Metalico reports $10M third quarter loss
Metalico, Inc. reported a third quarter net loss of $10.7 million, equivalent to $0.22 per diluted share, due principally to a $12.1 million non-cash impairment charge to intangible assets.
Excluding the impairment charge and other unusual items, Metalico posted an adjusted loss of $1.3 million, or $0.03 per share. Net income for the prior year quarter was $5.1 million, or earnings per share of $0.11.
Metalico posted sales of $133 million for the quarter ended September 30, as compared to $169 million in the 2011 period. Weak metal selling prices and sluggish volume contributed to the reduction in revenue.
The operating loss in the third quarter resulted primarily from a pre-tax $12.1 million non-cash impairment of intangible assets in the Company’s Platinum Group Metals (PGM) reporting units.
Year-over-year comparison to the third quarter of 2011 shows lower shipments except for nonferrous scrap, with ferrous scrap volumes down one percent. Lower PGM volumes accounted for a majority of the drop in revenue.
- Sales decreased 21 percent to $133 million from $169 million.
- The company had adjusted operating income of $188,000, versus income of $6.5 million.
- A net loss of $10.7 million was reported, of which $8.4 million was the non-cash impairment, and $955,000 related to the book-to-physical inventory adjustment, compared to reported net income of $5.1 million in the prior year quarter.
- Reported loss per share was $0.22, compared to earnings of $0.11.
Shipments of nonferrous metals increased 31 percent to 42.9 million pounds. Ferrous shipments were relatively unchanged at 134,300 gross tons.
- Lead product shipments decreased 11 percent to 11.3 million pounds.
The company’s scrap metal recycling segment reported a $2.1 million operating loss in the third quarter compared to $4.2 million profit last year. A $1.5 million book-to-physical adjustment of ferrous inventory, due to shrinkage, was the chief contributor to the segment’s loss, combined with tighter metal margins.
The $12.1 million impairment charge, combined with lower volumes, pushed the PGM and minor metals segment to an operating loss of $12.9 million versus operating income of $1.6 million in the prior year quarter.
Metalico’s ferrous and nonferrous recycling business suffered from a commodity-based rapid decline in scrap selling prices during the quarter. Both ferrous and nonferrous selling prices were down, with ferrous pricing dropping $48, or 11 percent, to $370 from $418 per gross ton in the sequential quarter.
Carlos E. Agüero, Metalico’s president and chief executive officer, said, “Undeniably, we had a difficult quarter. Our operations were adversely impacted by tight supply which resulted in persistently high metal buying prices coupled with volatile and declining commodity selling prices. However, we are making considerable progress in reducing operating expenses and have maintained discipline in metal buying practices.
“Competitive pressures for securing scrap units at acceptable margins have not abated. Yet we remain confident in Metalico’s ability to successfully navigate the challenging macroeconomic and metals industry environment.”