Metalico Inc. (MEA)

[polkamatic]

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.
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