PITTSBURGH, May 11, 2011 /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 the first quarter ended March 31, 2011.
(Logo: http://photos.prnewswire.com/prnh/20110406/MM78984LOGO )
Highlights
- Revenue After Raw Materials Costs was $135.2 million, up 26.7% compared to $106.8 million in the first quarter of 2010
- Adjusted EBITDA was $34.6 million, up 33.8% compared to $25.9 million in the first quarter of 2010
- Completed an initial public offering of 11.2 million shares of Class A common stock on April 14, 2011 and announced the underwriter's exercise of their over-allotment option for an additional 1.68 million shares on April 29, 2011, providing funds to repay $44 million of debt and providing an incremental $86 million of cash for investment in growth.
Fiscal 2011 1st Quarter Results
Total Revenue for the first fiscal quarter was $664.0 million, an increase of 41.1% compared to the same prior year quarter. Revenue After Raw Materials Costs, the Company's measurement of sales performance, was a record $135.2 million, an increase of 26.7% compared to $106.8 million in the first quarter of 2010. Adjusted EBITDA for the first fiscal quarter increased 33.8% to $34.6 million from $25.9 million in the prior year period. Adjusted EBITDA margin (1) increased 140 basis points to 25.6% compared to the first quarter of last year.
Joseph Curtin, President and Chief Executive Officer of TMS International Corp. said, "We are pleased with our strong financial results for the first quarter, which is also our first quarter reported as a public company. We capitalized on a strengthening operating environment and reported significant improvements in Revenue After Raw Material Costs and Adjusted EBITDA."
"We continued to focus on expanding our operations globally and we are pleased with our recent successes across Europe, Latin America and North America. We are excited about these new opportunities as they reflect the continued recognition by our customers of our leading global service capabilities and the hard work and dedication put forth by our entire team. We are also very pleased to have added $86 million of cash to our balance sheet for investment in future opportunities," added Mr. Curtin.
Free cash flow (2) was $27.3 million, or 20% of Revenue After Raw Materials Costs, in the first quarter of 2011 compared to $20.4 million or 19% of Revenue After Raw Materials Costs in the first quarter of 2010. The Company ended the quarter with a cash balance of $53.6 million.
The Company completed its initial public offering of 11.2 million shares of Class A common stock on April 14, 2011. On April 29, 2011, it announced the underwriter's exercise of their over-allotment option for an additional 1.68 million shares, providing funds to repay $44 million of debt and providing an incremental $86 million of cash for investment in growth. As of today, the Company has a total of 39,255,973 shares of common stock outstanding.
Conference Call Information
The Company will hold a conference call to discuss first quarter 2011 results at 11:00 a.m. EDT this morning. The call will be web cast live over the Internet from the company's Web site at www.tmsinternationalcorp.com under "Investor Relations." Participants should follow the instructions provided on the Web site for downloading and installing the necessary audio 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 one hour after the call. The replay also 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 449915. The telephonic replay will be available until Thursday, May 19, 2011.
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 services at 74 customer sites in nine countries and operates a global raw materials procurement network spanning 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 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. Such forward-looking statements 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 Registration Statement on Form S-1. The Company undertakes no obligation to update or revise forward-looking statements after the day of the release as a result of new information, future events or developments except as required by law.
(1) Adjusted EBITDA Margin – calculated as a percentage of Revenue After Raw Materials Costs | |
(2) Adjusted EBITDA minus maintenance capex | |
TMS INTERNATIONAL CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands of dollars, except share and per share data) | |||
Quarter ended | |||
2011 | 2010 | ||
(unaudited) | (unaudited) | ||
Revenue: | |||
Revenue From Sale of Materials | $551,126 | $377,210 | |
Service Revenue | 112,834 | 93,463 | |
Total Revenue | 663,960 | 470,673 | |
Costs and Expenses: | |||
Cost of Raw Materials Shipments | 528,726 | 363,911 | |
Site Operating Costs | 84,564 | 68,968 | |
Selling, General and Administrative Expenses | 16,065 | 11,939 | |
Depreciation | 11,799 | 12,930 | |
Amortization | 3,062 | 3,051 | |
Total Costs and Expenses | 644,216 | 460,799 | |
Income from Operations | 19,744 | 9,874 | |
Interest Expense, Net | (8,677) | (11,505) | |
Income (Loss) Before Income Taxes | 11,067 | (1,631) | |
Income Tax Expense | (4,850) | (1,017) | |
Net Income (Loss) | 6,217 | (2,648) | |
Accretion on preferred stock | (5,895) | (5,459) | |
Net Income (Loss) attributable to common stockholders | $ 322 | $ (8,107) | |
Net Income (Loss) per share: | |||
(basic and diluted) | $0.07 | $(1.62) | |
Average common shares outstanding: | |||
(basic and diluted) | 4,943,992 | 4,994,428 | |
TMS INTERNATIONAL CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS | |||
March 31, | December 31, | ||
2011 | 2010 | ||
(unaudited) | |||
Assets | |||
Current assets: | |||
Cash and cash equivalents | $ 53,580 | $ 49,492 | |
Accounts receivable, net of allowance for doubtful accounts of $2,125 and $2,125, respectively | 284,229 | 207,147 | |
Inventories | 58,782 | 38,664 | |
Prepaid and other current assets | 16,404 | 19,562 | |
Deferred tax asset | 6,603 | 6,702 | |
Total current assets | 419,598 | 321,567 | |
Property, plant and equipment, net | 140,256 | 138,540 | |
Deferred financing costs, net of accumulated amortization of $9,897 and $9,280, respectively | 7,767 | 8,384 | |
Goodwill | 243,984 | 242,148 | |
Other intangibles, net of accumulated amortization of $50,485 and $47,232, respectively | 163,203 | 165,295 | |
Other noncurrent assets | 2,538 | 2,971 | |
Total assets | $ 977,346 | $ 878,905 | |
Liabilities, Redeemable Preferred Stock and Stockholders' Deficit | |||
Current liabilities: | |||
Accounts payable | $ 254,472 | $ 177,668 | |
Accounts payable overdraft | 49,105 | 25,802 | |
Salaries, wages and related benefits | 21,729 | 28,934 | |
Accrued expenses | 23,582 | 30,834 | |
Revolving borrowings | 517 | 304 | |
Current portion of long-term debt | 2,687 | 3,185 | |
Total current liabilities | 352,092 | 266,727 | |
Long-term debt | 380,511 | 380,997 | |
Indebtedness to related parties | 42,155 | 42,155 | |
Deferred tax liability | 45,295 | 42,932 | |
Other noncurrent liabilities | 19,817 | 20,203 | |
Total liabilities | 839,870 | 753,014 | |
Redeemable preferred stock: | |||
Redeemable, convertible preferred stock, 50,000 shares authorized with 25,000 shares designated as Class A; $0.001 par value per share; 21,883 shares issued and outstanding at March 31, 2011 and December 31, 2010, liquidation preference of $302,739 and $296,844 at March 31, 2011 and December 31, 2010, respectively, accumulated and unpaid dividend of $86,098 and $80,203 at March 31, 2011 and December 31, 2010, respectively | 302,739 | 296,844 | |
Stockholders' deficit: | |||
Class A common stock; 200,000,000 shares authorized, $0.001 par value per share; no shares issued and outstanding at March 31, 2011 and December 31, 2010. | — | — | |
Class B common stock 30,000,000 shares authorized, $0.001 par value per share; 4,943,992 issued and outstanding at March 31, 2011 and December 31, 2010. | — | — | |
Capital in excess of par value | — | — | |
Accumulated deficit | (165,386) | (165,717) | |
Accumulated other comprehensive loss | (143) | (5,502) | |
Total TMS International Corp. stockholders' deficit | (165,529) | (171,219) | |
Noncontrolling Interest | 266 | 266 | |
Total stockholders' deficit | (165,263) | (170,953) | |
Total liabilities, redeemable preferred stock and stockholders' deficit | $ 977,346 | $ 878,905 | |
TMS INTERNATIONAL CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands of dollars, except share and per share data) | |||
Quarter ended | |||
2011 | 2010 | ||
(unaudited) | (unaudited) | ||
Cash flows from operating activities: | |||
Net Income (Loss) | $ 6,217 | $ (2,648) | |
Adjustments to reconcile Net Income (Loss) to net cash provided by operating activities: | |||
Depreciation and Amortization | 14,861 | 15,981 | |
Amortization of deferred financing costs | 617 | 618 | |
Deferred income tax | 2,176 | (815) | |
Provision for bad debts | 12 | 26 | |
Gain on the disposal of equipment | (36) | (759) | |
Non cash share based compensation cost | 7 | 6 | |
Increase (decrease) from changes in: | |||
Accounts receivable | (77,094) | (74,782) | |
Inventories | (20,118) | (27,881) | |
Prepaid and other current assets | 3,158 | 1,168 | |
Other noncurrent assets | 423 | 14 | |
Accounts payable and cash overdraft | 100,108 | 86,929 | |
Accrued expenses | (14,357) | (7,226) | |
Other noncurrent liabilities | 159 | (44) | |
Other, net | 950 | (39) | |
Net cash provided by (used in) operating activities | 17,083 | (9,452) | |
Cash flows from investing activities: | |||
Capital Expenditures | (11,728) | (9,259) | |
Proceeds from sale of equipment | 191 | 1,119 | |
Contingent payment for acquired business | (337) | (139) | |
Cash flows related to IU International, net | (229) | (28) | |
Net cash used in investing activities | (12,103) | (8,307) | |
Cash flows from financing activities: | |||
Revolving credit facility borrowing (repayments), net | 189 | 18,345 | |
Repayment of debt | (1,081) | (21,551) | |
Net cash used in financing activities | (892) | (3,206) | |
Cash and cash equivalents: | |||
Net (decrease) increase in cash | 4,088 | (20,965) | |
Cash at beginning of period | 49,492 | 29,814 | |
Cash at end of period | $ 53,580 | $ 8,849 | |
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. A reconciliation of net income (loss) to Adjusted EBITDA is as follows:
Quarter Ended | |||
March 31, | |||
2011 | 2010 | ||
(unaudited) | (unaudited) | ||
Adjusted earnings before interest, taxes, depreciation and amortization | $ 34,605 | $ 25,855 | |
Less: Depreciation and Amortization | (14,861) | (15,981) | |
Interest Expense | (8,677) | (11,505) | |
Income (Loss) Before Income Taxes | $ 11,067 | $ (1,631) | |
Free Cash Flow is calculated as our Adjusted EBITDA minus our Maintenance Capital Expenditures. We believe Free Cash Flow is useful in measuring our liquidity. Free 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. Free 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 | |||||
2011 | 2010 | ||||
Adjusted EBITDA | $ 34,605 | $ 25,855 | |||
Maintenance Capital Expenditures | (7,336) | (5,500) | |||
Free Cash Flow | $ 27,269 | $ 20,355 | |||
The following table reconciles Free Cash Flow to net cash provided by (used in) operating (in thousands):
Quarter ended | ||||||
2011 | 2010 | |||||
Free Cash Flow | $ 27,269 | $ 20,355 | ||||
Maintenance Capital Expenditures | 7,336 | 5,500 | ||||
Cash interest expense | (12,499) | (16,946) | ||||
Cash income taxes | (205) | (715) | ||||
Change in accounts receivable | (77,094) | (74,782) | ||||
Change in inventory | (20,118) | (27,881) | ||||
Change in account payable | 100,108 | 86,929 | ||||
Change in other current assets and liabilities | (6,760) | 5 | ||||
Other operating cash flows | (954) | (1,917) | ||||
Net cash provided by (used in) operating activities | $ 17,083 | $ (9,452) | ||||
SOURCE TMS International Corp.