Commonwealth Industries Inc. (Nasdaq:CMIN), Louisville, has announced that it anticipates reporting third-quarter 2004 net income from continuing operations of approximately $0.15 per diluted share inclusive of the recognition of certain net charges totaling $1.5 million.
The net charges consist of $5.2 million of restructuring costs associated with the company's previously announced proposed merger with IMCO Recycling, Inc., its streamlining activities and closure of the tube products line. These charges are partially offset by a mark-to-market aluminum contract hedge gain of $3.7 million.
Exclusive of the $5.2 million of restructuring charges and $3.7 million aluminum hedge gain, the Company's income from continuing operations would be approximately $0.25 per diluted share after those adjustments. The nearest equivalent GAAP measure to the $0.25 adjusted earnings per diluted share is earnings per diluted share, which as indicated in the previous paragraph is $0.15 per diluted share.
Net sales are expected to increase approximately 39 percent from $221 million in the third quarter of 2003 to approximately $309 million in the third quarter of 2004 on a 30 percent increase in aluminum shipments. Third-quarter 2004 aluminum business material margins, exclusive of hedge gain or loss effects and tube closure charges, are expected to improve to approximately $0.336 per pound, or $0.028 per pound more than the 2004 second quarter material margin of $0.308 per pound and $0.004 per pound more than the 2003 third quarter.
Steven J. Demetriou, president and chief executive officer, says, "We are pleased to see improvements in material margins reflecting the outcome of our recent work to achieve returns more in line with existing market conditions. It is especially encouraging to note the strong demand growth, and we look forward to further improvements in material margins in the fourth quarter of 2004 and into 2005."
Additionally, Commonwealth says it expects its renewed focus on working capital management to result in the generation of approximately $10 million in cash from continuing operations during the quarter, as inventory levels and receivable days outstanding were both reduced.
Commonwealth Industries is one of North America's leading manufacturers of aluminum sheet for distributors and the transportation, construction, and consumer durables product industries. The company has direct-chill casting facilities in Kentucky and continuous casting mini-mills in Ohio and California.