WBJ Weekly News Bulletin: Week of May 3-9, 2011 - Industrial Services of America Posts First Quarter Revenue up 43%

Industrial Services of America Posts First Quarter Revenue up 43%

Date: April 28, 2011

Source: Industrial Services of America, Inc.

Industrial Services of America, Inc. Reports First Quarter 2011 Results

Industrial Services of America, Inc. (NASDAQ: IDSA), a company that buys, processes and markets ferrous and non-ferrous metals and other recyclable commodities for domestic users and export markets, and offers programs and equipment to help businesses manage wastes, today reported financial results for the first quarter ending March 31, 2011.

For the three months ending March 31, 2011:

Total revenue was $106.2 million in the first quarter of 2011, compared with $74.2 million in the first quarter of 2010.

Net income was $2,166,782 (basic and diluted earnings of $0.31 per share) in the first quarter of 2011, compared with $1,763,264 (basic and diluted earnings of $0.27 per share) in the first quarter of 2010. Basic and diluted weighted average shares outstanding were 6,885,170 and 6,928,448 respectively in the first quarter of 2011 and were 6,449,522 and 6,487,650 respectively (split-adjusted) for basic and diluted shares in the first quarter of 2010.

Earnings before interest, taxes, depreciation and amortization (EBITDA) for the first quarter of 2011 was $5,229,971 compared with EBITDA of $4,132,001 for the first quarter of 2010. (See attached reconciliation.)

Key Highlights for the First Quarter Ending March 31, 2011

Revenue up 43% year-over-year

Net Income up 23% year-over-year

Diluted EPS up 15% year-over-year, despite a 7% increase in diluted shares outstanding

EBITDA up 27% year-over-year

Chairman of the Board Harry Kletter commented, "ISA had another record quarter, with revenue up 43% over last year's first quarter. Even though some of this increase was from higher commodity prices, our unit volume was up 37% over the first quarter of 2010. Our earnings also posted strong growth, increasing 23% over the first quarter of 2010. These results are particularly impressive when you consider that they surpass the record results we posted in the first quarter of last year."

Mr. Kletter continued, "We remain focused on improving margins in 2011, and we will work hard to improve margins to that we can increase earnings growth even without substantial growth on the top-line. Our Chief Operating Officer is implementing a number of process improvements and other operating efficiencies designed to expand margins.

"Our balance sheet also continued to strengthen during the first quarter, with our current ratio improving to 3.8x and our leverage ratios decreasing. We expect these trends to continue throughout the remainder of the year."

ISA also reports that Terry Hancock resigned from the Company last month. Brian Donaghy, ISA's President & Chief Operating Officer, is overseeing the operation of ISA Alloys, along with the other 30 members of the Alloys team.

Conference Call to Discuss First Quarter 2011 Results

ISA will host a conference call on Monday, May 2, 2011 at 2:00 PM Eastern time to discuss first quarter results. Participants can access the call by dialing:

U.S. and Canada Dial-in Number: 877-354-6067
Conference ID #62760248

Callers should identify the Industrial Services of America earnings results call.

A replay will be available one hour after the call through midnight May 4, 2011 by calling:

800-642-1687 or 706-645-9291.

ISA's 2010 SEC filings are available for review at the Securities and Exchange Commission web site at 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, ISA offers commercial, industrial and business customers a variety of programs and equipment to 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 fluctuations in the price of recycled materials, varying demand for waste managing systems, equipment and services, competitive pressures in waste managing systems and equipment, competitive pressures in the waste managing business, and loss of customers. Further information on factors that could affect ISA's results is detailed in ISA's filings with the Securities and Exchange Commission. ISA undertakes no obligation to publicly release the results of any revisions to the forward-looking statements.

Industrial Services of America, Inc.
Harry Kletter, 502-366-3452
hklet@isa-inc.com.
or
Alan Schroering, 502-366-3452
aschroering@isa-inc.com
http://www.isa-inc.com.

FINANCIAL INFORMATION
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
INDUSTRIAL SERVICES OF AMERICA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS




	March 31, 2011 (Unaudited)		December 31, 2010

	(in thousands)
Current assets
Cash and cash equivalents	$	2,209	$	2,468
Accounts receivable – trade (after allowance for doubtful accounts of $100 thousand in 2011 and 2010)		30,706		27,449
Net investment in sales-type leases		35		33
Inventories		35,667		34,311
Deferred income taxes		942		942
Other		423		398

Total current assets		69,982		65,601

Net property and equipment		26,981		27,554

Other assets
Net investment in sales-type leases		31		40
Notes receivable – related party		78		88
Goodwill		6,840		6,840
Intangible assets, net		5,587		5,775
Other assets		224		263

Total other assets		12,760		13,006

Total assets	$	109,723	$	106,161

INDUSTRIAL SERVICES OF AMERICA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
CONTINUED
LIABILITIES AND STOCKHOLDERS’ EQUITY




	March 31, 2011 (Unaudited)			December 31, 2010

	(in thousands)
Current liabilities
Current maturities of long-term debt (Note 4)	$	1,827		$	1,824
Accounts payable		11,807			11,406
Income tax payable		3,182			2,909
Interest rate swap agreement liability (Note 4)		567			650
Accrued bonuses		713			1,175
Other current liabilities		418			319

Total current liabilities		18,514			18,283

Long-term liabilities
Long-term debt (Note 4)		44,209			43,623
Deferred income taxes		3,407			3,373

Total long-term liabilities		47,616			46,996

Shareholders’ equity
Common stock, $0.0033 par value: 10,000,000 shares authorized, 7,192,500 shares issued in 2011 and 2010, 6,940,517 and 6,454,938 shares outstanding in 2011 and 2010, respectively		24			24
Additional paid-in capital		18,282			17,852
Retained earnings		26,105			23,938
Accumulated other comprehensive loss		(304	)		(353	)
Treasury stock at cost, 251,983 and 737,562 shares in 2011 and 2010, respectively		(514	)		(579	)

Total shareholders’ equity		43,593			40,882

Total liabilities and shareholders’ equity	$	109,723		$	106,161

INDUSTRIAL SERVICES OF AMERICA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 2011 AND 2010
(UNAUDITED)




	2011			2010

	(in thousands, except per share information)
Revenue from services	$	1,371		$	1,535
Revenue from product sales		104,816			72,634

Total Revenue		106,187			74,169

Cost of goods sold for services		1,277			1,351
Cost of goods sold for product sales		97,075			66,535

Total Cost of goods sold		98,352			67,886

Selling, general and administrative expenses		3,780			3,201


Income before other income (expense)		4,055			3,082

Other income (expense)
Interest expense		(671	)		(329	)
Interest income		6			8
Gain on sale of assets		49			185
Other income (loss), net		—			(7	)

Total other income (expense)		(616	)		(143	)


Income before income taxes		3,439			2,939

Income tax provision		1,272			1,176


Net income	$	2,167		$	1,763


Basic earnings per share	$	0.31		$	0.27


Diluted earnings per share	$	0.31		$	0.27


Weighted shares outstanding:
Basic		6,885			6,450

Diluted		6,928			6,488

See accompanying notes to consolidated financial statements.

INDUSTRIAL SERVICES OF AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
THREE MONTHS ENDED MARCH 31, 2011
(UNAUDITED)




	Common Stock				Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss			Treasury Stock						Total Shareholders’ Equity

	Shares		Amount									Shares			Cost

(in thousands, except share information)
Balance as of December 31, 2010		7,192,500	$	24	$	17,853	$	23,938	$	(353	)		(402,583	)	$	(579	)	$	40,883

Net unrealized income on derivative instruments, net of tax		—		—		—		—		49			—			—			49

Stock bonuses		—		—		429		—		—			150,600			65			494

Net income		—		—		—		2,167		—			—			—			2,167


Balance as of March 31, 2011		7,192,500	$	24	$	18,282	$	26,105	$	(304	)		(251,983	)	$	(514	)	$	43,593

See accompanying notes to consolidated financial statements.

INDUSTRIAL SERVICES OF AMERICA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2011 AND 2010
(UNAUDITED)




	2011			2010

	(in thousands)
Cash flows from operating activities
Net income	$	2,167		$	1,763
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization		1,119			864
Stock bonus to employees		494			167
Loss on sale of property and equipment		(49	)		(185	)
Change in assets and liability
Receivables		(3,257	)		(15,520	)
Net investment in sales-type leases		8			7
Inventories		(1,357	)		6,574
Other assets		137			109
Accounts payable		401			9,675
Accrued bonuses		(462	)		337
Income tax payable		272			540
Other current liabilities		100			(22	)

Net cash (used in) from operating activities		(427	)		4,309

Cash flows from investing activities
Proceeds from sale of property and equipment		54			274
Purchases of property and equipment		(331	)		(525	)
Deposits on equipment		(154	)		(70	)
Payments from related party		10			10

Net cash used in investing activities		(421	)		(311	)

Cash flows from financing activities
Payments on capital lease obligation		—			(18	)
Payments on long-term debt		(4,101	)		(4,644	)
Proceeds from long-term debt		4,690			1,087

Net cash from (used in) financing activities		589			(3,575	)

Net (decrease) increase in cash		(259	)		423
Cash at beginning of year		2,468			713


Cash at end of year	$	2,209		$	1,136


Supplemental disclosure of cash flow information:
Cash paid for interest		671			329
Cash paid for taxes		1,000			635

SEGMENT INFORMATION

The Company’s operations include two primary segments: Recycling and Waste Services. The Company’s two reportable segments are determined by the products and services that each offers. The Recycling segment generates its revenues based on buying and selling of ferrous, non-ferrous, including stainless steel, and fiber scrap. Waste Services’ revenues consist of charges to customers for waste disposal services and equipment sales and lease income. The components of the column labeled “other” are selling, general and administrative expenses that are not directly related to the two primary segments. We evaluate segment performance based on gross profit or loss and the evaluation process for each segment includes only direct expenses and selling, general and administrative costs, omitting any other income and expense and income taxes.


FOR THE THREE MONTHS ENDED MARCH 31, 2011	RECYCLING			WASTE SERVICES			OTHER			SEGMENT TOTALS

	(in thousands)
Recycling revenues	$	104,238		$	—		$	—		$	104,238
Equipment sales, service and leasing revenues		—			578			—			578
Management fees		—			1,371			—			1,371
Cost of goods sold		(96,862	)		(1,490	)		—			(98,352	)
Selling, general, and administrative expenses		(2,162	)		(194	)		(1,424	)		(3,780	)


Segment profit (loss)	$	5,214		$	265		$	(1,424	)	$	4,055


Segment assets	$	99,094		$	2,430		$	8,199		$	109,723


FOR THE THREE MONTHS ENDED MARCH 31, 2010	RECYCLING			WASTE SERVICES			OTHER			SEGMENT TOTALS

	(in thousands)
Recycling revenues	$	72,069		$	—		$	—		$	72,069
Equipment sales, service and leasing revenues		—			565			—			565
Management fees		—			1,535			—			1,535
Cost of goods sold		(66,312	)		(1,574	)		—			(67,886	)
Selling, general, and administrative expenses		(1,675	)		(282	)		(1,244	)		(3,201	)


Segment profit (loss)	$	4,082		$	244		$	(1,244	)	$	3,082


Segment assets	$	69,992		$	2,510		$	3,056		$	75,558

Waste Business Journal

Industrial Services of America Posts First Quarter Revenue up 43%

Industrial Services of America, Inc. Reports First Quarter 2011 Results

Industry News & Events

Waste Business Journal