WHEELING, W.Va., April 30 /PRNewswire-FirstCall/ -- Esmark Incorporated
(Nasdaq: ESMK) (the "Company"), today reported its financial results for
the fourth quarter and year ended December 31, 2007, which consist of the
results of Esmark Steel Service Group, Inc. (ESSG), and the results of
Wheeling Pittsburgh Corporation (Wheeling Pittsburgh) subsequent to the
merger on November 27, 2007.
For 2007, the Company reported a net loss of $9.0 million, or ($2.15)
per basic and diluted share. This compares to net income of $3.5 million
for 2006, or ($9.71) per basic and diluted share. For the fourth quarter of
2007, the Company reported a net loss of $12.3 million, or ($0.76) per
basic and diluted share. This compares with a net loss of $5.6 million in
the fourth quarter of 2006, or ($1.40) per basic and diluted share.
Earnings per share include the effect of dividends on and conversions of
preferred stock that was outstanding prior to the merger.
"While a net loss is being reported today, it includes the non-cash
write off of $9.7 million of goodwill at ESSG in the fourth quarter," said
James P. Bouchard Chairman and Chief Executive Officer. "I am pleased to
report that EBITDA, adjusted for this non-cash charge, was a positive $25.3
million for the year and $7.9 million in the fourth quarter, which was the
combined companies' first reporting period. In addition, as I indicated in
our release in early March, both ESSG and Wheeling Pittsburgh have positive
Adjusted EBITDA."
Net sales for 2007 totaled $825.6 million, as compared to net sales of
$578.0 million for 2006. Steel shipments for 2007 totaled 1,145,000 tons,
or $721 per ton. Steel shipments for 2006 totaled 734,000 tons, or $788 per
ton. The increase in net sales can be attributed to an increase in the
volume of steel products sold, partially offset by a decrease in the
average selling price of steel products of $67 per ton. The lower average
selling price reflected the lower priced mix largely due to the effect of
including the post-merger sales of Wheeling Pittsburgh. Tons sold include
toll processed tons.
Cost of sales for 2007 totaled $750.6 million, or $655 per ton, as
compared to cost of sales of $508.7 million for 2006, or $693 per ton. The
increase in the cost of steel products sold of $241.9 million was due
primarily to the increased shipments, while the $38 per ton decrease
resulted primarily from lower substrate cost and the lower priced mix
described above.
Net sales for the fourth quarter of 2007 totaled $313.4 million, as
compared to net sales of $150.2 million for the fourth quarter of 2006.
Steel shipments for the fourth quarter of 2007 totaled 454,000 tons, or
$690 per ton. Steel shipments for the fourth quarter of 2006 totaled
188,000 tons, or $801 per ton. Revenue increased primarily due to inclusion
of post-merger Wheeling Pittsburgh, while average revenue per ton decreased
due to the lower priced mix.
Cost of sales for the fourth quarter of 2007 totaled $286.7 million, or
$631 per ton, as compared to cost of sales of $137.2 million, or $730 per
ton, for the fourth quarter of 2006. Again, the decrease reflects the
inclusion of Wheeling Pittsburgh and the lower priced mix.
Formation and Merger
On November 27, 2007, the Company consummated a business combination
transaction in which Wheeling Pittsburgh and ESSG (f/k/a Esmark
Incorporated) became wholly-owned subsidiaries of the Company. For
financial reporting purposes, pursuant to the provisions of Statement of
Accounting Standards No. 141, "Business Combinations", ESSG was identified
as the acquiring entity and Wheeling Pittsburgh was identified as the
acquired entity relative to the merger transaction. As a result, the
consolidated financial statements of the Company include the accounts of
ESSG on an historical basis and the accounts of Wheeling Pittsburgh from
the date of the merger.
The opening balance sheet of Wheeling Pittsburgh prepared as of
November 27, 2007, includes an estimated liability of approximately $42.0
million related to Company's planned reorganization of the Wheeling
Pittsburgh Mill Operations, which includes the already announced shutdowns
of the Allenport, PA sheet finishing operations and two of the three
galvanizing lines at our Martins Ferry, OH plant.
Conference Call
Management will conduct a live call today, April 30, 2008 at 2:00 pm ET
to review the Company's financial results and business prospects.
Individuals wishing to participate can join the conference call by dialing
888-224-1075 or 913-981-5574. A replay will be available through May 7 by
dialing 888-203-1112 or 719-457-0820, and using the pass code 8470714. The
call can also be accessed via the Internet live or as a replay through
http://www.investorcalendar.com.
*****
Use of Non-GAAP Financial Measures
The Company provides other financial data in addition to providing
financial results in accordance with GAAP. This data is not in accordance
with, or an alternative to GAAP, and may be different from Non-GAAP
financial data used by other companies. This Non-GAAP financial data is
Adjusted EBITDA, which the Company believes provides useful information, to
both its management and investors about the Company's current performance.
The Company believes the most directly comparable GAAP financial measure is
net income (loss) and has provided a reconciliation of GAAP net income
(loss) to Non-GAAP EBITDA and Adjusted EBITDA.
Forward-Looking Statements Cautionary Language
This press release contains forward-looking statements within the
meaning of Section 21E of the Securities Exchange Act of 1934, as amended,
relating to the future financial performance of the Company, the
preparation of the Company's Form 10-K for the fiscal year ended December
31, 2007, the listing of the Company's securities with NASDAQ and other
matters. These forward-looking statements are based on current expectations
and assumptions that are subject to risks and uncertainties that could
cause actual results to differ materially. These risks and uncertainties
include, among others, factors relating to (1) the completion of the
company's financial statements for the year ended December 31, 2007 in
connection with the filing of the company's annual report on Form 10-K, (2)
the Company's potential inability to generate sufficient operating cash
flow to service or refinance its indebtedness, (3) concerns relating to
financial covenants and other restrictions contained in its credit
agreements, (4) the possibility that NASDAQ may reject the Company's
requests and, as a result, delist the Company's common stock and (5)
certain other risks detailed in the other reports and filings with the SEC
by the Company, which identify important risk factors that could cause
actual results to differ from those contained in the forward-looking
statements. In addition, any forward-looking statements represent the
Company's views only as of today and should not be relied upon as
representing views as of any subsequent date. While the Company may elect
to update forward-looking statements from time to time, it specifically
disclaims any obligation to do so.
About Esmark Incorporated
Esmark Incorporated is a vertically integrated steel producer and
distributor, combining steel production capabilities through both blast
furnace and electric arc furnace technologies with the just-in-time
delivery of value-added steel products to a broad customer base
concentrated in the Ohio Valley and Midwest regions. Currently
headquartered in Wheeling, WV, the Company is a producer of carbon
flat-rolled products for the construction, container, appliance,
converter/processor, steel service center, automotive and other markets.
The company's products include various sheet products such as hot rolled,
cold rolled, hot dipped galvanized, electro-galvanized, black plate and
electrolytic tinplate. More information about Esmark can be found at
http://www.esmark.com.
ESMARK INCORPORATED AND SUBSIDIARIES
Consolidated Statements of Operations (unaudited)
(Dollars in thousands, except per share amounts)
Quarter Ended Year Ended
December 31, December 31,
2007 2006 2007 2006
Revenues
Net sales, including sales to
affiliates of $23,204 in 2007 $313,411 $150,241 $825,562 $577,982
Cost and expenses
Cost of sales, including cost
of sales to affiliates of
$21,571 in 2007, excluding
depreciation amortization
expense 286,698 137,182 750,579 508,733
Depreciation and amortization
expense 6,597 2,505 15,126 9,623
Impairment of goodwill and
customer relationships 9,700 6,532 9,700 6,532
Selling, general and
administrative expense 19,343 14,619 51,709 43,960
Total costs and expenses 322,338 160,838 827,114 568,848
Operating income (8,927) (10,597) (1,552) 9,134
Interest expense and other
financing costs (5,010) (1,100) (8,382) (2,656)
Other income (666) 155 430 578
(Loss) income before income taxes
and minority interest (14,603) (11,542) (9,504) 7,056
Income tax (benefit) provision (1,090) (5,811) 1,125 3,669
(Loss) income before minority
interest (13,513) (5,731) (10,629) 3,387
Minority interest 1,182 142 1,605 142
Net (loss) income $(12,331) $(5,589) $(9,024) $3,529
Net (loss) income (12,331) (5,589) (9,024) 3,529
Preferred stock dividends (2,235) (4,388) (12,743) (15,758)
Beneficial conversion feature -
preferred stock - - - (42,965)
Loss available to common
stockholders $(14,566) $(9,977) $(21,767) $(55,194)
Loss per share:
Basic and diluted $(0.76) $(1.40) $(2.15) $(9.71)
Weighted average common shares
outstanding (in thousands):
Basic and diluted 19,065 7,122 10,139 5,685
Shipments (tons) 454,000 188,000 1,145,000 734,000
ESMARK INCORPORATED AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures to US GAAP (unaudited)
(Dollars in thousands)
The following table sets forth a reconciliation of EBITDA and Adjusted
EBITDA from net income, which management believes is the most nearly
equivalent measure under US GAAP for the reporting periods indicated.
Quarter Ended Year Ended
December 31, December 31,
2007 2006 2007 2006
Net (loss) income $(12,331) $(5,589) $(9,024) $3,529
Income tax provision (benefit) (1,090) (5,811) 1,125 3,669
Interest expense and other financing
costs 5,010 1,100 8,382 2,656
Depreciation and amortization 6,597 2,505 15,126 9,623
EBITDA $(1,814) $(7,795) $15,609 $19,477
Impairment of goodwill 9,700 6,532 9,700 6,532
Adjusted EBITDA $7,886 $(1,263) $25,309 $26,009
ESMARK INCORPORATED AND SUBSIDIARIES
Consolidated Balance Sheets (unaudited)
(Dollars in thousands)
December 31,
2007 2006
Assets
Current assets:
Cash and cash equivalents $20,007 $9,765
Investment in marketable securities - 536
Accounts receivables, less allowance for
doubtful accounts of $3,972 and $1,019 198,089 59,978
Inventories 395,009 140,548
Deferred income tax benefit - 2,262
Prepaid expenses and other current assets 9,374 7,212
Total current assets 622,479 220,301
Investment in and advances to affiliates 252,330 95
Property, plant and equipment, less
accumulated depreciation of $16,667
and $8,541 663,305 48,780
Deferred income tax benefits 54,900 -
Intangible assets, less accumulated
amortization of $15,571 and $9,910 41,060 34,284
Goodwill 32,217 41,917
Other assets 2,759 389
Total assets $1,669,050 $345,766
Liabilities
Current liabilities:
Accounts payable, including book
overdrafts of $13,101 in 2007 $154,720 $43,635
Short-term debt 208,439 46,315
Payroll and employee benefits payable 60,277 2,397
Accrued income and other taxes 8,792 1,551
Deferred income taxes payable 55,805 -
Accrued interest and other current
liabilities 68,605 1,857
Dividends payable - 3,468
Long-term debt due in one year 231,020 484
Total current liabilities 787,658 99,707
Long-term debt, less amount due in
one year, net of discount of $8,443
in 2007 29,685 1,375
Employee benefits 185,827 -
Deferred income taxes payable - 230
Other liabilities 26,962 266
Total liabilities 1,030,132 101,578
Minority interest 500 1,306
Temporary equity - preferred stock - 170,518
Stockholders' equity
Common stock - $.01 par value; 100,000,000
shares authorized; 39,332,685 shares issued
and outstanding at December 31, 2007; no
par value; 500,000 shares authorized;
143,052 shares issued and outstanding
at December 31, 2006 393 -
Additional paid-in capital 736,578 143,564
Accumulated deficit (97,997) (71,139)
Accumulated other comprehensive loss (556) (61)
Total stockholders' equity 638,418 72,364
Total liabilities and
stockholders' equity $1,669,050 $345,766
SOURCE Esmark Incorporated
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Related links:
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CONTACT:
Media, Dennis Halpin, +1-304-234-2421
(office) or +1-304-654-6474, (mobile), dhalpin@esmark.com; or
Bill Keegan of Edelman, +1-312-927-8424 (mobile),
bill.keegan@edelman.com, Investor Relations, Dennis Halpin,
+1-304-234-2421 (office) or +1-304-650-6474 (mobile),
dhalpin@esmark.com, both for Esmark Incorporated
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