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 half."
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 liquidity.
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 arena.