Empire Resources Reports Second Quarter 2013 Results

             Empire Resources Reports Second Quarter 2013 Results

PR Newswire

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

FORT LEE, N.J., Aug.14, 2013 /PRNewswire/ --Empire Resources, Inc. (NASDAQ:
ERS), a distributor of value added, semi-finished metal products, announced
today that net sales for the second quarter of 2013 were $110.5 million, which
is 24% lower than the second quarter of 2012, and reflected the market decline
in metal pricing as well as lower unit volume shipments to most geographic
regions in line with soft economic conditions.

Gross profit for the second quarter of 2013 was $5.3 million, down 18% from
the second quarter of 2012. However, gross profit as a percentage of sales
improved to 4.8% from 4.4% of sales in the second quarter of 2012, as the
Company continued to implement its inventory management strategy and reduced
storage and processing costs in the quarter.

Operating income for the second quarter of 2013 was $1.8 million compared with
$3.1 million in the second quarter of 2012. SG&A expenses were 6% higher
versus the second quarter of 2012 due in part to the Company's investment in
employee count to expand its geographic reach. 

Interest expense of $1.1 million in the second quarter of 2013 was 20% below
the second quarter of 2012. The Company's continued success in controlling
inventory levels, which decreased $36.9 million or 24% from the end of the
second quarter of 2012, enabled Empire to reduce bank debt by $43.8 million or
28% from the end of the prior year second quarter.

In the second quarter of 2013, the Company recognized a non-cash non-operating
loss of $0.04 million related to the change in fair market valuation of the
derivative feature of its convertible subordinated note. That compares with a
non-cash non-operating gain of $0.2 million related to the derivative
valuation recognized in the second quarter of 2012. 

Before including the non-cash non-operating derivative-related amounts in both
periods, pre-tax income was $0.6 million in the second quarter of 2013 versus
$1.7 million in the second quarter of 2012.

Net income for the second quarter of 2013 was $0.4 million, or $0.04 per
diluted share, including the derivative related non-cash non-operating loss.
That compares with net income of $1.2 million, or $0.11 per diluted share, in
the second quarter of 2012, including the non-cash non-operating gain in the
prior year period.

For the first six months of 2013, net sales were $243.9 million; pre-tax
income, before including a non-cash non-operating derivative-related loss of
$2.2 million, was $2.9 million; and net income was $0.5 million, or $0.05 per
diluted share, including the derivative-related loss. In the first six months
of 2012, net sales were $291.3 million; pre-tax income, before including a
non-cash non-operating derivative-related loss of $0.05 million, was $3.3
million; and net income was $2.0 million, or $0.21 per diluted share,
including the derivative-related loss. 

Nathan Kahn, President and CEO, commented, "Softer than expected economic
conditions in most regions of the world and the fall-off in the market pricing
of both aluminum and steel made the second quarter an especially challenging
period. Additionally, the drop in the value of the Brazilian real meant that
many potential steel orders in that market did not meet our margin
requirements and caused us to curtail volume in the second quarter. However,
the rest of South America remained strong and we are continuing to expand our
reach in the region, most recently through the establishment of a wholly owned
subsidiary in Mexico. We also have initiatives underway in Europe to improve
our market position there."

"Additionally, we moved forward in the second quarter with our strategy to
improve profitability, and were successful in further reducing inventory, bank
debt and interest costs. That progress is also reflected in our cash flow from
operations, which nearly doubled to $7.9 million for the six month period from
$4.0 million in the same period of 2012."

"It is generally expected that market conditions will begin to strengthen in
the fourth quarter. In the meantime, we will continue to execute our plan for
profitable growth with our central focus on being effective partners to our
customers and suppliers."

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, Latin America, 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 Annual
Report on Form 10-K 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 June 30,  Six Months Ended June 30,
                            2013           2012         2013          2012
Net sales               $   110,468     $  145,692   $  243,898    $  291,301
Cost of goods sold          105,201        139,271      232,001       278,526
Gross profit                5,267          6,421        11,897        12,775
Selling, general and        3,501          3,307        6,759         6,759
administrative expenses
Operating income            1,766          3,114        5,138         6,016
Other expenses
 Change in value of       (44)           195          (2,167)       (49)
derivative liability
 Interest expense,        (1,134)        (1,413)      (2,247)       (2,741)
net
Income before income        588            1,896        724           3,226
taxes
Income taxes                221            728          272           1,227
Net income              $   367         $  1,168     $  452        $  1,999
Weighted average shares
outstanding:
 Basic                  8,586          9,230        8,585         9,205
 Diluted                8,871          12,117       8,860         12,096
Earnings per share:
 Basic              $   0.04        $  0.13      $  0.05       $  0.22
 Diluted            $   0.04        $  0.11      $  0.05       $  0.21
See notes to unaudited condensed consolidated
financial statements





Condensed Consolidated Balance Sheets
(In thousands except share amounts)
                                              June 30, 2013  December 31, 2012
                                              (Unaudited)
ASSETS
Current assets:
 Cash                                     $   2,212      $     3,136
 Trade accounts receivable (less
allowance for doubtful                            58,408           53,551
 accounts of $517 and $521)
 Inventories                                  119,585          145,547
 Deferred tax assets                          4,166            3,306
 Advance to supplier, net of imputed          3,089            3,061
interest of $235 and $292
 Other current assets                         10,229           3,965
 Total current assets                    197,689          212,566
 Advance to supplier, net of imputed
interest of $130 and                              4,880            6,413
 $234,net of current maturities
 Preferential supply agreement                802              962
 Long-term financing costs, net of            637              862
amortization
 Property and equipment, net                  3,930            3,987
Total assets                                  $   207,938    $     224,790
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
 Notes payable - banks                    $   113,853    $     124,095
 Current maturities of mortgage payable       177              171
 Trade accounts payable                       27,481           36,048
 Income taxes payable                         4,248            3,036
 Accrued expenses and derivative              3,003            4,783
liabilities
 Dividends payable                            215              -
 Total current liabilities               148,977          168,133
Mortgage payable, net of current maturities       1,200            1,290
Subordinated convertible debt net of
unamortized discount                              10,349           10,067
 of $1,651 and $1,933 respectively
Derivative liability for embedded conversion      4,163            1,996
option
Deferred taxes payable                            138              195
 Total Liabilities                       164,827          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 June 30, 2013 and December 31,
2012
 Additional paid-in capital                   11,937           11,937
 Retained earnings                            36,664           36,641
 Accumulated other comprehensive loss         (136)            (136)
 Treasury stock, 3,165,249 and 3,158,597
shares                                            (5,471)          (5,450)
 at June 30, 2013 and December 31,
2012, respectively
 Total stockholders' equity              43,111           43,109
Total liabilities and stockholders' equity    $   207,938    $     224,790
See notes to unaudited condensed consolidated financial
statements





Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
                                                  Six Months Ended June 30,
Cash flows from operating activities:                2013            2012
 Net income                                  $   452          $  1,999
 Adjustments to reconcile net income to net
cash provided
 by operating activities:
 Depreciation and amortization        286             271
 Change in value of derivative         2,167           49
liability
 Amortization of convertible note      283             283
discount
 Imputed interest on vendor            (161)           (259)
advance
 Amortization of supply agreement      160             -
 Deferred income taxes                (942)           (39)
 Foreign exchange loss/(gain), and     10              35
other
 Loss on sale of marketable            31              -
securities
 Changes in:
 Trade accounts receivable        (4,900)         (12,148)
 Inventories                      25,879          27,423
 Other current assets             (6,270)         (1,197)
 Trade accounts payable           (8,562)         (14,905)
 Income taxes payable             1,212           1,008
 Accrued expenses and             (1,746)         1,476
derivative liabilities
 Net cash provided by operating     7,899           3,996
activities
Cash flows provided by/(used in) investing
activities:
 Repayment/(advance) related to supply            1,667           (5,000)
agreement
 Net proceeds from sale of marketable             6               -
securities
 Purchases of property and equipment              (4)             (20)
 Net cash provided by/(used in)      1,669           (5,020)
investing activities
Cash flows (used in)/provided by financing
activities:
 (Repayments of)/proceeds from notes payable     (10,169)        3,398
– banks
 Repayments - mortgage payable                   (84)            (79)
 Dividends paid                                 (215)           (461)
 Deferred financing costs                        -               (2)
 Treasury stock purchased                       (21)            (1,932)
 Net cash (used in)/provided by      (10,489)        924
financing activities
Net decrease in cash                                 (921)           (100)
 Effect of exchange rate                      (3)             (15)
Cash at beginning of period                          3,136           4,274
Cash at end of the period                        $   2,212        $  4,159
Supplemental disclosures of cash flow
information:
 Cash paid during the period for:
 Interest                               $   2,137        $  2,697
 Income taxes                           $   1,825        $  2,221
Non cash financing activities:
 Dividend declared but not yet paid         $   215          $  215
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