HANNIBAL, Ohio--(BUSINESS WIRE)--Ormet Corporation, an independent U.S. producer of aluminum, announced
its results of operations for the three months and year ended December
31, 2009. Results for the three months ended December 31, 2009 were a
net loss of $9.8 million compared to a net loss of $1.8 million for the
same period of 2008. Net profit for the year ended December 31, 2009 was
$32.8 million compared to a net loss of $5.1 million for 2008.
2009 Results of Operations
Three months ended December 31, 2009
Net sales from continuing operations for the three months ended December
31, 2009 were $89.5 million compared to $126.1 million for the same
period in 2008. The decrease is primarily attributed to a 33% reduction
in operations in the 2009 period compared to the 2008 period and lower
metal pricing due to the ending of the tolling agreement with Glencore,
which was at above market pricing, in August 2009. Total volume of sow
sold was 44,571 metric tonnes (tons) and 66,822 tons for the three month
period ended December 31, 2009 and 2008, respectively. A small amount of
toll revenue was generated in the fourth quarter of 2009, totaling $4.4
million, a decline of $102.9 million from tolling revenue of $107.3
million during the same period of 2008. Non-toll sow sales increased to
$84.6 million on 41,571 tons during the three months of 2009 compared to
$16.1 million on 9,631 tons for the same period in 2008. The decline in
toll volume and increase in non toll revenue was due to the ending of
the tolling agreement with Glencore. The monthly average cash settlement
price on the LME including the Midwest premium was $2,122/metric ton and
$1,915/metric ton during the fourth quarters of 2009 and 2008,
respectively.
The gross profit for the three months ended December 31, 2009 was $0.2
million compared to a gross loss of $0.1 million for the same period in
2008. The $36.6 million sales decline, described above, was offset by a
$36.8 million reduction in cost of sales. This cost of sales reduction
was a result of the 33% decrease in production (approximately $34.8
million), the effect of lower unit costs for power and anodes of $19.2
million and $9.8 million, respectively. Power unit costs decreased from
$50.70/MKh to $24.78/MKh while consumed anode cost declined from
$968/ton to $599/ton for the three months ended December 30, 2008 and
2009, respectively. Additional cost increases for the 2009 period,
principally for alumina as the 2008 period was dedicated to tolling,
totaled $27.0 million
Operating expenses for the three months ended December 31, 2009
totaled $6.2 million, an increase of $8.9 million from the $2.7 million
benefit for the same period in 2008. General and administrative expenses
were $6.2 million and $5.6 million for the three month period 2009 and
2008, respectively. The increase was due to higher legal and
professional fees of $0.6 million. Operating expense in the fourth
quarter of 2008 was favorably impacted by a gain on the sale of vacant
land at the Burnside alumina facility during that period amounting to
$8.3 million.
For the three months ended December 31, 2009, the Company reported a
$6.0 million operating loss compared to an operating profit of $2.7
million in the same period of 2008.
Non operating expenses totaled $3.0 million versus $3.9 million for the
three months ended December 31, 2009 and 2008, respectively. This
decrease was due to a decrease in debt interest.
Discontinued operation expenses totaled $0.7 million for the three month
period ending December 31, 2009 compared to $0.5 million for 2008 due to
an increase in the amortization of pension plan losses allocated to
discontinued operations.
For the three month period ended December 31, 2009, the Company recorded
an alternative minimum tax provision of $0.1 million when there was no
tax provision for the same period in 2008.
The average number of shares of common stock issued and outstanding
during the three months ended December 31, 2009 was 18,461,952. The
resulting net loss from continuing operations for the three month period
ended December 31, 2009 was $0.49 per share compared to a net loss from
continuing operations for the three month period ended December 31, 2008
of $0.07 per share with an average of 18,461,952 shares outstanding. Net
loss per share was $0.52 during the three month periods ended December
31, 2009 compared to a net loss for the three month period ended
December 31, 2008 of $0.10 per share.
Year Ended December 31, 2009
Net sales from continuing operations for the year ended December 31,
2009 were $419.3 million related to the sale of 218,423 tons of sow
compared to $549.6 million for 260,149 tons for the same period in 2008.
The decrease is the result of the reduction in 2009 of smelting
operations that began during the second quarter from 6 to 4.6 potlines
and eventually to 4 potlines in August 2009 as a result of the Glencore
contractual dispute and ending the tolling agreement with Glencore.
Non-toll sow revenue for 2009 totaled $150.2 million, a decline of 20%
from non-toll sow revenue of $187.8 million from 2008. Non-toll sow
volume sold increased during 2009 to 79,339 tons compared to 75,699 tons
in the same period of 2008. The monthly average cash settlement price on
the LME including the Midwest premium was $1,769/ton and $2,666/ ton
during the calendar years 2009 and 2008, respectively. Sow revenue from
tolling was $265.0 million for 2009 versus $346.5 million for 2008
reflecting the reduced operations and ending of the Glencore tolling
agreement. Miscellaneous non sow sales were $4.1 million and $15.4
million for the years ended December 31, 2009 and 2008, respectively,
reflecting the reduced level of operations in 2009 from 2008.
The gross profit for the year ended December 31, 2009 was $42.8 million
compared to a gross profit of $27.5 million for the same period in 2008.
The revenue decline described above of $130.3 million was offset by a
$145.6 million decrease in cost of goods sold. In addition to the 16%
reduction of sow volume sold which caused an $80.0 million decrease in
cost of sales, a reduction in the electric power rate to $36.36/MKh for
2009 versus $50.61/MKh for 2008 had a favorable effect of $51.6 million,
while improvements in power efficiency reduced costs by $6.1 million.
Lower cost of anodes consumed and improved anode usage accounted for an
additional reduction in cost of goods sold of $7.4 million and $4.8
million, respectively.
Operating expenses for the 2009 totaled $26.2 million, an
increase of $10.1 million from $16.1 million for 2008, primarily due to
increased legal and professional expenses of $3.8 million related to the
arbitration with Glencore, partially offset by a reduction of $2.6
million in loan fee amortization costs. Operating expense in 2008 was
also favorably impacted by the gain on the sale of vacant land at the
Burnside alumina facility during 2008 of $8.3 million.
For the year ended December 31, 2009, the Company reported a $16.7
million operating profit compared to an operating profit of $11.4
million for the same period of 2008.
Non operating income totaled $19.0 million versus non operating expenses
of $15.1 million for the years ended December 31, 2009 and 2008,
respectively. The increase in non-operating income was due to the
arbitration award, fees and associated interest paid by Glencore of
$31.1 million and lower interest expense of $1.6 million. As noted
above, legal and professional fees associated with the arbitration were
$3.8 million.
For the year ended December 31, 2009, the Company recorded an
alternative minimum tax provision of $.1 million. As of December 31,
2009, the Company has approximately $182.3 million of net operating
losses (“NOL”) to carry-forward to apply to income tax liabilities in
future years. The Company recorded certain valuation reserves and, as a
result, no deferred tax assets or deferred tax liabilities are reflected
on the balance sheet. As a result of a change of control as defined in
Section 382 of the IRC, which took place in May 2007, NOL of $96.4
million are estimated to be subject to an annual Section 382 limitation
of approximately $12.6 million, as of December 31, 2009. Unrestricted
NOL as of December 31, 2009 are estimated to be approximately $85.9
million.
Discontinued operation expenses totaled $2.8 million for 2009 compared
to a cost of $1.4 million for 2008 and reflected an increase in the
amortization of pension plan losses allocated to discontinued operations
of $1.4 million.
The average number of shares of common stock issued and outstanding
during the year ended December 31, 2009 was 18,461,952. The resulting
net income from continuing operations for the year ended December 31,
2009 was $1.93 per share compared to net loss from continuing operations
for the year ended December 31, 2008 of $0.20 per share with an average
of 18,300,270 shares outstanding during the year 2008. Net income per
share was $1.78 for 2009 compared to a net loss of $0.28 for 2008.
Liquidity and Capital Resources
The net cash generated by operating activities was $57.2 million for
2009. Net cash was increased by net income and non cash expenses of
$28.7 million and a decrease in working capital of $21.6 million
(prepaid expenses of $16.6 million due to the adoption of standard terms
for electricity consumed, trade accounts receivable and payable totaling
$8.0 million, partially offset by an increase in inventory of $3.0
million), and reduced by pension and VEBA funding requirements (net of
accrued expenses) totaling $26.8 million. Net cash used in investing
activities was $10.1 million and was directly related to the relining of
certain “pots” at the aluminum smelter in Ohio totaling $8.9 million.
Net cash used from financing activities was $45.2 million, due to the
payment of $1.2 million of financing fees and net payments on the bank
line of credit of $44.0 million.
The cash balance of the Company at December 31, 2009 increased by $1.8
from the balance at December 31, 2008 to a total of $4.0 million.
On March 2, 2010, the Company announced its new $50 million credit
facility and $110 million term loan. As of March 5, 2010, liquidity
reflected $26.0 million in cash and $21.7 million of availability on the
new bank credit facility and there was no outstanding loan balance on
the credit facility with $5.6 million of outstanding letters of credit
remaining issued.
Mike Tanchuk, Ormet’s President and CEO commented that, “We are pleased
with our strong 2009 financial performance in an exceedingly difficult
economic environment. The results reflected how well we positioned
ourselves with our 2008 metal pre-pricing and our reduced smelter
operating costs. The last half of 2009’s results was negatively impacted
by the contract arbitration and ending of the tolling agreement with
Glencore. We currently have a portion of 2010 business pre-priced and
are watching the market closely.”
The complete Ormet 2009 annual disclosure and financial statements will
be available on the Company’s website. Please visit the Investor section
of the website at www.ormet.com.
Cautionary Statement
This Statement contains forward-looking statements that can be
identified by use of words such as “anticipates,” “believes,”
“estimates,” “expects,” “hopes,” “targets,” “should,” “forecast,”
“outlook,” “projects” or other words of similar meaning. All statements
that address the Company’s expectations or projections about the future,
including statements about the Company’s strategy for growth, cost
reduction goals, expenditures, financial results, liquidity and capital
needs, are forward-looking statements. Forward-looking statements are
based on the Company’s estimates, assumptions and expectations of future
events and are subject to a number of risks and uncertainties and may or
may not be realized. The Company cannot guarantee its future performance
or results of operations. All forward-looking statements in this press
release are based on information available to the Company on the date
hereof. The Company disclaims any intention or obligation to update or
revise any forward-looking statements, except as may be required by law.
The Company’s business is subject to a number of significant risks and
uncertainties. Reference is made to the risk factors and other
disclosures contained in the Company's Information and Disclosure
Statements for the year ended December 31, 2009, which is available on
the Company's website at www.ormet.com.
Given the significant uncertainties and risks to which the Company is
subject (a) the reader should not place undue reliance on
forward-looking statements contained in this press release and (b) the
Company’s future results could differ materially from the Company’s
current results and from those anticipated in the Company’s
forward-looking statements.
Headquartered in Hannibal, Ohio, Ormet Corporation is a major U.S.
producer of aluminum. Ormet employs approximately 1,000 people. For more
information, visit the website at www.ormet.com.
|
Ormet Corporation
|
|
Consolidated Financial Statements
|
|
December 31, 2009
|
|
($000; except per share amounts)
|
|
|
|
CONSOLIDATED STATEMENT OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Year Ended
|
|
|
|
December 31
|
|
December 31
|
|
|
|
2009
|
|
2008
|
|
2009
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
Net sales from continuing operations
|
|
$
|
89,530
|
|
|
$
|
126,094
|
|
|
$
|
419,284
|
|
|
$
|
549,626
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cost of sales
|
|
|
89,309
|
|
|
|
126,145
|
|
|
|
376,444
|
|
|
|
522,085
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit (loss)
|
|
|
221
|
|
|
|
(51
|
)
|
|
|
42,840
|
|
|
|
27,541
|
|
|
Operating expenses (income)
|
|
|
|
|
|
|
|
|
|
General and administrative expenses
|
|
|
6,209
|
|
|
|
5,557
|
|
|
|
26,336
|
|
|
|
24,401
|
|
|
Gain on sale of assets
|
|
|
2
|
|
|
|
(8,270
|
)
|
|
|
(153
|
)
|
|
|
(8,270
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
(5,990
|
)
|
|
|
2,662
|
|
|
|
16,657
|
|
|
|
11,410
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-operating (expenses) income
|
|
|
|
|
|
|
|
|
|
Income from arbitration award
|
|
|
-
|
|
|
|
-
|
|
|
|
31,096
|
|
|
|
-
|
|
|
Other income (expense), net
|
|
|
(199
|
)
|
|
|
(241
|
)
|
|
|
844
|
|
|
|
(502
|
)
|
|
Interest expense
|
|
|
(2,783
|
)
|
|
|
(3,657
|
)
|
|
|
(12,961
|
)
|
|
|
(14,571
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total non-operating income (expenses)
|
|
|
(2,982
|
)
|
|
|
(3,898
|
)
|
|
|
18,979
|
|
|
|
(15,073
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income tax
|
|
|
(8,972
|
)
|
|
|
(1,236
|
)
|
|
|
35,636
|
|
|
|
(3,663
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
80
|
|
|
|
-
|
|
|
|
80
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
|
|
(9,052
|
)
|
|
|
(1,236
|
)
|
|
|
35,556
|
|
|
|
(3,663
|
)
|
|
Loss from discontinued operations
|
|
|
(719
|
)
|
|
|
(521
|
)
|
|
|
(2,782
|
)
|
|
|
(1,422
|
)
|
|
Net income (loss)
|
|
$
|
(9,771
|
)
|
|
$
|
(1,757
|
)
|
|
$
|
32,774
|
|
|
$
|
(5,085
|
)
|
|
Shares outstanding:
|
|
|
|
|
|
|
|
|
|
Average during period
|
|
|
18,462
|
|
|
|
18,462
|
|
|
|
18,462
|
|
|
|
18,300
|
|
|
As December 31
|
|
|
18,462
|
|
|
|
18,462
|
|
|
|
18,462
|
|
|
|
18,462
|
|
|
Net income (loss) per share from continuing operations
|
|
$
|
(0.49
|
)
|
|
$
|
(0.07
|
)
|
|
$
|
1.93
|
|
|
$
|
(0.20
|
)
|
|
Net income (loss) per share
|
|
$
|
(0.52
|
)
|
|
$
|
(0.10
|
)
|
|
$
|
1.78
|
|
|
$
|
(0.28
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ormet Corporation
|
|
Consolidated Financial Statements
|
|
December 31, 2009
|
|
($000s)
|
|
|
|
Consolidated Balance Sheet
|
|
|
|
|
|
|
|
|
|
12/31/2009
|
|
12/31/2008
|
|
ASSETS
|
|
|
|
|
|
Cash
|
|
$
|
4,035
|
|
|
$
|
2,156
|
|
|
Trade accounts receivable, net
|
|
|
8,614
|
|
|
|
13,308
|
|
|
Inventories
|
|
|
83,817
|
|
|
|
80,791
|
|
|
Prepaid expense and other current assets
|
|
|
1,351
|
|
|
|
17,781
|
|
|
Total current assets
|
|
|
97,817
|
|
|
|
114,036
|
|
|
|
|
|
|
|
|
Property and equipment
|
|
|
54,131
|
|
|
|
58,569
|
|
|
Goodwill
|
|
|
42,284
|
|
|
|
42,284
|
|
|
Assets held for sale
|
|
|
3,016
|
|
|
|
3,016
|
|
|
Other assets
|
|
|
1,605
|
|
|
|
3,725
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
198,853
|
|
|
$
|
221,630
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
26,123
|
|
|
$
|
22,755
|
|
|
Bank line of credit
|
|
|
4,061
|
|
|
|
48,079
|
|
|
Accrued compensation
|
|
|
8,623
|
|
|
|
6,050
|
|
|
Accrued interest
|
|
|
2,635
|
|
|
|
1,005
|
|
|
Postretirement obligations
|
|
|
8,075
|
|
|
|
8,340
|
|
|
Other accrued liabilities
|
|
|
9,751
|
|
|
|
10,067
|
|
|
Total current liabilities
|
|
|
59,268
|
|
|
|
96,296
|
|
|
|
|
|
|
|
|
Long term debt
|
|
|
52,099
|
|
|
|
46,144
|
|
|
Other liabilities:
|
|
|
|
|
|
Pension obligations
|
|
|
176,803
|
|
|
|
220,841
|
|
|
Postretirement obligations
|
|
|
51,107
|
|
|
|
56,648
|
|
|
Other liabilities
|
|
|
4,324
|
|
|
|
5,092
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’ DEFICIT
|
|
|
(144,748
|
)
|
|
|
(203,391
|
)
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|
$
|
198,853
|
|
|
$
|
221,630
|
|
|
|
|
|
|
|
|
|
|
|
|
Ormet Corporation
|
|
Consolidated Financial Statements
|
|
December 31, 2009
|
|
($000s)
|
|
|
|
CONSOLIDATED STATEMENT OF CASH FLOWS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2009
|
|
2008
|
|
Cash flows from operating activities
|
|
|
|
|
|
Net income (loss)
|
|
$
|
32,774
|
|
|
$
|
(5,085
|
)
|
|
Adjustments to reconcile net income (loss) to net cash from:
|
|
|
|
|
|
Depreciation and amortization
|
|
|
14,618
|
|
|
|
11,573
|
|
|
Bad debt expense (recovery)
|
|
|
19
|
|
|
|
(41
|
)
|
|
Deferred interest
|
|
|
8,225
|
|
|
|
7,602
|
|
|
Impairment of fixed assets
|
|
|
-
|
|
|
|
144
|
|
|
Compensation expense related to options
|
|
|
2,784
|
|
|
|
2,828
|
|
|
Amortization of deferred financing costs
|
|
|
3,254
|
|
|
|
5,880
|
|
|
Gain on sale of property and equipment
|
|
|
(153
|
)
|
|
|
(8,270
|
)
|
|
Net change in:
|
|
|
|
|
|
Trade accounts receivable
|
|
|
4,675
|
|
|
|
3,186
|
|
|
Inventory
|
|
|
(3,026
|
)
|
|
|
17,142
|
|
|
Prepaid expenses & other assets
|
|
|
16,581
|
|
|
|
20,381
|
|
|
Accounts payable
|
|
|
3,368
|
|
|
|
9,548
|
|
|
Accrued liabilities & other assets
|
|
|
849
|
|
|
|
(4,950
|
)
|
|
Pension and postretirement
|
|
|
(26,759
|
)
|
|
|
(34,046
|
)
|
|
Net cash provided (used) in operating activities
|
|
|
57,209
|
|
|
|
25,892
|
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
Proceeds from asset sales
|
|
|
353
|
|
|
|
9,011
|
|
|
Cash paid for intangible assets
|
|
|
-
|
|
|
|
(36
|
)
|
|
Capital spending
|
|
|
(10,460
|
)
|
|
|
(21,065
|
)
|
|
Net cash used in investing activities
|
|
|
(10,107
|
)
|
|
|
(12,090
|
)
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
Repayment of long term loan
|
|
|
-
|
|
|
|
(13,166
|
)
|
|
Proceeds from –long term debt
|
|
|
-
|
|
|
|
9,722
|
|
|
(Repayment) proceeds on bank line of credit - net
|
|
|
(44,018
|
)
|
|
|
(7,962
|
)
|
|
Payment of financing fees
|
|
|
(1,205
|
)
|
|
|
(2,978
|
)
|
|
Proceeds from issue of stock warrants/stock options
|
|
|
-
|
|
|
|
278
|
|
|
Net cash provided (used) by financing activities
|
|
|
(45,223
|
)
|
|
|
(14,106
|
)
|
|
Net (decrease) increase in cash
|
|
|
1,879
|
|
|
|
(304
|
)
|
|
Cash - beginning of period
|
|
|
2,156
|
|
|
|
2,460
|
|
|
Cash - end of period
|
|
$
|
4,035
|
|
|
$
|
2,156
|
|
|
|
|
|
|
|
|
|
|
|
See the audited financial statements which will be available on the
Company’s website in the Investor’s section – www.ormet.com.