, coupled with selective cost pass-throughs, kept selling prices flat. Year-over-year volume sold was virtually the same at 12.7 million pounds.