|
PITTSBURGH--(BUSINESS WIRE)--
Horsehead Holding Corp. (Nasdaq: ZINC)
reported a consolidated net loss of $(4.1) million, or $(0.08) per
diluted share, for the fourth quarter of 2014, compared to a
consolidated net loss for the fourth quarter of 2013 of $(12.4) million,
or $(0.26) per diluted share. Adjusted EBITDA(1) for the
fourth quarter of 2014 was $7.4 million compared to $11.2 million for
the fourth quarter of 2013.
“We are pleased with the progress made during the fourth quarter with
the ramp-up of production at the Mooresboro, NC facility. The fourth
quarter represented a milestone for our Horsehead Corporation segment as
we achieved break-even adjusted EBITDA even though the Mooresboro
facility only operated at an average utilization of 30% of projected
capacity. This is compared with negative adjusted EBITDA of
approximately $(7.0) million for the same segment during the third
quarter of 2014. The Zochem and INMETCO segments also turned in strong
performance for the quarter and the demand for our zinc calcine
continued to be solid,” said Jim Hensler, President and Chief Executive
Officer.
Mooresboro Status
“Our primary focus during the quarter was the ramp-up of the Mooresboro
facility. The facility produced approximately 12,000 tons of zinc metal
during the quarter compared to 4,300 tons in the third quarter of 2014.
Production for the month of December was approximately 5,400 tons as
improvements with equipment reliability and process debottlenecking
helped to increase the ramp up rate during the quarter. We made
significant progress with the previously reported solids/liquid
separation issue at the front end of the process, allowing the
production rate to increase. We were particularly pleased that for
extended periods in December, the facility operated near our estimated
cash flow break-even level after cash interest expense of 230 tons per
day. Zinc metal sales continued to be supplemented with the sale of
approximately 23,500 tons of zinc calcine during the fourth quarter. As
a result of strong zinc calcine sales, the total quantity of zinc
contained in all product shipments during the quarter was 39,621 tons
which was essentially equal to the prior year’s quarter despite the
lower metal production during the ramp-up of Mooresboro.”
“Since the beginning of 2015, the daily average production rate
continued to improve compared with the fourth quarter rate. During
January 2015 we produced approximately 4,600 tons of zinc metal. We
reduced the plating rate for several days in January to perform some
needed maintenance in the cell house. We also experienced intermittent
equipment reliability issues, particularly with some key pumps, which
were further exacerbated by recent extreme cold weather conditions. On
February 20, 2015 we began a planned seven day outage to address several
of these issues. We expect to ramp up production following this outage.
Our interim target is to demonstrate that no bottlenecks exist to
operating the facility at 75% of nameplate capacity, or 330 tons per
day, by the end of the first quarter of 2015. We believe that our
ability to achieve this higher level of production will depend primarily
on the absence of further unplanned equipment issues.
“We began introducing feed into the lead-silver recovery circuit during
the fourth quarter and have started to produce lead-silver concentrate
that we are currently analyzing to fine tune this circuit. We are also
addressing some issues with pump selection identified during the initial
operating period.”
“We are pleased with the progress being made and continue to believe
that once we are operating at full capacity, we will realize $90 to $110
million of incremental EBITDA benefit as a result of the investment in
this transformation. However, the timing for completion of the ramp up
cannot be determined with certainty at this time,” added Hensler.
Fourth Quarter Highlights
Compared to the same quarter last year:
-
Zochem had a strong quarter, with pre-tax income increasing 90%,
reflecting the full integration of our zinc oxide business into a
single location,
-
INMETCO realized a 119% increase in pre-tax income as the planned
maintenance outage was deferred into the first quarter of 2015,
-
Zinc product shipments, excluding sales of zinc calcine, decreased
12,432 tons, or 31%, to 27,562 tons for the quarter, reflecting the
shutdown of operations and liquidation of inventory at the Monaca
facility and the start of shipments from Mooresboro. Shipment of zinc
calcine totaled 23,458 tons for the quarter.
-
The LME zinc price averaged $1.01/lb for the fourth quarter of 2014
compared to $0.86/lb for the fourth quarter of 2013. The LME nickel
price averaged $7.17/lb for the fourth quarter of 2014 compared to
$6.31/lb for the fourth quarter of 2013. Zinc prices were hedged at
$1.05/lb for the majority of the fourth quarter of 2014.
-
Net sales increased $3.0 million, or 2.9%, to $106.6 million. Higher
LME zinc and nickel prices, a favorable change in noncash hedge
charges and shipments of zinc calcine more than offset the decline in
shipments of finished zinc products. Noncash mark-to-market
adjustments reduced sales $0.6 million in the fourth quarter of 2014
compared to a reduction of $4.7 million in the fourth quarter of 2013.
Net sales of zinc metal were $24.7 million for the quarter reflecting
the combination of brokered metal and Mooresboro production.
-
Cost of sales were $94.8 million, or $17.3 million lower than the
prior year quarter, as lower volume of total shipments of zinc
products and lower cost associated with the shutdown of the Monaca
plant were partially offset by the higher LME zinc price and the
startup of the Mooresboro facility. Cost of sales for the prior year
quarter included $19.7 million related to impairment and severance
costs associated with the planned shutdown of the Company’s Monaca,
Pennsylvania facility.
-
Depreciation increased $3.8 million as higher amounts associated with
the new zinc plant and the Zochem expansion were partially offset by
reduced depreciation of the Monaca facility. Interest expense
increased $8.5 million, or $(0.08) per diluted share, reflecting
reduced levels of capitalized interest and higher levels of debt.
Other income for the fourth quarter of 2014 included $7.5 million
earned under the contract with Shell Chemical LLC to permit early
demolition of certain buildings at our Monaca, PA facility.
-
Cash used by operating activities was $33.0 million and included a
$27.8 million reduction in accounts payable and accrued expenses for
the quarter ended December 31, 2014. Capital spending was $4.3 million
for the quarter, and financing activities used $4.1 million during the
quarter. Cash on hand was $30.7 million and we had $5.5 million of
unused availability under our various credit facilities as of December
31, 2014. In January 2015, we completed a follow on equity offering
and received $69.6 million in net proceeds. We believe we have
adequate liquidity to meet the capital needs of the business and the
ramp-up of the Mooresboro facility.
|
Shipments and Production Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended Dec 31,
|
|
|
|
Year ended Dec 31,
|
|
|
|
|
2014
|
|
|
2013
|
|
|
|
2014
|
|
|
2013
|
Zinc Production - tons
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
finished products - tons
|
|
|
|
25,340
|
|
|
39,051
|
|
|
|
98,960
|
|
|
157,174
|
Shipments - tons
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Zinc finished product
|
|
|
|
27,562
|
|
|
39,994
|
|
|
|
128,988
|
|
|
169,376
|
WOX/Calcine shipments - tons
|
|
|
|
23,458
|
|
|
5,065
|
|
|
|
97,391
|
|
|
5,065
|
Total zinc contained shipments
|
|
|
|
39,621
|
|
|
39,577
|
|
|
|
179,287
|
|
|
156,305
|
Net sales realization - per pound
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Zinc finished products
|
|
|
|
$1.11
|
|
|
$0.96
|
|
|
|
$1.06
|
|
|
$0.98
|
Zinc finished products - zinc contained
|
|
|
|
$1.26
|
|
|
$1.06
|
|
|
|
$1.19
|
|
|
$1.09
|
EAF dust receipts - tons
|
|
|
|
141,707
|
|
|
144,387
|
|
|
|
588,996
|
|
|
613,749
|
Nickel remelt alloy shipments - tons
|
|
|
|
7,476
|
|
|
6,863
|
|
|
|
29,024
|
|
|
27,897
|
LME average zinc price - per lb
|
|
|
|
$1.01
|
|
|
$0.86
|
|
|
|
$0.98
|
|
|
$0.87
|
LME average nickel price - per lb
|
|
|
|
$7.17
|
|
|
$6.31
|
|
|
|
$7.65
|
|
|
$6.81
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business Outlook
Demolition of the Monaca site, undertaken pursuant to the agreement with
Shell Chemical, is expected to be completed during the first quarter of
2015. The water treatment plant is the final structure to be removed.
During the fourth quarter, EAF dust tons processed decreased
approximately 4% compared with the third quarter of 2014 while EAF dust
received decreased 9.5% over the same period, as reported steel industry
capacity utilization decreased from 78.8% to 76.3%. We are seeing signs
during the first quarter that operating levels in the steel industry are
reducing; however, based on available inventory, we expect to operate
all of our waelz kilns through the first quarter of 2015. Based upon the
expected rate of ramp up at Mooresboro, we expect to continue to produce
zinc calcine from excess waelz oxide during the first quarter. The
calcining operation will be shut down when Mooresboro begins to
consistently achieve a production capacity utilization level of
approximately 75%.
Zochem’s earnings before taxes for the quarter were $3.0 million, a
significant improvement compared with the prior year’s fourth quarter,
due primarily to increased volume of shipments. For the full year,
Zochem’s earnings before taxes were $13.6 million, a 70% increase over
the prior year, as shipment volume increased 73% to a record level of
68,000 tons of zinc oxide for the facility. Zochem has also operated 36
consecutive months without a recordable injury and finished the year
with six consecutive months with 100% in-spec production.
INMETCO’s earnings before taxes were $3.4 million for the quarter, which
is an increase of 119% versus the prior year’s quarter, due primarily to
the ability to defer planned maintenance, higher realized prices and
cost reductions associated with the idling of the cadmium recovery
facility in November 2013. INMETCO operated at full capacity. Pig
production increased by 8.3% compared with the prior year’s fourth
quarter. Tolling receipts were down 4% compared with the prior year’s
fourth quarter, reflecting primarily a reduction in output from one
customer that was experiencing a production bottleneck. Nickel price
also contributed to the positive quarter at INMETCO as the price was up
14% over the fourth quarter of 2013. The annual maintenance outage which
had been planned for the fourth quarter of 2014 was deferred until
January 2015. It lasted a total of 22 days.
In January 2015, we added approximately $70 million of additional
capital through a follow on equity offering to provide additional
liquidity to support strategic investment opportunities and to provide
back stop liquidity in case we continue to encounter unforeseen issues
during the continued ramp up of Mooresboro.
Conference Call Information
Horsehead will conduct a conference call with investors and analysts on
Tuesday, February 24, 2015, at 11:00 am EST to discuss its fourth
quarter. Dial-in instructions are as follows:
Dial-In Numbers:
|
United States:
|
|
(877) 261-8992
|
International:
|
|
(847) 619-6548
|
|
|
|
Confirmation Number:
|
|
3893 3783
|
|
|
|
An Audio-Only Web Conference Cast will also be available from the
Investor Relations Corporate Information page of our website www.horsehead.net
or directly at http://event.on24.com/r.htm?e=936557&s=1&k=7A85C4C50AD7F5CED22B13A5CEF5EB8B.
A replay of the call will be available beginning at 1:30 pm ET on
Tuesday, February 24, 2015, and ending on Tuesday, March 3, 2015, at
11:59 pm ET. Dial in instructions for the replay are:
Dial-In Numbers:
|
United States:
|
|
(888) 843-7419
|
International:
|
|
(630) 652-3042
|
Access Code:
|
|
3893 3783#
|
About Horsehead
Horsehead Holding Corp. (“Horsehead”) (ZINC) is the parent
company of Horsehead Corporation, a leading U.S. producer of specialty
zinc and zinc-based products and a leading recycler of electric arc
furnace dust; The International Metals Reclamation Company (“INMETCO”),
a leading recycler of metals-bearing wastes and a leading processor of
nickel-cadmium (NiCd) batteries in North America; and Zochem, a zinc
oxide producer located in Brampton, Ontario. Horsehead, headquartered in
Pittsburgh, Pa., employs approximately 700 people and has seven
facilities throughout the U.S. and Canada. Visit www.horsehead.net
for more information.
Cautionary Statement about Forward-Looking Statements
This press release contains forward-looking statements, including
statements about business outlook, future operating levels, liquidity,
proposed and potential initiatives and strategy, financial and
performance targets and statements about historical results that may
suggest trends for our business. These statements are based on
assumptions, estimates and information available to us at the time of
this press release and are not guarantees of future performance. Our
actual results, performance or achievement could differ materially from
those expressed in, or implied by, the forward-looking statements. We
can give no assurances that any of the events anticipated by the
forward-looking statements will occur or, if any of them does, what
impact they will have on our results of operations and financial
condition. You should carefully read the factors described in the “Risk
Factors” section of our filings with the Securities and Exchange
Commission for a description of certain risks that could, among other
things, cause our actual results to differ from these forward-looking
statements. All forward-looking statements are qualified in their
entirety by this cautionary statement, and we undertake no obligation to
revise or update this press release to reflect events or circumstances
after the date hereof.
Summary Consolidated Financial Results (in
thousands except per share amounts):
Income Statement
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended Dec 31,
|
|
|
|
Year ended Dec 31,
|
|
|
|
|
|
2014
|
|
|
|
2013
|
|
|
|
|
|
2014
|
|
|
|
|
2013
|
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
Net sales
|
|
|
|
$
|
106,630
|
|
|
|
$103,627
|
|
|
|
|
$
|
453,937
|
|
|
|
$
|
441,936
|
|
Cost of sales (excluding depreciation and amortization)
|
|
|
|
|
94,710
|
|
|
|
104,372
|
|
|
|
|
|
414,786
|
|
|
|
|
409,568
|
|
Severance expenses
|
|
|
|
|
83
|
|
|
|
7,691
|
|
|
|
|
|
288
|
|
|
|
|
7,691
|
|
Insurance claim income
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
|
(2,450
|
)
|
Gross profit (loss) - excluding depreciation and amortization
|
|
|
|
|
11,837
|
|
|
|
(8,436
|
)
|
|
|
|
|
38,863
|
|
|
|
|
27,127
|
|
Depreciation and amortization
|
|
|
|
|
11,910
|
|
|
|
8,104
|
|
|
|
|
|
35,406
|
|
|
|
|
29,678
|
|
S G & A expenses
|
|
|
|
|
6,359
|
|
|
|
5,328
|
|
|
|
|
|
24,149
|
|
|
|
|
22,207
|
|
Loss from operations
|
|
|
|
|
(6,432
|
)
|
|
|
(21,868
|
)
|
|
|
|
|
(20,692
|
)
|
|
|
|
(24,758
|
)
|
Interest expense
|
|
|
|
|
9,178
|
|
|
|
721
|
|
|
|
|
|
21,680
|
|
|
|
|
2,728
|
|
Interest and other income
|
|
|
|
|
7,031
|
|
|
|
3,782
|
|
|
|
|
|
13,942
|
|
|
|
|
6,072
|
|
Loss before taxes
|
|
|
|
|
(8,579
|
)
|
|
|
(18,807
|
)
|
|
|
|
|
(28,430
|
)
|
|
|
|
(21,414
|
)
|
Income tax benefit
|
|
|
|
|
(4,524
|
)
|
|
|
(6,363
|
)
|
|
|
|
|
(12,974
|
)
|
|
|
|
(7,455
|
)
|
Net loss
|
|
|
|
$
|
(4,055
|
)
|
|
|
$ (12,444
|
)
|
|
|
|
$
|
(15,456
|
)
|
|
|
$
|
(13,959
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per diluted share
|
|
|
|
$
|
(0.08
|
)
|
|
|
$(0.26
|
)
|
|
|
|
$
|
(0.30
|
)
|
|
|
$
|
(0.31
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average diluted shares outstanding
|
|
|
|
|
50,719
|
|
|
|
48,375
|
|
|
|
|
|
50,682
|
|
|
|
|
45,160
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA (1)
|
|
|
|
$
|
7,383
|
|
|
|
$11,169
|
|
|
|
|
$
|
20,400
|
|
|
|
$
|
33,626
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet Items
|
|
|
|
December 31, 2014
|
|
|
|
December 31, 2013
|
|
|
|
|
(unaudited)
|
|
|
|
|
Cash and equivalents
|
|
|
|
$
|
30,714
|
|
|
|
$
|
136,327
|
Other current assets
|
|
|
|
|
124,256
|
|
|
|
|
139,826
|
Property, plant and equipment, net
|
|
|
|
|
799,093
|
|
|
|
|
708,250
|
Other assets
|
|
|
|
|
19,454
|
|
|
|
|
20,909
|
Total assets
|
|
|
|
$
|
973,517
|
|
|
|
$
|
1,005,312
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
$
|
106,423
|
|
|
|
$
|
161,819
|
Long-term debt
|
|
|
|
|
406,016
|
|
|
|
|
354,768
|
Other long-term liabilities
|
|
|
|
|
26,893
|
|
|
|
|
43,831
|
Stockholders’ equity
|
|
|
|
|
434,185
|
|
|
|
|
444,894
|
Total liabilities and stockholders’ equity
|
|
|
|
$
|
973,517
|
|
|
|
$
|
1,005,312
|
|
|
|
|
|
|
|
|
|
Segment Information (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended December 31, 2014
|
|
|
|
Horsehead
|
|
|
|
Zochem
|
|
|
|
INMETCO
|
|
|
|
Corporate, eliminations and other
|
|
|
|
Total
|
Net sales
|
|
|
|
$
|
57,977
|
|
|
|
|
$
|
35,682
|
|
|
|
$
|
13,280
|
|
|
|
$
|
(309
|
)
|
|
|
|
$
|
106,630
|
|
(Loss)income before income taxes
|
|
|
|
|
(6,648
|
)
|
|
|
|
|
2,958
|
|
|
|
|
3,353
|
|
|
|
|
(8,242
|
)
|
|
|
|
|
(8,579
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended December 31, 2013
|
|
|
|
Horsehead
|
|
|
|
Zochem
|
|
|
|
INMETCO
|
|
|
|
Corporate, eliminations and other
|
|
|
|
Total
|
Net sales
|
|
|
|
$
|
73,026
|
|
|
|
|
$
|
18,903
|
|
|
|
$
|
12,416
|
|
|
|
$
|
(718
|
)
|
|
|
|
$
|
103,627
|
|
(Loss)income before income taxes
|
|
|
|
|
(21,807
|
)
|
|
|
|
|
1,560
|
|
|
|
|
1,530
|
|
|
|
|
(90
|
)
|
|
|
|
|
(18,807
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2014
|
|
|
|
Horsehead
|
|
|
|
Zochem
|
|
|
|
INMETCO
|
|
|
|
Corporate, eliminations and other
|
|
|
|
Total
|
Net sales
|
|
|
|
$
|
256,609
|
|
|
|
|
$
|
144,685
|
|
|
|
$
|
54,090
|
|
|
|
$
|
(1,447
|
)
|
|
|
|
$
|
453,937
|
|
(Loss)income before income taxes
|
|
|
|
|
(37,189
|
)
|
|
|
|
|
13,554
|
|
|
|
|
13,906
|
|
|
|
|
(18,701
|
)
|
|
|
|
|
(28,430
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2013
|
|
|
|
Horsehead
|
|
|
|
Zochem
|
|
|
|
INMETCO
|
|
|
|
Corporate, eliminations and other
|
|
|
|
Total
|
Net sales
|
|
|
|
$
|
311,914
|
|
|
|
|
$
|
78,342
|
|
|
|
$
|
53,638
|
|
|
|
$
|
(1,958
|
)
|
|
|
|
$
|
441,936
|
|
(Loss)income before income taxes
|
|
|
|
|
(40,934
|
)
|
|
|
|
|
7,941
|
|
|
|
|
12,535
|
|
|
|
|
(956
|
)
|
|
|
|
|
(21,414
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Adjusted EBITDA is a non-GAAP financial measure. Management
uses adjusted EBITDA to help it evaluate performance and to
compare current results with those for prior periods as well as
with the results of other companies in our industry. We caution
investors that adjusted EBITDA should not be considered as a
substitute for disclosures made in accordance with GAAP. Below is
a reconciliation of adjusted EBITDA to net loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended Dec 31,
|
|
|
|
Year ended Dec 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
|
2013
|
|
|
|
2014
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
$
|
(4,055
|
)
|
|
|
$
|
(12,444
|
)
|
|
|
|
$
|
(15,456
|
)
|
|
|
$
|
(13,959
|
)
|
Non-cash hedge adjustments
|
|
|
|
|
638
|
|
|
|
|
4,733
|
|
|
|
|
|
(1,054
|
)
|
|
|
|
5,719
|
|
Non-cash compensation expense
|
|
|
|
|
1,184
|
|
|
|
|
422
|
|
|
|
|
|
4,768
|
|
|
|
|
3,209
|
|
Impairment of assets - Monaca
|
|
|
|
|
-
|
|
|
|
|
9,349
|
|
|
|
|
|
-
|
|
|
|
|
9,349
|
|
Severance and other - Monaca
|
|
|
|
|
83
|
|
|
|
|
10,429
|
|
|
|
|
|
1,972
|
|
|
|
|
10,429
|
|
Income tax benefit
|
|
|
|
|
(4,524
|
)
|
|
|
|
(6,363
|
)
|
|
|
|
|
(12,974
|
)
|
|
|
|
(7,455
|
)
|
Interest expense
|
|
|
|
|
9,178
|
|
|
|
|
721
|
|
|
|
|
|
21,680
|
|
|
|
|
2,728
|
|
Interest and other income
|
|
|
|
|
(7,031
|
)
|
|
|
|
(3,782
|
)
|
|
|
|
|
(13,942
|
)
|
|
|
|
(6,072
|
)
|
Depreciation and amortization
|
|
|
|
|
11,910
|
|
|
|
|
8,104
|
|
|
|
|
|
35,406
|
|
|
|
|
29,678
|
|
Adjusted EBITDA
|
|
|
|
$
|
7,383
|
|
|
|
$
|
11,169
|
|
|
|
|
$
|
20,400
|
|
|
|
$
|
33,626
|
|
|
|