Horsehead Holding Corporation announced consolidated net earnings of USD 14.6 million for the Q4 of 2010 or USD 0.33 per diluted share including USD 7.7 million benefit after taxes or USD 0.18 per share from insurance recovery related to the July 2010 Monaca refinery incident. This was the first quarter in which the Company recorded an insurance benefit related to this incident. Consolidated net earnings were USD 0.2 million or USD 0.00 per diluted share for the Q4 of 2009. For the year ended December 31st 2010, Horsehead had USD 24.8 million in consolidated net earnings or USD 0.57 per diluted share versus a net loss of USD 27.5 million or USD per diluted share for the year ended December 31st 2009.
Q4 highlights compared to the same quarter last year:
1. Zinc metal shipments increased 8,227 tonnes or 49.8%, to 24,753 tonnes for the quarter offsetting an 8,005 tonne decline in zinc oxide shipments.
2. EAF dust receipts increased 8.6% to 126,293 tonnes for the quarter as steel capacity utilization improved 9.3%.
3. The LME zinc price was USD 1.05 per lb for the Q4 of 2010 compared to USD 1.00 per lb for the Q4 of 2009. The LME nickel price was USD 10.70 per lb for the Q4 of 2010 compared to USD 7.96 for the Q4 of 2009.
4. Net sales increased USD 27.5 million or 39.9% to USD 96.3 million. Higher average price realization and the effect of higher shipment volume increased sales USD 2.6 million and USD 3.0 million respectively. The International Metals Reclamation Company acquired on December 31st 2009 added USD 15.3 million to sales for the current quarter. Current quarter net sales were reduced by USD 1.3 million due to non cash charges related to hedges. In comparison, the Q4 2009 net sales were reduced by USD 4.5 million due to non cash hedging charges. Shipments of waelz oxide added USD 4.1 million to sales for the quarter.
5. Cost of sales excluding depreciation, amortization and insurance proceeds increased USD 21.8 million or 36.1%, to USD 82.3 million. This increase reflects the effect of the higher shipment volume higher recycling costs and cost of sales related to INMETCO partially offset by an increase in EAF based feedstock. The portion of feed to the smelter derived from EAF dust increased to 81.1% for the current quarter compared to 66.7% for the Q4 of 2009 reflecting additional waelz kiln capacity added during the past 12 months and higher steel industry output. INMETCO added USD 9.1 million to cost of sales for the current quarter.
6. During the quarter USD 19.3 million of income from insurance recovery was recorded based upon preliminary undisputed claims for business interruption, property damage and extra expenses associated with the Monaca refinery incident. The preliminary claim submitted by the Company to the insurer for the period from the date of the incident through December 31st 2010 was for USD 32.7 million. We are pursuing the balance of the claim and expect to reach a settlement in 2011. Following is a summary of the insurance effect on the quarter's results.
Mr Jim Hensler president and CEO of Horsehead Holding said that "The Q4 was marked by the restart of production of zinc oxide and refined zinc metal at our refinery and the return of our smelting operation to full capacity late in the quarter. Zinc oxide shipments lagged the restart of production capability as we rebuilt inventories and resumed commercial relationships with our customers."
Mr Hensler said that shipments of zinc metal were bolstered by our efforts to expand shipments beyond our traditional markets in order to partially offset the loss of zinc oxide sales while we were rebuilding the Monaca refinery. Electric arc furnace dust receipts were down slightly from the third quarter as output from the steel industry softened, although we processed a record 148,000 tonnes of EAF dust in the fourth quarter as the full capacity of the new Barnwell plant was available for the entire period."
He said that we are pleased that we have been able to resolve and therefore record a significant portion of the insurance claim relating to the Monaca refinery incident. We are still working through final resolution of the business interruption and physical damage claim with our insurance carrier.
