Wise Metals Group LLC announces financials

Recycling Today, April, 2005

Shipments of Wise Metals Group's aluminum beverage can stock, other rolled aluminum products and scrap in the fourth quarter of 2004 totaled 166 million pounds, compared to 146.3 million for the same period in 2003, according to an announcement by company officials.

For all of 2004, shipments totaled 736.1 million pounds, compared to 605.2 million pounds for 2003, an increase of 22 percent. Net loss for the fourth quarter of 2004 was $25.2 million. This compares to net income of $1.8 million in the fourth quarter of 2003.

Adjusted earnings before interest and fees, taxes, depreciation and amortization (EBITDA) for Wise Recycling increased approximately 62 percent in the fourth quarter vs. the fourth quarter of 2003. For the full year, adjusted EBITDA also increased by approximately 49 percent to $3.6 million.

The company's network of recycling centers generated a 47 percent increase in quarterly sales from the prior year, reflecting an increase in market pricing and an 18 percent increase in volumes handled through the Wise system.

"We are extremely pleased with our performance this year," says Wise Recycling Chief Financial Officer Jim Tierney. "We have managed our system of centers and our administrative side to take advantage of favorable market conditions without adding significantly to costs as volumes increase."

Wise Recycling continues to diversify from its roots as a used beverage container (UBC) collection network, Wise Recycling Vice President Gary Curtis says. "UBCs continue to be our largest single volume contributor, but we are seeking to become a one-stop shop for small and large recyclable scrap collectors," he says. "UBC volume represented roughly 30 percent of the volume through the Wise Recycling system in 2004, but volume growth over the prior year in that market was only 4 percent compared to more than 26 percent for other scrap types."

For the year, Wise Metals Group reported a net loss of $41.5 million. These results compare to a reported profit of $7.6 million for 2003.

Wise says that increased costs for transportation, material and supplies and continued high energy costs have offset gains achieved by productivity increases.

"Obviously our productivity increases cannot continue to offset the rapidly rising costs outside of our control, which is why we had our previously announced price increase," Wise Metals Group Executive Vice President and Chief Financial Officer Danny Mendelson says. "This price increase, including an annual price increase equal to a percentage increase of the PPI (Producer Price Index), is set to take place April 1. Accordingly, first quarter 2005 results will continue to be affected by these rising input costs, with margin improvement from our price increases expected in the second quarter of 2005," he says.

Wise Metals Group Chairman and CEO David D'Addario says, "As we head into 2005, I am enthusiastic about both our prospects in the can industry and the growth potential in the building and construction (B&C) and common alloy distributor markets." He adds, "The interest in these products has been very strong given the recent and continuing trends in both residential and commercial construction. Through our developing manufacturing practices and resulting efficiencies, we have generated additional capacity to now expand our presence in these markets."

Wise Metals Group's newest subsidiary, Listerhill Total Maintenance Center (LTMC), continues to grow its customer base, D'Addario says. LTMC provides maintenance, repairs and fabrication to manufacturing and industrial plants.