EXHIBIT 99.1
OREGON STEEL MILLS, INC.
Portland, Oregon
FOR IMMEDIATE RELEASE April 28, 2004
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Contact: Ray Adams
Chief Financial Officer
(503) 240-5223
OREGON STEEL MILLS, INC. ANNOUNCES
FIRST QUARTER RESULTS
HIGHLIGHTS:
[BULLET] SHIPMENTS AT 476,500 TONS, WERE AT AN ALL TIME HIGH AND UP 19 PERCENT
FROM THE FIRST QUARTER OF 2003
[BULLET] SALES WERE $252.4 MILLION, THE HIGHEST LEVEL SINCE 1998 AND THE SECOND
HIGHEST IN THE COMPANY'S HISTORY
[BULLET] EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION, BEFORE
A NON-CASH CHARGE OF $7 MILLION, WAS $32.9 MILLION
[BULLET] NET INCOME, BEFORE A NON-CASH CHARGE OF $7 MILLION, WAS $14.5 MILLION,
A RECORD FOR THE COMPANY
Portland, Oregon, April 28, 2004/Business Wire/--Oregon Steel Mills, Inc. (NYSE:
OS) today reported first quarter net income of $7.5 million ($.28 per share)
compared to a net loss of $9 million (a negative $.34 per share) for the first
quarter of 2003. During the first quarter, the Company recorded a pretax
non-cash charge of $7 million ($.26 per share) related to the previously
announced tentative agreement to issue four million shares of Company common
stock as part of the settlement of the labor dispute ("Settlement") at the
Company's majority-owned subsidiary, Rocky Mountain Steel Mills. The charge is a
result of adjusting the previously recorded value at December 31, 2003 of the
four million shares of Company common stock ($23.3 million at $5.81 per share)
to market at March 31, 2004. The closing price of the Company's common stock on
the New York Stock Exchange at March 31, 2004 was $7.56 per share, resulting in
an additional non-cash charge of $7 million ("Stock Settlement Charge"). The
Company will continue to adjust the common stock portion of the Settlement at
the end of each quarter either up or down for the change in the price of the
Company's common stock through the effective date of the Settlement. Net income
exclusive of the Stock Settlement Charge was $14.5 million ($.54 per share).
Sales for the first quarter of 2004 were $252.4 million. This compares to 2003
first quarter sales of $175.7 million. Average sales price per ton in the first
quarter of 2004 was $529 compared to $440 in the first quarter of 2003. Overall
shipments for the first quarter of 2004 were 476,500 tons compared to 2003 first
quarter shipments of 399,200 tons. The increase in shipments are primarily due
to increased shipments of plate, coil, welded pipe, structural tubing and rod
products partially offset by lower rail
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and seamless pipe shipments. The increase in sales and average sales price were
primarily due to higher average selling prices for plate, coil, rail and rod and
bar products and the increased shipments noted above, partially offset by lower
average selling prices for welded and seamless pipe.
Operating income for the first quarter of 2004 was $15.1 million, including the
$7 million Stock Settlement Charge noted above. Operating income before the
Stock Settlement Charge was $22.1 million. This compares to an operating loss of
$6.6 million in the first quarter of 2003 and an operating loss of $38.4 million
for the fourth quarter of 2003, which included a labor dispute settlement charge
of $31.1 million. Operating loss in the fourth quarter of 2003, before the labor
dispute settlement charge, was $7.3 million. Earnings before interest, taxes,
depreciation and amortization (EBITDA) for the first quarter of 2004 was $32.9
million (exclusive of the $ 7 million Stock Settlement Charge noted above)
compared to $4.3 million in the first quarter of 2003 and a negative $25.4
million in the fourth quarter of 2003, which included a labor dispute settlement
charge of $31.1 million. EBITDA for the fourth quarter of 2003, before the
non-cash Company common stock component ($23.2 million) of the labor dispute
settlement charge, was a negative $2.2 million. A reconciliation of EBITDA is
provided in the last table of this press release. Increased operating income and
EBITDA during the first quarter of 2004 compared to the first quarter of 2003
reflects increased volume and higher average selling prices, as discussed above,
partially offset by higher slab costs at the Company's Oregon Steel Division,
and higher scrap costs at the Company's Rocky Mountain Steel Division ("RMSM").
Since January 1, the Company has announced numerous price increases on plate and
coil products, increasing the base price on as-rolled plate and coil by
approximately $210 per ton for March deliveries. Likewise for rod and bar
products, price increases and raw material surcharges have increased the base
price for these products by approximately $120 per ton for March deliveries.
During the quarter, the Company also announced and is implementing price
increases for its structural tubing, welded pipe and rail products.
Jim Declusin, the Company's President and CEO, stated, "We at Oregon Steel are
very pleased with the results of our first quarter. While much of our
profitability has been fueled by a strong steel demand for our products,
resulting in our ability to raise steel prices throughout the quarter, equally
important has been the changes the Company has made in its culture during the
past six months. These cultural changes have resulted in cost reductions by
increasing productivity, improving yields, reducing delay rates and ever
improving levels of quality. These improvements have been solely achieved by the
dedication of our employees. We believe the improvements that have been made
will result in even stronger results in the second quarter. Our performance was
accomplished even though we had unprecedented high costs for slab and scrap
during the quarter. It is also important to note that these results were
achieved without having high production levels, shipments or profitability in
large diameter pipe."
LIQUIDITY
At March 31, 2004, the Company maintained a $65 million revolving credit
facility of which $5.0 million was restricted, an additional $15.4 million was
restricted under
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outstanding letters of credit and $44.6 million was available for use. There
were no amounts outstanding on the revolving credit facility as of March 31,
2004. Total debt outstanding, net of cash of $6.5 million, was $305 million
compared to $296 million at December 31, 2003. During the first quarter of 2004,
the Company incurred capital expenditures of $4.4 million; depreciation and
amortization was $9.9 million. For all of 2004, the Company anticipates that
capital expenditures and depreciation/amortization will be approximately $31
million and $40 million, respectively.
2004 OUTLOOK
For 2004, the Company expects to ship approximately 1,750,000 tons of products
and generate approximately $1 billion in sales. In the Oregon Steel Division the
product mix is expected to consist of 630,000 tons of plate and coil, 200,000
tons of welded pipe and 60,000 tons of structural tubing. At these shipment
levels, the Company expects its Portland combination mill to run at
approximately 80 percent of its rated capacity and its welded pipe mills to run
at approximately 30 percent of their rated capacities. The Company's RMSM
Division expects to ship approximately 380,000 tons and 482,000 tons of rail and
rod and bar products, respectively. At these shipment levels, the rail and rod
mills would be at 90 percent and 100 percent, respectively, of their rated
capacities. Seamless pipe shipments will be dependent on market conditions in
the drilling industry. At the present time the seamless mill is not operating.
Based on performance to date, the Company anticipates that for the second
quarter of 2004 it will have record quarterly sales. Exclusive of any further
labor dispute settlement adjustments relating to the future changes in the
market value of the Company's common stock price, the Company anticipates that
quarterly operating income and net income will be the highest in the Company's
history in the second quarter of 2004. Because of the uncertainty related to
third and fourth quarter sales price and the volatility of the slab and scrap
market, the Company does not currently believe the third and fourth quarter
financial performance will be equal to the results anticipated for the second
quarter; however, the Company believes the results for the third quarter of 2004
will exceed that of the first quarter of 2004. For fiscal 2004 the Company
currently anticipates that it will have record sales, operating income and net
income.
FORWARD-LOOKING STATEMENTS
Forward-looking statements in this release are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements are subject to risks and uncertainties and actual
results could differ materially from those projected. Such risks and
uncertainties include, but are not limited to, general business and economic
conditions; competitive products and pricing, as well as fluctuations in demand;
potential equipment malfunction; and plant construction and repair delays. For
more detailed information, please review the discussion of risks, which may
cause results to differ materially, in our most recently filed Form 10-K, Form
10-Q and other SEC reports.
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ANNUAL MEETING
Our 2004 Annual Meeting will be held on April 29, 2004 at 8:00 a.m. Pacific
Time, at the Benson Hotel in Portland, Oregon.
CONFERENCE CALL WEBCAST
On April 28, 2004 at 9:00 a.m. PT (12:00 p.m. ET), the Company will hold a
conference call to discuss the results of the first quarter. You are invited to
listen to a live broadcast of the Company's conference call over the Internet,
accessible at www.osm.com on the Investor Relations' page.
Oregon Steel Mills, Inc. is organized into two divisions. The Oregon Steel
Division produces steel plate, coil, welded pipe and structural tubing from
plants located in Portland, Oregon, Napa, California and Camrose, Alberta,
Canada. The Rocky Mountain Steel Mills Division, located in Pueblo, Colorado,
produces steel rail, rod, bar, and tubular products.
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OREGON STEEL MILLS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED INCOME STATEMENTS FN1
(In thousands, except tonnage, per share and per ton amounts)
(Unaudited)
THREE MONTHS ENDED
MARCH 31
--------------------------
2004 2003
--------- ----------
Sales $ 252,396 $ 175,681
Cost of sales 214,600 169,602
Gain on sales of assets (263) (61)
Labor dispute settlement adjustment 7,000 --
Selling, general and administrative expenses 15,956 12,711
--------- ---------
Operating income (loss) 15,103 (6,571)
Interest expense, net (8,529) (8,101)
Other income, net 597 169
Minority interest 355 258
--------- ---------
Income (loss) before income taxes 7,526 (14,245)
Provision for income tax (expense) benefit (2) 5,220
--------- ---------
Net income (loss) $ 7,524 $ (9,025)
========= =========
Basic earnings (loss) per share $ .28 $ (.34)
Diluted earnings (loss) per share $ .28 $ (.34)
Basic weighted average shares outstanding 26,489 26,388
Diluted weighted average shares outstanding 26,661 26,388
Operating income (loss) per ton $ 31.70 $ (16.46)
Operating margin 6.0% (3.7)%
Depreciation and amortization $ 9,868 $ 10,464
EBITDA exclusive of labor dispute settlement
adjustment $ 32,923 $ 4,320
Total tonnage sold:
Oregon Steel Division:
Plate and coil 173,800 108,700
Welded pipe 58,800 51,100
Structural tubing 10,400 --
--------- ---------
243,000 159,800
--------- ---------
Rocky Mountain Steel Mills Division:
Rail 100,700 113,000
Rod/Bar 130,000 115,500
Seamless pipe 2,800 10,900
--------- ---------
233,500 239,400
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Total Company 476,500 399,200
========= =========
Sales:
Oregon Steel Division $ 145,626 $ 83,125
Rocky Mountain Steel Mills Division 106,770 92,556
--------- ---------
Total Company $ 252,396 $ 175,681
========= =========
Average selling price per ton:
Oregon Steel Division $ 599 $ 520
Rocky Mountain Steel Mills Division $ 457 $ 387
Total Company $ 529 $ 440
FN1 Certain reclassifications have been made in prior year's periods to conform
to the current period presentations. Such reclassifications do not effect
results of operations as previously reported.
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OREGON STEEL MILLS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS FN1
(In thousands)
MARCH 31, DECEMBER 31,
2004 FN2 2003
----------- ------------
(Unaudited)
Current assets:
Cash and cash equivalents $ 6,498 $ 5,770
Trade accounts receivable, net 84,991 78,026
Inventories 135,449 139,623
Deferred taxes and other current assets 18,219 35,142
-------- --------
245,157 258,561
Property, plant and equipment, net 486,958 477,581
Goodwill 520 520
Intangibles, net 11,694 11,803
Other assets 11,721 15,513
-------- --------
Total assets $756,050 $763,978
======== ========
Current liabilities $110,035 $131,833
Other long-term debt 311,440 301,832
Deferred taxes 8,312 20,442
Other liabilities FN3 112,970 106,048
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542,757 560,155
Minority interest 18,458 16,571
Stockholders' equity 194,835 187,252
-------- --------
Total liabilities and stockholders' equity $756,050 $763,978
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FN1 Certain reclassifications have been made in prior year's periods to
conform to the current period presentations. Such reclassifications do not
affect results of operations as previously reported.
FN2 The Company adopted FIN 46R effective March 31, 2004, and changed the
method of accounting for its Oregon Feralloy Partners from an equity
investment basis to a consolidated basis. The impact of the adoption on the
financial statements at March 31, 2004 was to increase current assets by
$1.7 million, increase net property, plant and equipment by $15 million,
decrease other assets by $3.5 million, increase current liabilities by $1.4
million, increase other long-term liabilities by $9.5 million (consisting of
bank debt) and increase minority interest by $2.2 million.
FN3 Included in other liabilities is an accrued liability of $30.2 million
and $23.2 million at March 31, 2004 and December 31, 2003, respectively, for
the value of the 4 million shares of Company common stock to be issued as
part of the Settlement.
OREGON STEEL MILLS, INC. AND SUBSIDIARY COMPANIES
CALCULATION OF EBITDA
(In thousands)
(Unaudited)
THREE MONTHS ENDED
MARCH 31,
-----------------------
2004 2003
-------- ---------
Net income (loss) $ 7,524 $ (9,025)
Provision for income tax expense (benefit) 2 (5,220)
-------- --------
Pre-tax income (loss) 7,526 (14,245)
Add back:
Interest income (40) (107)
Interest expense 8,788 8,493
Interest capitalized (219) (285)
Depreciation 9,759 10,433
Amortization 109 31
-------- --------
18,397 18,565
-------- --------
EBITDA 25,923 4,320
Add back labor dispute settlement adjustment 7,000 --
-------- --------
EBITDA exclusive of labor dispute settlement
adjustment $ 32,923 $ 4,320
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