ISA also expects operating loss to be in the range of $0.29 to $0.34 per share and one-time charges after income tax of $0.37, which will result in a fourth quarter 2008 loss in the range of $0.66 and $0.71 per basic and diluted share.
The fourth quarter 2008 loss reflects three primary factors:
An operating loss caused by much lower demand and lower prices for ISA recyclable commodities, a result of the slowdown of global economic activity;
An inventory write-down of about $1.2 million to revalue ferrous and non-ferrous inventories at the current lower market prices;
A $990,000 reserve for the previously announced settlement of a lawsuit.
Reported fourth quarter 2007 earnings were $566,295, or $0.16 per share, on revenues of $21.6 million. The company expects to report full-year 2008 and fourth quarter earnings on or about March 31, 2009.
“Due to the worldwide economic downturn, the demand for recycled products and commodities came to a standstill in the fourth quarter of 2008, and we responded by cutting overhead and reducing staff,” stated Brian Donaghy, president and chief operating officer of ISA. “While this trying time presented management many challenges, it also provided some real opportunities.”
During the first quarter of 2009, ISA expanded into the stainless steel and high-temperature alloys recycling business by purchasing the inventories from Ventures Metals, LLC, agreeing to lease its processing equipment and facilities on Campground Road in Louisville, Kentucky and in Mobile, Alabama, and hiring key executives to head up a new ISA Alloys division. Over 90% of the inventories acquired in the transaction have been sold and shipped.
By settling the lawsuit, ISA is re-gaining access to several acres of property and facilities at its Grade Lane headquarters. The area will host company’s new stainless steel operations, allowing the company to consolidate ferrous and non-ferrous metals and stainless steel processing at its Grade Lane location. “We expect this consolidation will improve processing efficiencies and reduce unit costs,” added Donaghy.
ISA transformed its new Campground Road location into a full-service recycling material receiving facility. The company began expanded operations at this location March 16, 2009 and this location is expected to play a strategic role in providing materials for ISA’s new high-capacity shredder on Grade Lane. The shredder, anticipated to begin full operations in April, will increase processing capacity, offer specialty grades of scrap and improve end-product quality.
