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| 8-K - KEYSTONE CONSOLIDATED INDUSTRIES, INC. - 8-K 4TH QUARTER EARNINGS 12-31-2011 - KEYSTONE CONSOLIDATED INDUSTRIES INC | kci8k4thqrtearn12312011.htm |
KEYSTONE CONSOLIDATED INDUSTRIES, INC.
PRESS RELEASE
FOR IMMEDIATE RELEASE
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Keystone Consolidated Industries, Inc.
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CONTACT:
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5430 LBJ Freeway, Suite 1740
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Bert E. Downing, Jr.
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Dallas, Texas 75240-2697
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Vice President and Chief Financial Officer
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(972) 458-0028
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(972) 458-0028
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KEYSTONE REPORTS FOURTH QUARTER 2011 RESULTS
DALLAS, TEXAS . . . March 15, 2012 . . . Keystone Consolidated Industries, Inc. (OTCQB: KYCN), reported net income of $5.6 million, or $0.46 per diluted share, in the fourth quarter of 2011 as compared to a net loss of $2.9 million, or $0.24 per diluted share, in the fourth quarter of 2010. The improved results were primarily due to increased shipment volumes, a higher margin between selling prices and raw material costs and a $9.1 million higher defined benefit pension credit during the fourth quarter of 2011.
Because the amount of the Company’s net periodic defined benefit pension and other postretirement benefit (“OPEB”) expense or credits are unrelated to the ongoing operating activities of the Company, Keystone measures its overall operating performance using operating income (loss) before pension and OPEB expense or credits. A reconciliation of operating income (loss) as reported to operating income adjusted for pension and OPEB expense or credits is set forth in the following table.
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Year ended
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December 31,
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December 31,
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2010
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2011
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2010
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2011
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(restated)(1)
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(restated)(1)
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(In thousands)
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Operating income (loss) as reported
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$ | (3,607 | ) | $ | 9,676 | $ | 21,885 | $ | 51,568 | |||||||
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Defined benefit pension credit
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(1,022 | ) | (10,138 | ) | (4,654 | ) | (24,388 | ) | ||||||||
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OPEB credit
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(1,229 | ) | (1,901 | ) | (5,258 | ) | (5,799 | ) | ||||||||
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Operating income (loss) before pension and OPEB
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$ | (5,858 | ) | $ | (2,363 | ) | $ | 11,973 | $ | 21,381 | ||||||
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(1) At the end of 2011, certain Keystone segments changed their method for productive inventory costing from LIFO to FIFO or average cost. As required by GAAP, the Company retroactively restated their financial statements for prior periods to reflect this change in accounting. See Keystone’s 2011 Annual Report on Form-10K for the impact of this restatement.
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Operating performance before pension and OPEB for the 2011 periods was significantly better than 2010 primarily due to the net effects of the following factors:
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increased shipment volumes,
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a higher margin between selling prices and raw material costs,
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higher insurance costs, and
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increased accrued incentive compensation expense due to improved profitability.
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Primarily due to an $86 million increase in Keystone’s pension plans’ assets during 2010, the Company recorded a defined benefit pension credit of $10.1 million and $24.4 million during the fourth quarter and year ended December 31, 2011, respectively, as compared to the $1.0 million and $4.7 million defined benefit pension credit recorded during the fourth quarter and year ended December 31, 2010.
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:
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Future supply and demand for Keystone’s products (including cyclicality thereof),
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Customer inventory levels,
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Changes in raw material and other operating costs (such as ferrous scrap and energy),
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Availability of raw materials,
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The possibility of labor disruptions,
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General global economic and political conditions,
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Competitive products (including low-priced imports) and substitute products,
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Customer and competitor strategies,
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The impact of pricing and production decisions,
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Environmental matters (such as those requiring emission and discharge standards for existing and new facilities),
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Government regulations and possible changes thereof,
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Significant increases in the cost of providing medical coverage to employees,
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The ultimate resolution of pending litigation and U.S. Environmental Protection Agency investigations,
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International trade policies of the United States and certain foreign countries,
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Operating interruptions (including, but not limited to, labor disputes, fires, explosions, unscheduled or unplanned downtime, supply disruptions and transportation interruptions),
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The Company’s ability to renew or refinance credit facilities,
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The ability of the Company’s customers to obtain adequate credit,
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Any possible future litigation, and
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Other risks and uncertainties as discussed in the Company’s filings with the SEC.
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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:
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The Company discloses operating income (loss) 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 (loss) 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.
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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).
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KEYSTONE CONSOLIDATED INDUSTRIES, INC. AND SUBSIDIARIES
Condensed Summary of Operations
(In thousands, except per share data)
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Three months ended
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Year ended
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December 31,
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December 31,
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2010
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2011
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2010
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2011
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(restated)(1)
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(restated)(1)
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(unaudited)
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Net sales
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$ | 102,424 | $ | 132,894 | $ | 450,745 | $ | 563,985 | ||||||||
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Cost of goods sold
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(102,692 | ) | (129,846 | ) | (417,918 | ) | (520,015 | ) | ||||||||
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Gross margin (loss)
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$ | (268 | ) | $ | 3,048 | $ | 32,827 | $ | 43,970 | |||||||
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Operating income (loss)
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$ | (3,607 | ) | $ | 9,676 | $ | 21,885 | $ | 51,568 | |||||||
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Income (loss) before income taxes
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$ | (3,538 | ) | $ | 9,418 | $ | 20,659 | $ | 51,049 | |||||||
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Income tax benefit (expense)
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656 | (3,805 | ) | (8,645 | ) | (20,838 | ) | |||||||||
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Net income (loss)
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$ | (2,882 | ) | $ | 5,613 | $ | 12,014 | $ | 30,211 | |||||||
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Basic and diluted net income (loss) per share
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$ | (0.24 | ) | $ | 0.46 | $ | 0.99 | $ | 2.50 | |||||||
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Basic and diluted weighted average shares outstanding
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$ | 12,102 | 12,102 | 12,102 | 12,102 | |||||||||||
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(1) At the end of 2011, certain Keystone segments changed their method for productive inventory costing from LIFO to FIFO or average cost. As required by GAAP, the Company retroactively restated their financial statements for prior periods to reflect this change in accounting. See Keystone’s 2011 Annual Report on Form-10K for the impact of this restatement.
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