PITTSBURGH Metalico Inc.
fell into the red last year due to higher raw material costs,
lower volumes and lethargic pricing, but the company resolved
the covenant issues it had been facing.
Last year "provided an uncanny
repeat of 2011," president and chief executive officer Carlos
E. Agüero said in a statement. "The first half of the year
produced acceptable performance in a difficult environment, but
we were once again disappointed with the subpar operating
results and impairment charges incurred in the second
The last six months of the year
were plagued by difficult market conditions, lower selling
prices for processed material and tight supply due to
competition for feedstock.
Metalico uses earnings before
interest, taxes, depreciation and amortization (Ebitda) to
determine its compliance with some of the covenants under its
credit facility and had been facing covenant issues at the end
of 2012, executive vice president and chief operating officer
Michael Drury said in a conference call to discuss the
companys financial results.
The company was able to get its
fourth-quarter covenant obligations retroactively reduced and
reset its covenants for the current year to reflect current
expectations, and the issue will not impact the companys
Metalico posted a 2012 net loss
of $13.11 million, in contrast to net income of $17.42 million
the previous year, on sales that fell 13.2 percent to $573.64
million. The fourth-quarter net loss of $7.58 million was more
than double a $3.07-million loss in the same period last year
on sales that slipped 2.4 percent to $128.57 million.
The companys Metals
Recycling segment posted a full-year operating loss of nearly
$7.49 million vs. operating earnings of $23.66 million in 2011
despite a 1.4-percent increase in sales to $394.56 million from
$389.07 million. The segments fourth-quarter operating
loss jumped to $10.79 million from a $1.8-million loss a year
earlier despite sales jumping 17.5 percent to $89.12 million
from $75.82 million.
The Metals Recycling segment
succeeded in boosting its scrap shipments last year. Ferrous
scrap shipments inched up 0.6 percent to 538,000 gross tons,
with ferrous revenues accounting for 69 percent of the
companys revenues in 2012, while nonferrous scrap
shipments increased 24 percent to 175 million pounds.
Fourth-quarter ferrous scrap
shipments increased 19 percent from a year earlier to 127,300
tons, and nonferrous scrap shipments rose 31 percent to 40.66
million pounds in the same comparison.
The company expects its ferrous
scrap shipments to continue to grow this year and surpass 2012
levels due to an increase in shredded shipments.
In addition, the Cranford,
N.J.-headquartered recycler believes that scrap prices should
show some resistance to a meltdown in the near term due to
tight supply and a possible strengthening in the export