Horsehead Holding Corporation announced a consolidated net loss of USD 1.7 million or USD 0.04 per diluted share for the Q2 of 2012, compared to a net loss for the Q2 of 2011 of USD 3.7 million or USD 0.08 per diluted share. Consolidated net earnings, excluding non cash charges associated with hedges and a lower of cost or market adjustment to inventory were USD 1.5 million for the Q2 of 2012 or USD 0.03 per diluted share.
In comparison, consolidated net earnings, excluding non cash charges associated with hedges were USD 5.5 million or USD 0.13 per diluted share for the Q2 of 2011. The LME zinc price was 14% lower versus the same quarter last year, reducing earnings an estimated USD 0.13 per share for the quarter.
Mr Jim Hensler president and CEO of Horsehead Holding said that "While pleased with the operating levels at our businesses, lower commodity prices had a noticeable effect on our earnings when compared to the same quarter last year. Demand for our zinc products was strong and our zinc smelting facility and recycling plants operated at close to full capacity. When the non cash impact of hedge write offs, mark to market adjustments and LCM charges are eliminated our operating results were positive despite much lower commodity prices compared with the prior year."
Mr Jim Hensler said that "At INMETCO, higher shipment volumes of nickel remelt alloy partially offset the impact of lower nickel prices but the quarter was also adversely affected by higher maintenance repair cost due to unplanned equipment outages. The net impact was a USD 0.04 per share decline in earnings compared with the Q2 of 2011. We are also pleased that we were able to close on USD 175 million senior secured notes offering on July 26th 2012 to provide additional financing for the completion of our new zinc plant project in Rutherford County, North Carolina. Construction activity on this project is accelerating and over 65% of the project spending has been committed. We continue to be on schedule for a startup in the second half of 2013."
Second Quarter Highlights;
Compared to the same quarter last year:
1. Zinc product shipments which include a full quarter of Zochem, increased 10,883 tonnes or 29% to 48,572 tonnes for the quarter.
2. EAF dust receipts increased 17% to an annualized rate of 647,000 tonnes and dust processed increased 11%.
3. The LME zinc price averaged USD 0.87 per lb for the Q2 of 2012 compared to USD 1.02 per lb for the Q2 of 2011. The LME nickel price averaged USD 7.78 per lb for the Q2 of 2012 compared to USD 10.96 per lb for the Q2 of 2011.
4. Net sales, excluding USD 2.5 million related to non cash hedge charges for the current quarter and USD 14.5 million for the Q2 of 2011 increased USD 9.7 million or 9% to USD 120.0 million as higher shipment volumes more than offset the effect of lower commodity prices. Price realization for zinc products on a zinc-contained basis was an USD 0.18 per lb premium to the average LME zinc price for the quarter compared to an USD 0.11 per lb premium in the prior year quarter reflecting primarily the addition of the Zochem business.
5. Cost of sales included USD 1.2 million non cash LCM charge associated with the write down of inventory values as the LME zinc price declined to USD 0.84 per lb on June 30th 2012. EAFD based feed made up 77.2% of the feed mix for the smelter during the most recent quarter compared to 74.6% for the same quarter last year.
6. The effective tax rate was for the Q2 of 2012 as the estimated full year tax rate for 2012 was changed to 38.2% compared to an estimate of 43.9% in the Q1 of 2012. This change for the 6 months ended June 30th 2012 was recorded in the Q2 and had an unfavorable effect on reported earnings of USD 0.02 per diluted share. The estimated effective tax rate for the Q2 of 2011 was 34.8%.
6. Cash generated by operating activities was USD 23.5 million for the quarter ended June 30th 2012 and was more than offset by USD 31.7 million of capital spending during the quarter. Cash on hand at the end of the quarter was USD 164 million not including the approximately USD 165 million in net proceeds we received in July from our senior secured notes offering. In addition, we had USD 39 million of unused availability under our revolving credit facility at the end of the quarter.
Source - Horsehead Holding
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