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Customer outages drive down TMS sales, earnings

Keywords: Tags  scrap metal, mill services, TMS International, Tube City IMS, Raymond Kalouche, Lisa Gordon

PITTSBURGH — TMS International Corp.’s second-quarter revenue and earnings were driven lower by outages at domestic steel customers.

The Pittsburgh-based parent company of Tube City IMS LLC posted net income of $8.23 million in the three months ended June 30, down 15.3 percent from $9.71 million in the same period last year on revenue that fell 5.7 percent to $631.42 million.

"While new contracts in our mill services group performed very well in the quarter, our results were unfavorably impacted by softness in steel production at our customer mills in North America, mostly due to planned and unplanned outages, as well as lower activity in our raw materials procurement business," president and chief executive officer Raymond Kalouche said.

Revenue from raw material shipments was negatively impacted by an extended outage at one mill, a second mill stopping production due to an equipment malfunction and a labor outage at a third facility in Canada. A decision to stop selling scrap metal to a fourth customer over dissatisfaction with payment terms reduced revenue but improved cash flow.

Kalouche said during an earnings conference call that the company is cautiously optimistic that production levels will improve in the second half of the year.

The company announced it is expanding its scope of services with Mexico’s largest integrated steel mill, which is expected to generate more than $66 million in revenue during the length of the contract. Services will begin in the first quarter of 2014.

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