Empire Resources Reports Second Quarter 2013 Results

FORT LEE, N.J., Aug. 14, 2013 /PRNewswire/ -- Empire Resources, Inc. (NASDAQ: ERS), a distributor of value added, semi-finished metal products, announced today that net sales for the second quarter of 2013 were $110.5 million, which is 24% lower than the second quarter of 2012, and reflected the market decline in metal pricing as well as lower unit volume shipments to most geographic regions in line with soft economic conditions.

Gross profit for the second quarter of 2013 was $5.3 million, down 18% from the second quarter of 2012.  However, gross profit as a percentage of sales improved to 4.8% from 4.4% of sales in the second quarter of 2012, as the Company continued to implement its inventory management strategy and reduced storage and processing costs in the quarter. 

Operating income for the second quarter of 2013 was $1.8 million compared with $3.1 million in the second quarter of 2012.  SG&A expenses were 6% higher versus the second quarter of 2012 due in part to the Company's investment in employee count to expand its geographic reach.   

Interest expense of $1.1 million in the second quarter of 2013 was 20% below the second quarter of 2012.  The Company's continued success in controlling inventory levels, which decreased $36.9 million or 24% from the end of the second quarter of 2012, enabled Empire to reduce bank debt by $43.8 million or 28% from the end of the prior year second quarter.

In the second quarter of 2013, the Company recognized a non-cash non-operating loss of $0.04 million related to the change in fair market valuation of the derivative feature of its convertible subordinated note.  That compares with a non-cash non-operating gain of $0.2 million related to the derivative valuation recognized in the second quarter of 2012.  

Before including the non-cash non-operating derivative-related amounts in both periods, pre-tax income was $0.6 million in the second quarter of 2013 versus $1.7 million in the second quarter of 2012.

Net income for the second quarter of 2013 was $0.4 million, or $0.04 per diluted share, including the derivative related non-cash non-operating loss. That compares with net income of $1.2 million, or $0.11 per diluted share, in the second quarter of 2012, including the non-cash non-operating gain in the prior year period.

For the first six months of 2013, net sales were $243.9 million; pre-tax income, before including a non-cash non-operating derivative-related loss of $2.2 million, was $2.9 million; and net income was $0.5 million, or $0.05 per diluted share, including the derivative-related loss.  In the first six months of 2012, net sales were $291.3 million; pre-tax income, before including a non-cash non-operating derivative-related loss of $0.05 million, was $3.3 million; and net income was $2.0 million, or $0.21 per diluted share, including the derivative-related loss.   

Nathan Kahn, President and CEO, commented, "Softer than expected economic conditions in most regions of the world and the fall-off in the market pricing of both aluminum and steel made the second quarter an especially challenging period.  Additionally, the drop in the value of the Brazilian real meant that many potential steel orders in that market did not meet our margin requirements and caused us to curtail volume in the second quarter.  However, the rest of South America remained strong and we are continuing to expand our reach in the region, most recently through the establishment of a wholly owned subsidiary in Mexico.  We also have initiatives underway in Europe to improve our market position there."

"Additionally, we moved forward in the second quarter with our strategy to improve profitability, and were successful in further reducing inventory, bank debt and interest costs. That progress is also reflected in our cash flow from operations, which nearly doubled to $7.9 million for the six month period from $4.0 million in the same period of 2012."

"It is generally expected that market conditions will begin to strengthen in the fourth quarter.  In the meantime, we will continue to execute our plan for profitable growth with our central focus on being effective partners to our customers and suppliers."

Empire Resources, Inc. is a distributor of a wide range of semi-finished metal products to customers in the transportation, automotive, housing, appliance and packaging industries in the U.S., Canada, Latin America, Australia, New Zealand and Europe. It maintains supply contracts with mills in various parts of the world.

This press release contains "forward-looking statements." Such statements may be preceded by the words "intends," "may," "will," "plans," "expects," "anticipates," "projects," "predicts," "estimates," "aims," "believes," "hopes," "potential" or similar words. Forward-looking statements are not guarantees of future performance, are based on certain assumptions and are subject to various known and unknown risks and uncertainties, many of which are beyond the Company's control, and cannot be predicted or quantified and consequently, actual results may differ materially from those expressed or implied by such forward-looking statements. Such risks and uncertainties include, without limitation, risks and uncertainties associated with (i) the loss or default of one or more suppliers; (ii) the loss or default of one or more significant customers; (iii) a default by counterparties to derivative financial instruments; (iv) changes in general, national or regional economic conditions; (v) an act of war or terrorism that disrupts international shipping; (vi) changes in laws, regulations and tariffs; (vii) the imposition of anti-dumping duties on products the Company imports; (viii) changes in the size and nature of the Company's competition; (ix) changes in interest rates, foreign currencies or spot prices of aluminum; (x) the loss of one or more key executives; (xi) increased credit risk from customers; (xii) the Company's failure to grow internally or by acquisition and (xiii) the Company's failure to improve operating margins and efficiencies. More detailed information about the Company and the risk factors that may affect the realization of forward-looking statements is set forth in the Company's filings with the Securities and Exchange Commission (SEC), including the Company's Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q. Investors and security holders are urged to read these documents free of charge on the SEC's web site at http://www.sec.gov. The Company assumes no obligation to publicly update or revise its forward-looking statements as a result of new information, future events or otherwise.

SOURCE Empire Resources, Inc.