Metalico Inc., headquartered in Cranford, N.J., has reported net income of $6.6 million for the second quarter of the fiscal year, a 50 percent increase from the same time last year.
The company posted sales of $178 million for the quarter, compared with $145 million for the same time last year. Operating income for the second quarter jumped 70 percent to $11.4 million compared with $6.7 million in the prior year.
According to Metalico, year-over-year comparison to the second quarter of 2010 reflects improved financial performance on near-record ferrous shipments and moderate increases in volume except for PGM shipments, which declined.
In a press release, Metalico notes the following highlights:
- Sales increased 23 percent to $178 million from $144 million.
- Operating income rose by 70 percent to $11.4 million from $6.7 million.
- Net income grew 50 percent to $6.6 million from $4.4 million.
- Unit volume shipments increased 40 percent for ferrous scrap and 9 percent for nonferrous scrap.
- Platinum group metals (PGM) unit volumes decreased 26 percent to 28,900 troy ounces from 39,000 troy ounces.
- Minor metal shipments rose 3 percent to 432,000 pounds from 421,000 pounds.
- Lead product shipments increased 3 percent to 13.3 million pounds.
Metalico reported volume increases in all segments other than its PGM and minor metals segment. Changes in sequential unit shipments were mixed, with gains in nonferrous and lead and decreases in ferrous, PGMs and minor metals. Acquisitions added 7,900 gross tons of ferrous scrap and 1.7 milliion pounds of nonferrous scrap in the quarter.
Average selling prices for all metal categories rose year-over-year. Sequentially, all categories were marginally down to flat, except for a price increase of 23 percent for minor metals.
Commenting on the results for the quarter, Carlos Agüero, Metalico president and CEO, says, "Our overall positive operating results again this quarter in the face of rising scrap procurement costs is a testament to our broadly diversified commodity metal mix strategy. Ferrous, nonferrous and minor metals product lines turned in stellar results, while the PGM's suffered from lower volumes and competitive cost pressures. Fabricated lead products extended their return to profitability."
Agüero added, "General economic conditions for our industry, although still good, are not as favorable as we experienced earlier in the year. Going into the second half of 2011, we think the standout will be ferrous and non-ferrous metal consumer demand, supported by relatively stable pricing. Sourcing sufficient metal units at acceptable costs, while achievable, could be challenging.
Metalico says its largest segment, ferrous and nonferrous recycling, continues to grow and be very profitable, contributing 74 percent of operating income on only 60 percent of consolidated revenues so far this year. Additionally, metals recycling operating income doubled from Q2 2010, driven by significant improvement in volumes and higher selling price levels for ferrous and nonferrous metals.
PGM segment results were affected by rising cost pressures on metal units purchased but were partially offset by higher selling prices and improved margins for minor metal sales, according to Metalico.
The lead segment benefited from rising selling prices related to new value-added products and higher unit volume shipments, continuing the return to profitability in the quarter and six month period.
Metalico allso addressed what it says are its best growth opportunities. Progress on the company’s new Buffalo, N.Y., shredder installation is expected to be complete by the four quarter of 2011.
Production of frag and loading of rail cars and trucks is designed to be conducted indoors, facilitating operations in inclement weather. Metalico plans to have up to 15,000 tons of raw material on site upon startup of shredding activity.
Also, Metalico says that as the company has rebuilt its Warren, Ohio, feeder yard, it expects to undertake replacing the old shredder acquired with the Youngstown, Ohio, operation.
Finally, the company is increasing its shredding capacity at its Pittsburgh location over the next six months. Metalico's interim goal is to achieve combined shredding capacity of 40,000 gross tons per month among the three strategically located shredder locations.
Forecasting the market over the second half of this year, Metalico says for ferrous, assuming that export and domestic demand remains at first half levels, sales volumes and selling prices should remain steady over the next few months. Year-to-date steel industry capacity utilization of 74 percent is likely to hold steady for the third quarter.
For nonferrous metals, demand for copper and other red metals, along with aluminum and stainless steel, is expected to remain firm. The market should be aided by stronger second half economic activity and resilient commodity prices.
For aluminum de-ox, demand should remain unchanged, but higher supply of product in the marketplace may keep selling prices in check. The company adds that it continues develop plans to introduce other aluminum products to better use its available plant capacity.
In the PGM sector, Metalico notes prices are volatile but remain at elevated prices, driven by improving demand for emission control products and investors seeking protection from anticipated inflation.