PITTSBURGH, April 25, 2013 /PRNewswire/ -- TMS
International Corp. (NYSE: TMS), the parent company of Tube City
IMS Corporation, a leading provider of outsourced industrial
services to steel mills globally, today announced results for its
first quarter ended March 31,
2013.
(Logo: http://photos.prnewswire.com/prnh/20110406/MM78984LOGO
)
The company also announced today that its Board of Directors has
approved the initiation of a quarterly cash dividend. The first
dividend of $0.10 per share will be
payable on July 3, 2013 to
stockholders of record as of the close of business on May 16, 2013. This is the first dividend declared
by the company since its initial public offering in April 2011.
2013 First Quarter Highlights
- Revenue After Raw Materials Costs(1) in the quarter was
$155.8 million, compared to
$155.9 million in the first quarter
of 2012.
- Adjusted EBITDA(1) for the quarter was $38.3 million compared to $36.8 million in the first quarter of 2012, a 4%
increase.
- Successfully completed a repricing of its $300 million term loan facility that is expected
to reduce its cash interest costs by approximately $3.0 million annually.
2013 First Quarter Financial Results
Revenue After Raw
Materials Costs, the company's measurement of sales performance,
was $155.8 million, compared to
$155.9 million in the first quarter
of 2012.
Adjusted EBITDA for the first quarter of 2013 was $38.3 million compared to $36.8 million of Adjusted EBITDA in the first
quarter of 2012. Income before income taxes was $12.3 million compared to $0.2 million in the first quarter of 2012.
Net income attributable to common stock was $8.1 million for the first quarter compared with
$0.4 million in 2012.
Basic and diluted earnings per share were $0.21 for the first quarter of 2013 compared with
$0.01 in 2012. Adjusted Basic and
fully diluted earnings per share was $0.22 in the first quarter of 2013 which was
comparable to $0.22 in the first
quarter of last year. Both of these amounts were adjusted to
remove the impact of costs associated with favorable debt
restructuring activity.
The company's Adjusted EBITDA Margin(2) for the first quarter of
2013 was 24.6% compared to 23.6% in the first quarter of 2012.
Total Revenue for the first quarter was $589.6 million compared to $747.0 million in the first quarter of 2012.
Discretionary Cash Flow(1,3), which the company uses to measure
operating cash flow generation, was $28.0
million for the first quarter of 2013 compared with
$29.1 million in the first quarter of
2012.
Commenting on the first quarter results, Raymond Kalouche, President and Chief Executive
Officer of TMS International Corp., said, "Our first quarter was
consistent with our expectations given the challenging industry
environment we continue to face. We are well positioned for future
growth in our market and are confident in our ability to meet our
outlook for the year."
New Raw Materials Brokerage Office
During the quarter, the company continued to expand its global
procurement web with the opening of another Mexico trading office, this one in
Mexico City. This expansion into
Mexico City complements the
company's office in Monterrey,
Mexico, and its mill services operations in Mexico and the Caribbean.
Outlook
The company reaffirms its full-year guidance
for 2013 adjusted EBITDA in a range of $152
million to $160 million, which represents a year-over-year
growth rate of 5 to 10 percent.
Conference Call Information
The company will hold a
conference call to discuss first quarter 2013 results at
11 a.m. Eastern time this morning.
The call will be web cast live along with a slide presentation over
the Internet from the company's Web site at
www.tmsinternationalcorp.com under "Investors." Participants
should follow the instructions provided on the Web site for
downloading and installing the necessary audio and visual
applications. The conference call also is available by dialing
1-800-860-2442 (domestic toll free) or 1-412-858-4600
(international) and asking for the TMS International Corp. first
quarter earnings conference call. Following the live conference
call, a replay will be available beginning one hour after the call.
The replay will be available on the company's web site or by
dialing 1-877-344-7529 (domestic toll free) or 1-412-317-0088
(international) and entering the replay passcode 10022571.
The telephonic replay will be available until May 10, 2013.
About TMS International Corp.
TMS International Corp., through its subsidiaries, including
Tube City IMS Corporation, is the largest provider of outsourced
industrial services to steel mills in North America as measured by revenue and has a
substantial and growing international presence. The company
provides mill services at 81 customer sites in 11 countries and
operates 36 brokerage offices from which it buys and sells raw
materials across five continents.
Forward Looking Statements
Certain information in this
news release contains forward-looking statements with respect to
the company's financial condition, results of operations or
business or its expectations or beliefs concerning future events.
Such forward-looking statements include the discussions of the
potential new debt refinancing, the company's business strategies,
estimates of future global steel production and other market
metrics and the company's expectations concerning future
operations, margins, profitability, liquidity and capital
resources. Although the company believes that such forward-looking
statements are reasonable, it cannot assure you that any
forward-looking statements will prove to be correct.
Forward-looking statements may be preceded by, followed by or
include the words "may," "will," "believe," "expect," "anticipate,"
"intend," "plan," "estimate," "could," "might," or "continue" or
the negative or other variations thereof or comparable
terminology. Such forward-looking statements are not
guarantees of future performance and involve risks, uncertainties,
estimates and assumptions that may cause the company's actual
results, performance or achievements to be materially different.
Additional information relating to factors that may cause actual
results to differ from the company's forward-looking statements can
be found in the company's most recent Annual Report on Form 10-K
and elsewhere in the company's filings with the Securities and
Exchange Commission. You should not place undue reliance on any of
these forward- looking statements. Any forward-looking statement
speaks only as of the date on which it is made, and we undertake no
obligation to update any such statement to reflect new information,
or the occurrence of future events or changes in circumstances.
TMS
INTERNATIONAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(In
thousands of dollars, except share and per share
data)
|
|
|
|
|
|
|
|
Quarter
ended
|
|
|
March
31,
|
|
|
2013
|
|
2012
|
|
|
(unaudited)
|
|
(unaudited)
|
Revenue:
|
|
|
|
|
Revenue
from sale of materials
|
$
453,630
|
|
$
612,659
|
Service
revenue
|
135,965
|
|
134,299
|
|
|
|
|
|
Total
revenue
|
589,595
|
|
746,958
|
|
|
|
|
|
Costs and
expenses:
|
|
|
|
Cost of
scrap shipments
|
433,791
|
|
591,058
|
Site
operating costs
|
101,668
|
|
101,846
|
Selling,
general and administrative expenses
|
15,821
|
|
17,261
|
Depreciation
|
15,796
|
|
13,166
|
Amortization
|
3,083
|
|
3,053
|
Total
costs and expenses
|
570,159
|
|
726,384
|
Income
from operations
|
19,436
|
|
20,574
|
Loss on
Modification and Early Extinguishment of Debt
|
(1,102)
|
|
(12,300)
|
Loss from
equity investment
|
(43)
|
|
-
|
Interest
expense, net
|
(5,973)
|
|
(8,101)
|
|
|
|
|
|
Income
before income taxes
|
12,318
|
|
173
|
|
|
|
|
|
Income tax
expense
|
(4,261)
|
|
(60)
|
|
|
|
|
|
Net
Income
|
8,057
|
|
113
|
Net loss
attributable to noncontrolling interest
|
6
|
|
298
|
|
|
|
|
|
Net Income
applicable to common stockholders
|
$
8,063
|
|
$
411
|
|
|
|
|
|
Net Income
per share:
|
|
|
|
Basic
|
$
0.21
|
|
$
0.01
|
Diluted
|
$
0.21
|
|
$
0.01
|
|
|
|
|
|
Average
common shares outstanding:
|
|
|
|
Basic
|
39,277,441
|
|
39,255,973
|
Diluted
|
39,330,737
|
|
39,255,973
|
|
|
|
|
|
|
|
|
|
|
TMS
INTERNATIONAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In
thousands of dollars, except share data)
|
|
|
|
|
|
March
31,
|
|
December 31,
|
|
2013
|
|
2012
|
Assets
|
(unaudited)
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
30,276
|
|
$
26,936
|
Accounts receivable, net of allowance for
doubtful accounts of
$2,951 and $3,038,
respectively
|
280,251
|
|
280,472
|
Inventories
|
58,956
|
|
50,520
|
Prepaid and other current assets
|
21,254
|
|
22,757
|
Deferred tax asset
|
7,108
|
|
7,485
|
Total current assets
|
397,845
|
|
388,170
|
|
|
|
|
Property, plant and equipment, net
|
217,933
|
|
214,668
|
Equity
investment
|
2,192
|
|
2,235
|
Deferred financing costs, net of accumulated
amortization of $2,327 and $1,863, respectively
|
9,348
|
|
10,069
|
Goodwill
|
241,554
|
|
242,669
|
Other
intangibles, net of accumulated amortization of $74,842
and
$72,012, respectively
|
146,661
|
|
147,885
|
Other
noncurrent assets
|
4,087
|
|
4,098
|
|
|
|
|
Total assets
|
$
1,019,620
|
|
$
1,009,794
|
|
|
|
|
Liabilities and Stockholders'
Equity
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts payable
|
$
252,351
|
|
$
251,941
|
Salaries, wages and related
benefits
|
23,612
|
|
29,274
|
Current taxes payable
|
408
|
|
964
|
Accrued expenses
|
17,363
|
|
18,284
|
Revolving bank borrowings
|
13,500
|
|
-
|
Current portion of long-term debt
|
7,492
|
|
8,395
|
Total current liabilities
|
314,726
|
|
308,858
|
|
|
|
|
Long-term debt
|
303,563
|
|
303,657
|
Loans
from noncontrolling interest
|
3,094
|
|
4,341
|
Deferred tax liability
|
60,066
|
|
58,192
|
Other
noncurrent liabilities
|
26,627
|
|
27,704
|
Total liabilities
|
708,076
|
|
702,752
|
|
|
|
|
Stockholders' equity:
|
|
|
|
Class A common stock; 200,000,000 shares
authorized, $0.001
par value per share; 14,578,332 and
14,564,928 shares issued
and outstanding at March 31, 2013 and
December 31, 2012,
respectively
|
14
|
|
14
|
Class B common stock; 30,000,000 shares
authorized, $0.001
par value per share; 24,699,109 and 24,712,513
issued and
outstanding at March 31, 2013 and December 31,
2012,
respectively
|
25
|
|
25
|
Capital in excess of par value
|
436,985
|
|
436,359
|
Accumulated deficit
|
(114,091)
|
|
(122,154)
|
Accumulated other comprehensive
income
|
(13,030)
|
|
(8,963)
|
Total TMS International Corp. stockholders'
equity
|
309,903
|
|
305,281
|
Noncontrolling interest
|
1,641
|
|
1,761
|
Total stockholders' equity
|
311,544
|
|
307,042
|
Total liabilities and
stockholders' equity
|
$
1,019,620
|
|
$
1,009,794
|
|
|
|
|
|
|
|
|
TMS
INTERNATIONAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS
(In
thousands of dollars, except share and per share
data)
|
|
|
|
|
|
Three
months ended
|
|
March
31,
|
|
|
|
|
|
2013
|
|
2012
|
|
(unaudited)
|
|
(unaudited)
|
Cash
flows from operating activities:
|
|
|
|
Net
Income
|
$
8,057
|
|
$
113
|
Adjustments to reconcile Net Income to net cash
provided by operating activities:
|
|
|
|
Depreciation and Amortization
|
18,879
|
|
16,219
|
Amortization of deferred financing
costs
|
617
|
|
747
|
Deferred income tax
|
2,907
|
|
(4)
|
Provision for bad debts
|
(87)
|
|
226
|
Loss
(Gain) on the disposal of equipment
|
43
|
|
(165)
|
Non-cash share-based compensation
cost
|
627
|
|
322
|
Equity
loss
|
43
|
|
-
|
Loss on
Modification and Early Extinguishment of Debt
|
1,103
|
|
12,300
|
Increase (decrease) from changes
in:
|
|
|
|
Accounts receivable
|
308
|
|
(47,247)
|
Inventories
|
(8,436)
|
|
(14,257)
|
Prepaid
and other current assets
|
58
|
|
5,604
|
Other
noncurrent assets
|
11
|
|
(348)
|
Accounts payable
|
410
|
|
48,905
|
Accrued
expenses
|
(7,139)
|
|
(14,227)
|
Other
non current liabilities
|
(1,078)
|
|
99
|
Other,
net
|
(1,909)
|
|
1,735
|
Net
cash provided by operating activities
|
$
14,414
|
|
$
10,022
|
|
|
|
|
Cash
flows from investing activities:
|
|
|
|
Capital
expenditures
|
(20,579)
|
|
(33,153)
|
Software and systems expenditures
|
(2,366)
|
|
(71)
|
Proceeds from sale of
equipment
|
78
|
|
271
|
Contingent payment for acquired
business
|
-
|
|
(131)
|
Cash
flows related to IU International, net
|
-
|
|
(27)
|
Net
cash used in investing activities
|
(22,867)
|
|
(33,111)
|
|
|
|
|
Cash
flows from financing activities:
|
|
|
|
Revolving credit facility borrowing (repayments),
net
|
13,500
|
|
25,142
|
Borrowing from noncontrolling
interests
|
-
|
|
1,917
|
Repayment of debt
|
(3,185)
|
|
(380,732)
|
Proceeds from debt issuance, net of original issue
discount
|
2,250
|
|
297,000
|
Debt
issuance and termination fees
|
(772)
|
|
(13,630)
|
Payments to acquire noncontrolling
interests
|
-
|
|
(231)
|
Contributions from noncontrolling
interests
|
-
|
|
269
|
Net
cash provided by (used in) financing
activities
|
11,793
|
|
(70,265)
|
|
|
|
|
Cash
and cash equivalents:
|
|
|
|
Net
increase (decrease) in cash
|
3,340
|
|
(93,354)
|
Cash at
beginning of period
|
26,936
|
|
108,830
|
Cash at
end of period
|
$
30,276
|
|
$
15,476
|
|
|
|
|
|
|
|
|
DESCRIPTION AND GAAP
RECONCILIATIONS OF
CERTAIN FINANCIAL MEASUREMENTS
Revenue After Raw Materials Costs
We measure our sales volume on the basis of Revenue After Raw
Materials Costs, which we define as Total Revenue minus Cost of Raw
Materials Shipments. Revenue After Raw Materials Costs is not
a recognized financial measure under GAAP, but we believe it is
useful in measuring our operating performance because it excludes
the fluctuations in the market prices of the raw materials we
procure for and sell to our customers. We subtract the Cost of Raw
Materials Shipments from Total Revenue because market prices of the
raw materials we procure for and generally concurrently sell to our
customers are offset on our statement of operations. Further, in
our raw materials procurement business, we generally engage in two
alternative types of transactions that require different accounting
treatments for Total Revenue. In the first type, we take no title
to the materials being procured and we record only our commission
as revenue; in the second type, we take title to the materials and
sell it to a buyer, typically in a transaction where a buyer and
seller are matched. By subtracting the Cost of Raw Materials
Shipments, we isolate the margin that we make on our raw materials
procurement and logistics services, and we are better able to
evaluate our operating performance in terms of the volume of raw
materials we procure for our customers and the margin we
generate.
|
Quarter ended
March 31,
|
|
(dollars in thousands)
|
2013
|
|
2012
|
|
(unaudited)
|
Revenue
After Raw Materials Costs:
|
|
|
|
Consolidated:
|
|
|
|
Total
Revenue
|
$
589,595
|
|
$
746,958
|
Cost of
Raw Materials Shipments
|
(433,791)
|
|
(591,058)
|
|
|
|
|
Revenue
After Raw Materials Costs
|
$
155,804
|
|
$
155,900
|
|
|
|
|
Mill
Services Group:
|
|
|
|
Total
Revenue
|
$
172,351
|
|
$
180,070
|
Cost of
Raw Materials Shipments
|
(35,389)
|
|
(43,712)
|
|
|
|
|
Revenue
After Raw Materials Costs
|
$
136,962
|
|
$
136,358
|
|
|
|
|
Raw
Material and Optimization Group:
|
|
|
|
Total
Revenue
|
$
417,190
|
|
$
566,872
|
Cost of
Raw Materials Shipments
|
(398,394)
|
|
(547,339)
|
|
|
|
|
Revenue
After Raw Materials Costs
|
$
18,796
|
|
$
19,533
|
|
|
|
|
Administrative:
|
|
|
|
Total
Revenue
|
$
54
|
|
$
16
|
Cost of
Raw Materials Shipments
|
(8)
|
|
(7)
|
|
|
|
|
Revenue
After Raw Materials Costs
|
$
46
|
|
$
9
|
|
|
|
|
Adjusted EBITDA
Adjusted EBITDA is not a recognized financial measure under
GAAP, but we believe it is useful in measuring our operating
performance. Adjusted EBITDA is used internally to determine our
incentive compensation levels, including under our management bonus
plan, and it is required, with some additional adjustments, in
certain covenant compliance calculations under our senior secured
credit facilities. We also use Adjusted EBITDA to benchmark the
performance of our business against expected results, to analyze
year-over-year trends and to compare our operating performance to
that of our competitors. We also use Adjusted EBITDA as a
performance measure because it excludes the impact of tax
provisions and Depreciation and Amortization, which are difficult
to compare across periods due to the impact of accounting for
business combinations and the impact of tax net operating losses on
cash taxes paid. In addition, we use Adjusted EBITDA as a
performance measure of our operating segments in accordance with
ASC Topic 280, Disclosures About Segments of an Enterprise and
Related Information. We believe that the presentation of Adjusted
EBITDA enhances our investors' overall understanding of the
financial performance of and prospects for our business.
|
Quarter ended
March 31,
|
|
(dollars in thousands)
|
2013
|
|
2012
|
|
(unaudited)
|
Adjusted
EBITDA:
|
|
|
|
Net
Income
|
$
8,057
|
|
$
113
|
Income Tax
Expense
|
4,261
|
|
60
|
Interest
Expense, Net
|
5,973
|
|
8,101
|
Depreciation and Amortization
|
18,879
|
|
16,219
|
Loss on
Modification and Early Extinguishment of debt
|
1,102
|
|
12,300
|
|
|
|
|
Adjusted
EBITDA
|
$
38,272
|
|
$
36,793
|
|
|
|
|
Adjusted
EBITDA by Operating Segment:
|
|
|
|
Mill
Services Group
|
$
32,750
|
|
$
32,417
|
Raw
Material and Optimization Group
|
13,769
|
|
14,615
|
Administrative
|
(8,247)
|
|
(10,239)
|
|
|
|
|
|
$
38,272
|
|
$
36,793
|
|
|
|
|
|
Quarter
ended
March 31,
|
|
2013
|
|
2012
|
|
(unaudited)
|
|
(unaudited)
|
Income
before income taxes
|
$
12,318
|
|
$
173
|
Plus:
Depreciation and amortization
|
18,879
|
|
16,219
|
Interest Expense, Net
|
5,973
|
|
8,101
|
|
|
|
|
Earnings
before interest, taxes, depreciation and amortization
|
37,170
|
|
24,493
|
Loss on Modification and Early Extinguishment of
Debt
|
1,102
|
|
12,300
|
|
|
|
|
Adjusted
EBITDA
|
$
38,272
|
|
$
36,793
|
|
|
|
|
Discretionary Cash Flow is calculated as our Adjusted EBITDA
minus our Maintenance Capital Expenditures. We believe
Discretionary Cash Flow is useful in measuring our liquidity.
Discretionary Cash Flow is not a recognized financial measure under
GAAP, and may not be comparable to similarly titled measures used
by other companies in our industry. Discretionary Cash Flow should
not be considered in isolation from or as an alternative to any
other performance measures determined in accordance with GAAP (in
thousands):
|
Quarter ended
|
|
March
31,
2013
|
|
March
31,
2012
|
Adjusted
EBITDA
|
$
38,272
|
|
$
36,793
|
Maintenance Capital Expenditures
|
(10,238)
|
|
(7,696)
|
|
|
|
|
Discretionary Cash Flow
|
$
28,034
|
|
$
29,097
|
|
|
|
|
The following table reconciles Discretionary Cash Flow to net
cash provided by (used in) operating activities (in
thousands):
|
|
|
|
|
Quarter
ended
|
|
March
31,
2013
|
|
March
31,
2012
|
Discretionary Cash Flow
|
$
28,034
|
|
$
29,097
|
Maintenance Capital Expenditures
|
10,238
|
|
7,696
|
Cash
interest expense
|
(5,090)
|
|
(15,382)
|
Cash
income taxes
|
(619)
|
|
(1,005)
|
Change in
accounts receivable
|
308
|
|
(47,247)
|
Change in
inventory
|
(8,436)
|
|
(14,257)
|
Change in
account payable
|
410
|
|
48,905
|
Change in
other current assets and liabilities
|
(7,347)
|
|
(595)
|
Other
operating cash flows
|
(3,084)
|
|
2,810
|
|
|
|
|
Net cash
provided by operating activities
|
$
14,414
|
|
$
10,022
|
|
|
|
|
(1) "Revenue After Raw Materials Costs," "Adjusted EBITDA" and
"Discretionary Cash Flow" are non-GAAP financial measurements we
believe are useful in measuring our operating performance.
Descriptions and reconciliations of these measurements to GAAP are
provided below.
(2) Adjusted EBITDA Margin is calculated as a percentage of
Revenue After Raw Materials Costs.
(3) Adjusted EBITDA minus maintenance capex.
SOURCE TMS International Corp.