Industrial Services of America, Inc. Announces Fourth Quarter and 2012 Results

Industrial Services of America, Inc. Announces Fourth Quarter and 2012 Results

LOUISVILLE, Ky.--(BUSINESS WIRE)-- Industrial Services of America, Inc. (NAS: IDSA) , a company that buys, processes and markets ferrous and non-ferrous metals and other recyclable commodities for domestic users and export markets and offers programs and equipment to help businesses manage waste, today announced financial results for the year and fourth quarter ended December 31, 2012.


Revenue for 2012 was $194.2 million compared with $277.2 million in 2011. Net loss for 2012 was $(6.6) million, or $(0.95) per diluted share, which included a non-cash impairment charge to goodwill of $3.9 million, net of income tax, compared with net loss of $(3.9) million, or $(0.56) per diluted share for 2011. Excluding the goodwill impairment, the net loss for 2012 would have been $(2.7) million, net of income tax, or $(0.39) per diluted share.

Revenue for the fourth quarter of 2012 was $37.0 million compared with $50.0 million in the fourth quarter of 2011. Net loss for the fourth quarter of 2012 was $(4.5) million, or $(0.65) on a diluted share basis, which included a non-cash impairment charge to goodwill of $3.9 million, net of income tax, compared with a net loss of $(1.8) million, or $(0.26) per diluted share, for the comparable period in 2011.

The company continues to manage its way through a challenging market environment. During 2012, ISA reduced overhead costs by approximately $3,400,000 in an effort to adjust capacity to match the reduction in scrap processing volumes in the eastern U.S. The market remains intensely competitive for scrap materials.

Key Highlights2012

  • ISA launched its Pick.Pull.Save retail auto parts division in July. This division has gained significant market traction, operating on 15 acres at ISA's headquarters facility and maintaining over 1,200 autos in inventory.

  • ISA's shredder has benefitted from higher quality product inflow as a result of scrap flows from the Pick.Pull.Save operation, which is adjacent to the shredder.

  • The company has used excess cash to reduce its term debt ahead of schedule.

ISA was recently recognized by the Institute of Scrap Recycling Industries ("ISRI"), the scrap industry's leading trade group, as a leader in the safe and efficient operation of its fleet of equipment.

Key Financial Highlights

  • Earnings Before Interest, Taxes, Depreciation and Amortization and Impairment charges ("Adjusted EBITDA") for the year ended December 31, 2012 was $2.3 million.

  • Current ratio at December 31, 2012 was 3.9 to 1.

  • Working capital as of December 31, 2012 was $25.1 million.

  • Credit facility and term debt extended through April 30, 2014.

ISA's SEC filings are available for review at the Securities and Exchange Commission web site at http://www.sec.gov/edgar/searchedgar/companysearch.html.

About ISA

Headquartered in Louisville, Kentucky, Industrial Services of America, Inc., is a publicly traded company whose core business is buying, processing and marketing scrap metals and recyclable materials for domestic users and export markets. Additionally, ISA offers commercial, industrial and business customers a variety of programs and equipment to manage waste. More information about ISA is available at www.isa-inc.com.

This news release contains forward-looking statements that involve risks and uncertainties that could cause actual results to differ from predicted results. Specific risks include fluctuations in the price of recycled materials, varying demand for waste managing systems, equipment and services, competitive pressures in waste managing systems and equipment, competitive pressures in the waste managing business, and loss of customers. Further information on factors that could affect ISA's results is detailed in ISA's filings with the Securities and Exchange Commission. ISA undertakes no obligation to publicly release the results of any revisions to the forward-looking statements.

FINANCIAL RESULTS AND

SUPPLEMENTAL FINANCIAL INFORMATION

FOLLOW

Industrial Services of America, Inc. and Subsidiaries
Consolidated Statements of Income

THREE MONTHS ENDED

YEAR ENDED

December 31,

2012

December 31,

2011

December 31,

2012

December 31,

2011

Revenue from services

$

1,401,154

$

1,215,224

$

5,087,555

$

5,279,411

Revenue from product sales

35,571,876

48,768,999

189,144,375

271,933,501

Total revenue

36,973,030

49,984,223

194,231,930

277,212,912

Cost of goods sold for services

1,322,377

1,133,552

4,655,469

4,716,484

Cost of goods sold for product sales

33,649,648

48,675,644

180,344,790

260,775,526

Inventory adjustment for lower of cost or market

3,441,140

Total cost of goods sold

34,972,025

49,809,196

185,000,259

268,933,150

Provision for employee terminations and severances

228,400

Other selling, general and administrative expense

2,654,930

3,103,385

11,196,562

12,394,075

Total selling, general and administrative expense

2,654,930

3,103,385

11,424,962

12,394,075

Impairment loss, goodwill

6,840,046

6,840,046

(Loss) income before other income (expense)

(7,493,971

)

(2,928,358

)

(9,033,337

)

(4,114,313

)

Other income (expense)

Interest expense

(372,461

)

(423,125

)

(1,797,421

)

(2,367,944

)

Interest income

481

3,339

9,075

18,865

Gain on sale of assets

11,809

(4,156

)

46,667

107,148

Provision for lawsuit settlement

Other income (loss)

81

91,815

21

(566,028

)

(360,090

)

(332,127

)

(1,741,658

)

(2,807,959

)

(Loss) income before income taxes

(7,854,061

)

(3,260,485

)

(10,774,995

)

(6,922,272

)

Income tax (benefit) provision

(3,350,923

)

(1,436,318

)

(4,154,505

)

(3,041,456

)

Net (loss) income

$

(4,503,138

)

$

(1,824,167

)

$

(6,620,490

)

$

(3,880,816

)

Basic (loss) earnings per share

$

(0.65

)

$

(0.26

)

$

(0.95

)

$

(0.56

)

Diluted (loss) earnings per share

$

(0.65

)

$

(0.26

)

$

(0.95

)

$

(0.56

)

Weighted shares outstanding:

Basic:

6,944,267

6,940,517

6,942,912

6,926,870

Diluted:

6,944,267

6,940,517

6,942,912

6,926,870

INDUSTRIAL SERVICES OF AMERICA, INC.
SUPPLEMENTAL FINANCIAL INFORMATION

Reconciliation of Adjusted Net Loss and Earnings per Share:

The following table reconciles the Company's adjusted net loss and earnings per share (basic and diluted) to net loss and earnings per share as reported in accordance with GAAP ($ in thousands, except per share data):

Three months ended

Per share

amount

Year ended

Per share

amount

December 31, 2012

December 31, 2012

Net loss as reported

$

(4,503

)

$

(0.65

)

$

(6,620

)

$

(0.95

)

Impairment charges, net of income taxes

3,899

0.56

3,899

0.56

Net (loss) income as adjusted

$

(604

)

$

(0.09

)

$

(2,721

)

$

(0.39

)

Reconciliation of Adjusted EBITDA(1):

Three Months ended

Year ended

December 31,

December 31,

2012

2011

2012

2011

Net (loss) income

$

(4,503,138

)

$

(1,824,167

)

$

(6,620,490

)

$

(3,880,816

)

Interest expense

372,461

423,125

1,797,421

2,367,944

Income tax (benefit) provision

(3,350,923

)

(1,436,318

)

(4,154,505

)

(3,041,456

)

Impairment loss, goodwill

6,840,046

6,840,046

Depreciation

884,018

942,397

3,651,353

3,767,110

Amortization

187,500

187,500

750,000

750,000

Adjusted EBITDA (1)

$

429,964

$

(1,707,463

)

$

2,263,825

$

(37,218

)

(1) Adjusted EBITDA is calculated by the Company as net income before interest expense, income tax expense, depreciation and amortization and impairment charges. The Company uses Adjusted EBITDA as a key performance measure of results of operations for purposes of evaluating performance internally. This non-GAAP measurement is not intended to replace the presentation of our financial results in accordance with GAAP. Rather, we believe the Adjusted EBITDA calculation provides additional information to investors and debt holders due to the fact that tax credits, tax rates and other tax related items vary by company. Additionally, years of service for fixed assets and amortizable assets are based on company judgment. Finally, companies have several ways of raising capital which can affect interest expense. We believe the presentation of Adjusted EBITDA provides a meaningful measure of performance exclusive of these unique items.



Industrial Services of America, Inc.
Harry Kletter or Alan Gildenberg, 502-366-3452
hklet@isa-inc.com
http://www.isa-inc.com/

KEYWORDS: United States North America Kentucky

INDUSTRY KEYWORDS:

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