U.S. Plastic Lumber Corp. Announces Second Quarter 2002 Operating Results

U.S. Plastic Lumber Corp.(USPL), Boca Raton, Fla., has announced its operating results for the three and six-month periods ended June 30, 2002.

USPL reported an operating income of $945,000 at its Plastic Lumber division for the second quarter of 2002, as compared with an operating loss of $70,000 in the same quarter in 2001. On a consolidated basis, USPL recorded an operating loss of $332,000 in the second quarter of 2002, as compared to operating income of $2.7 million in the second quarter of 2001. Lower revenues at USPL's Environmental Recycling division and increases in certain corporate expenses with respect to the proposed sale of the Environmental Recycling division, compliance with forbearance agreements with senior lenders and the restructuring of the Company's balance sheet lead to the decrease. These expenses totaled approximately $1,042,000 in the second quarter of 2002. The net loss for the second quarter of 2002 was $3.7 million, or $0.08 per basic and diluted share, compared with net income of $71,000 or $0.00 per basic and diluted share in 2001.

Net revenues for the three months ended June 30, 2002, were $35.4 million, a decrease of $15.4 million, or 30 percent, from the comparable period in 2001. Environmental Recycling revenues were $20.5 million in 2002, as compared to $34.2 million in 2001, a decrease of 40 percent, as USPL's liquidity constraints delayed the start of significant contracts. Work on these projects is now underway, and the USPL expects revenues to return to prior year levels beginning in the third quarter of this year. Plastic Lumber division revenues in the second quarter of 2002 were $14.9 million, as compared to $16.6 million in the second quarter of 2001. USPL’s decision to discontinue resin processing for outside customers, which has historically been a very low margin business, impacted revenues by approximately $1.5 million.

For the six months ended June 30, 2002, USPL reported operating income of $1.8 million at its Plastic Lumber division, compared to an operating loss of $2.2 million in the prior year, as it continues to benefit from the restructuring plan that commenced in the third quarter of 2001. On a consolidated basis, USPL reported year to date operating income of $172,000 in 2002, as compared to an operating loss of $379,000 in 2001. Net loss for the six months ending June 30, 2002, was $6.5 million, or $0.16 per basic and diluted share, as compared to $4.9 million, or $0.17 per basic and diluted share, in the comparable period of 2001. The year to date 2002 results include approximately $1.8 million of charges pertaining to the sale of the Environmental Recycling division, compliance with forbearance agreements and restructuring of the balance sheet. Operating loss and net loss in the six-month period ending June 30, 2001, included a charge of $182,000 for the severance component of the Plastic Lumber division's fourth quarter 2000 restructuring.

Revenues for the first six months of 2002 were $72.3 million, compared with $89.4 million for the same period in 2001, a decrease of 19 percent. Revenues from the Plastic Lumber division were $29.1 million in the first half of 2002, as compared to $32.2 million in the prior year. The Plastic Lumber division's revenues were below last year's revenues primarily because of the impact of exiting the low margin resin trading business. The first six months of 2001 included approximately $3.5 million of resin revenues with no comparable amount in the first six months of 2002. Revenues from the Environmental Recycling division during the first six months of 2002 were $43.1 million, compared with $57.2 for the same period in 2001.

Commenting on the second quarter and six-month 2002 results, Mark Alsentzer, chairman, CEO and president of USPL said, "While our second quarter and year to date results were negatively impacted by significantly lower sales and operating income at our Environmental Recycling division, we see this as a temporary situation resulting from short term cash constraints. This situation has been somewhat alleviated by the amended and restated purchase agreement for the sale of the environmental division which we signed on June 14 of this year. We have begun to see a recovery in the revenues at the Environmental Recycling division and remain on track to close the sale transaction in late August or early September."

On the results of the Plastic Lumber division, Alsentzer continued, "The second quarter and year to date results are a validation of the restructuring and facilities consolidation plan we put into place at the end of last year. We continue to generate consistent margins from the Plastic Lumber business, and will be well positioned for future growth following the sale of the environmental division and the restructuring of our balance sheet."

As previously announced on June 17, upon or shortly after the closing of the sale of its environmental division USPL anticipates it will have agreements in place for new credit to finance ongoing working capital needs, extended forbearance of up to 24 months on its Master Credit Facility and the restructuring of its outstanding debentures.

Mike McCann, Chief Operating Officer of USPL, added, "We continue to experience significant sales growth with respect to our OEM plastic lumber and transportation products, suggesting a definitive change in the market's direction from pressure treated lumber to safer, alternative wood products. Because of this trend and the groundwork we have laid in 2002, we expect sales of our decking, structural lumber and packaging products to improve as we move into the latter half of 2002 and into 2003."