Industrial Services of America, Inc. Announces Third Quarter 2012 Results

  Industrial Services of America, Inc. Announces Third Quarter 2012 Results

Business Wire

LOUISVILLE, Ky. -- November 16, 2012

Industrial Services of America, Inc. (NASDAQ: 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, recently announced financial
results for the third quarter ended September 30, 2012.

Revenue for the quarter was $45.7 million compared with $55.8 million in the
third quarter of 2011. The net loss for the quarter was ($0.9) million, or
($0.13) per diluted share, compared with net loss of ($4.5) million, or
($0.67) per diluted share, for the comparable period in 2011.

Key Highlights

  *Pick.Pull.Save auto parts division is now fully operational on 15 acres
    with over 1,200 autos in inventory
  *Shredder now receiving higher quality product inflow with auto parts
    division adjacent to shredder
  *Term debt approximately $7 million
  *Outstanding revolving line of credit paid down to less than $20 million,
    from a high of $45 million
  *Potential growth opportunities as industry improves

Key Financial Highlights

  *Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”)
    for the nine months ending September 30, 2012 was $1.8 million
  *Current ratio at September 30, 2012 was 3.2 to 1
  *Working capital as of September 30, 2012 was $22.6 million
  *Cost reductions now approximately $1 million annually

During the past four years the Company purchased a stainless steel recycling
operation, invested approximately $15 million in a shredder and extensive
downstream non-ferrous recovery system, acquired property for expansion and
established a self-service auto parts division, which now has over 1,200 cars
in inventory on 15 acres of land. These assets, along with all of ISA’s other
long-term assets, currently secure approximately $7 million of outstanding
debt.

Commenting on the Company’s quarterly operating performance, Brian Donaghy,
President and Chief Operating Officer of ISA, stated, “Once again our industry
has faced a challenging quarter, yet we continue to reduce our debt and expand
for the future. During the quarter we identified and implemented additional
cost savings that are now in excess of $1 million annually. We will continue
to look for more efficiencies. We feel optimistic that our continued cost cuts
and disciplined approach to purchasing will position us well as better markets
emerge.”

Harry Kletter, founder and Chairman of ISA, stated, “I am very proud of the
Company during these very competitive and volatile times in the industry. The
management team has adjusted to the current environment and has become much
more lean which will allow us to return to our growth once the industry gets
back to a more normal mode. We have accumulated 55 acres of land, an alloys
operation, three satellite locations, a retail self-service auto parts center
and a fleet of trucks in our in-house logistics operation. I look forward to a
bright future for ISA.”

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                 NINE MONTHS ENDED
                   September 30,   September 30,      September 30,    September 30,
                   2012              2011               2012               2011
                                                                           
Revenue from       $ 1,378,613       $ 1,402,789        $ 3,686,401        $ 4,064,187
services
Revenue from       44,350,017       54,363,010        153,572,500       223,164,502  
product sales
Total revenue      45,728,630        55,765,799         157,258,901        227,228,689
                                                                           
Cost of goods
sold for           1,196,285         1,299,757          3,333,092          3,582,932
services
Cost of goods
sold for           42,366,749        55,337,896         146,504,679        211,865,248
product sales
Inventory
adjustment for     —                3,441,130         —                 3,441,130    
lower of cost
or market
Total cost of      43,563,034        60,078,783         149,837,771        218,889,310
goods sold
                                                                           
Provision for
employee           —                 —                  228,400            —
terminations
and severances
Other selling,
general and        2,782,614        2,851,941         8,732,096         9,525,334    
administrative
expense
Total selling,
general and        2,782,614         2,851,941          8,960,496          9,525,334
administrative
expense
                                                                           
(Loss) income
before other       (617,018    )     (7,164,925   )     (1,539,366   )     (1,185,955   )
income
(expense)
                                                                           
Other income
(expense)
Interest           (485,533    )     (426,182     )     (1,424,960   )     (1,944,819   )
expense
Interest           2,682             4,980              8,499              15,526
income
Gain (loss)on      —                 (29,926      )     34,858             111,304
sale of assets
Provision for
lawsuit            —                 —                  —                  (175,000     )
settlement
Other income       81               18,778            (60          )     (482,843     )
(loss)
                   (482,770    )     (432,350     )     (1,381,663   )     (2,475,832   )
                                                                           
(Loss) income
before income      (1,099,788  )     (7,597,275   )     (2,921,029   )     (3,661,787   )
taxes
                                                                           
Income tax
(benefit)          (213,581    )     (3,061,268   )     (803,582     )     (1,605,138   )
provision
                                                                           
Net (loss)         $ (886,207  )     $ (4,536,007 )     $ (2,117,447 )     $ (2,056,649 )
income
                                                                           
Basic (loss)
earnings per       $ (0.13     )     $ (0.67      )     $ (0.30      )     $ (0.30      )
share
Diluted (loss)
earnings per       $ (0.13     )     $ (0.67      )     $ (0.30      )     $ (0.30      )
share
                                                                           
Weighted
shares
outstanding:
Basic:             6,944,267         6,789,917          6,942,912          6,922,271
Diluted:           6,944,267         6,789,917          6,942,912          6,922,271
                                                                                        
                                                                                        

                     INDUSTRIAL SERVICES OF AMERICA, INC.

                      SUPPLEMENTAL FINANCIAL INFORMATION

Reconciliation of EBITDA ^ (1):

               Three Months ending               Nine Months ending
                 September 30,                       September 30,
                 2012           2011               2012             2011
                                                                        
Net (loss)       $ (886,207 )     $ (4,536,007 )     $ (2,117,447 )     $ (2,056,649 )
income
Interest         485,533          426,182            1,424,960          1,944,819
expense
Income tax
(benefit)        (213,581   )     (3,061,268   )     (803,582     )     (1,605,138   )
provision
Depreciation     906,360          945,067            2,767,335          2,824,713
Amortization     187,500         187,500           562,500           562,500      
EBITDA ^ (1)     $ 479,605       $ (6,038,526 )     $ 1,833,766       $ 1,670,245  
                                                                                     

(1) EBITDA is calculated by the Company as net income before interest expense,
income tax expense, depreciation and amortization. The Company uses 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 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 EBITDA provides a meaningful measure of performance
exclusive of these unique items.

Contact:

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