2013-03-14 19:47:49 -
DALLAS, TEXAS . . . March 14, 2013 . . . Keystone Consolidated Industries, Inc.
(OTCQB: KYCN), reported an operating loss before pension and other
postretirement benefit ("OPEB") credits for the fourth quarter of 2012 of $2.4
million, which approximated the operating loss of the fourth quarter of 2011 as
a higher selling price margin over ferrous scrap costs and lower incentive
compensation expense was offset by increased costs associated with optimizing
operations at one of Keystone's segments.
Because the amount of the Company's net periodic defined benefit pension and
OPEB expense or credits are unrelated to the ongoing operating activities of the
Company, Keystone measures its overall operating performance using operating
income before pension and OPEB expense or credits. A reconciliation of
operating income as reported to operating income adjusted for pension and OPEB
expense or credits is set forth in the following table.
Three months ended Year ended
December 31, December 31,
---------------------------------- -----------------------------
2011 2012 2011 2012
(In thousands)
Operating $ $ $
income as 9,676 $ 877 51,568 33,898
reported
Defined
benefit (10,138) (1,715) (24,388) (6,858)
pension credit
OPEB credit
(1,901) (1,518) (5,799) (6,075)
Operating
income (loss)
before pension
and OPEB
pension and $ $ (2,356) $
$
OPEB (2,363) 21,381 20,965
Operating income before pension and OPEB for 2012 approximated operating results
for 2011 primarily due to the net effects of the following factors:
* increased shipment volumes of higher-margin fabricated wire products as
Keystone gained market share and experienced increased demand,
* lower shipment volumes of lower-margin wire rod due to weakened demand and
the influence of imported rods,
* higher margin between selling prices and raw material costs for mesh and bar
products, partially offset by a lower margin for all other product lines due
to competitive pressures and customers' reaction to generally falling scrap
prices,
* increased costs associated with continued efforts to optimize production
operations at one of the Company's segments,
* lower utility costs,
* increased salary and wage expense primarily due to increased headcount,
* higher healthcare costs,
* lower insurance costs, and
* higher incentive compensation expense.
Net income for the fourth quarter of 2012 was $0.7 million, or $0.05
per diluted share, as compared to net income of $5.6 million, or $0.46 per
diluted share, in the fourth quarter of 2011. For the full year 2012, net
income was $20.2 million, or $1.67 per diluted share, compared to net income of
$30.2 million, or $2.50 per diluted share, in 2011. The decrease in net income
was primarily due to a lower defined benefit pension credit during the 2012
periods. Primarily due to a $45 million decrease in Keystone's pension plans'
assets as well as a 101 basis point reduction in the applicable discount rate
during 2011, the Company recorded a defined benefit pension credit of $6.9
million during 2012 as compared to the $24.4 million defined benefit pension
credit recorded during 2011. Accordingly, Keystone recorded a defined benefit
pension credit of $1.7 million during the fourth quarter of 2012 as compared to
the $10.1 million credit recorded during the fourth quarter of 2011.
This release contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Statements in this release
that are not historical in nature are forward-looking and are not statements of
fact. Forward-looking statements represent the Company's beliefs and
assumptions based on currently available information. In some cases you can
identify these forward-looking statements by the use of words such as
"believes," "intends," "may," "should,"
"could," "anticipates," "expected" or
comparable terminology, or by discussions of strategies or trends. Although
Keystone believes the expectations reflected in forward-looking statements are
reasonable, it does not know if these expectations will be correct. Forward-
looking statements by their nature involve substantial risks and uncertainties
that could significantly impact expected results. Actual future results could
differ materially from those predicted. While it is not possible to identify all
factors, the Company continues to face many risks and uncertainties. Among the
factors that could cause Keystone's actual future results to differ materially
from those described herein are the risks and uncertainties discussed from time
to time in the Company's filings with the Securities and Exchange Commission
("SEC") including, but not limited to, the following:
* Future supply and demand for Keystone's products (including cyclicality
thereof),
* Customer inventory levels,
* Changes in raw material and other operating costs (such as ferrous scrap and
energy),
* Availability of raw materials,
* The possibility of labor disruptions,
* General global economic and political conditions,
* Competitive products (including low-priced imports) and substitute products,
* Customer and competitor strategies,
* The impact of pricing and production decisions,
* Environmental matters (such as those requiring emission and discharge
standards for existing and new facilities),
* Government regulations and possible changes thereof,
* Significant increases in the cost of providing medical coverage to
employees,
* The ultimate resolution of pending litigation and U.S. Environmental
Protection Agency investigations,
* International trade policies of the United States and certain foreign
countries,
* Operating interruptions (including, but not limited to, labor disputes,
fires, explosions, unscheduled or unplanned downtime, supply disruptions and
transportation interruptions),
* The Company's ability to renew or refinance credit facilities,
* The ability of the Company's customers to obtain adequate credit,
* Any possible future litigation, and
* Other risks and uncertainties as discussed in the Company's filings with the
SEC.
Should one or more of these risks materialize, if the consequences
worsen, or if the underlying assumptions prove incorrect, actual results could
differ materially from those forecasted or expected. Keystone disclaims any
intention or obligation to update or revise any forward-looking statement
whether as a result of changes in information, future events or otherwise.
In an effort to provide investors with additional information regarding the
Company's results as determined by accounting principles generally accepted in
the United States of America ("GAAP"), the Company has disclosed certain non-
GAAP information, which the Company believes provides useful information to
investors:
* The Company discloses operating income before pension and OPEB expense or
credits, which is used by the Company's management to assess its
performance. The Company believes disclosure of operating income before
pension and OPEB expense or credits provides useful information to investors
because it allows investors to analyze the performance of the Company's
operations in the same way the Company's management assesses performance.
Keystone Consolidated Industries, Inc. is headquartered in Dallas, Texas. The
Company is a leading manufacturer of steel fabricated wire products, industrial
wire and wire rod. Keystone also manufactures wire mesh, coiled rebar, steel
bar and other products. The Company's products are used in the agricultural,
industrial, cold drawn, construction, transportation, original equipment
manufacturer and retail consumer markets. Keystone's common stock is quoted on
the OTCQB (Symbol: KYCN).
* * * * * * * * * *
Three months ended Year ended
December 31,
December
31,
2011 2012 2011 2012
(unaudited)
Net sales $ $ 108,545 $ $
132,894 563,985 547,657
Cost of (106,402)
goods sold (129,846) (520,015) (502,779)
Gross $ $ $
$
margin 3,048 2,143 43,970 44,878
Operating $ $ $
$
income 9,676 877 51,568 33,898
Income $ $ $
before 9,418 $ 601 51,049 32,167
income taxes
Income tax
benefit (3,805) 56 (20,838) (11,943)
(expense)
Net income $ $ $
$
5,613 657 30,211 20,224
Basic and
diluted net $ $
$ $
income per 0.46 0.05 2.50 1.67
share
Basic and
diluted
weighted
average
shares
outstanding 12,102 12,102 12,102 12,102
CONTACT: Bert E. Downing, Jr., Vice President and Chief Financial Officer (972)
458-0028
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originality of the information contained therein.
Source: Keystone Consolidated Industries, Inc. via Thomson Reuters ONE
[HUG#1685481]
