Industrial Services of America, Inc. Announces Results for 2013
LOUISVILLE, Ky. -- April 1, 2014
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, today reported financial results
for the fiscal year ending December 31, 2013.
Summary of 2013 Operating Results:
*Total revenue decreased $57.4 million or 29.6% to $136.8 million in 2013,
compared to $194.2 million in 2012
*Recycling segment revenue decreased $57.6 million or 30.8% to $129.4
million in 2013, compared to $187.0 million in 2012
*Stainless steel shipments decreased by 31.6 million pounds, or 38.0%,
relative to stainless steel shipments in 2012
*Shipments of ferrous material decreased by 11,500 gross tons, or 8.0%, and
shipments of nonferrous material decreased 2.3 million pounds, or 6.8%
*Net loss increased to ($13.8) million from a net loss of ($6.6) million in
2012, or a decline of $7.2 million
*Basic and diluted loss per share was ($1.96), compared with a loss per
basic and diluted share of ($0.95) in 2012.
In the fourth quarter of 2013, ISA underwent a series of dramatic changes in
an effort to right-size the business, overhaul operations, streamline the
balance sheet and position the Company to significantly improve its
profitability in 2014. Among the more significant milestones ISA achieved
during the fourth quarter were:
*Entered into a Management Services Agreement (“MSA”) with Algar, Inc.
whereby Algar will provide day-to-day senior executive level operating
management supervisory services to ISA
*Appointed Sean Garber, CEO of Algar, to the position of President of ISA
Also during the fourth quarter, as a result of continued pressure on the
prices of stainless steel materials, ISA’s management decided to discontinue
production of stainless steel blends. This action accomplishes two primary
objectives: It increases the amount of capital the Company can reallocate to
its core ferrous and nonferrous processing businesses, and it reduces the
Company’s reliance on a single customer for a large percentage of its sales.
Management believes this action will reduce the overall risk profile of ISA’s
business, as well as the volatility of the Company’s revenue and profit.
In addition to taking this decisive action, management undertook initiatives
to improve ISA’s balance sheet, including:
*Completed the write-down of the stainless steel blends inventory, bringing
the total inventory write-down for 2013 to $2.2 million
*Wrote off the remaining $3.5 million of intangible assets associated with
*Reduced total debt by $6.6 million, or 26.2%, from $25.1 million to $18.5
*Obtained a new $4 million credit facility from Bank of Kentucky to
supplement the Fifth Third credit facility
Cash Flow Highlights:
ISA concluded 2013 with cash of $1.6 million, a $0.3 million reduction from
the cash balance at the end of 2012. During 2013 the Company:
*Generated $5.5 million of cash from operations
*Generated $0.3 million of cash from investing activities; and
*Repaid $9.9 million of debt, or $6.6 million on a net basis, after taking
into account the new capital provided by Bank of Kentucky.
In February 2014, ISA accomplished two other important objectives:
*Renegotiated its primary credit facility with Fifth Third Bank, and
obtained a waiver of default
*Regained compliance with NASDAQ
The amendment to the Fifth Third credit facility extends the maturity date of
both the revolving credit facility and the term loan to July 31, 2015,
temporarily reduces the interest rate on both loans, lowers the monthly
principal payment on the term loan and increases the advance rate on
inventory. These benefits enhance ISA’s near-term liquidity, which the Company
is using to grow operations.
Commenting on the significant financial and operational improvements, Sean
Garber, President of ISA stated: “When we agreed to assume operational control
of ISA, we immediately recognized that ISA had an impressive portfolio of
assets. However, the Company needed to address some legacy issues that
resulted from a strategy it established during the scrap boom.
“Although the business faced many operational challenges, it was clear to us
that ISA had a group of dedicated and capable employees. We determined that
with the proper tools and guidance we could capitalize on ISA’s valuable
assets – namely, location, physical facility and people.
“Since the beginning of 2014, we have reduced the annual amount of our
selling, general and administrative expense by approximately $1.9 million. At
the same time, we have improved our scrap buying discipline, and as a result
we have already started to see increasing shipments into ISA’s main yard.
“While we are extremely pleased with the improvement in operations, we are
especially impressed with the tireless efforts of the entire ISA team. There
still is a lot of hard work ahead in this challenging market environment. The
ISA team is committed to success, and I am encouraged that we will emerge from
these conditions in a better position than we are in today.”
For details regarding the Company’s results of operations and financial
condition as of December 31, 2013, see the Company’s Annual Report on Form
10-K as filed with the U.S. Securities and Exchange Commission on March 31,
ISA’s SEC filings are available for review at the Securities and Exchange
Commission web site at
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
Industrial Services of America, Inc.
Alan Schroering, 502-214-3710
Vice President of Finance and Interim Chief Financial Officer
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