Ormet Announces Favorable Ruling by the Public Utilities Commission of Ohio and Its 2nd Quarter 2012
Ormet Announces Favorable Ruling by the Public Utilities Commission of Ohio
and Its 2nd Quarter 2012 Financial Results
HANNIBAL, Ohio--(BUSINESS WIRE)-- Faced with declining London Metals Exchange ("LME") prices compared to 2011 and higher electric power prices, the Company has reduced operations and has taken other measures to mitigate these developments. The Company's liquidity will continue to be pressured because the 2012 contractual discounts that the Company received from its power supplier were fully utilized in August 2012.
In addition, the Company has engaged Evercore Group L.L.C. to assist in identifying and evaluating strategic alternatives. Representative initiatives being explored include: asset sales, new sources of funds, vendor contract re-negotiations and debt restructuring.
To that end, the Company has been in negotiations with its various constituents (i.e. Term Loan lenders, ABL lender, the United Steelworkers International, its electricity and other trade vendors and state government agencies).
The Public Utilities Commission of Ohio ("PUCO") approved the Company's request on October 17, 2012 for a deferral of AEP's power bills that would be payable in November 2012 and December 2012. These power bills, totaling approximately $27 million, would have normally been paid twenty-one days after receipt by the Company. According to the agreement, the payment for these bills will be made in seventeen equal monthly installments beginning in January 2014 and ending in May 2015. While this approval provides the Company significant relief, the Company's longer term liquidity will only be achieved if all constituents and the Company reach satisfactory agreements. The outcome of these remaining negotiations and the impact on the Company is uncertain at this time.
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Ormet announces a $13.9 million and $15.0 million net loss for the second quarter of 2012 and first half of 2012, respectively. Net loss per common share outstanding was $0.74 for the quarter and $0.80 the first half of 2012. These results were significantly influenced by significantly lower selling prices and increased electric power costs.
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Jeffrey Marshall notified the Board of Directors on October 17, 2012 that he was resigning as a Director and Chairman of the Board, immediately, due to health reasons. The Board has accepted his resignation with regret and extended its thanks for his many years of service. In his capacity as Vice Chairman, Robert Prusak, will assume the responsibilities of Chairman, effective immediately.
Mike Tanchuk, Ormet's President and CEO commented, "Today, we received approval from the PUCO for the short term relief Ormet needed to move forward with improving our financial strength. On behalf of Ormet, its employees and the families of our community, I want to thank Governor Kasich, the PUCO, JobsOhio and the members of our region's state and federal legislative delegations for their untiring support. There is much work yet to do but today was a big step forward toward success. Ormet looks forward to continuing to work with AEP toward a long term energy solution.
"We are facing difficult short term headwinds in the aluminum market driven mainly by global financial uncertainty. Yet, at the same time, there has never been a brighter future for growth of the use of aluminum in our everyday lives around the world. We are optimistic that the global aluminum market will continue to grow and Ormet will be a strong partner in the lives and economic well-being of the families and communities in the region," said Mike Tanchuk.
The complete Rule 15c2-11 Information and Disclosure Statement for the six months ended June 30, 2012 is available on the Company's website. Please visit the Investor section of the website at www.ormet.com.
Cautionary Statement
This Statement contains forward-looking statements that can be identified by use of words such as "anticipates," "believes," "estimates," "expects," "hopes," "targets," "should," "forecast," "outlook," "projects" or other words of similar meaning. All statements that address the Company's expectations or projections about the future, including statements about the Company's strategy for growth, cost reduction goals, expenditures, financial results, liquidity and capital needs, are forward-looking statements. Forward-looking statements are based on the Company's estimates, assumptions and expectations of future events and are subject to a number of risks and uncertainties and may or may not be realized. The Company cannot guarantee its future performance or results of operations. All forward-looking statements in this press release are based on information available to the Company on the date hereof. The Company disclaims any intention or obligation to update or revise any forward-looking statements, except as may be required by law. The Company's business is subject to a number of significant risks and uncertainties. Reference is made to the risk factors and other disclosures contained in the Company's Information and Disclosure Statements for year ended December 31, 2011, which is available on the Company's website at www.ormet.com. Given the significant uncertainties and risks to which the Company is subject (a) the reader should not place undue reliance on forward-looking statements contained in this press release and (b) the Company's future results could differ materially from the Company's current results and from those anticipated in the Company's forward-looking statements.
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Headquartered in Hannibal, Ohio, Ormet Corporation is a major U.S. producer of aluminum. Ormet employs approximately 1,250 people. For more information, visit the Company's website at www.ormet.com.
Ormet Corporation | ||||||||||||
Financial Statements | ||||||||||||
Consolidated Balance Sheet | ||||||||||||
(Dollars in thousands) | ||||||||||||
Unaudited | ||||||||||||
6/30/2012 | 12/31/2011 | |||||||||||
ASSETS | ||||||||||||
Cash | $ | 6,103 | $ | 2,468 | ||||||||
Accounts Receivable: | ||||||||||||
Trade accounts receivable, net | 8,930 | $ | 20,619 | |||||||||
Receivable from sales contract cancellation | - | 23,000 | ||||||||||
Inventories | 110,789 | 124,013 | ||||||||||
Prepaid expense and other current assets | 14,674 | 12,411 | ||||||||||
Total current assets | 140,496 | 182,511 | ||||||||||
Property and equipment | 63,107 | 65,543 | ||||||||||
Goodwill | 42,284 | 42,284 | ||||||||||
Deferred income tax asset, net | 150,890 | 143,724 | ||||||||||
Other assets | 1,388 | 1,864 | ||||||||||
TOTAL ASSETS | $ | 398,165 | $ | 435,926 | ||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | ||||||||||||
Accounts payable | 32,855 | 51,906 | ||||||||||
Deferred energy discount | 14,028 | - | ||||||||||
Accrued compensation | 12,346 | 18,670 | ||||||||||
Accrued interest | 4,527 | 4,527 | ||||||||||
Postretirement obligations | 5,487 | 9,858 | ||||||||||
Current portion of long term debt | 127,146 | - | ||||||||||
Other accrued liabilities | 5,578 | 5,773 | ||||||||||
Total current liabilities | 201,967 | 90,734 | ||||||||||
Long term debt | - | 124,378 | ||||||||||
Other liabilities: | ||||||||||||
Pension obligations | 137,405 | 149,627 | ||||||||||
Postretirement obligations | 39,217 | 37,615 | ||||||||||
Other liabilities | 6,178 | 7,446 | ||||||||||
STOCKHOLDERS' EQUITY | ||||||||||||
Common stock 50,000 shares authorized at $0.001 per share, 18,662 issued as of 6/30/2012 and 12/31/2011 | 19 | 19 | ||||||||||
Additional paid in capital and stock warrants | 187,243 | 187,113 | ||||||||||
Accumulated deficit | (30,776 | ) | (15,790 | ) | ||||||||
Accumulated other comprehensive loss | (143,088 | ) | (145,216 | ) | ||||||||
Total stockholders' equity | 13,398 | 26,126 | ||||||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 398,165 | $ | 435,926 | ||||||||
CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) | ||||||||||||||||||||||
(Dollars in thousands, except per share amounts) | ||||||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||||||
As Adjusted | As Adjusted | |||||||||||||||||||||
6/30/2012 | 6/30/2011 | 6/30/2012 | 6/30/2011 | |||||||||||||||||||
Net sales from continuing operations | $ | 151,975 | $ | 148,099 | $ | 290,495 | $ | 272,280 | ||||||||||||||
Cost of sales | ||||||||||||||||||||||
Production costs | 163,207 | 121,641 | 293,727 | 230,109 | ||||||||||||||||||
Alumina refinery restart costs | - | 5,830 | - | 7,694 | ||||||||||||||||||
Total cost of sales | 163,207 | 127,471 | 293,727 | 237,803 | ||||||||||||||||||
Gross (loss) profit | (11,232 | ) | 20,628 | (3,232 | ) | 34,477 | ||||||||||||||||
Operating expenses (income) | ||||||||||||||||||||||
General and administrative expenses | 5,175 | 4,568 | 9,953 | 8,313 | ||||||||||||||||||
Gain on sale of assets | - | (5,827 | ) | - | (5,827 | ) | ||||||||||||||||
Operating (loss) income | (16,407 | ) | 21,887 | (13,185 | ) | 31,991 | ||||||||||||||||
Non-operating (expenses) income | ||||||||||||||||||||||
Other income (expense), net | 297 | 20 | 692 | 273 | ||||||||||||||||||
Interest expense | (5,354 | ) | (5,716 | ) | (10,716 | ) | (10,320 | ) | ||||||||||||||
Total non-operating expenses | (5,057 | ) | (5,696 | ) | (10,024 | ) | (10,047 | ) | ||||||||||||||
(Loss) income before income taxes | (21,464 | ) | 16,191 | (23,209 | ) | 21,944 | ||||||||||||||||
Income tax benefit | (7,605 | ) | (109,983 | ) | (8,223 | ) | (109,983 | ) | ||||||||||||||
(Loss) income from continuing operations | (13,859 | ) | 126,174 | (14,986 | ) | 131,927 | ||||||||||||||||
Income from discontinued operations (Note 15) | - | 11,189 | - | 10,971 | ||||||||||||||||||
Net (loss) income | $ | (13,859 | ) | $ | 137,363 | $ | (14,986 | ) | $ | 142,898 | ||||||||||||
Shares outstanding: | ||||||||||||||||||||||
Average during period | 18,662 | 18,607 | 18,662 | 18,559 | ||||||||||||||||||
As of June 30, 2012 | 18,662 | 18,662 | 18,662 | 18,662 | ||||||||||||||||||
Net (loss) income per share from continuing operations | $ | (0.74 | ) | $ | 6.78 | $ | (0.80 | ) | $ | 7.11 | ||||||||||||
Net (loss) income per share | $ | (0.74 | ) | $ | 7.38 | $ | (0.80 | ) | $ | 7.70 | ||||||||||||
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS) (Unaudited) | ||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||
Three months ended | Six months Ended | |||||||||||||||||||||
As Adjusted | As Adjusted | |||||||||||||||||||||
6/30/2012 | 6/30/2011 | 6/30/2012 | 6/30/2011 | |||||||||||||||||||
Net (loss) income | $ | (13,859 | ) | $ | 137,363 | $ | (14,986 | ) | $ | 142,898 | ||||||||||||
Other comprehensive income: | ||||||||||||||||||||||
Unrealized gain (loss) on derivatives | 1,789 | 5,014 | (549 | ) | 5,014 | |||||||||||||||||
Recognized gain on derivatives | (2,546 | ) | - | (2,546 | ) | - | ||||||||||||||||
Defined benefit pension plan: | ||||||||||||||||||||||
Adjusted prior service cost | 20 | 20 | 40 | 40 | ||||||||||||||||||
