Empire Resources, Inc. (NASDAQ: ERS)

Transcription

1 Empire Resurces, Inc. (NASDAQ: ERS) INVESTOR PRESENTATION NOVEMBER

2 FORWARD LOOKING STATEMENTS This presentatin cntains frward-lking statements. Such statements may be preceded by the wrds intends, may, will, plans, expects, anticipates, prjects, predicts, estimates, aims, believes, hpes, ptential r similar wrds. Frward-lking statements are nt guarantees f future perfrmance, are based n certain assumptins and are subject t varius knwn and unknwn risks and uncertainties, many f which are beynd the Cmpany s cntrl, and cannt be predicted r quantified and cnsequently, actual results may differ materially frm thse expressed r implied by such frward-lking statements. Such risks and uncertainties include, withut limitatin, risks and uncertainties assciated with (i) the lss r default f ne r mre suppliers; (ii) the lss r default f ne r mre significant custmers; (iii) a default by cunterparties t derivative financial instruments; (iv) changes in general, natinal r reginal ecnmic cnditins; (v) an act f war r terrrism that disrupts internatinal shipping; (vi) changes in laws, regulatins and tariffs; (vii) the impsitin f anti-dumping duties n prducts the Cmpany imprts; (viii) changes in the size and nature f the Cmpany s cmpetitin; (ix) changes in interest rates, freign currencies r spt prices f aluminum; (x) the lss f ne r mre key executives; (xi) increased credit risk frm custmers; (xii) the Cmpany s failure t grw internally r by acquisitin and (xiii) the Cmpany s failure t imprve perating margins and efficiencies. Mre detailed infrmatin abut the Cmpany and the risk factrs that may affect the realizatin f frward-lking statements is set frth in the Cmpany s filings with the Securities and Exchange Cmmissin (SEC), including the Cmpany s Annual Reprt n Frm 10-K and its Quarterly Reprts n Frm 10-Q. Investrs and security hlders are urged t read these dcuments free f charge n the SEC s web site at The Cmpany assumes n bligatin t publicly update r revise its frward-lking statements as a result f new infrmatin, future events r therwise. 2

3 Overview Leading Master Distributr and Imprter f Semi-Finished, Value-Added Aluminum and Steel Prducts 25+ Year Track Recrd in Specialized Metals Distributin Niche Essential Link between High Quality Rlling Mills Wrldwide and Tp-Tier Dmestic Service Centers and Metal Wrking Industry Fills Need fr Reliable, Lwer-Cst Secnd r Third Supply Surce Lng-Standing Relatinships with Suppliers and Custmers Expert Sales Netwrk Prven Management Team with Glbal Perspective 3

4 Grwth Driven Strategy Prvide Custmers with High Level f Service, Quality and Cst Effective Prducts Expand Prduct and Gegraphic Diversity Strengthen and Expand Custmer and Supplier Relatinships; Prvide Additinal Value-Added Services Optimize Margins and Cash Flw Maintain Strng Banking Relatinships Build Sharehlder Value OBJECTIVE: Duble Revenues in 5 Years, with Imprving Prfitability 4

5 Initiative Diversify Prducts 23% Sales by Prduct Aluminum Steel 77% 16% Sales by Prduct Aluminum Steel 84% 5

6 Initiative Diversify by Gegraphy Sales by Gegraphy % 10% 14% 8% 64% U.S Canada Eurpe Latin America Australia/New Zealand 11% 5% 6% 8% Sales by Gegraphy % U.S Canada Eurpe Latin America Australia/New Zealand 6

7 Highlights April 2011 $200 millin wrking capital credit agreement cmpleted with Rabbank Internatinal, JP Mrgan Chase, ABN AMRO, BNP Paribas, RBS Citizens, Sciété Générale, Brwn Brthers Harriman June 2011 Cmpleted private placement f $12 millin cnvertible nte t investr grup led by Len Cperman June 2011 Empire prvides $10 millin in financing t PT Alumind, Indnesia, fr multi-year, preferential and substantial supply psitin fr Empire May 2012 Registratin f 3.1 millin shares underlying cnvertible nte declared effective; Empire returns as SEC registrant cmpany July 2012 Empire cmpletes tender ffer, repurchases 600,000 shares December 2012 Empire declares special cash dividend f $0.20 per share February 2013 Empire shares begin trading n NASDAQ under stck symbl: ERS FY 2013 Sales f steel prducts reach 23% f ttal sales June 2014 New, expanded $225 millin wrking capital credit agreement cmpleted - led by Rabbank Internatinal September 2014 Empire declares 46 th cnsecutive quarterly cash dividend 7

8 Headquarters: Frt Lee, New Jersey EMPIRE RESOURCES: Gegraphic Reach Main Distributin Center: Baltimre, Maryland Principal Market: Nrth America Serving Latin America: Empire Resurces de Mexic, San Pedr Garza Garcia Serving Eurpe: Imbali Metals, Belgium Serving Australia/New Zealand: Empire Resurces Pacific 8 Americas: Baltimre, MD Camden, NJ Tampa, FL Miami, FL Little Rck, AR Hustn, TX, Ls Angeles, CA Oakland, CA Kent, WA Vancuver, BC Mntreal, QC Trnt, ON San Pedr Garza Garcia, Mexic Eurpe: Belgium UK France Germany Netherlands Italy Prtugal Spain* Denmark* Czech Republic* *Recently Added Asia-Pacific: Australia: Sydney Brisbane Melburne Perth Adelaide New Zealand: Auckland Christchurch

9 Range f Semi-Finished Prducts PRODUCT END MARKET APPLICATION Aluminum Sheet/Cil Transprtatin, Cnstructin, Fd Service Rad signs, Trailer gas tanks Aluminum Plate Transprtatin Shipbuilding, aut and truck bdies Aluminum Treadplate Treadbright Industrial, Autmtive Tlbxes, aut runners, trimming Aluminum Fil Packaging Candy/gum wrappers, gift wrap Stainless Steel Cil, Sheet, Plate Carbn Steel Multi: Fr aseptic, nncrrsive surfaces Cnstructin, Autmtive, Cnsumer Fd service, marine-related Machinery, Autmtive, Pipes, Furniture 9

10 Attractive Partner t Our Custmers Custmers 37% 63% (Fr full year ended 12/31/13) Tp 10 Other Tp 10 custmers accunted fr 37% f 2013 sales Service center leaders Ryersn, Samuel Sn & C. and Reliance are amng ur largest custmers We deliver value t ur custmers thrugh cst-effective, quality prducts and high service level including: Warehusing/Just-in-time delivery Timely market/prduct intelligence Arranging fr metal prcessing r finishing services Shipping frm ur stck t meet their shrt-term requirements 10

11 Attractive Partner t Our Suppliers Suppliers 38% 62% (Fr full year ended 12/31/13) Cntractual Other 62% f supply secured thrugh lng-term cntracts and relatinships in 2013 Largest suppliers: PT. Alumind Light Metal Industry Hulamin Ltd. Elval Hellenic Aluminum We bring value t ur suppliers: We make bulk purchases We serve as their marketing, distributin and service channel We assume respnsibility fr prduct transprtatin We eliminate their currency risk We prvide reliable and timely cash flw 11

12 Service Center Industry Ranking EMPIRE RESOURCES, INC. YEAR RANKING* REVENUES (Millins) 2013 # 24 $ # 22 $ # 23 $ # 24 $ # 30 $ MCN TOP 50 COMBINED* YEAR TOTAL (Billins) CHANGE 2013 $ % 2012 $ % 2011 $ % 2010 $ % 2009 $ % 12 Annual ranking f Tp 50 Service Center Industry Giants in Nrth America, based n revenues, cmpiled by Metal Center News September 2014

13 Empire Resurces: Metal Price Neutral Frmula Pricing Cntractual price is a negtiated fabricatin premium ver published index Metal passthrugh Fixed Pricing Custmer agrees t fixed sales price including metal value and fabricatin premium Back-t-back hedge 13 Additinal infrmatin n Empire Resurces hedging transactins and nn-cash mark-tmarket gains/lsses frm underlying metals price changes is available in the Cmpany s 2013 Annual Reprt n Frm 10-K.

14 Fcus n Grwth in Stckhlders Equity* 14 * Stckhlders Equity in $ Millins befre Dividends

15 Annual Financial Perfrmance (in thusands) Net sales $428,997 $246,062 $465,013 $514,633 $538,527 $482,683 Grss prfit 24,133 16,549 30,228 24,531 24,967 21,739 Op incme befre asset impairment/recvery 13,424 7,779 18,197 11,195 11,709 8,347 Operating incme 13,424 4,813 18,543 11,195 11,709 8,347 Other incme: Derivative liability change (63) (52) Int. expense incl. debt discunt amrtizatin 7,176 5,622 3,997 4,039 5,225 4,514 Pre-tax incme/(lss) 6,248 (809) 14,546 8,052 6,421 3,781 Net incme/(lss) $3,851 ($511) $9,145 $4,961 $3,964 $2,396 Weighted shares-diluted 9,874 9,437 9,435 10,987 12,028 8,852 EPS - Diluted $0.39 ($0.05) $0.97 $0.46 $0.42 $

16 Quarterly Financial Perfrmance (Unaudited, in thusands) 1Q13º 2Q13 3Q13º 4Q13 1Q14º 2Q14 3Q14 Net sales $ 133,430 $ 110,468 $ 126,390 $ 112,395 $ 138,317 $ 146,516 $ 159,366 Cst f gds sld 126, , , , , , ,897 Grss prfit 6,630 5,267 5,308 4,534 6,487 7,015 7,469 SG&A 3,258 3,501 3,602 3,031 3,299 3,482 3,819 Operating incme 3,372 1,766 1,706 1,503 3,188 3,533 3,650 Interest expense, net 1,113 1,134 1,156 1,111 1,091 1,091 1,041 Incme befre ther incme/(expense) 2, ,097 2,442 2,609 Other incme/(expense): Derivative liability change* (2,123) (44) 1, (429) 249 (2,059) Lss related t cnvertible debt cnversin (164) Incme taxes ,045 1,080 Net incme ($ 515) $ 367 $ 2,071 $ 473 $ 808 $ 1,646 ($ 694) Weighted shares-diluted 8,852 8,871 11,835 11,855 8,886 11,968 8,814 EPS - Diluted ($ 0.06) $ 0.04 $ 0.06 $ 0.04 $ 0.09 $ 0.15 ($ 0.08) 16 º See Nte 20 in 10-Q dated Nvember 14, 2014 regarding the restatement f the deferred taxatin related t the derivative liability. * Nn-cash nn-perating change in fair market valuatin f derivative feature f cnvertible subrdinated nte

17 Quarterly Nn-GAAP Incme Statement (Unaudited, in thusands) 1Q13º 2Q13 3Q13º 4Q13 1Q14º 2Q14 3Q14 GAAP pre-tax incme , ,668 2, Add back: Change in derivative liability value 2, (1,715) (400) 429 (249) 2,059 Nn-GAAP pre-tax incme 2, ,097 2,442 2,445 Incme taxes Nn-GAAP net incme $ 1,412 $ 394 $ 335 $ 234 $ 1,290 $ 1,494 $ 1,491 Weighted shares-diluted 8,852 8,871 8,850 8,842 8,886 8,924 8,814 Nn-GAAP EPS - Diluted $ 0.16 $ 0.04 $ 0.04 $ 0.03 $ 0.15 $ 0.17 $ 0.17 Use f Nn-GAAP Financial Measures T supplement the Cmpany s cnslidated financial statements presented n a GAAP basis, the Cmpany disclses nn-gaap net incme, because management uses this supplemental nn-gaap financial measure t evaluate perfrmance perid ver perid, t analyze the underlying trends in its business, and t establish peratinal gals. In additin, the Cmpany believes investrs already use this nn-gaap measure t mnitr the Cmpany s perfrmance. Nn-GAAP net incme is defined by the Cmpany as net incme excluding nncash, nnperating changes in value f derivative liability related t the cnversin ptin n its cnvertible debt. Generally, a nn-gaap financial measure is a numerical measure f a cmpany s perfrmance, financial psitin r cash flw that either excludes r includes amunts that are nt nrmally excluded r included in the mst directly cmparable measure calculated and presented in accrdance with GAAP. The nn-gaap measure discussed abve, hwever, shuld be cnsidered in additin t, and nt as a substitute fr r superir t net incme r ther measures f financial perfrmance prepared in accrdance with GAAP. A recnciliatin f nn-gaap t GAAP net incme is set frth in the table abve. 17 The Cmpany believes that prviding this infrmatin assists investrs in understanding the Cmpany s perating perfrmance and the methdlgy used by management t evaluate and measure such perfrmance. º See Nte 20 in 10-Q dated Nvember 14, 2014 regarding the restatement f the deferred taxatin related t the derivative liability.

18 Balance Sheet Highlights (in thusands) Cash 2,485 1,142 1,270 4,274 3,136 2,477 Accunts receivable 41,115 28,109 41,174 56,504 53,511 52,696 Inventries 107, , , , , ,752 Ttal current assets 173, , , , , ,370 Ttal assets 181, , , , , ,820 Ttal senir secured debt Ttal current liabilities Subrdinated debt Ttal stckhlders equity 107,973 54, , , , , , , , , , , ,000 12,000 12,000 31,261 31,325 39,743 43,602 43,109 44,769 OF NOTE: 6/3/11: Private placement f $12M Cnvertible Senir Subrdinated Ntes due 6/1/16 5/3/12: SEC declares registratin f 3.1M shares related t cnvertible ntes effective 5/4/12: Cmpany returns t SEC registrant cmpany status. 6/29/12: Cmpany repurchases 600,000 shares thrugh tender ffer 6/23/14: New, expanded $225M wrking capital credit agreement cmpleted 18

19 Debt Issuance Asset Based Lending Cnvertible Debt Ttal facility/issuance $225 millin $12 millin Lead Rabbank Internatinal and BNP Paribas Private Placement Maturity June 19, 2017 June 1, 2016 Accrdin Swingline Pricing $75 millin $10 millin $150M Cmmitted 2.35% ver Libr; $75M Uncmmitted 1.85% ver Libr 10% 19

20 Valuatin Cmparisns* Service Center Industry Ranking** Cmpany Market Cap Trailing P/E Price/ Sales Price/ Bk ROE ROA Dividend Yield #1 Reliance Steel & Aluminum (RS) #5 Russel Metals (RUS.TO) #12 Olympic Steel (ZEUS) #15 A.M. Castle (CAS) #24 Empire Resurces (ERS) $ 5.0B % 5.0% 2.7% $ 1.9B % 6.8% 4.6% $ 201.3M % 1.5% 0.5% $ 176.3M N/A % -3.0% N/A $ 45.0M % 2.8% 1.1% * Surce: Yah Finance, Reprted 11/14/14 ** Metal Center News Rankings fr 2013, Reprted September

21 In Summary Leading Master Distributr f Imprted Aluminum and Steel Prducts Essential Link between Rlling Mills and Service Centers/Metal Wrking Industry Filling Need fr Secnd r Third Supply Surce Lng-Standing Relatinships with Suppliers and Custmers Expert Sales Netwrk/Prven Management with Glbal Perspective Fully Fcused n Grwing Sales, Prfitability and Sharehlder Value 21