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Metalico, Inc. Q2 2010 Earnings Call Transcript
http://seekingalpha.com/article/219331-metalico-inc-q2-2010-earnings-call-transcript?source=yahoo
Metalico, Inc. (MEA) Q2 2010 Earnings Call August 05, 2010 10:00 am ET
Operator
Good morning, my name is Melissa and I will be your conference facilitator. At this time, I would like to welcome everyone to the Metalico 2010 second quarter results call. (Operator Instructions) The purpose of today's call is to discuss the results of the company's operations for the quarter ended June 30, 2010.
Earlier today, Metalico issued a press release announcing second quarter results and filed a report on Form 8-K in connection with the release. The company is scheduled to file its quarterly report on From 10-Q for the quarter shortly. You can access copies of Metalico's filings through the SEC at their online files or directly through the company's website at www.metalico.com.
Just log on to the website, click on Investors at the top of the home page and then click on SEC filings in the left column, then click to download the report. Metalico's filings are also available at the SEC's website at www.sec.gov.
In addition, an audio replay of the call will also be available at 800-642-1687 or 706-645-9291 for the first week after the call's conclusion. To access the recording, callers will be required to enter the conference identification number of 889-706-53.
As it is customary, let me reiterate the Safe Harbor statement under the Private Securities Litigation Reform Act of 1995. The following discussion contains forward-looking statements that are subject to risks and uncertainties, including those risks set forth in Metalico's filings with the SEC. These risks could cause actual results for the current period and beyond to differ materially from those expressed in any forward-looking statements made by or on behalf of the company.
We refer you to Metalico's periodic reports that are filed from time to time with the SEC. For a more detailed discussion of forward-looking statements and a discussion of the factors that could cause results to differ materially from the discussion’s today, please refer to the risk factor discussion in Metalico's annual report on Form 10-K for 2009, which is also available online.
In addition, during the course of the conference call, certain non-GAAP financial measures may be described which should be considered in addition to and not in lieu of comparable GAAP financial measures. The company has provided reconciliations of these non-GAAP measures to what it believes are the most directly comparable GAAP measures in the earnings release.
Thank you, ladies and gentlemen. I would now like to turn the call over to Mr. Carlos Aguero, President and Chief Executive Officer of Metalico.
Carlos Aguero
Carlos Aguero
Good morning and thank you for joining our call. With me here today are Michael Drury, our Executive Vice President and Eric Finlayson, our Senior Vice President and Chief Financial Officer. Following my presentation, we will be available to answer any questions you might have.
We will also post a transcript of our remarks and the question-and-answer session on the Metalico website when the transcript becomes available after the call. Earlier today, Metalico released financial results for the second quarter of 2010 showing improvements in revenue, operating income, net income and EBITDA as compared to same period in 2009. At the same time, on a sequential basis sales and net income improved, but several key measures of operating performance declined in comparison. We view this as the results of an acceptable quarter suffering by comparison to an outstanding first period result.
Now let’s go over some of the highlights. Second quarter financial highlights include the following, all as compared to the second quarter of 2009. Sales increased to a $144.6 million, an increase of $82.3 million or 132% over the $62 million of last year. Operating income was $6.7 million compared to operating income of $2.8, an increase of $3.9 or 139%.
Net income increased to $4.4 million, tripling from net income of $1.1. EBITDA rose to $10.7 million, an increase of $4.3 or 67% over the $6.4 million last year. Net income of $0.10 per diluted share compared to net income of $0.03 per share. Unit volume shift increased by 40% for ferrous scrap and 77% for non-ferrous scrap.
PGM unit volumes increased 165% to a total of 39,042 troy ounces from 14,690 troy ounces. Lead product shipments were down 33% from Q2 of ‘09 related primarily to unusually high ammunition product related sales in ‘09.
Excluding corporate overhead charges, the company’s scrap segment saw operating income more than triple to $8.8 million from $2.7 million. While the Lead Fabricating segment showed an operating loss of $100,000 compared to an operating income of $1.6 million in the second quarter of ‘09.
Compared sequentially with the first quarter of 2010, sales and net income improved, but operating income and EBITDA were lower. Sales increased to $144.6 million, an increase of $10.5 million or 8% over the $134.1 million posted in the first quarter. Operating income was $6.7 million compared to $13.6 million, a decrease of $6.9 or 51%.
Net income increased to $4.4 million, a 26% improvement from net income of $3.5 million. EBITDA decreased to $10.7, a decrease of $6.9 million or 39% versus $17.6 million. Net income of $0.10 per share compared to net income of $0.08 per share. Unit volumes shipped decreased by 19% for ferrous scrap and remain virtually flat for non-ferrous scrap. PGM unit volumes increased 9% to 39,042 troy ounces from 35,704 troy ounces shipped in the first quarter. And finally, lead product shipments were up 32% sequentially from Q1 of 2010.
Although second quarter results have now reached the levels we wanted, Metalico still had a stellar first half of the year. Let me just briefly recap this for you. Sales of $279 million was more than double last year’s first half total of $115. Operating income of $20.4 million was almost seven times better than the $3 million posted last year.
We posted net income of almost $8 million compared to $2.5 million loss last year. Earnings per share were a positive $0.17 after a $0.04 net after-tax charge for finance cost, as compared to last year where we had a loss of $0.07 per share. Compared to last year first half, interest expenses has decreased by $3.5 million while total debt decreased by $20 million since last June, meaning we have greatly reduced borrowing costs and our leverage.
From a year ago, Metalico’s networking capital has increased by almost $20 million to $93 million. Additionally, as of today, availability on our revolver stands at approximately $25 million which more than adequately accommodates anticipated capital needs for the remainder of the year. Capital expenditure for the second quarter totaled $2.5 million, an increase from $1.1 million in the first quarter of 2010. We expended $2.4 million for scrap metal recycling segment and a $120,000 for the lead segment. The purchases were primarily for scrap handling equipment, trucks and replacement containers.
As of June 30, Metalico had approximately $46.4 million common shares issued and outstanding and no preferred stock outstanding. Let’s break down the quarter starting with scrap metal first. Scrap segment generated sales of $126.4 million, more than two and a half times to $44.3 posted in the second quarter of 2009.
We derived 32% of our scrap revenue in the quarter from ferrous and 68% from all non-ferrous metal. Operating profit for the scrap segment before corporate overhead rose to $8.8 million compared to $2.7 million in the same quarter last year. We realized a 91% increase in our first average sales price to $392 per gross tone this quarter up by $187 compared to the average that was posted last year of $205 per gross ton, and a $35 per gross ton sequential rise from $357 in the first quarter of 2010.
In April, selling prices for ferrous scrap metal increased and domestic demand remained firm while scrap buying prices and volume rose steadily. The remainder of the quarter was marked by steadily declining ferrous selling prices with some grades of scrap in surplus along with lackluster demand from many consumers.
Metalico’s average inventory cost rose during the period and the company filled 19% less scrap as compared to the first quarter. Non-ferrous markets were impacted by price volatility brought on by concerns over Europe’s sovereign debt issues and banking concerns. The average selling price for non-ferrous scrap in the quarter was a $1.11 per pound compared to $0.83 per pound in the prior year quarter and a $1.05 in the first quarter of this year.
In our last quarterly update, we explained the change in how we report PGM units converting all reported volumes to troy ounces instead of pounds of substrate consistent with industry standards. PGM prices in the second quarter were much higher than a year ago reflecting increased precious metal investment demand and automobile production, and its impact on PGM prices. We realized an average PGM selling price of $1122 per troy ounce compared to last year’s $661 per ounce and this year’s prior quarter selling price of $966 per ounce.
Metalico’s volume of metal sold for the second quarter included $103,200 gross tons of ferrous scrap, that’s a 40% increase over the $73,700 tons sold in Q2 of 2009, but it is a 19% decrease sequentially. We shipped 36.1 million pounds of non-ferrous metal in the quarter, another significant year over-year-increase of 77% from the 20.4 million pounds over a year ago and a small increase of this year’s first quarter.
Aluminum, stainless steel and nickel-based alloys as well as copper, brass and molybdenum continue to be the primary contributors to our non-PGM volumes of non-ferrous scrap metal sold. The 39,000 troy ounces of PGM sold in the quarter was two and a half times more than last year’s 14,690 troy ounces and 9% higher than the first quarter 2010 shipment.
Let’s move on now to the Lead Fabricating segment. In this year second quarter, we generated sales of $18.2 million compared to same period sales of $18 million in ‘09. We generated an operating loss before corporate overhead of approximately $99,000 compared to operating income of $1.6 million for the second quarter last year.
The lead segment continues to be impacted by competitive pressures and weak demand in many of the markets the company sells to. Segments of the economy such as commercial construction including medical facilities, diagnostic and therapy equipment manufacturers, plumbing supply, lead anode consumers, all remain impacted by the continuing economic softness. However, shot sales, seasonal roof flashings and department of defense sales remain robust.
The lead segment realized an average selling price of a $1.42 per pound in the quarter compared to $0.94 per pound in the second quarter of 2009 and a $1.46 in this year’s first quarter. Volumes rose by 32% sequentially to 12.8 million pounds, but were lower year-over-year due to last year’s strong market for ammunition-related products when we sold 19.1 million pounds in the second quarter.
The second quarter results like those of the first quarter demonstrate that our efforts to reduce an interest expense, to control operating cost and focus on profits over volume enabled the company to post strong results even in the sluggish economy.
We remain optimistic about our performance even in the absence of a strong recovery. During the quarter, our 700 employees performed their jobs professionally, efficiently and safely and as always we want to express our appreciation to employees at all levels of the company for their significant contribution.
Now, a word on guidance and forward-looking statements; Metalico’s practice like many others in our industry is not to provide guidance on earnings or earnings estimates. The scrap recycling industry is highly cyclical and commodity metal markets are often very erratic. We believe that earnings estimates could be unreliable because of the unpredictability, duration and magnitude of commodity pricing.
Having said that, let’s now go through our second quarter recap and third quarter outlook. Going into the third quarter, we believe the domestic scrap prices have stabilized and demand is once again supported by the export market. The short-term strength of the dollar in the second quarter helped drive many ferrous export consumers from the US market.
Now that the dollar has weakened, the export buyers are returning providing competition to domestic metals for available ferrous scrap. By an event that once again drives capital a dollar as a safe haven, we expect a weaker dollar will support a much more active export market.
Metalico views the second quarter low as a buying opportunity and is well positioned with ample inventories to participate in the anticipated improvement in the ferrous market. Demand for non-ferrous scrap continues to be strong, but pricing for most grades declined modestly throughout the quarter in part due to the strength in the US dollar and weakness in the Euro. The flow of non-ferrous scrap into yards have slowed down somewhat from the brisk pace of early to middle spring, but is expected to improve as long as non-ferrous metal pricing maintains its recent improvements.
Domestic, non-ferrous consumers appear to have strong order books, which should help support prices and keep scrap in high demand and export market consumers are recently more active in buying scrap once again as supported by a weaker dollar. Demand for aluminum de-ox has slowed. Selling prices have declined in tandem with the London Metal Exchange and a drop in steel industry capacity utilization. But recently de-ox selling prices have been stabilizing, but at lower levels than they were earlier this year.
During the second quarter, we experienced a significant improvement in PGM troy ounces recycled. This was driven by aggressive buying complemented by strong metal selling prices in the early part of the quarter and resulted in great performance for this part of our business. Average prices for PGM declined approximately 10% in the latter part of the quarter resulting in reduced supply of catalysts. Barring non-market pricing disruption, we believe that PGM prices will continue to recover during the remainder of 2010, which will help drive the supply of catalysts into the market place.
As mentioned earlier, the lead segments have been impacted by sluggish industrial demand, which increased competitive pressures. That is, the industry has a same production capacity chasing reduced demand across a broad array of industries. We continue to market our products aggressively so as not to lose market share. We are investing our productivity improvement and are taking steps to position ourselves in new markets that we have not previously serviced.
As we stated before, our goal is to continue to be a leading participant in the secondary commodity metal businesses and the complementary niche businesses in which we operate. We are focused on increasing operating density within our existing geographic markets and we will further leverage our existing platforms by proactive sourcing and internalizing scrap flows. We are investing in complimentary scrap processing capacity edition as well as expansions and tuck-in acquisition where and when they might become available.
Finally, we look ahead to the second half optimistic that the market condition that prevailed early in the year will again be present and help drive the economy, our industry and particularly our company to achieve the results that we all want.
This concludes our prepared remarks and with that, operator, I would like to open up the call for any questions we might have.
Continue to Q&A »
InPlay: Metalico misses by $0.02, beats on revs (MEA) 4.37 : Reports Q2 (Jun) earnings of $0.10 per share, $0.02 worse than the Thomson Reuters consensus of $0.12; revenues rose 131.7% year/year to $144.6 mln vs the $122.6 mln consensus. Co stated that "it believed that, going into the third quarter, domestic ferrous scrap prices have reached a plateau and demand is somewhat more stable. Metalico expects prices and demand to strengthen over the period. While intake of ferrous scrap at its yards has been below expectations since May, Metalico used the second quarter lull as a buying opportunity and is well positioned with ample inventories to participate in the anticipated improvement in the ferrous markets and stronger pricing for non-ferrous commodities."
http://finance.yahoo.com/marketupdate/inplay#mea
Metalico Reports Continued Improvement in Second Quarter
Metalico, Inc. (NYSE Amex: MEA) today reported net income of $4.4 million and earnings of $0.10 per share for the quarter ended June 30, 2010, with continued increases in volume, revenues, and operating income compared to the prior-year quarter.
Sales were $144.6 million, an increase of $82.3 million, or 132%, over same-quarter 2009 results. Operating income for the 2010 second quarter was $6.7 million, compared to $2.8 million for the prior-year quarter. EBITDA (as defined below) increased by 67% to $10.7 million from $6.4 million for the same quarter in 2009.
Second quarter 2010 results include a non-cash fair value benefit for financial instruments of $2.1 million or $.04 per share compared with a $1.5 million expense or ($.04) per share in the prior year quarter.
Sequential Quarter Comparison
Compared sequentially with the first quarter of 2010, sales and net income improved but several measures of operating performance declined.
-- Sales of $144.6 million increased by $10.5 million, or 8%, over $134.1
million.
-- Net income was $4.4 million, compared to net income of $3.5 million.
-- On a per-diluted-share basis, net income rose to $0.10, compared to
$0.08 per share.
-- Operating income was $6.7 million, a decrease of $6.9 million, or 51%,
from $13.6 million.
-- EBITDA was $10.7 million, a decrease of $6.9 million from $17.6
million.
-- Unit volumes shipped decreased by 19% for ferrous scrap and remained
flat for non-ferrous scrap.
-- Platinum Group Metal ("PGM") unit volumes were up by 9%.
-- Lead product shipments in the quarter rose by 32%.
The Company said its higher sales were largely driven by strong operating results from its PGM business.
Prior Year's Second Quarter Comparison
Year-over-year comparison to the second quarter of 2010 reflects substantially improved operating performance:
-- Sales increased to $144.6 million, an increase of $82.3 million, or
132%, over $62.3 million.
-- Operating income was $6.7 million, compared to operating income of $2.8
million, an increase of $3.9 million, or 139%.
-- Net income increased to $4.4 million, a 300% improvement from net
income of $1.1 million.
-- EBITDA rose to $10.7 million, an increase of $4.3 million, or 67% over
$6.4 million.
-- Net income of $0.10 per diluted share, compared to net income of $0.03
per share.
-- Unit volumes shipped increased by 40% for ferrous scrap and 77% for
non-ferrous scrap.
-- PGM unit volumes increased 165% to 39,042 troy ounces from 14,690 troy
ounces.
-- Lead product shipments were down 33% from Q2 2009 related primarily to
unusually high ammunition product-related sales in 2009.
Excluding corporate overhead charges, the Company's Scrap Metal segment reported $8.8 million in operating income in the 2010 second quarter compared to $2.7 million for the same period last year. The Company's Lead Fabrication segment reported an operating loss of $99,000 compared to operating income of $1.6 million in the prior-year period, also excluding corporate overhead charges.
Volume and Price Comparisons
Metalico's Scrap Metal segment experienced substantial year-over-year unit volume increases. Sequential quarterly volumes increased for PGM and non-ferrous, and fell for ferrous. Volumes in the Lead Fabricating segment rose sequentially, but were lower year-over-year due to 2009's strong market for ammunition-related products.
Quarterly volume of units sold
Q2 2010 Q2 2010
Q2 2010 Q1 2010 Change Q2 2009 Change
---------- ---------- --------- ---------- ---------
Ferrous (gross
tons) 103,200 127,100 -19% 73,700 40%
Non-Ferrous
(pounds) 36,102,000 36,013,000 0% 20,364,000 77%
PGM (troy ounces) 39,042 35,704 9% 14,690 165%
Lead (pounds) 12,845,000 9,752,000 32% 19,080,000 -33%
Average selling prices increased for all metals, both sequentially and year-over-year, with the exception of a 3% decline in sequential selling prices for lead products.
Quarterly selling price per unit sold
Q2 2010 Q2 2010
Q2 2010 Q1 2010 Change Q2 2009 Change
---------- ---------- --------- ---------- ---------
Ferrous (gross
ton) $ 392 $ 357 10% $ 205 91%
Non-Ferrous
(pound) $ 1.11 $ 1.05 6% $ 0.83 34%
PGM (troy ounce) $ 1,122 $ 966 16% $ 661 70%
Lead (pound) $ 1.42 $ 1.46 -3% $ 0.94 51%
Carlos E. Agüero, Metalico's President and Chief Executive Officer, said, "The second quarter when compared to 2009 showed significant improvement but was below the excellent performance posted in the first quarter of this year. The quarter was characterized by rising inventory purchase costs early in the period while selling prices for many ferrous and non-ferrous commodities steadily dropped in May and June, thereby squeezing metal margins. Operations generated EBITDA margins of 7.4%, which is less than our target of 10%. However, through the first six months of 2010, EBITDA margins were 10.2%.
"We anticipate market conditions will remain choppy for the remainder of the year as domestic consumers grapple with erratic order books and foreign consumers who enter the U.S. only when they see opportunistic buying conditions. Non-ferrous markets were impacted by price volatility brought on by concerns over Europe's sovereign debt issues and banking concerns. We are concerned that similar issues and concerns over domestic issues will roil the commodity markets for the foreseeable future."
He added, "As we said earlier this year, we expect to enhance the operating leverage of our existing platforms by opening or acquiring additional scrap metal buying centers in strategic adjacent areas that will provide additional market penetration. Our goal is to add four or five such new buying centers over the next twelve months, all subject to finding, securing and permitting such properties to accept scrap metals."
Shareholders' Equity and Debt
Metalico's outstanding debt remained flat at approximately $127 million as of June 30, 2010 compared to March 31, 2010, but net working capital improved by approximately $3.8 million. Shareholders' equity increased by $5.2 million to $160.1 million as of the end of the second quarter from $154.9 million as of the prior quarter-end.
As of June 30, 2010, Metalico had 46,449,085 common shares issued and outstanding. The Company has no outstanding preferred stock.
Metalico operates in the highly volatile and cyclical commodity metals industry and therefore deems it unreliable to provide earnings guidance. The Company's core business strategy emphasizes balanced growth of the ferrous and non-ferrous Scrap Metal Recycling business through acquisitions or new facility development in existing and contiguous new markets.
Outlook and Update
In April of 2010, selling prices for ferrous scrap metal increased and domestic demand remained firm while scrap buying prices continued to rise. The remainder of the quarter was marked by steadily declining ferrous selling prices with some grades of scrap in surplus, along with lackluster demand from many consumers. Metalico's average inventory cost rose during the period and the Company sold 19% less scrap as compared to first quarter.
The Company believes that, going into the third quarter, domestic ferrous scrap prices have reached a plateau and demand is somewhat more stable. Metalico expects prices and demand to strengthen over the period. While intake of ferrous scrap at its yards has been below expectations since May, Metalico used the second quarter lull as a buying opportunity and is well positioned with ample inventories to participate in the anticipated improvement in the ferrous markets and stronger pricing for non-ferrous commodities.
Demand for non-ferrous scrap continues to be strong, but pricing for most grades declined modestly through the quarter in part due to strength in the US Dollar and weakness in the Euro. The flow of non-ferrous scrap into yards slowed down somewhat from the brisk pace of early to middle Spring but is expected to improve as long as non-ferrous metal pricing holds during the third quarter. Non-ferrous consumers appear to have strong order books, which should help support prices and keep scrap supplies tight.
Demand for aluminum de-ox has slowed. Selling prices have declined in tandem with quotations on the LME and a drop in steel industry capacity utilization.
During the second quarter Metalico experienced a 9% improvement in PGM troy ounces recycled. This increase was driven by aggressive buying complemented by strong metal selling prices in the early part of the quarter, and resulted in superior performance for this part of the Company's business.
After starting out strong early in the quarter, average prices for PGM's fell approximately 10% in the latter part of the quarter, resulting in a declining supply of catalyst. Barring non-market pricing disruptions, Metalico believes that PGM prices have started to rebound and will continue to recover during the remainder of 2010, which will help drive the supply of catalyst into the market place.
The Company's lead segment continues to be impacted by competitive pressures and weak demand in many of the markets Metalico sells to. Segments of the economy such as commercial construction including medical facilities, diagnostic and therapy equipment manufacturers, plumbing supply and lead anode consumers remain deeply impacted by the continuing economic softness.
However, the Company said that shot sales, seasonal roof flashings and Department of Defense sales remain robust.
About Metalico
Metalico, Inc. is a holding company with operations in two principal business segments: ferrous and non-ferrous scrap metal recycling, and fabrication of lead-based products. The Company operates twenty-four recycling facilities in New York, Pennsylvania, Ohio, West Virginia, New Jersey, Texas, and Mississippi and four lead fabricating plants in Alabama, Illinois, and California. Metalico's common stock is traded on the NYSE Amex under the symbol MEA.
Contact:
Metalico, Inc.
Carlos E. Agüero
Michael J. Drury
Email Contact
186 North Avenue East
Cranford, NJ 07016
(908) 497-9610
Fax: (908) 497-1097
www.metalico.com
Metalico Sets August 5 Call for Second Quarter Results
Metalico, Inc. (NYSE Amex: MEA) a scrap metal recycler and lead products fabricator, will host a conference call on Thursday, August 5, 2010 at 10:00 a.m. Eastern time to discuss its earnings results for the quarter ended June 30, 2010 and to provide an update on business developments. The Company is scheduled to release its Second Quarter results earlier that day.
http://ih.advfn.com/p.php?pid=nmona&article=43700562&symbol=mea
I just bought some of this stock that was referred by under 10.00 at The street.com. Are there any thoughts as to where this stock is headed.
Thanks
Still running.
wow have I traded EVERY stock? lol
yeah, looks cheap
MEA is lookin dead sexy and cheap
Forbes: The 200 Best Small Companies
Heavy Metal
David Whelan 10.27.08, 12:00 AM ET
Carlos Aguero aims to make Metalico the cleanest outfit in a very dirty business.
in the scrap business it's easier to make money when metal prices are rising. That's when you get a bonus on the metal you bought that morning. Carlos Agüero, the chief executive of Metalico, was not enjoying such an ebullient moment when we visited him at his office in Cranford, N.J. Car production is down this year and demand for raw materials in China has been dropping since before the Olympics. In the space of three months the price of platinum recovered from catalytic converters collapsed from $2,060 to $1,150 per ounce. In one month a common grade of scrap steel slumped from $540 a ton to $365. Notwithstanding a recent spike in oil, the trend in commodity prices these days is down.
Metalico, which owns 20 scrap yards, mostly in the Northeast, is doing fairly well under the circumstances. In the last 12 months it netted $24 million, or 70 cents a share, on revenue of $681 million. In the most recent quarter it had net income of $8 million (after an $8 million accounting charge) with $295 million in sales. To get those results it has to move a lot of metal--58,000 tons a month. The company ranks No. 40 on our list of the 200 Best Small Companies in America.
Metalico buyers are disciplined, changing copper prices three times a day if they have to. But in August Agüero got some bad news. One of his newest yards in Texas was buying junked catalytic converters at $80 apiece, a price that only made sense when platinum was at $1,800. (An average converter contains two grams, or a fifteenth of an ounce, of recoverable precious metal.) The mistake was destined to chop $10 million out of Metalico's third-quarter pretax profit. "We made a mistake in platinum," Agüero says, staring grimly at a daily price chart. "Commodity markets are dangerous."
With danger comes opportunity. The Agüero modus operandi is to buy several family-owned scrap yards in a city, then consolidate them. The acquisitions have enabled Metalico to enlarge its top line at a 44% average annual rate over the last five years and its bottom line at a 26% rate. In Buffalo, for example, Agüero bought four yards and consolidated their steel, aluminum, copper and precious metals into one large yard, while leaving a satellite yard in Niagara Falls where metal is collected and then transported to Buffalo.
Besides delivering some economies of scale, the roll-up strategy has diversified the metal mix, so that when aluminum is rising and copper is falling, the company still can show healthy growth. Metalico is also expanding upstream, by refining or otherwise processing scrap to collect an extra round of profit.
Agüero, 55, came to the U.S. with his family when he was 7, after Fidel Castro confiscated his father's restaurant and other property. Agüero studied accounting at now-defunct Upsala College in East Orange, N.J. and went to work for Coopers & Lybrand. In 1980 he and his wife, a physician, took a month off to volunteer with the Federal Emergency Management Agency to help Cubans who arrived during the Mariel boat lift. After working as a CPA for nine years at Coopers and then a smaller accounting firm, Agüero and a younger colleague, Michael Drury, left to start a garbage company.
Using some of their contacts from accounting, the two began brokering trash shipments from New Jersey to other states. The Garden State had closed landfills and disposal rates charged to carting companies had doubled. The company they started, Continental Waste Industries, had luck sending trucks full of trash to cash-strapped cities in Ohio and Pennsylvania. But that game got harder after politicians in these towns passed laws against receiving out-of-state rubbish--and garbage haulers bypassed the brokers to deal directly with the out-of-state landfills. The two responded by buying landfills of their own to receive the trash. The first, in Prichard, W.Va., was theirs for $800,000 plus $2.2 million in notes given to the seller.
The two were not welcomed. "Carlos' name ended in a vowel," Drury remembers. "Everyone thought we had cauliflower ears and broken noses." The partners recall receiving death threats by telephone in their hotel room at night. A newspaper reported spotting them with briefcases full of cash and an armed security force. In reality they were just barely paying the bills--sharing a Honda Accord to drive all night to West Virginia to save money on airfare. Sometimes they helped unload the trucks.
They held on in West Virginia and bought more dumps in Michigan, Tennessee, Illinois and Indiana. In New Jersey they started buying routes and clashing with the carting companies there. "I haven't dealt with mobsters, just people who thought they were," Agüero says. The more routes, transfer stations and landfills they owned in one geographic area, the better they did. Revenue reached $100 million. Republic Industries, Wayne Huizenga's second attempt at consolidating the garbage industry after Waste Management, came calling. In late 1996 it bought Continental for $240 million. Agüero's share was $29 million. He went looking for something to do.
Scrap metal! Agüero figured the hub-and-spoke model could be applied there just as it had been in garbage. He put $10 million into the pot, persuaded Drury to throw in $1 million and rounded up more cash from venture firms. The first deal was a $14 million purchase of Taracorp, a lead reprocessing company in Illinois. Next the pair spent $9 million on a 20-acre scrap yard in Rochester, N.Y. that had been owned by one family for 65 years.
Family yards were receptive to all-cash offers. Metalico bought two more yards in Rochester and another four in Buffalo. There's a roll-up gain built in, it seems. Thomas Weisel Partners analyst Jeffrey Osborne estimates that Metalico paid only four times pretax earnings for private scrap yards. But Metalico's own multiple was eight.
This is not a pretty business. At Metalico's 24-acre yard in Buffalo, peddlers with ramshackle pickup trucks line up to unload old washing machines and boxes of copper wire and aluminum siding. One guy's old Explorer, filled with bicycles, stalls in the yard and needs a jump. "We're the ATM for East Buffalo," says George Ostendorf, the yard's general manager. He dishes out $50,000 a day in cash.
Out back a $400,000 crane with magnetic loaders moves pieces of iron and steel among piles and fills up CSX railcars that leave every few days for a minimill. Large trucks from the satellite location in Niagara Falls or from industrial sites come in and dump everything with a loud bang. Inside, 30 Vietnamese immigrant workers, who live and carpool together, sort and clean. One worker sits hunched like a baseball catcher banging the lead weights off aluminum tire rims. Ostendorf buys the rims for 85 cents a pound, spends 3 to 4 cents to get them ready and sells the aluminum for $1.10 a pound. Drill bits with weird tungsten alloys and batteries containing lead are sorted into buckets and pallets to be shipped to special recyclers.
Insulated copper wire comes in. It would be too expensive for Metalico to strip off the plastic, so it sends the wire to China, where laborers either pull off the insulation by hand or, more likely, burn it off (a no-no here--and maybe why our baby formula is not toxic). The upgradable scrap is where the yard makes money: breaking apart engines, air conditioners, a 100-yard-long pile of highway lights.
Outside Ostendorf's office a skinny hooker rides by on a bike. The window has a .22 bullet hole. "We try to leave here quickly when it gets dark," he says. There's still some small manufacturing nearby, but much of the scrap comes from old appliances, cars and home building. With scrap copper worth $3 a pound, the city has suffered a wave of thefts of pipes and furnaces from old houses. Ostendorf says the cops come every few days to review the scans of drivers' licenses that are collected with every $50 purchase by Metalico.
This is an industry with a bad rap. Some of Metalico's competitors offer to pay more per pound for copper and other metals. They may be "stealing off the scale"--advertising a highball price but lowballing the weight. Near Buffalo a yard called Jamestown Scrap was convicted of fraud in 1992 and fined for giving manufacturers phony weight measures for their loads of industrial scrap. Outside Pittsburgh a scrap dealer was sentenced to two years' probation in 1998 after selling low-grade steel, hidden beneath higher-quality stuff, to a mill. In Cleveland two scrap metal companies, their owner and an employee pleaded guilty in 2005 to a bid-rigging scheme that ripped off local manufacturers.
Agüero installs digital scales and encourages peddlers to stand on them to gauge their precision. Agüero says that by producing digital receipts and going to the authorities to report competitors he views as dishonest, he can build a brand around integrity. "We constantly compete with scrap yards that do not treat their customers well," he says.
--------------------------------------------------------------------------------
Agüero aims to widen his profit margin by doing more with metal than shredding and shipping it. So Metalico owns a hydraulic press that breaks apart engines in Akron to recover aluminum and iron, a melter of scrap aluminum in Syracuse and a plant in Quarryville, Pa. that recovers steel-alloying metals like molybdenum and tungsten. But processing metals is tricky work. In the course of recovering lead from batteries, two plants Metalico bought produced piles of plastic shards it offered as filler for driveways and farms. In 2004 the U.S. Environmental Protection Agency asked the company for $12 million to clean up 86 sites where the chips had been spread. Metalico ended up contesting it and won but still has spent $5 million a year cleaning up its own sites, over two years when its pretax net was only about twice that. It's now hoping to recover that money through litigation with the predecessor company's biggest customer.
To succeed in this business you need capital, and not just to pay for the acquired scrap yards. A nice auto shredder costs $11 million. It can eat 40 cars an hour and has, in addition to the usual magnets that pick up iron and steel, coils that can induce eddy currents in aluminum so scraps of this metal can be plucked out. To feed its capital budget--and refinance its debt load to avoid possible bankruptcy in 2001--Metalico has, by turns, given warrants for 17% of the company to lenders, cut financing deals with private equity firms and twice borrowed from its founders. It went public in 2005 after merging with a public shell company. Since 2005 Agüero has spent $149 million on property and equipment, mostly in Texas, New Jersey, New York and Pennsylvania. All that activity has been funded by pipe (private investment in public equity) deals--notorious for creating short positions in the stock and adding volatility. "We don't want to do any more pipe deals if we can help it," Agüero says.
With only 14 people in Metalico's main office, Agüero has to delegate a lot of power to the general managers of the yards. Those jobs pay as much as $200,000 a year, yet good bosses are hard to find. This is not a profession that people aspire to. A Buffalo program designed to train new metal-buying managers was advertised in the newspaper for $45,000, and no young people applied.
Can scrap be romanticized? Agüero tries to do that. He says that recycling aluminum saves 95% of the energy that would have been spent mining and smelting it. When steel is reused, you save 65% of the energy. As scrapping technology gets better, the materials that fill up garbage dumps get smaller as a percentage of the total trash volume.
Agüero would like investors and consumers to view Metalico as a green company. Its trucks use biodiesel. It has a 37%-owned subsidiary, Beacon Energy, that turns animal fat from slaughterhouses and grease from fast-food restaurants into diesel fuel. Beacon already has a $200 million market value, even though it's losing money and has sales of only $50 million. Despite the fact that Metalico is making money, it has a value of only a third of sales.
As a collector of Corvettes and motorcycles, Agüero is an energy hog. But he atones by putting solar panels on his country home in New Jersey. He bought three windmills and would have already put them up if they hadn't been nixed by his neighbors. "They think it's ugly, but I think it's beautiful," he says. You could say the same thing about scrap.
http://www.forbes.com/forbes/2008/1027/120_print.html
thanks polka
looks like it MEA rebounded nicely (while I was away of course).
Hope to see some green soon :)
Thanks, Tina! That's solid guidance in troubled times. I wish they had put that out last week instead of the generic 8-k warning we got that appears to have been an early xmas present to the short sellers here.
I think we saw the worst of it today.
Unfortunately, I saw it twice...lol.
Good to see 6's when I came in from the window ledge, though. Somehow I came out ahead today. I wish I could say as much for my fingernails!
I love the pincher board and have added the chart to the ibox.
GL!
tight pincher here (waiting on bottom)
Keep an eye for a bottom on MEA
Statement today from the company:
Metalico Issues Statement on Stock Activity
CRANFORD, NJ -- (Marketwire) -- 09/15/08 -- Metalico, Inc. (AMEX: MEA) issued the following statement today in light of recent trading activity in the Company's common stock:
We have received multiple inquiries from shareholders concerned about the rapid decline in Metalico's stock price in the past two weeks and whether the Company is facing near-term profitability or liquidity problems. Given the volatile and uncertain conditions that exist today in the financial markets, the Company has decided to deviate from its established policy of not commenting on results before release of quarterly earnings to reassure our shareholders and the investing community at large about the Company and its prospects.
Balance Sheet
Metalico is in a liquid and strong working capital position with borrowing availability of approximately $60,000,000 and only a relatively small amount of debt outstanding under its revolving credit facility. The Company is conducting business as usual and is using conversion of inventories and collections of accounts receivable to reduce indebtedness by approximately $30,000,000 for the quarter and to further strengthen our financial position going forward. Inventories remain at historically acceptable levels.
Most of Metalico's debt was issued to institutional holders. The nearest maturity of any of the Company's long-term institutional debt is just under five years away. The notes issued by Metalico on May 1 of this year are convertible to common stock at $14 per share and do not contain any sort of reset provision allowing for a repricing of the stock conversion rate unless, under certain circumstances, the Company issues new securities at, or convertible to new shares at, a lower price. The Company currently has no plans or intention to issue any such securities. The earliest the Company could receive a mandatory put of the convertible notes is June 30, 2014.
Platinum Group Metals
As Metalico disclosed in an 8-K filed with the Securities and Exchange Commission September 8, the Company has observed rapid and significant reductions in commodity pricing for many metals during the third quarter, particularly Platinum Group Metals from catalytic converter recycling.
This trend, coupled with anticipated exposure on unhedged metal, is resulting in a negative impact on the Company's revenues and margins in the quarter to date.
The Company believes losses from unhedged metals and the impact of lower commodity selling prices will likely reduce EBITDA by approximately $10,000,000 in the Third Quarter but nonetheless the Company should report a profit for the period. This negative impact resulted from aggressive (long lead-time) purchase commitments for unhedged Platinum Group Metals, a practice that has been discontinued.
Metalico has implemented procedures to correct the conditions that contributed to the loss and is now hedged on nearly 100% of its Platinum Group Metals exposure.
The Company has explained repeatedly in its quarterly results calls that it does not offer guidance or earning estimates because the scrap recycling industry is highly cyclical and commodity metal markets can be and often are volatile. Recent movements in the commodity metal markets have confirmed this position.
Carlos E. Agüero, Metalico's President and Chief Executive Officer, said, "During this period of lower commodity metal prices and uncertain financial markets, we intend to concentrate operationally on protecting margins, turning over inventories and using our positive cash flow to further strengthen our balance sheet. We remain optimistic about the Company's long-term prospects and our ability to create shareholder value in the future."
Metalico, Inc. is a rapidly growing holding company with operations in two principal business segments: ferrous and non-ferrous scrap metal recycling, and fabrication of lead-based products. The Company operates twenty recycling facilities in New York, Pennsylvania, Ohio, New Jersey, Texas, Mississippi, and West Virginia and five lead fabrication plants in Alabama, Illinois, Nevada, and California. Metalico's common stock is traded on the American Stock Exchange under the symbol MEA.
Contact:
Metalico, Inc.
Carlos E. Agüero
Michael J. Drury
Email Contact
MEA @ 5.00!!!
I guess I better get some of them too...
col (crying out loud)
MEA @ 6.10!!!
I've got to get me some of them.
From the recent 8-k(9/8/08):
The Company has observed rapid and significant reductions in commodity pricing for many metals during the third quarter, particularly Platinum Group Metals from catalytic converter recycling. This trend, coupled with anticipated exposure on unhedged metal, is resulting in a negative impact on the Company's revenues and margins in the quarter to date. Although the Company does not provide specific guidance or interim financial information during quarters, it acknowledges it may need to confirm these recent trends in the commodity markets in the course of the presentations to be made at conferences in New York and Boston this week and related question-and-answer periods.
http://biz.yahoo.com/e/080908/mea8-k.html
Current MEA Investors Presentation:
http://library.corporate-ir.net/library/18/180/180159/items/304420/Aug-2008-Metalico-Pres_8-K.pdf
Metalico Inc $ 12.58
MEA 1.38
Short Interest (Shares Short) 5,462,000
Days To Cover (Short Interest Ratio) 7.6
Short Percent of Float 23.30 %
Short Interest - Prior 6,235,900
Short % Increase / Decrease -12.41 %
Short Squeeze Ranking™ 128
% From 52-Wk High ($ 18.85 ) -49.84 %
% From 52-Wk Low ($ 7.01 ) 44.28 %
% From 200-Day MA ($ 13.37 ) -6.28 %
% From 50-Day MA ($ 14.14 ) -12.40 %
Price % Change (52-Week) 72.30 %
Shares Float 23,442,100
Total Shares Outstanding 35,378,942
% Owned by Insiders 44.80 %
% Owned by Institutions 45.40 %
Market Cap. $ 445,067,090
Trading Volume - Today 1,038,341
Trading Volume - Average 721,500
Trading Volume - Today vs. Average 143.91 %
Earnings Per Share 0.57
PE Ratio 19.60
Record Date 2008-AugA
Sector Basic Materials
Industry Steel & Iron
Data Provided Without Warranty
Mission Statement
The mission of ShortSqueeze.com TM is to provide short interest stock market data and services, so our members will be better informed of short selling in the market, track shorts in stocks and gain from the advantages that can be achieved from this valuable market data.
http://shortsqueeze.com/?symbol=mea
Metalico Inc $ 11.72
MEA -1.62
Short Interest (Shares Short) 5,462,000
Days To Cover (Short Interest Ratio) 7.6
Short Percent of Float 23.30 %
Short Interest - Prior 6,235,900
Short % Increase / Decrease -12.41 %
% From 52-Wk High ($ 18.85 ) -60.84 %
% From 52-Wk Low ($ 6.45 ) 44.97 %
% From 200-Day MA ($ 13.32 ) -13.65 %
% From 50-Day MA ($ 14.79 ) -26.19 %
Price % Change (52-Week) 78.30 %
Shares Float 23,442,100
Total Shares Outstanding 35,378,942
% Owned by Insiders 44.80 %
% Owned by Institutions 45.40 %
Market Cap. $ 414,641,200
Trading Volume - Today 1,365,915
Trading Volume - Average 721,500
Trading Volume - Today vs. Average 189.32 %
Earnings Per Share 0.57
PE Ratio 25.70
Record Date 2008-AugA
Sector Basic Materials
Industry Steel & Iron
http://shortsqueeze.com/?symbol=mea
Yikes, looks like the shorts have had a romp on this one.
Thanks,Kiwi... here's that cool chart:
Any one still here?
view MEA chart TA from charts are cool, read posts onwards from:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=31504425
Kiwi
BUYINS.NET: TNK, XRM, GMO, LNG, MEA, AVTR Have Been Added To Naked Short List Today
Monday May 19, 2008 04:30:05 EDT
Metalico Inc (AMEX:MEA) through its subsidiaries, engages in ferrous and non-ferrous scrap metal recycling and lead-based products fabrication activities in the United States. Its Ferrous and Non-Ferrous Scrap Metal Recycling segment collects industrial and obsolete scrap metal; processes into reusable forms; and supplies the recycled metals to electric arc furnace mills, steel mills, foundries, secondary smelters, aluminum recyclers, and metal brokers, as well as to exporters and international brokers. This segment offers ferrous products, which include sheared and bundled scrap metal, and other scrap metal, such as turnings and busheling, and cast and broken cast iron; and processes and packages non-ferrous metals, including aluminum, copper, stainless steel, brass, nickel-based alloys, and high-temperature alloys for resale. The company's Lead Fabrication segment produces and sells sheet lead, shot, extruded strip lead, and cast lead, as well as other lead products, including roof flashings, lead wool, anodes, and babbitt. Its products are used in the roofing, plumbing, radiation shielding, electronic soldering, ammunition, and automotive industries. This segment also sells its products to the contractors in the U.S. Department of Defense. As of December 31, 2007, the company operated 11 scrap metal recycling facilities; an aluminum de-ox plant; and 5 lead product manufacturing and fabricating plants. Metalico was founded in 1997 and is headquartered in Cranford, New Jersey. With 35.38 million shares outstanding and 1.72 million shares declared short as of April 2008, there is a failure to deliver in shares of MEA. According to quarterly data provided by the SEC, there were still 50,876 shares of MEA that were failing-to-deliver as of September 28, 2007.
6 month metal chart: MEA, CMC, GNA
IBD:Getting A Grip On Demand
Friday May 16, 5:56 pm ET
J. Bonasia
Orange sparks fly from welding torches, and molten steel glows white in furnaces around the globe -- fitting metaphors for the scorching-hot demand for metal by the developing world.
An unprecedented need for steel in China and elsewhere is fueling demand for all industries tied to steel production. That includes the diverse sector of metal processors and fabricators.
Metal processing and fabrication ranked No. 12 among IBD's 197 industry group as of Friday. Related sectors such as steel producers (ranked No. 2) and metal ores firms (No. 13) are performing similarly well.
Metal processors and fabricators don't include the companies that operate mines to extract raw iron and other ores. That job falls to the big integrated steel makers such as United States Steel (NYSE:X - News).
But many processors and fabricators -- known as metal service centers -- also run steel minimills that recycle scrap metal from old cars and appliances. This stock group includes Metalico (AMEX:MEA - News), Schnitzer Steel (NasdaqGS:SCHN - News), Gerdau Ameristeel (NYSE:GNA - News) and Commercial Metals (NYSE:CMC - News).
In addition, some fabricators sell materials made from aluminum, copper, brass and other alloys. But steel remains by far the most important industrial metal.
1. Business
Metal processing service centers act as middlemen that buy steel in bulk. They store long bars or huge coils of flat steel in warehouses. The service centers cut and shape the steel into smaller, more useful forms before selling it to builders and manufacturers.
Two Ohio-based companies, Olympic Steel (NasdaqGS:ZEUS - News) and Worthington Industries (NYSE:WOR - News), supply lots of heavy-gauge, flat-rolled steel for heavy equipment manufacturers and aerospace clients.
Los Angeles-based Reliance Steel & Aluminum (NYSE:RS - News) also sells to some equipment makers. But Reliance is focused on small manufacturers and machine shops. More than half its jobs come from "callers today who want deliveries of processed materials tomorrow," says Reliance CEO David Hannah.
"Our business is based on quick turnarounds for small orders," he said. "We need to be in position with just the right inventory and stock, and we need enough truck fleets that are ready to deliver in time."
Reliance is perhaps the nation's most efficient service center, says Sal Tharani of Goldman Sachs. He rates the stock as neutral, but calls it his favorite pick in the sector.
"Reliance runs a very competent company with a lean organization in their central headquarters and an expansive network of shops," Tharani said.
The Reliance business model hinges on an ability to quickly deliver quality service in high volumes on very small deals. The company posted record revenue of $7.3 billion last year -- on an average order size of just $1,350 per deal.
Name Of The Game: It may sound obvious, but the goal through all steps of the steel producing and metal fabrication process is to buy low and sell high, says John Lichtenstein, executive partner of the Accenture metals industry practice.
"Wherever you are in the value chain, it's about the spread between what you pay for materials, and what you can charge your customer for the value you've added," he said.
Prices fluctuate, so service centers need to turn their inventories over quickly. Those who try to speculate too long can get burned, Tharani says.
In addition, the best service centers are able to pass along any added costs to their customers, says Bob Richard, a steel industry specialist with Longbow Research.
"When the price of steel goes up, these companies hope they can sell at that replacement cost above what they paid," he said. "In times of rapid price escalation, these companies do very well."
2. Market
A massive industrial buildup is under way in China, creating a nearly boundless demand for steel there.
Almost overnight, this trend has shifted industry dynamics for steel firms around the world.
China now gobbles up some 35% of the 1.3 billion tons of steel consumed worldwide each year.
Until recently, foreign steel makers often undercut the U.S. mini-mills.
But now, with the dollar so weak and fuel prices so high, most overseas producers have cut shipments to the U.S. as their products grow comparatively expensive.
That has created an opening for the American minimills. Some are even exporting steel for the first time in years. Even though scrap steel prices are still relatively high at roughly $600 per ton, the service centers can thrive by passing on cost increases to their customers.
The American market is mature, growing at about 2% per year. Gains are not derived so much from growth in volume as from price increases.
The U.S. consumes roughly 125 million tons of steel per year. About 20% of that amount goes into cars, 35% into nonresidential construction and 20% into machinery and manufacturing.
The remainder goes toward other uses. The U.S. housing downturn has not had much impact on this market, as few metals are used to build homes.
3. Climate
Some big steel makers have renegotiated labor contracts in recent years to bring down the costs of health care and pensions. But the most important recent trend in this decade has been a steady shakeout for the industry.
Lots of cheap foreign steel was being dumped into the U.S. market in the early part of the decade, resulting in more than 30 American steel mills going bankrupt from 2001 to 2003.
But the situation has improved, thanks to a steadily falling dollar and mergers and acquisitions that have cleared out the field.
Two years ago, Arcelor merged with Mittal Steel in a $38 billion deal that created the world's largest steel maker. U.S. Steel, Nucor (NYSE:NUE - News) and ArcelorMittal (NYSE:MT - News) now control about two-thirds of the world's steel supply.
In turn, the service center field has been whittled down. For instance, Reliance bought rival processors Earle M. Jorgensen Co. and Yarde Metals in 2006. This consolidation is not yet over, predicts Bill Larson, chief financial officer of Commercial Metals.
"The field needs still more consolidation to give producers greater pricing power," he said.
The biggest survivors have already helped stabilize prices for everyone, says Larson. He adds that it's best for each fabricator to join forces with a minimill to supply the needed steel.
"The fabricators that are going to prevail will be the ones that have steel mills behind them, because they have a profitable parent," Larson said. "All the other pure fabricators (without minimills) then become our other customers."
4. Technology
Not much has changed in the way of steel production over the past century. More computer systems and automation have been applied to the process. Yet the bedrock technology still involves the brute-force process of melting down metal and shaping it for users.
Recently, Nucor has refined a new way of making metal sheets by pouring molten steel directly into molds. This Castrip method allows steel mills to forgo bulky, expensive steel rollers that usually squeeze the metal into sheets.
The approach, developed in conjunction with partners from Japan and Australia, saves energy and makes it possible to build much smaller mills.
Nucor pioneered the industry's minimill breakthrough in the 1960s. Rather than rely on raw ore, producers started recycling old scrap metal.
Today the mills are working to make their processes more environmentally friendly by cutting down on carbon pollution and other emissions.
5. Outlook
Despite a poor domestic economy, this market remains resilient. Steel prices roughly doubled in the U.S. in the first half of this year, yet sales have still grown based on unequalled demand overseas.
"The important thing to know is this environment is unprecedented in our industry's history," said Reliance CEO Hannah. "The environment is different because there is no cheap import alternative."
Upside: Shareholders are flocking to this sector due to growth even with rising steel prices, says consultant Lichtenstein.
"Investors view the global steel industry positively," he said. "In North America, the industry is expected to maintain profits despite a market slowdown, due to a high degree of vertical integration and reduced imports due to the weak dollar."
Risks: Rapid improvement in the dollar's value could invite a flood of steel imports.
Another potential problem is China, which imports much of its steel from India and the Middle East and has been boosting its domestic production.
Though that country's growth remains strong, a slowdown could flood the world with a glut of cheap steel.
http://biz.yahoo.com/ibd/080516/industry.html?.v=1
MARK MY PREVIOUS WORDS POLK....sEEN THIS BEFORE IN A SIMILAR SECTOR, AS THIS GETS PUBLICITY, ITS GONNA MOVE..
$28 TARGET BY DECEMBER IF SCRAP STAYS HIGH
MEA looking leggy here. I think she wants to go for a run.IMO
Bigly volume.
RU still watching this li'l gem? She's shiny today,imo...
gl2u
Metalico Completes Placement, Snyder Group Purchase
Monday May 5, 9:25 am ET
CRANFORD, NJ--(MARKET WIRE)--May 5, 2008 -- Metalico, Inc. (AMEX:MEA - News), a rapidly growing scrap metal recycler and lead fabricator, today announced it has completed its previously announced private placement of $100 million in convertible notes and has used a portion of the proceeds to acquire the assets of the Snyder Group, a multi-yard fully integrated scrap metal recycling operation in Western Pennsylvania and West Virginia.
The acquisition includes the business operations of Grand Avenue Incorporated, Assad Iron & Metals, Inc., Heidelberg Metals, Inc., (which does business as Neville Metals), Neville Recycling LLC, and Platt Properties LLC, a group of affiliated companies. The assets are located principally in the greater Pittsburgh, Pennsylvania area where collectively the selling companies comprise a leading recycler of ferrous and non-ferrous scrap metals.
Among the assets acquired is a Texas Shredder model 80/104 operating on the Grand Avenue site on Neville Island, Pennsylvania, and Harris shears, Harris balers and a fleet of transportation equipment for the pick up and delivery of scrap. Metalico's purchase also includes four feeder yards that source scrap for the shredder and are located in Pennsylvania and West Virginia. The two principal operating sites in Brownsville and Neville Island are served by rail and the Neville Island location also has river barge shipping and receiving capabilities. The total purchase price was approximately $76 million, plus $3.8 million for excess inventory. Accounts receivable and payable were retained by the sellers. A $7 million portion of consideration was paid in Metalico common stock.
The acquired operations generated sales of $120 million in 2007 and shipped approximately 300,000 gross tons of ferrous and non-ferrous metals.
The company will continue to be operated and managed as Metalico Neville, Inc. by James R. Snyder, Charles B. Snyder and Daniel R. Snyder, the former owners, and by their team of dedicated employees, which also includes other Snyder family members.
Commenting on the transaction, Metalico President and Chief Executive Officer Carlos E. Agüero said, "We are very pleased to add the Snyder group of companies to Metalico and thrilled with the opportunity to work with such a distinguished group of seasoned industry veterans."
In addition, Agüero added, "This purchase provides Metalico with an exceptional platform to expand the volume and profitability of the ferrous component of our business. Given the favorable markets trends and the high scrap steel prices that we are experiencing, it is a timely period to increase our exposure to the ferrous commodities."
In the private placement, Metalico issued 7% senior unsecured convertible notes in the aggregate principal amount of $100 million, which notes are convertible into shares of Metalico's common stock at an initial conversion price of $14.00 per share. The notes mature on April 30, 2028 and are subject to certain redemption, repurchase and anti-dilution rights. In addition, Metalico issued to the purchasers of the notes a total of 250,000 warrants for shares of Metalico's common stock with a term of six years. The exercise price of the warrants is $14.00 per share, subject to adjustment.
The Company intends to use the remaining net proceeds from the offering to fund potential acquisitions and, subject to obtaining the consent of certain of its securities holders, for working capital purposes.
The notes, the warrants, the shares of common stock issuable upon conversion of the notes, and the shares of common stock issuable upon exercise of the warrants have not been registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration under the Securities Act and applicable state securities laws or an applicable exemption from those registration requirements.
Metalico has agreed to file a registration statement with the United States Securities and Exchange Commission covering the shares issuable upon conversion of the notes and upon exercise of the warrants sold in the offering no later than 45 days after the effective date of a registration statement the Company is committed to file in connection with a private placement of equity completed in early April 2008 and to use commercially reasonable efforts to cause the registration statement to be declared effective within 90 days (or 120 days upon receipt of comments from the SEC after the filing of such registration statement), subject to the Company's right to delay such obligations under certain circumstances. The Company will include the shares issuable in connection with the debt placement in the registration statement to be filed in connection with the equity placement upon receipt of the requisite consent of the investors in the equity transaction. In the event Metalico fails to meet its obligations, it will be subject to customary penalties.
Morgan Joseph & Co. Inc. acted as placement agent in connection with the placement.
This press release does not constitute an offer to sell or the solicitation of an offer to buy nor will there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such state or jurisdiction.
Metalico has filed a Current Report on Form 8-K with the Securities and Exchange Commission describing in more detail the terms of the private placement and the acquisition.
Metalico, Inc. is a rapidly growing holding company with operations in two principal business segments: ferrous and non-ferrous scrap metal recycling, and fabrication of lead-based products. With its recent acquisitions, the Company operates twenty recycling facilities in New York, Pennsylvania, Ohio, New Jersey, Texas, Mississippi, and West Virginia and five lead fabrication plants in Alabama, Illinois, Nevada, and California. Metalico's common stock is traded on the American Stock Exchange under the symbol MEA.
Forward-looking Statements
This news release also contains "forward-looking statements" made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements related to the potential acquisitions. Forward-looking statements include statements with respect to Metalico's beliefs, plans, objectives, goals, expectations, anticipations, assumptions, estimates, intentions, and future performance, and involve known and unknown risks, uncertainties and other factors, which may be beyond Metalico's control, and which may cause Metalico's actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. All statements other than statements of historical fact are statements that could be forward-looking statements. Metalico assumes no obligation to update the information contained in this news release.
Contact:
Contact:
Metalico, Inc.
Carlos E. Agüero
Michael J. Drury
Email Contact
186 North Avenue East
Cranford, NJ 07016
(908) 497-9610
FAX: (908) 497-1097
http://www.metalico.com
--------------------------------------------------------------------------------
Source: Metalico, Inc.
http://biz.yahoo.com/iw/080505/0393498.html?printer=1
8-K here:
http://biz.yahoo.com/e/080505/mea8-k.html
Thanks for your industrial insights here! The OS is 35.4mil(as of 4/9)
and the float is estimated at 24.4mil. There's an earnings call Thurs.
I think short covering on that announcement(4/14) sparked the recent rally(imo)
Strong growth expected,imo...
No I haven't looked at it, I will consider.
The reason I say potentially double is this. I personally work in steel industry, US Steel. I have watched it continue to grow when no-one else thought it would break $100 much less $150! I looked at AK Steel at $9 comparitively,and drug my feet, now $60-$70.
MEA has huge potential being that the scrap steel price is ridiculously high right now, Steel is the sector to be in, no doubt in my mind. I would buy more if I had liquid assets to cut loose.
Metalico Schedules April 24 Call for First Quarter Results
Monday April 14, 9:15 am ET
CRANFORD, NJ--(MARKET WIRE)--Apr 14, 2008 -- Metalico, Inc. (AMEX:MEA - News), a scrap metal recycler and lead products fabricator, will host a conference call on Thursday, April 24, 2008 at 10:00 a.m. Eastern time to discuss First Quarter 2008 earnings results, which are scheduled for release earlier that day, and to provide an update on business developments.
The conference call can be accessed by dialing (866) 213-8494, Conference Identification Number 42429235. Callers should identify the Metalico results call.
A transcript of the call will be posted on the Company's website, www.metalico.com, when available after the call. An audio replay of the call will also be available at (800) 642-1687 for the first forty-eight hours after the call's conclusion. Callers will be required to enter the Conference Identification Number to access the recording.
Metalico, Inc. is a rapidly growing holding company with operations in two principal business segments: ferrous and non-ferrous scrap metal recycling, and fabrication of lead-based products. The Company operates thirteen recycling facilities in New York, Pennsylvania, Ohio, New Jersey, Texas, and Mississippi and five lead fabrication plants in Alabama, Illinois, Nevada, and California. Metalico's common stock is traded on the American Stock Exchange under the symbol MEA.
This announcement and the April 24 conference call may contain, in addition to historical information, certain forward-looking statements that involve risks and uncertainties. Such statements reflect management's current views and are based on certain assumptions. Actual results could differ materially from the assumptions currently anticipated.
Contact:
Contacts:
Metalico, Inc.
Carlos E. Agüero
President and Chief Executive Officer
Michael J. Drury
Executive Vice President
Email Contact
186 North Avenue East
Cranford, NJ 07016
(908) 497-9610
FAX: (908) 497-1097
http://www.metalico.com
--------------------------------------------------------------------------------
Source: Metalico, Inc.
http://biz.yahoo.com/iw/080414/0386083.html?printer=1
Cleantech Report: Recycling Industry Offers Recession Proof Investing
NEW YORK, April 1, 2008 /PRNewswire-FirstCall/ -- Between record high oil prices, the volatile stock market and a recession, it's a tough time to be an investor. But there's a little known bright spot on the market that actually benefits from high oil prices -- the Recycling Industry.
In fact, the Recycling Industry offers investors one of the few ways to profit during the current recession, according to a report released by Progressive Investor, 'Investing in Recycling.'
'Ever escalating energy prices, commodity price inflation and scarcity, and global environmental concerns have coalesced into a 'perfect storm' for the industry,' says Eric Prouty, Senior Energy Analyst, Cannacord Adams.
Many people aren't aware of the central role the recycling industry plays these days. It has become a backbone of our economy, pulling in $236 billion in revenues last year and employing over a million people. The industry accounted for about 2% the U.S. gross domestic product in 2007.
At the current rate of resource depletion, especially from emerging economies like China, the world literally can no longer satisfy demand for paper and steel from virgin materials alone. Recycling has become an absolute necessity for industrial growth and stability. We couldn't print a newspaper, build a car, or ship a product in a cardboard box without recycled materials.
'Although we usually think of the benefits of recycling as reducing waste and protecting forests and habitats from mining and clearcutting,' says Rona Fried, editor of Progressive Investor, 'it is also a key solution for climate change. Making new materials from old ones is a classic example of energy efficiency -- it vastly reduces the amount of energy (and resulting emissions) required to support our economy.'
For example, making aluminum from scrap uses 96% less energy than from virgin minerals, while making iron and steel from scrap requires 74% less energy. Two thirds of the steel produced in U.S. is now made from recycled materials.
Progressive Investor identifies the following trends benefiting the Recycling Industry:
-- The higher energy costs go, the more economically valuable are recycled
materials. Example: energy accounts for 20-30% of the cost to make
metals such as aluminum and zinc.
-- Metal prices are rising sharply from strong demand - partly from growth
in India and China -- creating strong economic incentives to recycle
all kinds of metals
-- Recycling benefits from the attention to climate change for its ability
to reduce the energy intensity of manufacturing and methane generated
by landfill waste.
-- Growing recognition that natural resources are scarce, finite, and
increasingly expensive to mine. Example: virgin copper and zinc
supplies could be completely exhausted within decades.
-- Rising concerns about pollution from discarded electronics
The report profiles the World's Top Recycling Stocks, including:
-- Casella Waste Systems (Nasdaq: CWST): regional solid waste company;
strong focus on recycling.
-- Metalico (Amex: MEA): small cap metals recycler.
-- Schnitzer Steel (Nasdaq: SCHN): vertically integrated scrap metal
recycler and steel manufacturer.
-- LKQ Corp (Nasdaq: LKQX): dominates the U.S. automotive replacement
parts market.
-- Interface (Nasdaq: IFSIA): leading carpet tile manufacturer uses a high
percentage of recycled material.
-- Sims Group (SGM.AX; NYSE: SMS): the world's largest metals and
electronics recycler
4/9: Metalico Completes Private Placement
Wednesday April 9, 4:05 pm ET
CRANFORD, NJ--(MARKET WIRE)--Apr 9, 2008 -- Metalico, Inc. (AMEX:MEA - News), a rapidly growing scrap metal recycler and lead fabricator, today announced it has completed its previously announced private placement of its common stock with institutional investors, raising $28,750,000 of gross proceeds. In connection with the private placement, Metalico issued an aggregate of 2,923,077 shares of common stock at a price per share of $9.75 and 1,169,231 warrants to purchase its common stock at an exercise price of $12.65 per share for a term of six years.
The shares of common stock and the warrants issued in the private placement have not been registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration under the Securities Act and applicable state securities laws or an applicable exemption from those registration requirements. Metalico has agreed to file a registration statement with the United States Securities and Exchange Commission covering the shares and the shares underlying the warrants sold in the offering no later than forty-five days after the closing, and to use its best efforts to have the registration statement declared effective as soon as practicable thereafter. Metalico now has approximately 35.4 million shares of common stock outstanding.
Canaccord Adams, Inc. acted as placement agent in connection with the offering.
This press release does not constitute an offer to sell or the solicitation of an offer to buy nor will there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such state or jurisdiction.
Metalico, Inc. is a rapidly growing holding company with operations in two principal business segments: ferrous and non-ferrous scrap metal recycling, and fabrication of lead-based products. With its recent acquisitions, the Company operates fourteen recycling facilities in New York, Pennsylvania, Ohio, New Jersey, Texas, and Mississippi and five lead fabrication plants in Alabama, Illinois, Nevada, and California. Metalico's common stock is traded on the American Stock Exchange under the symbol MEA.
Forward-looking Statements
This news release also contains "forward-looking statements" made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements related to the potential acquisitions. Forward-looking statements include statements with respect to Metalico's beliefs, plans, objectives, goals, expectations, anticipations, assumptions, estimates, intentions, and future performance, and involve known and unknown risks, uncertainties and other factors, which may be beyond Metalico's control, and which may cause Metalico's actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. All statements other than statements of historical fact are statements that could be forward-looking statements. Metalico assumes no obligation to update the information contained in this news release.
Contact:
Contact:
Metalico, Inc.
Carlos E. Agüero
Michael J. Drury
Email Contact
186 North Avenue East
Cranford, NJ 07016
(908) 497-9610
FAX: (908) 497-1097
http://www.metalico.com
--------------------------------------------------------------------------------
Source: Metalico, Inc.
http://biz.yahoo.com/iw/080409/0385299.html?printer=1
3/28:Metalico Secures Private Placement, Increases Credit Facility
Friday March 28, 9:32 am ET
CRANFORD, NJ--(MARKET WIRE)--Mar 28, 2008 -- Metalico, Inc. (AMEX:MEA - News), a rapidly growing scrap metal recycler and lead fabricator, today announced it has entered into a definitive purchase agreement with institutional investors to raise $28,500,000 million of gross proceeds in a private placement of its common stock.
In connection with the private placement, Metalico will issue an aggregate of approximately 2,925,000 shares of common stock at a price per share of $9.75. Investors will also receive a total of approximately 1,170,000 warrants for shares of the company's stock at an exercise price of $12.65 per share with a term of six years.
The Company intends to use the net proceeds from the offering to reduce debt, to fund potential acquisitions, and for general corporate purposes.
The Company plans to close the private placement promptly, subject to customary closing conditions. The closing and funding of the private placement is not subject to the consummation of any contemplated acquisition or any other financing.
Metalico has also closed on a $15,000,000 increase in its revolving credit facility. The facility, provided by a syndicate led by Wells Fargo Foothill, Inc. and including J.P. Morgan Chase and Wachovia Bank, now provides for aggregate revolving and term availability of up to $100,000,000 and matures in May 2012.
"The proceeds from this equity offering will help position us to take advantage of opportunities in the marketplace and fuel our continued growth," said Carlos E. Agüero, Metalico's President and Chief Executive Officer.
The shares of common stock have not been registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration under the Securities Act and applicable state securities laws or an applicable exemption from those registration requirements. Metalico has agreed to file a registration statement with the United States Securities and Exchange Commission covering the shares sold in the offering no later than forty-five days after the closing, and to use commercially reasonable efforts to have the registration statement declared effective as soon as practicable thereafter. Following this transaction, Metalico will have approximately 35.4 million shares of common stock outstanding.
Canaccord Adams, Inc., acted as placement agent in connection with the placement.
This press release will not constitute an offer to sell or the solicitation of an offer to buy nor will there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such state or jurisdiction.
Metalico, Inc. is a rapidly growing holding company with operations in two principal business segments: ferrous and non-ferrous scrap metal recycling, and fabrication of lead-based products. With its recent acquisitions, the Company operates fourteen recycling facilities in New York, Pennsylvania, Ohio, New Jersey, Texas, and Mississippi and five lead fabrication plants in Alabama, Illinois, Nevada, and California. Metalico's common stock is traded on the American Stock Exchange under the symbol MEA.
Forward-looking Statements
This news release also contains "forward-looking statements" made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements with respect to Metalico's beliefs, plans, objectives, goals, expectations, anticipations, assumptions, estimates, intentions, and future performance, and involve known and unknown risks, uncertainties and other factors, which may be beyond Metalico's control, and which may cause Metalico's actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. All statements other than statements of historical fact are statements that could be forward-looking statements. Metalico assumes no obligation to update the information contained in this news release.
Contact:
Contact:
Metalico, Inc.
Carlos E. Agüero
Michael J. Drury
Email Contact
186 North Avenue East
Cranford, NJ 07016
(908) 497-9610
FAX: (908) 497-1097
http://www.metalico.com
--------------------------------------------------------------------------------
Source: Metalico, Inc.
http://biz.yahoo.com/iw/080328/0381052.html?printer=1
Metalico Reports Record Year
Thursday March 13, 7:35 am ET
Gains in Revenue, Operating Income, Net Income, EBITDA, Earnings per Share
CRANFORD, NJ--(MARKET WIRE)--Mar 13, 2008 -- Metalico, Inc. (AMEX:MEA - News) today reported its best year ever, with increases in revenues, operating income and net income for 2007 compared to 2006.
HIGHLIGHTS FROM 2007 RECORD FINANCIAL RESULTS
-- Revenues of $334.2 million exceeded 2006 by 61%.
-- Operating income of $29.4 million, a 48% increase over 2006.
-- Net income of $14.8 million compared to net income of $10.3 million in
2006, an increase of 44%.
-- Earnings per share of $.50 versus $.40 per share, an increase of 25%.
-- EBITDA of $37.2 million compared to $24.3 million in 2006, an increase
of 53%.
Net income for the year ended December 31, 2007 was $14.8 million or $.50 per share (on a diluted basis) on sales of $334.2 million, compared to net income of $10.3 million or $.40 per share (on a diluted basis) on sales of $207.7 million for the year ended December 31, 2006. These results represent an increase in sales of $126.5 million or 61% over the 2006 results. Operating income for 2007 increased $9.5 million or 48% to $29.4 million, compared to $19.9 million for 2006.
Metalico's Scrap Metal segment obtained year-over-year unit volume increases of approximately 44% for ferrous and 19% for non-ferrous. The Lead Fabrication segment experienced approximately 22% lower year-over-year unit volume. Non-ferrous metal prices saw an increase of 58% year over year, while prices for ferrous and fabricated lead products also rose year over year by 20% and 53%, respectively although lead as quoted on the LME declined in price by approximately 27%.
Excluding Corporate overhead charges, the Company's Scrap segment experienced a 39% increase in operating income while the Lead Fabrication segment increased operating income by 51%. Net income for 2007 was impacted by a higher effective tax rate of 36% (versus 35% for 2006) due to higher state income taxes.
Fourth Quarter Highlights
-- Fourth-quarter sales increased by 138% to $113.7 million in 2007,
compared to $47.8 million in the prior year's fourth quarter.
-- Operating income for the quarter ended December 31, 2007 was $7.5
million, compared to operating income of $2.7 million for the quarter ended
December 31, 2006, an increase of 178%.
-- Income from continuing operations increased for the quarter ended
December 31, 2007 67% to $3.5 million from $2.1 million in the prior year.
-- EBITDA (as defined below) of $10.0 million for 2007, an increase for
the quarter ended December 31, 2007 of 150% over $4.0 million in 2006.
-- Income from continuing operations of $.11 per diluted share was an
increase for the quarter ended of 38% over $.08 per share last year.
Fourth-quarter 2007 results were negatively impacted by declining lead product selling prices and product unit volumes as compared to the third quarter of 2007, as well as these additional factors:
-- Continued implementation of Sarbanes-Oxley compliance requirements and
absorption of losses from development stage companies totaling $637,000 on
a pre-tax basis.
-- Higher interest expense related to debt incurred in connection with
acquisitions closed in 2007.
-- Higher effective federal and state income tax rates compared to 2006.
-- Discontinued operations charge net of taxes totaling $915,000 in the
quarter.
Metalico operates in a highly cyclical and volatile commodity metals universe made ever more difficult by the current unpredictable economic and capital markets. The Company's strategy focuses on broad diversification among various commodity metal groups, through internal growth and acquisitions, and taking a long-term view to achieve growth and above-average financial results.
"Our record financial performance in 2007 resulted from a successful acquisition program, strong pricing across most commodity products sold and dedicated execution by our employees and managers," said Carlos E. Agüero, Metalico's President and Chief Executive Officer. "Despite the challenging environment," Agüero added, "we expect that 2008 will be another year of strong growth for Metalico."
Discontinued Operations
In May 2006, the Company sold substantially all of the lead smelting assets of its Gulf Coast Recycling, Inc. subsidiary, exiting the lead smelting business. As part of the sale, Metalico retained environmental remediation responsibility for a battery waste disposal site and recognized a discontinued operations charge (net of tax) totaling $1.3 million during the third quarter of 2006. Site remediation began in January 2008 and, based upon updated field projections remediation, costs are expected to exceed the Company's initial estimates. Work is expected to be completed in the second quarter of 2008. Metalico has therefore recorded an additional charge in the fourth quarter of approximately $907,000, net of applicable tax benefits. Metalico currently has legal claims pending with other potentially responsible parties for clean-up contributions exceeding its anticipated liability. However, although Metalico is vigorously pursing reimbursement from other potentially responsible parties, there can be no assurance that the Company will prevail in its legal claims and obtain any contributions from third parties.
Shareholders Debt and Equity
Metalico's outstanding debt increased to a total of $95.1 million as of December 31, 2007 from $18.5 million at December, 31, 2006, a difference of $76.6 million, resulting mostly from financing approximately $75.8 million in acquisitions and capital expenditures. Shareholders' equity increased by 68% or $50.3 million to $124.0 million as of December 31, 2007, from $73.3 million as of December 31, 2006. The Company's results also reflect the consolidation of its investment in Beacon Energy Corp., a biodiesel development stage company formerly known as AgriFuel Co.
As of December 31, 2007, Metalico had 31,738,108 common shares issued and outstanding. The Company has no outstanding preferred shares.
OUTLOOK AND UPDATE
The Company said it believes its results for the first quarter of 2008 may be influenced by the following factors:
-- Scrap metal and precious metal prices appear to be strengthening. Non-
ferrous prices, particularly for copper, aluminum and nickel, are expected
to increase above levels experienced in the fourth quarter of 2007.
Shipments from Metalico's new aluminum deox plant in Syracuse, New York are
increasing as production ramps up towards design capacity.
-- Platinum group metal ("PGM") prices have increased during the quarter
and appear to be remaining high by historical standards. As a result, the
Company anticipates higher average PGM selling prices than in the fourth
quarter of 2007, coupled with higher unit volume shipments. The Company
should also see increased PGM volumes from its recently acquired and
rapidly growing catalytic converter recycling facilities in Texas and
Mississippi.
-- Ferrous scrap prices appear to be trending higher and demand for scrap
products from steel mills has been reported as strong. However, the
Company does not anticipate significant change in ferrous shipments over
the fourth quarter of 2007.
-- The lead fabrication segment is expected to experience compressed
margins during the quarter while the Company works through high cost
inventory, lower product selling prices, and lower unit volumes.
The Company expects to accept delivery and to begin commissioning a new high-speed lead rolling mill at its Birmingham, Alabama lead fabricating facility in the second quarter. The new mill is expected to significantly increase the plant's rolled product capacity. Metalico anticipates that the new mill will also enable the Company to expand its product mix and capabilities while reducing operating costs.
Metalico, Inc. is a rapidly growing holding company with operations in two principal business segments: ferrous and non-ferrous scrap metal recycling, and fabrication of lead-based products. With its recent acquisitions, the Company operates fourteen recycling facilities in New York, Pennsylvania, Ohio, New Jersey, Texas, and Mississippi and five lead fabrication plants in Alabama, Illinois, Nevada, and California. Metalico's common stock is traded on the American Stock Exchange under the symbol MEA.
http://biz.yahoo.com/iw/080313/0374265.html
LOL, This is my get rich slow play.
Love it? Well, let's just say I have a deep and lasting respect for this rusty li'l issue...gl2y...
love this stock!!!................................
MEA shining again today...go metal!!!
MEA...whizzz, bang....POW!!!
imo
glta
Thanks Polka, this was a great find. Kudos to you!
Kudos! Very nice profile on MEA....
Metalico Inc (AMEX: MEA) has recently captured the attention of the under-$10-and-trendy growth crowd. With operations in ferrous and non-ferrous scrap metal recycling and fabrication of lead-based products, Metalico collects, processes and sells scrap metal to customers including integrated steel mills, foundries, secondary smelters, aluminum recyclers and metal brokers. The company currently operates eleven recycling facilities through New York, Pennsylvania, Ohio and New Jersey and five lead fabrication plants in Alabama, Illinois, Nevada, and California. Metalico's 391 employees generate almost $550,000 each in revenues, making the company one of the most efficiently operated recyclers in the business.
--------------------------------------------------------------------------------
Significant Material Events
With a taste for acquiring junkyards and scrap metal recyclers, Metalico has grown its business from $61 million in 2004 to estimated revenues of $259 million* for 2007. This year, Metalico purchased four companies with combined annualized revenues of approximately $125 million, including Tranzact Corporation, Annaco, Inc, Totalcat Group, and Compass Environmental Haulers. PA-based Tranzact reported sales of approximately $25 million during each of the two previous years. Annaco and Totalcat collectively generated approximately $92 million in revenues in their most recently completed fiscal years. Since Metalico took over Rochester-based Compass, volume through the facility has nearly doubled to approximately 300 tons per day.
In April 2007, majority owned subsidiary Beacon Energy Corp. completed a $3.6 million investment in Terra Bioenergy LLC, a Missouri-based development stage biodiesel production company. Terra is in the initial phases of constructing a 30 million gallon per year biodiesel production plant. Beacon currently owns 40% of Terra, with an option to increase its ownership level to over 50%.
Metalico recently increased its existing credit facilities to an aggregate amount of $85 million, including modification of an existing loan agreement with primary lender Wells Fargo Foothill and the addition of a revolving line of credit for equipment and capital expenditures.
--------------------------------------------------------------------------------
Fundamentals
Over the past three years, Metalico posted compounded top line growth of 44% while delivering double-digit returns on equity. For the second quarter of 2007, EPS climbed to $0.14 on revenues of $66.8 million, compared to $0.12 and $57.3 million in the year-ago quarter. Earnings were in-line with analyst estimates, with revenues topping consensus by almost $6 million.
Metalico appears attractively undervalued at this time, boasting an estimated forward P/E of 12 versus a trailing P/E of 19 compared to 25 for the industry. Price to cash flow is a low 5.63 versus 14.60 for the industry, with price to sales (0.40 vs. 2.70) and price to book (2.44 vs. 3.28) placing Metalico's valuation in the top third of its competitors. Operating margin (9.46% vs. 2.26%), ROE (34.30% vs. 12.66%), and ROA (10.49% vs. 5.94%) also soundly trump industry averages. EPS growth is 36.36% compared to 15.12% for the industry (TTM vs. prior TTM), with projected EPS growth of 24.53% versus 22.85%.
Because of tight regulations on scrap metal recyclers, Metalico could face obstacles as it strives to expand beyond local permitting restrictions for its facilities. The Company also continues to incur environmental monitoring costs of its former smelting and refining plant in Tennessee, and retains environmental liability exposure issues for off-site clean-up and remediation matters on a former subsidiary in Florida. Fluctuations in the price of metals is another critical factor, affecting both the cost to acquire scrap and the price at which recycled materials are sold.
Weather can also affect the bottom line. In its first quarter report, CEO Aguero noted, "The geographic regions where we operate were hampered with many days of severe winter weather conditions which resulted in lower unit volume sales in both business segments compared to last year." Diversifying into additional markets such as auto recycling and acquiring locations in fairer climates are two possible solutions being considered. In the still-growing $30 billion market for recycled metals, there are more than 1,000 independent operators, some of which may attract Metalico's current hunger for acquisition and expansion.
--------------------------------------------------------------------------------
What Analysts Say
Just two months after initiating coverage, Metalico was upgraded to Buy from Hold by analyst Morgan Joseph on August 7. Thomson changed its rating from Hold to Buy August 10, setting a price target of $9.00 and $10.50 per share. Louis Navellier grades Metalico a "B" overall, citing margin growth, return on equity, and cash flow among the company' top performing areas.
Sources: Company, Fidelity Research, Thomson, Louis Navellier/Blue Chip Growth, Motley Fool, SEC filings
*Independent Analyst Estimates
http://www.infinitistocks.com/StocksToWatch/MEA.htm
Metalico CEO Buys Shares
Wednesday August 22, 4:19 pm ET
NEW YORK (AP) -- The chief executive and president of metals recycler Metalico Inc. bought 19,400 shares of stock, according to a Securities and Exchange Commission filing Tuesday.
In a Form 4 filed with the SEC, Carlos E. Aguero reported he bought the shares for $5.70 to $5.95 apiece on Thursday.
Insiders file Form 4s with the SEC to report transactions in their companies' shares. Open market purchases and sales must be reported within two business days of the transaction.
Metalico is based in Cranford, N.J.
http://biz.yahoo.com/ap/070822/metalico_insider_transactions.html?.v=1
MotleyFool: "Heavy Metalico
Though the name Metalico conjures up head-banging and thrash metal, the New Jersey-based firm is a recycler of scrap metal, and has its own set of devoted groupies. With 82 CAPS players calling for outperform (and not a single bear in sight), Metalico is an overwhelming fan favorite.
According to our community, Metalico offers a nice way to play the trend of increasing "green" initiatives, as higher metals prices are bringing recycling back into the forefront. Just this past March, Metalico was named a Green Power Partner by the Environmental Protection Agency. Over the past three years, Metalico has grown its top line at a compounded rate of 44%, while delivering double-digit returns on equity.
The stock is up big year to date, but with today's 10% price drop -- caused by declining unit volumes in Q2 -- Metalico now trades at a forward P/E of 11.
CAPS player bluejohnnyd gets scrappy:
Metalico is tiny, and has a lot of room to cut expenses and raise margins. Over the past two years, the earnings have nearly doubled, and analysts are expecting a rise of about 25% next year as well. If this kind of growth continues, then it may be as little as half of its intrinsic value."
http://www.fool.com/investing/general/2007/08/06/5-low-priced-high-star-stocks.aspx
Article: "Metalico: Who Says That There's No Value in Trash?"
Thursday July 12, 7:19 am ET
Smallcap Investor submits: Metalico Inc. (AMEX: MEA - News) doesn’t just talk trash. The metal recycler is turning in big profits by rummaging through junkyards for thrifty finds, and reselling these in useful forms. Metalico then turns around and buys the junkyards as well. Not a shabby strategy: the company has a three-year annualized revenue growth rate of 51% and an earnings growth rate of 30%.
Cranford, N.J.-based Metalico has grown into a $250 million business by gathering industrial and obsolete scrap metal, processing it and selling the recycled metals to customers, including integrated steel mills, foundries, secondary smelters, aluminum recyclers and metal brokers. Its principal business segments are ferrous and non-ferrous scrap metal recycling, and fabrication of lead-based products. It has eight recycling facilities through New York, Pennsylvania, and Ohio, and five lead fabrication plants in four other states.
For Metalico, bigger is better. Late last week, the company replaced an existing loan arrangement with a new six-year deal that includes a $63 million revolving line of credit, plus access to funds for machinery and equipment. Metalico also arranged term loans for $50 million. The money will go toward the purchase of Annaco Inc., a scrap metal recycler in Akron, Ohio, and for most of the outstanding capital stock of Newark, N.J.-based Totalcat Group Inc., which recycles and manufactures catalytic devices.
“These financings support the major steps we’ve taken and will to continue to take to position Metalico as a significant player in our industries,” said Carlos E. Aguero, Metalico’s CEO, in a press release. Funds from the financing also will also be used for future acquisitions, working capital, and general corporate purposes.
This isn’t the first time Metalico has fattened up on junk food. The company is a late-night regular at the drive-through window. Analyst Christopher Bamman at Morgan Joseph said in a June 21 report that Metalico has successfully completed 20 acquisitions in the past ten years.
Here’s another opportunity: shredding old cars. Metalico currently sells about 5,000 tons to shredders each month and has been actively seeking to buy an auto shredder of its own. Bamman says such an acquisition could add “an incremental $48 million in revenue per year starting sometime in 2008."
All’s a little unsettled on the shredding front, though. Metalico wants to develop its own car shredder in New York, but there are permit issues associated with the establishment of a shredder on the chosen site. CEO Aguero indicated on the company’s first quarter conference call April 24 that an announcement was near: “As far as the shredder, we are nearing the point at which we can probably announce what we will be doing there, but we're not ready to do that yet.”
An auto shredder would add a lot of coppers to Metalico’s bottom line. Sales in fiscal 2006 ended Dec. 31 were $207.7 million, up from $155.2 million in 2005. The company earned $0.40 per share in 2006, up from $0.23 in 2005.
In the first quarter, EPS rose to $0.12 on revenues of $51.8 million, up from EPS of $0.11 on revenues of $47.2 million in the year-ago quarter. Metalico also has enviably low debt; its ratio of long term debt to equity is a measly 0.19 based on first quarter data.
Metalico is on the best ideas list of sustainability and resource optimization companies covered by Eric Prouty at Canaccord Adams. "We're a big fan of the scrap industry," Prouty told SmallCapInvestor.com. "The long term secular trend for the industry is fantastic."
Prouty said the new financing agreement last week pushed the market capitalization of Metalico over $250 million and brought the company's debt to $30 million. That level of debt is not a concern considering the type of business Metalico operates in, he said. Canaccord Adams has an investment banking relationship with the company.
Bamman issued his June report as he initiated coverage of Metalico with a “hold” rating, standing on the sidelines for now because of valuation. Metalico’s strategy has worked so well that it trades at a multiple above its peer group. Bamman did, though, say he is positive on the outlook for the company longer term, adding he believes the company is “ideally positioned to take advantage of the favorable environment in the scrap metal recycling and lead fabrication industries.”
For 2007, Bamman estimates earnings at $0.52 per share on revenues of $225.3 million. Based on this estimate, Metalico sports a PE ratio of 16.96. On Tuesday shares closed at $8.87, not far from the 52-week high set Thursday at $9.12.
Despite its valuation, there’s a lot of iron left for Metalico to pump. No steroids necessary: recycled metals sales for the industry are $30 billion and growing. There are more than 1,000 independent recyclers with more than 3,000 operating locations to pick through.The top 20 of those companies control about 35% of the industry, so there is lots of competition but also lots of choices for appropriate acquisitions.
But risks exist, not the least of which is the volatility of commodity prices. Domestic or global economic slowdowns, competition for sourcing scrap, the pricing of scrap metal substitutes and labor costs can hurt results, Metalico said in its annual report. High lead costs, for example, could reduce demand for the company’s lead products by making non-lead alternatives more attractive. The company also acknowledged that an unsuccessful acquisition may strain its resources.
And turning aluminum scrap into cans, unwanted copper into wiring and brass bits into building fixtures is dirty work indeed. Metal recyclers, with all their torching, briquetting, shearing, cutting and baling, make a mess. Metalico is subject to government regulations and environmental laws that deal with waste handling and pollution, among other things. There are lots of permits to collect, and significant liabilities and costs if regulations are violated. Because laws are likely to become stricter in the future, Metalico faces rising compliance costs.
Still, Metalico seems to have found the right strategy for the industry, and it is mitigating risks by blending different metals and varied, complementary approaches to its business. Who would’ve thought you could get rich by taking out the trash?
MEA 1-yr chart
Disclosure: none
http://biz.yahoo.com/seekingalpha/070712/40858_id.html?.v=1&printer=1
Metalico Secures Private Placement for Anticipated Acquisitions
Friday June 22, 8:45 am ET
CRANFORD, N.J.--(BUSINESS WIRE)--Metalico, Inc. (AMEX: MEA - News), a rapidly growing scrap metal recycler and lead fabricator, today announced it has entered into a definitive purchase agreement with institutional investors to raise $36,722,000 million of gross proceeds in a private placement of its common stock. In connection with the private placement, Metalico will issue an aggregate of 5,246,000 shares of common stock at a price per share of $7.
The Company intends to use the net proceeds from the offering to fund acquisitions of two scrap metal recycling companies currently under letter of intent and in advanced stages of contract negotiation, and for general corporate purposes. The acquisition targets collectively generated approximately $92 million in revenues in their most recently completed fiscal years.
The aggregate purchase price for the contemplated acquisitions is approximately $63 million plus additional items of consideration to be finalized, including in one case an earnout based on the performance of the purchased assets. The Company plans to finance the remaining portion of the purchase prices with debt to be issued by Metalico's current senior secured lender and under a new term loan facility to be provided by a prominent commercial and industrial lending institution.
No other terms of the pending acquisitions were disclosed.
The Company plans to close the private placement promptly, subject to customary closing conditions. The closing and funding of the private placement is not subject to the consummation of any contemplated acquisition or any other financing.
"This financing will be used to fuel our continued growth, particularly as we expand our geographic footprint and the types of commodity metals we recycle," said Carlos E. Aguero, Metalico's President and Chief Executive Officer.
The shares of common stock have not been registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration under the Securities Act and applicable state securities laws or an applicable exemption from those registration requirements. Metalico has agreed to file a registration statement with the United States Securities and Exchange Commission covering the shares sold in the offering no later than thirty days after the closing, and to use commercially reasonable efforts to have the registration statement declared effective as soon as practicable thereafter. Following this transaction, Metalico will have approximately 31.5 million shares of common stock outstanding.
Canaccord Adams, Inc., acted as placement agent in connection with the offering.
This press release will not constitute an offer to sell or the solicitation of an offer to buy nor will there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such state or jurisdiction.
http://biz.yahoo.com/bw/070622/20070622005263.html?.v=1&printer=1
MEA will be a new add to the Russell Microcap Index,fwiw...
"This is a list of companies which, after applying Russell's objective construction and methodology, will join the Russell Microcap Index at the close of the market June 22. A list of deletions is also available.
Final membership lists for the Russell 3000®, Russell 1000®, Russell 2000®, Russell Midcap® and Russell Microcap will be posted June 25."
http://www.russell.com/indexes/membership/US/Reconstitution/Recon_Microcap_Additions.asp?wt.mc_id=Mi...
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Metalico intends to be the recognized leader for performance and innovation in the metals recycling and fabrication industry. In addition, the Company strives to be viewed as the best in the eyes of our business constituents, employees, shareholders, and the community at large.
Metalico aims to become the preeminent, vertically integrated, regionally focused metals recycler. We work in partnership with our suppliers and consumers to be the recognized leader in all the markets where we operate.
Metalico is a leading full-service, broadly diversified scrap metal recycler, principally operating in the Northeastern United States. Our scrap operations source, buy, process, and sell four distinct groups of commodity metals for use in the manufacture of new products:
Metalico also is a leading fabricator of non-battery lead-based products, manufactured principally for commercial, industrial, and radiation shielding applications nationwide. Its facility in Syracuse, New York, converts aluminum scrap into deoxidizing cones, an additive used in the steel-making industry.
Metalico today employs 800 people in 30 operating locations across 10 states. Headquartered in Cranford, New Jersey, Metalico trades under the stock symbol MEA on the NYSE Amex.
Metalico's strategy is to grow by acquisition, and more recently, through emphasis on organically developed internal initiatives.
Metalico executes this strategy by carefully locating platform businesses to acquire that we can leverage to increase market penetration by adding tuck-in acquisitions to enhance our competitive advantage. We then look to exploit synergies in transportation, cross-selling among operations and working to realize operating efficiencies.
The Company looks to mitigate commodity price risk by diversifying across several commodity metals and through rapid turnover of its inventories. Metalico seeks to have a dominant position in the markets in which it operates, and to be the standard-bearer for customer service and quality assurance in the value-added products that we fabricate.We seek internal growth and expansion opportunities in contiguous geographic markets in order to maximize market share and profitability.
Recycling of Metals:
Metalico operates both ferrous and non-ferrous scrap metal recycling facilities in New York, Pennsylvania and Ohio, serving both U.S. and Canadian markets. All forms of metal scrap are purchased from manufacturers, small scrap dealers, demolition contractors, and peddlers.
The scrap is sorted and prepared for sale to mills, furnaces and foundries. Refractory metals, principally molybdenum, tungsten and tantalum, are recycled at our Tranzact facility in central Pennsylvania. Three of our facilities, located in Newark, NJ, Austin, TX, and Gulfport, MS, process used catalytic converters, recycling platinum, palladium, and rhodium, known as PGM's (Platinum Group Metals). Metalico operates an automobile shredder located on Neville Island near the city of Pittsburgh which serves as the platform for the Southwestern Pennsylvania operations.
The latest acquisition, Goodman Services, Inc., operates a full service metal recycling facility in both Bradford, PA and Jamestown NY, as well as a mill services operation in Canton, OH.
Metalico has earned a reputation for professionalism and trust with consumers and other large metal buyers. Mills and metal buyers know that Metalico delivers quality materials with exceptional reliability. This means that scrap suppliers can rely on Metalico to accept materials at a fair price, in both up and down markets.
Metalico's commitment to customer service and product variety, through its Mayco Industries division, has made it the largest lead and lead alloy fabricator in the United States. In Birmingham, Alabama, Mayco produces lead and lead alloy sheet on its new mill, now the largest lead rolling mill in the world.
Mayco has been providing lead products and services to the nuclear energy sector for over 50 years, and can produce lead pours for casks and containment in any size up to 120,000 pounds. Radiation shielding products for the medical and industrial community include customized plate, sheet, interlocking lead brick, lead lined doors and wallboard, lead wool and and lead oxide glass. Mayco is also a leader in lead roof flashings, lead wool, pipe sleeves and cast iron/pipe toilet lead bends.
Mayco manufactures two of the leading brands of reload shot for recreational trap and skeet shotgun users - Lawrence Brand Shot and West Coast Shot. Mayco manufactures came lead in over 100 sizes for the stained glass window industry under the Premier Lead Came brand.
Mayco manufactures lead sheet plate and brick for engineered balance systems in planes, bridges and ships including the US Navy Fleet. Lead has significant chemical resistance to many industrial grade chemicals, and therefore is used extensively in the chemical processing industry in the form of pipe and tank liners. Mayco manufactures lead alloy plate and shaped extrusions in support of the copper, zinc and chrome electro-plating industry.
Facility Locations:
http://www.metalico.com/locations.html
SEC Filings:
http://ir.metalico.com/phoenix.zhtml?c=180159&p=irol-sec
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