Empire Resources Reports First Quarter 2013 Results

             Empire Resources Reports First Quarter 2013 Results

- First Quarter 2013 Sales Increase 22% Sequentially to $133.4 Million

- Operating Income Rises 12% to $3.4 Million from 2012 Fourth Quarter

PR Newswire

FORT LEE, N.J., May 14, 2013

FORT LEE, N.J., May 14, 2013 /PRNewswire/ --Empire Resources, Inc. (NASDAQ:
ERS), a distributor of value added, semi-finished metal products, announced
today that net sales for the first quarter of 2013 were $133.4 million, which
is an increase of 22% from the fourth quarter of 2012, and 8% lower than the
2012 first quarter. While pounds shipped increased over both prior periods,
lower metal pricing versus the 2012 first quarter resulted in reduced sales
compared to that quarter.

Gross profit for the first quarter of 2013 was $6.6 million, which is 9%
higher than in the 2012 fourth quarter and 4% higher than in the first quarter
of 2012. Gross profit as a percentage of sales was 5.0% in the first quarter
of 2013. This compares with 5.1% of sales in the fourth quarter of 2012
(before including a partial recovery of a claim against MF Global) and 4.4% of
sales in the first quarter of 2012.

Operating income for the first quarter of 2013 reached $3.4 million, an
increase of 12% from the fourth quarter of 2012 and up 16% from the 2012 first
quarter, reflecting the improvement in the gross profit along with the
Company's ongoing efforts to control SG&A expenses. 

Interest expense was in line with the fourth quarter of 2012, and 16% below
the first quarter of 2012 as the Company has been able to reduce bank debt
because of its success in controlling inventory levels. Total inventories
decreased $16.5 million from the end of the fourth quarter of 2012 and were
$43.6 million lower than at the end of the first quarter of 2012.

In the first quarter of 2013, the Company recognized a non-cash non-operating
loss of $2.1 million related to the change in fair market valuation of the
derivative feature of its convertible subordinated note. The recent increase
in the Company's stock price following its listing on the NASDAQ Capital
Market in February 2013 and the resulting mark-to-market of the derivative
liability accounted for the change in fair value in the 2013 first quarter.
Non-cash non-operating losses related to the derivative feature totaled $0.4
million in the fourth quarter of 2012 and $0.2 million in the first quarter of
2012. 

Pre-tax income, before including the derivative-related loss, was $2.3 million
in first quarter of 2013, an increase of 18% from the fourth quarter of 2012
and up 44% from the first quarter of 2012, before including the
derivative-related losses in those prior periods.

Net income for the first quarter of 2013 was $0.1 million, or $0.01 per
diluted share, including the non-cash non-operating loss related to the change
in fair value of the derivative feature of the Company's convertible
subordinated notes. Net income was $0.9 million, or $0.11 per diluted share,
for the fourth quarter of 2012, and $0.8 million, or $0.09 per diluted share,
in the first quarter of 2012, also including the non-cash losses attributable
to the derivative-related liability in both periods. 

Nathan Kahn, President and CEO, commented, "Continued execution of our
strategy enabled us to achieve improved results in the first quarter despite
continued challenging industry conditions.

"The 22% sequential improvement in our sales in the quarter included growth in
all geographic regions, highlighted by our further gains in market share in
South America along with improved sales in North America after the sharp drop
in demand industry-wide at the end of 2012. We also advanced in our sales of
steel products in the quarter. Increasing our position in steel products,
while maintaining our strong market position in aluminum, is a key component
of our strategy to accelerate top-line growth.

"We also made additional progress in strengthening our profitability in the
first quarter, most notably by further reducing our inventory while
maintaining revenues. The resulting increase in inventory turns enabled us to
reduce working capital and pay down bank debt for a third consecutive quarter,
improving our profitability and cash flow.

"Most importantly, our progress in the first quarter, both in sales and
operating income, was accompanied by our full commitment to being effective
partners to our customers and suppliers. It is on that foundation that we
will continue to pursue future profitable growth."

Empire Resources, Inc. is a distributor of a wide range of semi-finished metal
products to customers in the transportation, automotive, housing, appliance
and packaging industries in the U.S., Canada, Brazil, Australia, New Zealand
and Europe. It maintains supply contracts with mills in various parts of the
world.

This press release contains "forward-looking statements." Such statements may
be preceded by the words "intends," "may," "will," "plans," "expects,"
"anticipates," "projects," "predicts," "estimates," "aims," "believes,"
"hopes," "potential" or similar words. Forward-looking statements are not
guarantees of future performance, are based on certain assumptions and are
subject to various known and unknown risks and uncertainties, many of which
are beyond the Company's control, and cannot be predicted or quantified and
consequently, actual results may differ materially from those expressed or
implied by such forward-looking statements. Such risks and uncertainties
include, without limitation, risks and uncertainties associated with (i) the
loss or default of one or more suppliers; (ii) the loss or default of one or
more significant customers; (iii) a default by counterparties to derivative
financial instruments; (iv) changes in general, national or regional economic
conditions; (v) an act of war or terrorism that disrupts international
shipping; (vi) changes in laws, regulations and tariffs; (vii) the imposition
of anti-dumping duties on products the Company imports; (viii) changes in the
size and nature of the Company's competition; (ix) changes in interest rates,
foreign currencies or spot prices of aluminum; (x) the loss of one or more key
executives; (xi) increased credit risk from customers; (xii) the Company's
failure to grow internally or by acquisition and (xiii) the Company's failure
to improve operating margins and efficiencies. More detailed information about
the Company and the risk factors that may affect the realization of
forward-looking statements is set forth in the Company's filings with the
Securities and Exchange Commission (SEC), including the Company's prospectus
filed pursuant to Rule 424(b) under the Securities Act of 1933, as amended,
with the SEC on May 3, 2012 and its Quarterly Reports on Form 10-Q. Investors
and security holders are urged to read these documents free of charge on the
SEC's web site at http://www.sec.gov. The Company assumes no obligation to
publicly update or revise its forward-looking statements as a result of new
information, future events or otherwise.



Condensed Consolidated Statements of Income (Unaudited)
(In thousands except per share amounts)
                                              Three Months Ended March 31,
                                              2013 2012
Net sales                                     $     133,430        $   145,609
Cost of goods sold                                  126,800            139,255
Gross profit                                        6,630              6,354
Selling, general and administrative expenses        3,258              3,452
Operating income                                    3,372              2,902
Other expenses
 Change in value of derivative liability         (2,123)            (244)
 Interest expense, net                            (1,113)            (1,328)
Income before income taxes                          136                1,330
Income taxes                                        51                 499
Net income                                    $     85             $   831
Weighted average shares outstanding:
 Basic                                          8,586              9,221
 Diluted                                        8,852              9,422
Earnings per share:
 Basic                                          $0.01              $0.09
 Diluted                                        $0.01              $0.09
See notes to unaudited condensed consolidated financial
statements





Condensed Consolidated Balance Sheets
(In thousands except share amounts)
                                             March 31, 2013  December 31, 2012
                                             (Unaudited)
ASSETS
Current assets:
 Cash                                    $    2,664      $     3,136
 Trade accounts receivable (less
allowance for doubtful                            65,956           53,551
 accounts of $515 and $521)
 Inventories                                  129,015          145,547
 Deferred tax assets                          4,183            3,306
 Advance to supplier, net of imputed          3,060            3,061
interest of $264 and $292
 Other current assets                         8,723            3,965
 Total current assets                    213,601          212,566
 Advance to supplier, net of imputed
interest of $178 and                              5,665            6,413
 $234, respectively, net of current
maturities
 Preferential supply agreement                882              962
 Long-term financing costs, net of            719              862
amortization
 Property and equipment, net                  3,966            3,987
Total assets                                 $    224,833    $     224,790
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
 Notes payable - banks                   $    117,358    $     124,095
 Current maturities of mortgage payable       174              171
 Trade accounts payable                       40,495           36,048
 Income taxes payable                         3,951            3,036
 Accrued expenses and derivative              3,968            4,783
liabilities
 Dividends payable                            215              -
 Total current liabilities               166,161          168,133
Mortgage payable, net of current maturities       1,245            1,290
Subordinated convertible debt net of
unamortized discount                              10,208           10,067
 of $1,792 and $1,933 respectively
Derivative liability for embedded conversion      4,119            1,996
option
Deferred taxes payable                            213              195
 Total Liabilities                       181,946          181,681
Commitments and Contingencies (Note 19)
Stockholders' equity:
 Common stock $.01 par value, 20,000,000
shares authorized
 and 11,749,651 shares issued              117              117
 at March 31, 2013 and December 31,
2012
 Additional paid-in capital                   11,937           11,937
 Retained earnings                            36,511           36,641
 Accumulated other comprehensive loss         (207)            (136)
 Treasury stock, 3,165,249 and 3,158,597
shares                                            (5,471)          (5,450)
 at March 31, 2013 and December 31,
2012, respectively
 Total stockholders' equity              42,887           43,109
Total liabilities and stockholders' equity   $    224,833    $     224,790
See notes to unaudited condensed consolidated financial
statements





Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
                                           Three Months Ended March 31,
                                           2013 2012
Cash flows from operating activities:
 Net income                            $    85              $   831
 Adjustments to reconcile net income
to net cash provided
 by/(used in) operating
activities:
 Depreciation and                 173                 163
amortization
 Change in value of               2,123               244
derivative liability
 Amortization of convertible      141                 141
note discount
 Imputed interest on vendor       (85)                (173)
advance
 Amortization of supply           80                  -
agreement
 Deferred income taxes           (866)               (94)
 Foreign exchange                 19                  (57)
loss/(gain), and other
 Changes in:
 Trade accounts              (12,512)            (10,730)
receivable
 Inventories                 16,355              11,824
 Other current assets        (4,761)             4,773
 Trade accounts payable      4,475               (8,311)
 Income taxes payable        915                 592
 Accrued expenses and        (789)               (258)
derivative liabilities
 Net cash provided             5,353               (1,055)
by/(used in) operating activities
Cash flows provided by/(used in) investing
activities:
 Repayment/(advance) related to supply       833                 (5,000)
agreement
 Purchases of property and equipment         (9)                 (20)
 Net cash provided              824                 (5,020)
by/(used in) investing activities
Cash flows (used in)/provided by financing
activities:
 (Repayments of)/proceeds from notes        (6,580)             3,949
payable – banks
 Repayments - mortgage payable              (42)                (39)
 Dividends paid                            -                   (231)
 Deferred financing costs                   -                   (2)
 Treasury stock purchased                  (21)                (121)
 Net cash (used                 (6,643)             3,556
in)/provided by financing activities
Net decrease in cash                            (466)               (2,519)
 Effect of exchange rate                 (6)                 15
Cash at beginning of period                     3,136               4,274
Cash at end of the period                  $    2,664           $   1,770
Supplemental disclosures of cash flow
information:
 Cash paid during the period for:
 Interest                         $    766                 1,058
 Income taxes                     $    110                 743
Non cash financing activities:
 Dividend declared but not yet paid   $    215                 230
See notes to unaudited condensed
consolidated financial statements

SOURCE Empire Resources, Inc.

Website: http://www.empireresources.com
Contact: Investor Relations: Comm-Counsellors, LLC: Edward Nebb, +1
203-972-8350, enebb@optonline.net, or June Filingeri, +1 203-972-0186,
junefil@optonline.net; Shareholders: David Kronfeld, +1 917-408-1940,
dkronfeld@empireresources.com