Metals USA Reports First Quarter 2012 EPS Of $0.44 On 22% Sales Growth

Metals USA Holdings Corp.
Unaudited Consolidated Statements of Operations
and Comprehensive Income
(In millions, except per share amounts)

Three Months Ended

March 31,

December 31,

2012

2011

2011

Revenues:

Net sales

$

525.3

$

432.3

$

455.7

Operating costs and expenses:

Cost of sales (exclusive of operating and delivery,
and depreciation and amortization shown below) 

407.1

329.7

353.3

Operating and delivery

51.0

41.1

44.7

Selling, general and administrative

27.8

26.8

25.1

Depreciation and amortization

5.3

4.8

5.8

Loss (gain) on sale of property and equipment

(0.1)

0.1

-

Operating income

34.2

29.8

26.8

Other expense:

Interest expense

9.2

9.0

9.0

Income before income taxes 

25.0

20.8

17.8

Provision for income taxes

8.7

8.4

3.8

Net income

$

16.3

$

12.4

$

14.0

   Other comprehensive income:

      Foreign currency translation adjustments

0.1

0.1

0.1

      Deferred hedging gains

-

0.1

-

Total comprehensive income

$

16.4

$

12.6

$

14.1

Income per share:

Income per share - basic

$

0.44

$

0.34

$

0.38

Income per share - diluted

$

0.44

$

0.33

$

0.37

Number of common shares used in the per share calculation:

Basic

37.1

37.0

37.1

Diluted

37.4

37.3

37.3

Metals USA Holdings Corp.
Unaudited Consolidated Balance Sheets
(In millions, except share amounts)

March 31,

December 31,

2012

2011

Assets

Current assets:

Cash

$

15.1

$

12.1

Accounts receivable, net of allowance of $6.1 and $6.9, respectively

244.9

212.2

Inventories

420.4

402.5

Deferred income tax asset

4.0

7.9

Prepayments and other

6.2

9.4

Total current assets

690.6

644.1

Property and equipment, net

250.3

247.8

Intangible assets, net

34.2

26.6

Goodwill

55.9

52.8

Other assets

12.8

13.5

Total assets

$

1,043.8

$

984.8

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable

$

116.8

$

110.0

Accrued liabilities

40.0

29.7

Current portion of long-term debt

1.0

1.0

Total current liabilities

157.8

140.7

Long-term debt, less current portion

497.2

467.6

Deferred income tax liability

96.4

97.1

Other long-term liabilities

18.3

22.3

Total liabilities

769.7

727.7

Commitments and contingencies

Stockholders' equity:

Preferred stock, $0.01 par value, 10,000,000 shares authorized, none issued or

outstanding at March 31, 2012 and December 31, 2011

-

-

Common stock, $0.01 par value, 140,000,000 shares authorized, 37,059,236 issued

and 37,058,507 outstanding at March 31, 2012 and December 31, 2011

0.4

0.4

Additional paid-in capital

231.9

231.3

Retained earnings

41.4

25.1

Accumulated other comprehensive income

0.4

0.3

Total stockholders' equity

274.1

257.1

Total liabilities and stockholders' equity

$

1,043.8

$

984.8

Metals USA Holding Corp.
Unaudited Consolidated Statements of Cash Flows
(In millions)

Three Months Ended

March 31,

2012

2011

Cash flows from operating activities:

Net income

$

16.3

$

12.4

Adjustments to reconcile net income to net cash used in operating activities:

        Loss (gain) on sale of property and equipment

(0.1)

0.1

Provision for bad debts

0.6

0.7

Depreciation and amortization

5.8

5.3

Amortization of debt issuance costs

0.8

0.7

Deferred income taxes

0.1

3.4

Stock-based compensation

0.6

0.4

Changes in operating assets and liabilities, net of acquisitions:

Accounts receivable

(31.9)

(54.6)

Inventories

(17.1)

(29.4)

Prepayments and other

3.2

0.5

Accounts payable and accrued liabilities

16.4

13.9

Other operating

0.3

0.2

Net cash used in operating activities

(5.0)

(46.4)

Cash flows from investing activities:

Sales of assets

-

0.1

Purchases of assets

(4.5)

(2.0)

Acquisition costs, net of cash acquired

(17.0)

(88.8)

Net cash used in investing activities

(21.5)

(90.7)

Cash flows from financing activities:

Borrowings on credit facility

93.1

133.4

Repayments on credit facility

(63.3)

-

Repayments of long-term debt

(0.2)

(0.1)

Deferred financing costs

(0.1)

(0.7)

Net cash provided by financing activities

29.5

132.6

Net increase (decrease) in cash

3.0

(4.5)

Cash, beginning of period

12.1

16.6

Cash, end of period

$

15.1

$

12.1

Metals USA Holdings Corp.
Unaudited Supplemental Segment and Non-GAAP Information
(In millions, except shipments)

Three Months Ended 

March 31,

December 31,

2012

2011

2011

Segment:

Flat Rolled and Non-Ferrous:

Net sales

$ 302.1

$ 228.5

$            261.0

Operating income

$   18.3

$   17.1

$              17.3

Depreciation and amortization

$     2.9

$     2.2

$                3.4

EBITDA       (1)

$   21.2

$   19.3

$              20.7

Adjusted EBITDA       (2)

$   21.2

$   19.3

$              20.7

Shipments    (3) 

241

207

195

Plates and Shapes:

Net sales

$ 210.3

$ 190.2

$            177.8

Operating income

$   23.3

$   22.0

$              15.9

Depreciation and amortization

$     2.3

$     2.3

$                 2.3

EBITDA       (1)

$   25.6

$   24.3

$              18.2

Adjusted EBITDA       (2)

$   25.6

$   24.9

$              18.2

Shipments    (3) 

165

163

135

Building Products:

Net sales

$   16.1

$   16.2

$              19.7

Operating income (loss)

$   (1.8)

$   (1.8)

$               (1.0)

Depreciation and amortization (5)

$     0.5

$     0.6

$                0.6

EBITDA       (1)

$   (1.3)

$   (1.2)

$               (0.4)

Adjusted EBITDA       (2)

$   (1.3)

$   (1.2)

$               (0.4)

Shipments    (3) 

-

-

-

Corporate and other:

Net sales (4)

$   (3.2)

$   (2.6)

$               (2.8)

Operating loss

$   (5.6)

$   (7.5)

$               (5.4)

Depreciation and amortization

$     0.1

$     0.2

$                0.1

EBITDA       (1)

$   (5.5)

$   (7.3)

$               (5.3)

Adjusted EBITDA       (2)

$   (4.5)

$   (5.7)

$               (4.0)

Shipments    (3)  (4)

(3)

(2)

(3)

Consolidated:

Net sales

$ 525.3

$ 432.3

$            455.7

Operating income

$   34.2

$   29.8

$              26.8

Depreciation and amortization (5)

$     5.8

$     5.3

$                6.4

EBITDA       (1)

$   40.0

$   35.1

$              33.2

Adjusted EBITDA       (2)

$   41.0

$   37.3

$              34.5

Shipments    (3) 

403

368

327

Product Mix: (6)

Carbon Flat Rolled

34.7%

35.7%

34.8%

Mini Mill Products

11.1%

10.7%

10.4%

Non-Ferrous

24.3%

21.1%

25.5%

Plate

17.7%

19.0%

17.0%

Structural

12.2%

13.5%

12.3%

Total

100.0%

100.0%

100.0%

  (1)   EBITDA is the summation of operating income (loss) and depreciation and amortization.  We believe that EBITDA is commonly used as a measure of performance for companies in our industry and is frequently used by analysts, investors, lenders and other interested parties to evaluate a company's financial performance and its ability to incur and service debt.  EBITDA should not be considered as a measure of financial performance under accounting principles generally accepted in the United States of America.  The items excluded from EBITDA are significant components in understanding and assessing financial performance.  EBITDA should not be considered in isolation or as an alternative to net income, cash flows generated by operating, investing or financing activities or other financial statement data presented in the consolidated financial statements as an indicator of operating performance or a measure of liquidity.

  (2) Adjusted EBITDA, as contemplated by our credit documents, is used by our lenders for debt covenant compliance purposes. Adjusted EBITDA is EBITDA adjusted to eliminate one-time, non-recurring charges related to the use of purchase accounting, and other non-cash income or expenses, which are more particularly defined in our credit documents and the indentures governing our notes.

  (3)   Expressed in thousands of tons.  Not a meaningful measure for Building Products.

  (4)   Negative net sales and shipment information represent the elimination of intercompany transactions.

  (5)   Includes depreciation expense recorded in cost of sales.

  (6)   Based on net sales by product line excluding Building Products.

EBITDA, Adjusted EBITDA and Pro Forma Adjusted EBITDA Non-GAAP Measures, Reconciliations and Explanations

EBITDA is the summation of operating income (loss) and depreciation and amortization.  EBITDA also represents net income before interest, income taxes, depreciation and amortization.  Adjusted EBITDA (as defined by the loan and security agreement governing the ABL facility and the indentures governing our notes) is defined as EBITDA further adjusted to exclude certain non-cash, non-recurring and realized (or in the case of the indentures, expected) future cost savings directly related to prior acquisitions.  EBITDA and Adjusted EBITDA are not defined terms under accounting principles generally accepted in the United Sates of America ("GAAP").  Neither EBITDA nor Adjusted EBITDA should be considered an alternative to operating income or net income as a measure of operating results or an alternative to cash flow as a measure of liquidity.   

There are material limitations associated with making the adjustments to our earnings to calculate EBITDA and Adjusted EBITDA and using these non-GAAP financial measures as compared to the most directly comparable GAAP financial measures. For instance, EBITDA and Adjusted EBITDA do not include: 

*

interest expense, and because we have borrowed money in order to finance our operations, interest expense is a necessary element of our costs and ability to generate revenue; 

*

depreciation and amortization expense, and because we use capital assets, depreciation and amortization expense is a necessary element of our costs and ability to generate revenue; and 

*

income tax expense, and because the payment of taxes is part of our operations, tax expense is a necessary element of our costs and ability to operate. 

We present EBITDA because we consider it an important supplemental measure of our performance and believe it is frequently used by our investors and other interested parties, as well as by our management, in the evaluation of companies in our industry, many of which present EBITDA when reporting their results.  In addition, EBITDA provides additional information used by our management and board of directors to facilitate internal comparisons to historical operating performance of prior periods.  Further, management believes EBITDA facilitates our operating performance comparisons from period to period because it excludes potential differences caused by variations in capital structure (affecting interest expense), tax positions (such as the impact of changes in effective tax rates or net operating losses) and the age and book depreciation of facilities and equipment (affecting depreciation expense). 

We believe that the inclusion of supplemental adjustments to EBITDA applied in presenting Adjusted EBITDA are appropriate to provide additional information to investors about the performance of the business, and we are required to present Adjusted EBITDA to demonstrate compliance with our debt covenants.  Management uses Adjusted EBITDA as a key indicator to evaluate performance of certain employees.

Pro Forma Adjusted EBITDA is defined as Adjusted EBITDA (as discussed above) with additions for the Adjusted EBITDA of our recent acquisitions, as though we owned those businesses for the twelve-month period ended March 31, 2012.  Adjusted EBITDA on a Pro Forma Basis, as defined by our credit agreements, is a non-GAAP measure used in the calculation of our Consolidated Total Debt Ratio, as defined by the indenture governing our notes.    

Three Months Ended

Twelve Months Ended

March 31,

December 31,

March 31,

2012

2011

2011

2012

 (In millions) 

Operating income

$    34.2

$    29.8

$                   26.8

$     139.6

Depreciation and amortization (1)

5.8

5.3

6.4

23.8

EBITDA

40.0

35.1

33.2

163.4

Indenture defined adjustments to EBITDA:

Facility closure and severance costs

-

0.6

-

-

Non cash employee benefit expense

0.6

0.4

1.2

2.6

Acquisition expenses

0.4

1.2

0.1

0.8

Adjusted EBITDA

$    41.0

$    37.3

$                   34.5

$     166.8

Pro forma acquisition adjustments

2.5

Pro Forma Adjusted EBITDA

$     169.3

  (1)   Includes depreciation expense recorded in cost of sales for the Building Products Group.