Horsehead Holding (ZINC) Q1 2012 Earnings Call May 04, 2012 11:00 am ET Executives Gary R. Whitaker - Vice President, General Counsel and Secretary James M. Hensler - Chairman, Chief Executive Officer and President Robert Scherich - Chief Financial Officer, Principal Accounting Officer and Vice President Analysts Carter W. Driscoll - Capstone Investments, Research Division Mitesh Thakkar - FBR Capital Markets & Co., Research Division Daniel Moore - CJS Securities, Inc. Paul Forward - Stifel, Nicolaus & Co., Inc., Research Division Robert Howard Presentation Operator
You should refer to our filings with the U.S. Securities and Exchange Commission, including our most recent Annual Report on Form 10-K filed on March 9, 2012, for a more detailed description of the risk factors that may affect our results.With that, I'm pleased to introduce Jim Hensler, our President and CEO. Jim? James M. Hensler Thanks, Gary. I'd like to welcome you to this conference call to discuss the results of the first quarter of 2012. I will review the performance of our operations and markets during the quarter, and Bob Scherich, our CFO, will review the financial results. The consolidated net earnings for the quarter were a loss of $8.5 million or $0.19 per share, including non-cash charges related to hedges and the accelerated write-off of a portion of the Monaca, PA, facility. This compares to a gain of $14.8 million or $0.33 per diluted share for the first quarter of 2011. Excluding these non-cash charges, consolidated net earnings for the first quarter of 2012 were $2.1 million or $0.05 per diluted share. For the same period in 2011, excluding an insurance recovery, consolidated net earnings were $8.6 million or $0.19 per diluted share. The LME zinc price was 15% lower versus the same quarter last year, reducing earnings by an estimated $0.15 per share for the quarter, and a 22% increase in the price of metallurgical coke versus the prior year's quarter also had a $0.035 per share negative impact on the current quarter. These adverse impacts were offset somewhat by new records for EAF dust receipts, EAF dust processing rates, zinc production and zinc product shipments during the first quarter of 2012. Compared to the prior year's first quarter, EAF dust receipts increased 24% on an annualized rate of 664,000 tons and dust process increased 15% to an annualized rate of 660,000 tons for the quarter, both record levels.
Zinc product shipments, which for the first time include a full quarter of Zochem results, increased 13,813 tons or 38% to 50,273 tons, also a record.However, the LME zinc price averaged only $0.92 per pound for the first quarter of 2012 compared to $1.09 per pound for the first quarter of 2011, while the nickel price averaged $8.91 per pound for the first quarter of 2012 versus $12.20 per pound for the same period in 2011. We also took a $15.2 million pretax charge related to the amortization of expiring put option positions and mark-to-market adjustments on open hedge positions. And cost of sales also included a $3.3 million non-cash impairment charge associated with the continued write-down of the Monaca, PA, smelter in anticipation of its eventual closure with the startup of our North Carolina facility and with the potential acquisition of the Monaca site by Shell Chemical. I am pleased that our operating results were positive despite much lower commodity prices and higher coke prices compared with the prior year when you eliminate these non-cash charges. The integration of Zochem into our zinc oxide business continued to proceed smoothly during the first quarter, making a positive contribution to our results. And INMETCO contributed solid earnings as a 7% productivity gain outpaced the reduced price of nickel. Also, we're pleased with the progress on construction at the site of our new zinc production facility in Rutherford County, North Carolina. We've placed orders for a significant portion of the equipment, and work at the site is proceeding without delay. I encourage you to follow the progress we're making on the construction of this new plant on our website. We continue to be on schedule and on budget for a startup in the third quarter of 2013. I'd now like to discuss the operating results in more detail. We processed 166,500 tons of electric arc furnace dust during the quarter, a 15.4% increase from the same quarter last year. EAF dust receipts increased from the prior year's first quarter from 134,000 tons to 166,000 tons, a 23.7% increase. Read the rest of this transcript for free on seekingalpha.com