PITTSBURGH Metalico Inc. fell deeper into the red in the third quarter due primarily to a non-cash impairment charge in its scrap metal recycling segment, but expects scrap demand to rebound in the coming months.
The Cranford, N.J.-based scrap metal recycler and processor posted a net loss of $27.65 million for the three months ended Sept. 30 compared with a $10.68-million loss in the same period last year despite a 2.3-percent increase in revenue to $135.78 million. Excluding the impairment charge, which was due primarily to acquisition-related write-offs, the companys adjusted net income was $938,000.
"We remain confident in being able to navigate through a difficult environment," president and chief executive officer Carlos E. Agüero said in a conference call.
An increase in steel production and higher tags for finished steel products are working to increase demand and prices for scrap metal, according to Metalico executives.
Scheduled and unplanned outages appear to be at an end, which should equate to increased demand as mills return to the market to build inventory, the company said. In addition to mills returning to their melt schedules, expansions by Ohio steelmakers are expected to strengthen demand.
"We see demand for shredded scrap growing in coming months," Agüero said.
Metalicos scrap metal recycling segment reported a third-quarter operating loss of $38.4 million compared with an operating loss of nearly $15 million in the same period last year.
Ferrous shipments increased 11.7 percent to 152,200 gross tons from 136,200 tons a year ago, but average selling prices dipped 0.5 percent to $366 per ton. Nonferrous shipments increased 2.5 percent to 45.4 million pounds from 44.3 million pounds and average selling prices rose 3.3 percent to 95 cents per pound in the same comparison.
The recycler expects the pricing environment to remain flat and shipments to retreat slightly through year-end.