Date: August 4, 2008
Source: Industrial Services of America, Inc.
Second quarter net income doubles to $1.7 million ($0.46 per share)
Non-ferrous shipment volumes up 67%; Ferrous up 32%
Company reports 21st consecutive profitable quarter
Industrial Services of America, Inc. (IDSA), a company that buys, processes and markets recyclable commodities and offers programs and equipment to help businesses manage wastes, today reported higher revenues and earnings for the second quarter and six months ending June 30, 2008.
For the second quarter of fiscal 2008
Total revenues increased 77% to $34.5 million, compared with $19.5 million in the similar 2007 period.
Earnings before interest, taxes, depreciation and amortization (EBITDA) were $3.5 million, compared with EBITDA of $1.9 million for the 2007 quarter. (See attached reconciliation.)
Net income grew 102 percent to $1,662,632 (basic and diluted earnings of $0.46 per share), a second quarter record. That compares with net income of $821,299 (basic and diluted earnings of $0.22 per share) in the second quarter of 2007. Basic and diluted shares outstanding were 3,596,368 in the second quarter of 2008 and 3,640,899 in 2007.
"ISA is benefiting not only from the higher price of commodities, but we are also successfully maximizing the utilization of current assets while we invest in expanding our processing and shipping capacities," said Brian Donaghy, ISA President and Chief Operating Officer. "This is evident from our second quarter performance, as shipments were up 67% and 32% for non-ferrous and ferrous materials from the same period a year ago."
Chairman and CEO Harry Kletter added, "Demand for commodities remains strong and these trends continue to benefit ISA and the recycling industry."
Revenues from product sales increased 92 percent in the second quarter, while management services revenue increased 10 percent to $4.0 million. Higher second quarter 2008 selling, general and administrative expenses reflected the inclusion of operating costs associated with Industrial Logistics Services, which was acquired in August 2007, as well as higher fuel costs.
The Company took advantage of pricing and demand trends near the end of the quarter to ship additional product, allowing it to exceed its June 23 earnings projection of $0.42 to $0.44 per share for the quarter.
For the first six months of fiscal 2008
Total revenues increased 62% to $60.6 million, compared with $37.4 million in the first half of 2007.
Earnings before interest, taxes, depreciation and amortization (EBITDA) were $5.9 million, compared with EBITDA of $3.7 million for the 2007 period. (See attached reconciliation.)
Net income increased 70 percent to $2,749,183 (basic and diluted earnings of $0.76 per share), compared with net income of $1,614,379 (basic and diluted earnings of $0.44 per share) in the first six months of 2007. Basic and diluted shares outstanding were 3,607,120 in 2008 and 3,640,899 in 2007.
For the first six months of 2008, product revenues rose 73% to $51.7 million, while service revenues increased 19% to $8.9 million. Ferrous shipments were 17 percent higher while non-ferrous shipments expanded by 58 percent.
Outlook
"The Company's performance during the first month of the third quarter has continued at roughly the same pace as the second quarter," said Donaghy. "We see positive trends for commodities over the long-term, but demand and pricing can remain volatile, as we've witnessed."
For the longer term, ISA is investing in a project that is expected to substantially increase its throughput capacity and expand its processing capabilities, Donaghy said.
"We are committed to improving our production methods and efficiencies as is evident in our recent ground breaking for a $10 million investment in a state-of-the-art shredding and non- ferrous recovery system," he said. "This investment will allow us to increase production, provide lower production costs and open the door to many new markets. It is important to recognize the continuous commitment by our management and ISA employees toward achieving our goals."
The Company's 2008 Form 10-Q filing is available for review at the Securities and Exchange Commission web site, www.sec.gov/edgar/searchedgar/companysearch.html.
About ISA
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, the company offers commercial, industrial and business customers a variety of programs and equipment to efficiently 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 varying demand for waste managing systems, equipment and services, competitive pressures in the waste managing systems and equipment, competitive pressures in the waste managing business, loss of customers and fluctuations in the price of recycled materials. Further information on factors that could affect the Company's results is detailed in the Company's filings with the Securities and Exchange Commission. The Company undertakes no obligation to publicly release the results of any revisions to the forward-looking statements.
Key words: recycling, scrap, ferrous, non-ferrous materials, waste management, international markets, global markets.
FINANCIAL RESULTS AND
SUPPLEMENTAL FINANCIAL INFORMATION
FOLLOW
INDUSTRIAL SERVICES OF AMERICA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 2008 AND 2007
(UNAUDITED)
2008 2007
------------ ------------
Revenue from services $ 4,011,256 $ 3,648,276
Revenue from product sales 30,499,829 15,879,820
------------ ------------
Total Revenue 34,511,085 19,528,096
Cost of goods sold for services 3,616,674 3,405,183
Cost of goods sold for product sales 24,598,437 13,174,595
Reduction of cost of goods sold - (107,266)
------------ ------------
Total Cost of goods sold 28,215,111 16,472,512
Selling, general and administrative expense 3,481,812 1,649,201
------------ ------------
Income before other income (expense) 2,814,162 1,406,383
Other income (expense)
Interest expense (135,003) (71,395)
Interest income 20,563 32,791
Gain/(loss) on sale of assets 21,623 (5,613)
Other income 127,369 305
------------ ------------
34,552 (43,912)
------------ ------------
Income before income taxes 2,848,714 1,362,471
Income tax provision 1,186,082 541,172
------------ ------------
Net income $ 1,662,632 $ 821,299
============ ============
Basic earnings per share $ 0.46 $ 0.22
============ ============
Diluted earnings per share $ 0.46 $ 0.22
============ ============
Weighted shares outstanding:
Basic 3,596,368 3,640,899
============ ============
Diluted 3,596,368 3,640,899
============ ============
INDUSTRIAL SERVICES OF AMERICA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2008 AND 2007
(UNAUDITED)
2008 2007
------------ ------------
Revenue from services $ 8,883,798 $ 7,492,503
Revenue from product sales 51,710,682 29,940,342
------------ ------------
Total Revenue 60,594,480 37,432,845
Cost of goods sold for services 8,243,037 6,927,882
Cost of goods sold for product sales 42,360,969 24,928,942
Reduction of cost of goods sold - (142,544)
------------ ------------
Total Cost of goods sold 50,604,006 31,714,280
Selling, general and administrative expense 5,291,417 3,013,208
------------ ------------
Income before other income (expense) 4,699,057 2,705,357
Other income (expense)
Interest expense (228,569) (113,852)
Interest income 43,997 61,764
Gain/(loss) on sale of assets 16,481 (11,388)
Other income 128,666 22,358
------------ ------------
(39,425) (41,118)
------------ ------------
Income before income taxes 4,659,632 2,664,239
Income tax provision 1,910,449 1,049,860
------------ ------------
Net income $ 2,749,183 $ 1,614,379
============ ============
Basic earnings per share $ 0.76 $ 0.44
============ ============
Diluted earnings per share $ 0.76 $ 0.44
============ ============
Weighted shares outstanding:
Basic 3,607,120 3,640,899
============ ============
Diluted 3,607,120 3,640,899
============ ============
INDUSTRIAL SERVICES OF AMERICA, INC.
SUPPLEMENTAL FINANCIAL INFORMATION
Reconciliation of EBITDA (1):
Three months ending Six Months ending
June 30, June 30,
----------------------------------------------------------------------
2008 2007 2008 2007
--------- --------- --------- ---------
Net Income 1,662,632 821,299 2,749,183 1,614,379
----------------------------------------------------------------------
Interest expense 135,003 71,395 228,569 113,852
----------------------------------------------------------------------
Income taxes 1,186,082 541,172 1,910,449 1,049,860
----------------------------------------------------------------------
Depreciation 521,664 460,146 1,041,000 916,643
----------------------------------------------------------------------
Amortization - - - -
----------------------------------------------------------------------
EBITDA (1) 3,505,381 1,894,012 5,929,201 3,694,734
----------------------------------------------------------------------
(1) EBITDA is calculated by the Company as net income before interest
expense, income tax expense, depreciation and amortization. The
Company uses EBITDA as a key performance measure of results of
operations for purposes of evaluating performance internally. This
non-GAAP measurement is not intended to replace the presentation of
our financial results in accordance with GAAP. Rather, we believe the
EBITDA calculation provides additional information to investors and
debt holders due to the fact that tax credits, tax rates and other
tax related items vary by company. Additionally, years of service for
fixed assets and amortizable assets are based on company judgment.
Finally, companies have several ways of raising capital which can
affect interest expense. We believe the presentation of EBITDA
provides a meaningful measure of performance exclusive of these
unique items.
For more information, contact:
Harry Kletter or Alan Schroering
Industrial Services of America, Inc., Louisville
502-366-3452
hklet@isa-inc.com or aschroering@isa-inc.com.
Website: www.isa-inc.com.
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