Completed Sale of Total Plastics, Inc.
Subsidiary
A. M. Castle & Co. (NYSE:CAS) (the “Company”
or “Castle”), a global distributor of specialty metal and
supply chain solutions, today reported financial results for the
first quarter ended March 31, 2016.
President and CEO Steve Scheinkman commented,
“Since I joined Castle a year ago, our primary focus has been on
restructuring our branch network costs and improving our capital
structure. During the first quarter, we substantially completed the
restructuring plan we announced in April 2015 within the projected
timeline and on budget. At the same time, we completed the sale of
our Total Plastics, Inc. (“TPI”) subsidiary, the sale of a vast
majority of our energy-related inventory and the closure of our
Houston and Edmonton facilities. The Company has utilized the
proceeds from these sales to reduce its debt and improve its
capital structure. We also negotiated separate exchanges to extend
the maturity of substantially all of our Senior Secured Notes and
Convertible Notes on terms that further improve our capital
structure.”
Summary of First Quarter 2016
Accomplishments:
- Completed sale of TPI for $55.1 million in cash, subject to
final working capital adjustments.
- Sold vast majority of energy-related inventory for net sales of
$27.1 million.
- Closed and sold all fixed assets related to the operations of
Houston and Edmonton facilities, both of which have recently
generated significant operating losses.
- Refinanced more than 97% of existing Senior Secured Notes due
December 2016 with New Senior Secured Notes due December 2018.
- Agreed with holders to the exchange of more than 99% of the
existing Convertible Notes due December 2017 for New Convertible
Notes due December 2019, and received the requisite approval from
the Company's stockholders for issuance of the underlying common
stock. The New Convertible Notes provide a 30% discount in
principal amount, a 1.75% reduction in coupon rate and the ability,
in certain circumstances, for the Company to initiate conversion
into equity.
Scheinkman further added, “While our
network-level restructuring activities are behind us, we
experienced some growing pains in our new facility in Janesville,
Wisconsin which negatively impacted our transactional sales and
operating expenses at that branch. We also incurred approximately
$1.5 million of additional operating expenses during the quarter
primarily as a result of the movement and repositioning of
inventory within our newly structured branch network in order to
better align the inventory at those branches with the customers
they primarily serve. This process is now largely completed and we
do not expect these costs to be recurring. Despite these temporary
headwinds, our continuing business, which excludes the operations
of our Houston and Edmonton facilities, achieved a
quarter-over-quarter increase in tons sold of 8.5% and an
improvement in overall gross material margin. With the goals of
each of our branches now clearly defined, we are focused on
continuing to improve our overall margin performance and
fine-tuning our operating expenses on an individual branch basis
while increasing sales through our commercial
activities.”
Houston and Edmonton Facility
Closures
In February 2016, the Company made the decision
to close its Houston and Edmonton facilities, which primarily
serviced the energy sector, and to sell the inventory and fixed
assets to a third party rather than consolidate these assets with
other Company facilities. With the sale of substantially all of the
inventory and subsequent closure of these facilities, the Company
has eliminated on a go forward basis the operating losses recently
generated by these branches and the accompanying negative impact on
gross material margin. Net sales attributable to the Houston and
Edmonton operations, which will not continue with the closure of
these facilities, were $33.0 million halfway through the first
quarter 2016 (including the $27.1 million sale of all the inventory
at those facilities), $9.1 million in the fourth quarter 2015 and
$18.0 million in the first quarter 2015. The Company expects a 100
to 150 basis point improvement in gross material margin and annual
operating cost savings of approximately $18 million to $21 million
as a result of the closure of these facilities. The operating
expenses of the Houston and Edmonton facilities were $3.5 million
in the first quarter 2016, $6.1 million in the first quarter 2015
and $4.6 million in the fourth quarter 2015.
First Quarter 2016 Results
Net sales in the first quarter 2016 were $163.8
million, a decrease of $24.7 million, or 13.1%, compared to the
three months ended March 31, 2015. Net sales in the first quarter
2016 include $27.1 million as a result of the sale of substantially
all of the Company's energy-related inventory at its Houston and
Edmonton facilities. Excluding the $27.1 million sale, net
sales in the first quarter decreased by $51.8 million, or 27.5%,
compared to the first quarter 2015. The decrease in net sales was
mainly attributable to a 27.6% decrease in tons sold per day to
customers compared to the same period last year, coupled with a
slight decrease in average selling prices.
Loss from continuing operations in the first
quarter 2016 was $44.8 million, or a loss from continuing
operations of $1.90 per diluted common share, compared to a loss
from continuing operations of $15.7 million, or a loss from
continuing operations of $0.67 per diluted common share, in the
prior year period. Adjusted non-GAAP loss from continuing
operations for the first quarter 2016, which excludes restructuring
activity, debt restructuring costs, and other items reconciled in
the tables below, was $26.1 million compared to adjusted non-GAAP
loss from continuing operations of $16.7 million in the first
quarter 2015. Adjusted non-GAAP loss from continuing operations was
$29.5 million in the fourth quarter 2015. Negative EBITDA from
continuing operations in the first quarter 2016 was $30.4 million,
compared to negative EBITDA from continuing operations of $6.6
million in the first quarter 2015 and $106.6 million in the fourth
quarter 2015. Exclusive of restructuring activity, debt
restructuring costs and other items reconciled in the tables below,
the Company had negative adjusted EBITDA from continuing operations
of $11.6 million in the first quarter 2016 compared with negative
adjusted EBITDA from continuing operations of $6.2 million in the
first quarter 2015 and $14.8 million in the fourth quarter
2015.
Total restructuring activity recorded during the
first quarter 2016, including a $0.5 million charge reflected in
cost of materials, resulted in expense of $12.2 million compared to
expense from restructuring activity of $0.8 million in the prior
year period. Restructuring activity in the first quarter 2016
consisted of additional charges from the Company's previously
announced April 2015 restructuring plan as well as charges related
to the closure and sale of assets at its Houston and Edmonton
facilities. Restructuring charges from the Houston and
Edmonton facility closures primarily were attributed to lease
termination costs.
Executive Vice President and CFO, Pat Anderson,
commented, “As evidenced by the recent closure of our Houston and
Edmonton facilities, we continue to execute against our plans to
streamline our core business and to lower our operating costs. The
strategic actions that we have executed to-date are important steps
as we work towards achieving positive EBITDA in 2016.”
Gross material margin, calculated as net sales
less cost of materials divided by net sales, was 18.4% in the first
quarter 2016 compared to 23.4% in the first quarter 2015. The gross
material margin in the first quarter 2016 was negatively impacted
by the $27.1 million sale of the inventory in the Houston and
Edmonton facilities as well as a $0.5 million non-cash inventory
charge related to restructuring activity in the first quarter 2016.
Excluding these items, adjusted gross material margin in the first
quarter 2016 was 22.3% compared to 23.4% in the first quarter 2015.
Adjusted gross material margin in the fourth quarter 2015 was
21.1%, which excludes a $61.5 million non-cash charge for the
write-down of inventory and purchase commitments at the Company's
Houston and Edmonton facilities and a $3.3 million charge related
to restructuring activity. The Company believes that the
closure of its Houston and Edmonton facilities will have a
favorable impact on gross material margin going forward.
Excluding restructuring expenses, operating
expenses were $45.2 million in the first quarter 2016, compared to
$50.5 million in the first quarter 2015. Operating expenses in the
first quarter 2015 include a $5.6 million gain on the sale of
facility. Operating expenses were $47.5 million in the fourth
quarter 2015.
Net cash from operating activities of continuing
operations was $3.5 million during first quarter 2016, compared to
net cash used in operating activities of continuing operations of
$4.5 million during the first quarter 2015. The cash flow from
operating activities of continuing operations in the quarter was
largely the result of the sale of inventory at the Houston and
Edmonton facilities. Net cash from investing activities of $52.8
million during the first quarter 2016 is attributable to cash
proceeds from the sale of TPI. The proceeds from the sale of TPI
were used to pay down the Company's long-term debt, which, along
with the $7.1 million payment of debt restructuring costs, resulted
in net cash used in financing activities of $51.6 million during
the quarter. The Company had $22.1 million of borrowings
outstanding under its revolving credit facility at March 31,
2016, and $54.3 million of additional unrestricted borrowing
capacity available under the terms of the revolving credit
facility. The Company had $66.1 million in borrowings under the
revolving credit facility at December 31, 2015. The Company’s
net debt-to-capital ratio was 92.3% at March 31, 2016,
compared to 84.1% at December 31, 2015. Total debt
outstanding, net of unamortized discount, was $275.5 million at
March 31, 2016 and $317.6 million at December 31, 2015.
Refer to the "Total Debt" table below for details related to the
Company’s outstanding debt obligations.
Scheinkman concluded, “We began the second
quarter as a leaner, more focused A. M. Castle. By completing our
network-level restructuring, taking important steps towards the
completion of our refinancing activities, and completing the sale
of TPI and substantially all of our energy-related assets in the
first quarter of 2016, we entered the second quarter of 2016 with
an unobstructed focus on our business. While we continue to further
develop our commercial platform, we also remain committed to
continuously improving the cost structure. We have already entered
in long-term agreements with a number of top-tier customers, many
of which are new customers, as well as extensions of existing
business with add-on volumes. We believe that we are now positioned
to take advantage of opportunities that will be available to us as
market cycles begin to turn.”
Webcast Information
Management will hold a conference call at 11:00
a.m. ET today to review the Company's results for the first quarter
ended March 31, 2016 and discuss market conditions and
business outlook. The call can be accessed via the internet live or
as a replay. Those who would like to listen to the call may access
the webcast through a link on the investor relations page of the
Company’s website at http://www.castlemetals.com/investors or
by calling (800) 708-4540 or (847) 619-6397 and citing code 424
50111#.
An archived version of the conference call
webcast will be available for replay at the link above
approximately three hours following its conclusion, and will remain
available until the next earnings conference call.
About A. M. Castle &
Co.
Founded in 1890, A. M. Castle & Co. is a
global distributor of specialty metal and supply chain services,
principally serving the producer durable equipment, commercial
aircraft, heavy equipment, industrial goods, construction
equipment, and retail sectors of the global economy. Its
customer base includes many Fortune 500 companies as well as
thousands of medium and smaller-sized firms spread across a variety
of industries. It specializes in the distribution of alloy and
stainless steels; nickel alloys; aluminum and
carbon. Together, Castle and its affiliated companies operate
out of 21 metals service centers located throughout North America,
Europe and Asia. Its common stock is traded on the New York
Stock Exchange under the ticker symbol "CAS".
Regulation G
Disclosure
This release and the financial statements
included in this release include non-GAAP financial measures. The
non-GAAP financial information should be considered supplemental
to, and not as a substitute for, or superior to, financial measures
calculated in accordance with GAAP. However, we believe that
non-GAAP reporting, giving effect to the adjustments shown in the
reconciliation contained in this release and in the attached
financial statements, provides meaningful information and therefore
we use it to supplement our GAAP reporting and guidance. Management
often uses this information to assess and measure the performance
of our business. We have chosen to provide this supplemental
information to investors, analysts and other interested parties to
enable them to perform additional analysis of operating results, to
illustrate the results of operations giving effect to the non-GAAP
adjustments shown in the reconciliations and to assist with
period-over-period comparisons of such operations. The exclusion of
the charges indicated herein from the non-GAAP financial measures
presented does not indicate an expectation by the Company that
similar charges will not be incurred in subsequent
periods.
In addition, the Company believes that the use
and presentation of EBITDA, which is defined by the Company as
income (loss) from continuing operations before provision for
income taxes plus depreciation and amortization, and interest
expense, less interest income, is widely used by the investment
community for evaluation purposes and provides investors, analysts
and other interested parties with additional information in
analyzing the Company’s operating results. Adjusted non-GAAP
net income (loss), adjusted non-GAAP income (loss) from continuing
operations, adjusted EBITDA, and adjusted gross material margin
which are defined as reported net income (loss), reported income
(loss) from continuing operations, EBITDA and gross margin adjusted
for non-cash items and items which are not considered by management
to be indicative of the underlying results, are presented as
the Company believes the information is important to provide
investors, analysts and other interested parties additional
information about the Company’s financial
performance. Operating expenses, excluding restructuring
expense (income), is presented as management believes it provides
useful information to investors, analysts and other interested
parties regarding the ongoing expenses of the Company. Management
uses EBITDA, adjusted non-GAAP net income (loss), adjusted non-GAAP
net income (loss) from continuing operations, adjusted EBITDA,
operating expenses excluding restructuring expense (income) and
adjusted gross material margin to evaluate the performance of the
business.
Cautionary Statement on Risks Associated
with Forward Looking Statements
Information provided and statements contained in
this release that are not purely historical are forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933, as amended (“Securities Act”), Section 21E of the
Securities Exchange Act of 1934, as amended (“Exchange Act”), and
the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements only speak as of the date of this
release and the Company assumes no obligation to update the
information included in this release. Such forward-looking
statements include information concerning our possible or assumed
future results of operations, including descriptions of our
business strategy, and the cost savings and other benefits that we
expect to achieve from our facility closures and organizational
changes. These statements often include words such as
“believe,” “expect,” “anticipate,” “intend,” “predict,” “plan,”
"should," or similar expressions. These statements are not
guarantees of performance or results, and they involve risks,
uncertainties, and assumptions. Although we believe that
these forward-looking statements are based on reasonable
assumptions, there are many factors that could affect our actual
financial results or results of operations and could cause actual
results to differ materially from those in the forward-looking
statements, including our ability to effectively manage our
operational initiatives and restructuring activities, the impact of
volatility of metals prices, the cyclical and seasonal aspects of
our business, our ability to effectively manage inventory levels,
our ability to successfully complete the remaining steps in our
strategic refinancing process, and the impact of our substantial
level of indebtedness, as well as including those risk factors
identified in Item 1A “Risk Factors” of our Annual Report on Form
10-K for the fiscal year ended December 31, 2015, as amended.
All future written and oral forward-looking statements by us or
persons acting on our behalf are expressly qualified in their
entirety by the cautionary statements contained or referred to
above. Except as required by the federal securities laws, we do not
have any obligations or intention to release publicly any revisions
to any forward-looking statements to reflect events or
circumstances in the future, to reflect the occurrence of
unanticipated events or for any other reason.
| CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS |
For the Three Months
Ended |
| (Dollars in thousands,
except per share data) |
| Unaudited |
March 31, |
| |
2016 |
|
2015 |
| Net sales |
$ |
163,848 |
|
|
$ |
188,540 |
|
| Costs and
expenses: |
|
|
|
| Cost of materials (exclusive of
depreciation and amortization) |
133,758 |
|
|
144,355 |
|
| Warehouse, processing and delivery
expense |
23,403 |
|
|
23,591 |
|
| Sales, general, and administrative
expense |
17,437 |
|
|
20,968 |
|
| Restructuring expense |
11,718 |
|
|
831 |
|
| Depreciation and amortization
expense |
4,393 |
|
|
5,894 |
|
| Total costs and
expenses |
190,709 |
|
|
195,639 |
|
| Operating loss |
(26,861 |
) |
|
(7,099 |
) |
| Interest expense,
net |
10,369 |
|
|
10,164 |
|
| Debt restructuring
costs |
7,075 |
|
|
— |
|
| Other expense, net |
1,145 |
|
|
6,225 |
|
| Loss from continuing
operations before income taxes and equity in earnings of joint
venture |
(45,450 |
) |
|
(23,488 |
) |
| Income tax benefit |
(335 |
) |
|
(6,951 |
) |
| Loss before equity in
earnings of joint venture |
(45,115 |
) |
|
(16,537 |
) |
| Equity in earnings of
joint venture |
311 |
|
|
875 |
|
| Loss from continuing
operations |
(44,804 |
) |
|
(15,662 |
) |
| Income from
discontinued operations, net of income taxes |
7,934 |
|
|
535 |
|
| Net loss |
$ |
(36,870 |
) |
|
$ |
(15,127 |
) |
| |
|
|
|
| Basic (loss) earnings
per common share: |
|
|
|
| Continuing operations |
$ |
(1.90 |
) |
|
$ |
(0.67 |
) |
| Discontinued operations |
0.34 |
|
|
0.02 |
|
| Net basic loss per
common share |
$ |
(1.56 |
) |
|
$ |
(0.65 |
) |
| |
|
|
|
| Diluted (loss) earnings
per common share: |
|
|
|
| Continuing operations |
$ |
(1.90 |
) |
|
$ |
(0.67 |
) |
| Discontinued operations |
0.34 |
|
|
0.02 |
|
| Diluted loss per common
share |
$ |
(1.56 |
) |
|
$ |
(0.65 |
) |
| |
|
|
|
| EBITDA (a) |
$ |
(30,377 |
) |
|
$ |
(6,555 |
) |
| |
|
|
|
| (a) Earnings (loss) from continuing operations before interest,
taxes, and depreciation and amortization. See reconciliation to
loss from continuing operations below. |
| |
|
|
|
|
|
|
|
Reconciliation of EBITDA and of Adjusted EBITDA to Reported
Net Loss: |
|
|
|
|
For the Three Months
Ended |
|
| For the Three Months
Ended |
|
|
| (Dollars in
thousands) |
|
|
| Unaudited |
March 31, |
|
December 31, |
|
| |
2016 |
|
2015 |
|
2015 |
|
| Net loss, as reported |
$ |
(36,870 |
) |
|
$ |
(15,127 |
) |
|
$ |
(120,569 |
) |
|
| Less: Income from
discontinued operations, net of taxes |
7,934 |
|
|
535 |
|
|
683 |
|
|
| Loss from continuing
operations |
(44,804 |
) |
|
(15,662 |
) |
|
(121,252 |
) |
|
| Depreciation and
amortization expense |
4,393 |
|
|
5,894 |
|
|
5,870 |
|
|
| Interest expense,
net |
10,369 |
|
|
10,164 |
|
|
10,178 |
|
|
| Income tax benefit |
(335 |
) |
|
(6,951 |
) |
|
(1,429 |
) |
|
| Negative EBITDA from continuing
operations |
(30,377 |
) |
|
(6,555 |
) |
|
(106,633 |
) |
|
| Non-GAAP adjustments
(a) |
18,728 |
|
|
324 |
|
|
91,810 |
|
|
| Adjusted negative EBITDA from
continuing operations |
$ |
(11,649 |
) |
|
$ |
(6,231 |
) |
|
$ |
(14,823 |
) |
|
| |
|
| (a) Refer to "Reconciliation of Adjusted Non-GAAP Net Loss to
Reported Net Loss" table for additional details on these
amounts. |
|
| |
|
| Reconciliation of
Adjusted Non-GAAP Net Loss to Reported Net Loss: |
|
|
|
|
For the Three Months
Ended |
| (Dollars in thousands,
except per share data) |
For the Three Months
Ended |
|
| Unaudited |
|
| |
March 31, |
|
December 31, |
| |
2016 |
|
2015 |
|
2015 |
| Net loss, as reported |
$ |
(36,870 |
) |
|
$ |
(15,127 |
) |
|
$ |
(120,569 |
) |
| Non-GAAP adjustments: |
|
|
|
|
|
| Restructuring activity (a) |
12,170 |
|
|
831 |
|
|
(5,324 |
) |
| Non-cash write-down of
inventory(b) |
— |
|
|
— |
|
|
61,472 |
|
| Debt restructuring costs |
7,075 |
|
|
— |
|
|
— |
|
| Foreign exchange (gains) losses on
intercompany loans |
(62 |
) |
|
3,823 |
|
|
1,242 |
|
| Foreign exchange (gains) losses on
intercompany loans of joint venture |
(192 |
) |
|
1,394 |
|
|
966 |
|
| Impairment of intangible
assets |
— |
|
|
— |
|
|
33,742 |
|
| Unrealized gains on commodity
hedges |
(263 |
) |
|
(102 |
) |
|
(288 |
) |
| Gain on sale of property, plant and
equipment |
— |
|
|
(5,622 |
) |
|
— |
|
| Non-GAAP adjustments |
$ |
18,728 |
|
|
$ |
324 |
|
|
$ |
91,810 |
|
| Tax effect of
adjustments |
— |
|
|
(1,370 |
) |
|
(16 |
) |
| Adjusted non-GAAP net
loss |
$ |
(18,142 |
) |
|
$ |
(16,173 |
) |
|
$ |
(28,775 |
) |
| Less: Income from
discontinued operations, net of taxes |
7,934 |
|
|
535 |
|
|
683 |
|
| Adjusted non-GAAP loss
from continuing operations |
$ |
(26,076 |
) |
|
$ |
(16,708 |
) |
|
$ |
(29,458 |
) |
| |
|
|
|
|
|
| Adjusted non-GAAP basic
loss per common share: |
|
|
|
|
|
| Continuing operations |
$ |
(1.10 |
) |
|
$ |
(0.71 |
) |
|
$ |
(1.25 |
) |
| Discontinued operations |
0.33 |
|
|
0.02 |
|
|
0.03 |
|
| Net adjusted non-GAAP
basic loss per common share |
$ |
(0.77 |
) |
|
$ |
(0.69 |
) |
|
$ |
(1.22 |
) |
| |
|
|
|
|
|
| Adjusted non-GAAP diluted
loss per common share |
|
|
|
|
|
| Continuing operations |
$ |
(1.10 |
) |
|
$ |
(0.71 |
) |
|
$ |
(1.25 |
) |
| Discontinued operations |
0.33 |
|
|
0.02 |
|
|
0.03 |
|
| Net adjusted non-GAAP
diluted loss per common share |
$ |
(0.77 |
) |
|
$ |
(0.69 |
) |
|
$ |
(1.22 |
) |
| |
| (a) Restructuring activity includes amounts recorded to
restructuring expense (income). For the three months ended March
31, 2016 and December 31, 2015, amounts include $452 and $3,321,
respectively, in inventory write-down charges, respectively,
recorded to cost of materials in the Condensed Consolidated
Statements of Operations. |
| (b) Amount relates to the non-cash write-down of inventory and
purchase commitments of the Company's Houston and Edmonton
locations which served the oil and gas industries. The write-down
was recorded in the three months ended December 31, 2015 in
conjunction with the Company's decision to market the inventory at
these locations and reduced the carrying value of the inventory to
its market value. In the first quarter 2016, the Company announced
the closure of the Houston and Edmonton facilities. |
| |
| Reconciliation
Gross Material Margin and Adjusted Gross Material
Margin: |
|
|
|
|
For the Three Months
Ended |
|
| (Dollars in
thousands) |
For the Three Months
Ended |
|
|
| Unaudited |
|
|
| |
March 31, |
|
December 31, |
|
| |
2016 |
|
2015 |
|
2015 |
|
| Net sales, as
reported |
$ |
163,848 |
|
|
$ |
188,540 |
|
|
$ |
132,497 |
|
|
| Sale of Houston and Edmonton
inventory |
(27,107 |
) |
|
— |
|
|
— |
|
|
| Adjusted net sales |
$ |
136,741 |
|
|
$ |
188,540 |
|
|
$ |
132,497 |
|
|
| |
|
|
|
|
|
|
| Cost of materials, as
reported (exclusive of depreciation and amortization) |
$ |
133,758 |
|
|
$ |
144,355 |
|
|
$ |
169,376 |
|
|
| Sale of Houston and Edmonton
inventory |
(27,107 |
) |
|
— |
|
|
— |
|
|
| Non-cash write-down on inventory
and purchase commitments |
— |
|
|
— |
|
|
(61,471 |
) |
|
| Restructuring activity in cost of
materials |
(452 |
) |
|
— |
|
|
(3,321 |
) |
|
| Adjusted cost of
materials (exclusive of depreciation and amortization) |
$ |
106,199 |
|
|
$ |
144,355 |
|
|
$ |
104,584 |
|
|
| Gross margin
(calculated as net sales, as reported, less cost of materials, as
reported |
$ |
30,090 |
|
|
$ |
44,185 |
|
|
$ |
(36,879 |
) |
|
| Gross material margin
(calculated as gross margin divided by net sales, as reported) |
18.4 |
% |
|
23.4 |
% |
|
(27.8 |
)% |
|
| Adjusted gross margin
(calculated as adjusted net sales less adjusted cost of
materials) |
$ |
30,542 |
|
|
$ |
44,185 |
|
|
$ |
27,913 |
|
|
| Adjusted gross material
margin (calculated as adjusted gross margin divided by adjusted net
sales) |
22.3 |
% |
|
23.4 |
% |
|
21.1 |
% |
|
| |
|
| CONDENSED
CONSOLIDATED BALANCE SHEETS |
As of |
| (In thousands, except
par value data) |
March 31, |
|
December 31, |
| Unaudited |
2016 |
|
2015 |
|
ASSETS |
|
|
|
| Current assets: |
|
|
|
| Cash and cash equivalents |
$ |
10,718 |
|
|
$ |
11,100 |
|
| Accounts receivable, less
allowances of $2,380 and $2,380, respectively |
83,619 |
|
|
73,191 |
|
| Inventories |
189,973 |
|
|
216,090 |
|
| Prepaid expenses and other current
assets |
13,903 |
|
|
10,424 |
|
| Income tax receivable |
329 |
|
|
346 |
|
| Current assets of discontinued
operations |
— |
|
|
37,140 |
|
| Total current assets |
298,542 |
|
|
348,291 |
|
| Investment in joint
venture |
36,001 |
|
|
35,690 |
|
| Intangible assets,
net |
8,709 |
|
|
10,250 |
|
| Prepaid pension
cost |
9,072 |
|
|
8,422 |
|
| Deferred income
taxes |
494 |
|
|
378 |
|
| Other noncurrent
assets |
5,710 |
|
|
6,109 |
|
| Property, plant and
equipment: |
|
|
|
| Land |
2,521 |
|
|
2,519 |
|
| Buildings |
39,850 |
|
|
39,778 |
|
| Machinery and equipment |
130,072 |
|
|
153,955 |
|
| Property, plant and equipment, at
cost |
172,443 |
|
|
196,252 |
|
| Accumulated depreciation |
(114,002 |
) |
|
(131,691 |
) |
| Property, plant and equipment,
net |
58,441 |
|
|
64,561 |
|
| Noncurrent assets of
discontinued operations |
— |
|
|
19,805 |
|
| Total assets |
$ |
416,969 |
|
|
$ |
493,506 |
|
| LIABILITIES AND
STOCKHOLDERS' EQUITY |
|
|
|
| Current
liabilities: |
|
|
|
| Accounts payable |
$ |
50,468 |
|
|
$ |
45,606 |
|
| Accrued and other current
liabilities |
38,686 |
|
|
28,078 |
|
| Income tax payable |
489 |
|
|
33 |
|
| Current portion of long-term
debt |
6,978 |
|
|
7,012 |
|
| Current liabilities of discontinued
operations |
— |
|
|
11,158 |
|
| Total current liabilities |
96,621 |
|
|
91,887 |
|
| Long-term debt, less
current portion |
268,546 |
|
|
310,614 |
|
| Deferred income
taxes |
— |
|
|
4,169 |
|
| Build-to-suit
liability |
12,775 |
|
|
13,237 |
|
| Other noncurrent
liabilities |
9,018 |
|
|
7,935 |
|
| Pension and
postretirement benefit obligations |
18,622 |
|
|
18,676 |
|
| Commitments and
contingencies |
|
|
|
| Stockholders'
equity: |
|
|
|
| Preferred stock, $0.01 par
value—9,988 shares authorized (including 400 Series B Junior
Preferred $0.00 par value shares); no shares issued and outstanding
at March 31, 2016 and December 31, 2015 |
— |
|
|
— |
|
| Common stock, $0.01 par
value—60,000 shares authorized and 23,888 shares issued and 23,794
outstanding at March 31, 2016 and December 31, 2015 |
238 |
|
|
238 |
|
| Additional paid-in capital |
227,046 |
|
|
226,844 |
|
| Accumulated deficit |
(182,179 |
) |
|
(145,309 |
) |
| Accumulated other comprehensive
loss |
(32,754 |
) |
|
(33,821 |
) |
| Treasury stock, at cost—94 shares
at March 31, 2016 and December 31, 2015 |
(964 |
) |
|
(964 |
) |
| Total stockholders' equity |
11,387 |
|
|
46,988 |
|
| Total liabilities and
stockholders' equity |
$ |
416,969 |
|
|
$ |
493,506 |
|
| |
|
| CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS |
For the Three Months Ended |
| (Dollars in
thousands) |
March 31, |
| Unaudited |
2016 |
|
2015 |
| Operating
activities: |
|
|
|
| Net loss |
$ |
(36,870 |
) |
|
$ |
(15,127 |
) |
| Less: Income from
discontinued operations, net of income taxes |
7,934 |
|
|
535 |
|
| Loss from continuing
operations |
(44,804 |
) |
|
(15,662 |
) |
| Adjustments to
reconcile net loss from continuing operations to net cash used in
operating activities of continuing operations: |
|
|
|
| Depreciation and amortization |
4,393 |
|
|
5,894 |
|
| Amortization of deferred gain |
(56 |
) |
|
(3 |
) |
| Amortization of deferred financing
costs and debt discount |
2,439 |
|
|
2,167 |
|
| Debt restructuring costs |
7,075 |
|
|
— |
|
| Loss from lease termination |
4,539 |
|
|
— |
|
| Loss (gain) on sale of property,
plant and equipment |
1,774 |
|
|
(5,622 |
) |
| Unrealized gains on commodity
hedges |
(263 |
) |
|
(102 |
) |
| Unrealized foreign currency
transaction (gains) losses |
(61 |
) |
|
3,823 |
|
| Equity in earnings of joint
venture |
(311 |
) |
|
(875 |
) |
| Dividends from joint venture |
— |
|
|
315 |
|
| Deferred income taxes |
— |
|
|
(7,351 |
) |
| Share-based compensation
expense |
202 |
|
|
714 |
|
| Changes in assets and liabilities: |
|
|
|
| Accounts receivable |
(9,979 |
) |
|
758 |
|
| Inventories |
26,563 |
|
|
(10,185 |
) |
| Prepaid expenses and other current
assets |
(2,129 |
) |
|
(3,894 |
) |
| Other noncurrent assets |
(173 |
) |
|
(242 |
) |
| Prepaid pension costs |
(122 |
) |
|
620 |
|
| Accounts payable |
4,073 |
|
|
15,130 |
|
| Income tax payable and
receivable |
504 |
|
|
643 |
|
| Accrued and other current
liabilities |
8,902 |
|
|
9,569 |
|
| Pension and postretirement benefit
obligations and other noncurrent liabilities |
968 |
|
|
(158 |
) |
| Net cash from (used in)
operating activities of continuing operations |
3,534 |
|
|
(4,461 |
) |
| Net cash (used in) from
operating activities of discontinued operations |
(5,219 |
) |
|
1,681 |
|
| Net cash used
in operating activities |
(1,685 |
) |
|
(2,780 |
) |
| Investing
activities: |
|
|
|
| Capital expenditures |
(1,238 |
) |
|
(1,837 |
) |
| Proceeds from sale of property,
plant and equipment |
467 |
|
|
7,541 |
|
| Net cash (used in) from
investing activities of continuing operations |
(771 |
) |
|
5,704 |
|
| Net cash from (used in)
investing activities of discontinued operations |
53,570 |
|
|
(224 |
) |
| Net cash from
investing activities |
52,799 |
|
|
5,480 |
|
| Financing
activities: |
|
|
|
| Proceeds from long-term debt |
287,113 |
|
|
206,900 |
|
| Repayments of long-term debt |
(331,196 |
) |
|
(204,357 |
) |
| Payment of debt restructuring
costs |
(7,075 |
) |
|
— |
|
| Payments of build-to-suit
liability |
(462 |
) |
|
— |
|
| Net cash (used
in) from financing activities |
(51,620 |
) |
|
2,543 |
|
| Effect of exchange rate
changes on cash and cash equivalents |
124 |
|
|
(331 |
) |
| Net change in cash and
cash equivalents |
(382 |
) |
|
4,912 |
|
| Cash and cash equivalents—beginning
of year |
11,100 |
|
|
8,454 |
|
| Cash and cash equivalents—end of
period |
$ |
10,718 |
|
|
$ |
13,366 |
|
| Total
Debt: |
|
As of |
| (Dollars in
thousands) |
|
March 31, |
|
December 31, |
| Unaudited |
|
2016 |
|
2015 |
| LONG-TERM DEBT |
|
|
|
|
| 12.75% Senior Secured Notes due
December 15, 2016 |
|
$ |
6,681 |
|
|
$ |
6,681 |
|
| 7.0% Convertible Notes due December
15, 2017 |
|
57,500 |
|
|
57,500 |
|
| 12.75% Senior Secured Notes due
December 15, 2018 |
|
203,319 |
|
|
203,319 |
|
| Revolving Credit Facility due
December 10, 2019 |
|
22,100 |
|
|
66,100 |
|
| Other, primarily capital
leases |
|
346 |
|
|
428 |
|
| Less: unamortized discount |
|
(10,835 |
) |
|
(12,255 |
) |
| Less: unamortized debt issuance
costs |
|
(3,587 |
) |
|
(4,147 |
) |
| Total debt |
|
$ |
275,524 |
|
|
$ |
317,626 |
|
| Less: current portion |
|
6,978 |
|
|
7,012 |
|
| Total long-term portion |
|
$ |
268,546 |
|
|
$ |
310,614 |
|
| Reconciliation of
Total Debt to Net Debt and Net Debt-to-Capital: |
|
As of |
| (Dollars in
thousands) |
|
March 31, |
|
December 31, |
| Unaudited |
|
2016 |
|
2015 |
| Total debt |
|
$ |
275,524 |
|
|
$ |
317,626 |
|
| Less: Cash and cash
equivalents |
|
10,718 |
|
|
11,100 |
|
| NET DEBT |
|
$ |
264,806 |
|
|
$ |
306,526 |
|
| |
|
|
|
|
| Stockholders'
equity |
|
$ |
11,387 |
|
|
$ |
46,988 |
|
| Total debt |
|
275,524 |
|
|
317,626 |
|
| CAPITAL |
|
$ |
286,911 |
|
|
$ |
364,614 |
|
| |
|
|
|
|
| NET
DEBT-TO-CAPITAL |
|
92.3 |
% |
|
84.1 |
% |
For Further Information:
-At ALPHA IR-
Analyst Contact
Chris Hodges or Chris Donovan
(312) 445-2870
Email: CAS@alpha-ir.com