Wise Metals Group LLC (Wise Metals) has reported sales of $296.9 million for the third quarter of 2008, up 21%, compared with the sales of $244.8 million in the year-ago quarter. It has reported a net loss of $27.6 million for the third quarter of 2008, compared with the net loss of $25.7 million in the year-ago quarter.
Consolidated shipments increased 19% in the third quarter of 2008 versus the third quarter of 2007, including a 13% increase of can sheet shipments at Wise Alloys partially offset by a decrease in shipments of commercial products while shipments of scrap at Wise Recycling increased 62% over the same period.
Overall consolidated shipments in the third quarter of 2008 totaled 207.4 million pounds compared to 174.6 million for the same period in 2007. Higher levels of can sheet volumes, including export, and shipments at Wise Recycling contributed to the increase. Recycling shipments have increased as a result of continued expansion and diversification of recycled metals to include ferrous as well as non-ferrous scrap.
Including a $5.1 million favorable adjustment for LIFO and a $5.2 million favorable impact for unrealized gains under FAS 133 (Accounting for Derivative Instruments and Hedging Activities), net loss for the third quarter of 2008 was $27.6 million. This compares to a net loss of about $25.7 million in the third quarter of 2007, which includes a $2.6 million unfavorable impact for unrealized losses under FAS 133. After adjusting for FAS 133 and LIFO, net loss for the third quarter of 2008 would have been $37.9 million, compared to, on the same basis, a loss of $23.1 million in the third quarter of 2007, reflecting a decrease of $14.8 million.
Adjusted EBITDA for the third quarter of 2008 was $80.2 million compared to $10.4 million for the third quarter of 2007, a decrease of $69.8 million. This includes an unfavorable $54.6 million lower of cost or market (LCM) adjustment for inventory to the first-in, first-out (FIFO) method at September 30, 2008, as used by the company to report inventory values consistent with a lower of FIFO cost or market basis to determine liquidity under the company’s revolving loan agreement. The reserve adjustment is resulting from a dramatic price decrease in the aluminum market which saw aluminum prices fall from a high of $1.54 in July to $1.13 by September 2008 and falling further to recent lows of about $.64 per pound.
Interest costs for the third quarter of 2008 of $8.8 million reflect a decrease of $0.6 million over the third quarter of 2007.
For the nine months ended September 30, 2008, consolidated shipments totaled 643.9 million pounds, compared to 545.2 million pounds for the same period in 2007, an increase of 98.7 million pounds or 18% including a 9% increase in shipments at Wise Alloys and a 50% increase in shipments of scrap at Wise Recycling over the same period. Higher levels of can sheet volumes, including export and shipments at Wise Recycling contributed to the increase. Recycling shipments have increased as a result of continued expansion and diversification of recycled metals to include ferrous as well as non-ferrous scrap.
Sales increased by 23% to $962.6 million for the nine months ended September 30, 2008, compared to $781.4 million for the same period in 2007 reflecting higher volumes and metal prices.
Including a $12.4 million unfavorable adjustment for LIFO and a $1.0 million favorable impact for unrealized gains under FAS 133 (Accounting for Derivative Instruments and Hedging Activities), net loss for the first nine months of 2008 was $44.3 million. This compares to a net loss of about $27.1 million in the first nine months of 2007, which includes a $5.1 million favorable impact for unrealized gains under FAS 133. After adjusting for FAS 133 and LIFO, net loss for the first nine months of 2008 would have been $32.9 million, compared to, on the same basis, a loss of $32.2 million in the first nine months of 2007, reflecting a decrease of $0.7 million.
Adjusted EBITDA for the first nine months of 2008 was $49.8 million compared to $5.5 million for the first nine months of 2007, a decrease of $55.3 million including a $54.6 million LCM adjustment.
Interest costs for the first nine months of 2008 of $27.2 million reflect a decrease of $0.7 million over the first nine months of 2007.
During the quarter the company completed the acquisition of Alabama Electric Motor Services, LLC (AEM). AEM specializes in the service, repair and replacement of electric motors and pumps. The services offered by AEM can be used in conjunction with those offered by Listerhill Total Maintenance Company (TMC). The acquisition price for AEM was immaterial and involved no outlay of cash.
“We are excited about leveraging our expertise to offer an expanded level of service capabilities”, said chief financial officer of Non-Core Operations, Jim Tierney. “We continue to pursue opportunities for expansion in all of our business segments.”
The company also announced today the addition of further can sheet product capability by making available a wider-width can sheet coil capable of further expanding the product capability and efficiencies of the operations of Wise’s customers.
“The project is very much near completion and we are on track to begin test production this quarter,” said Phil Tays, Wise Alloys Plant Manager.
“We are pleased at the levels of preliminary market demand for our wide-product for which we anticipate some modest availability in 2009 with significant long-term opportunity to allow our customers an increased choice of product-widths beginning in 2010,” said David D’Addario, chairman and chief executive officer.