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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) February 14, 1997
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HUNTCO INC.
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(Exact name of registrant as specified in its charter)
Missouri 1-13600 43-1643751
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(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification No.)
incorporation)
14323 S. Outer Forty, Suite 600N, Town & Country, Missouri 63017
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (314) 878-0155
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Not applicable
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(Former name or former address, if changed since last report)
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Item 5. Other Events
Huntco Inc. issued a news release on February 14, 1997, with respect to
its earnings release for the quarter ended January 31, 1997, and provided an
update of its outlook for the balance of fiscal 1997. This news release is
incorporated herein by reference to Exhibit 99 attached hereto.
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SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
HUNTCO INC.
By: /s/ Robert J. Marischen
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Robert J. Marischen,
Vice Chairman & Chief Financial Officer
Date: February 17, 1997
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EXHIBIT INDEX
These Exhibits are numbered in accordance with the Exhibit Table of Item
601 of Regulation S-K:
Exhibit No. Description
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99 News release of February 14, 1997
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HUNTCO INC.
14323 SOUTH OUTER FORTY - SUITE 600N
TOWN & COUNTRY, MISSOURI 63017
FOR IMMEDIATE RELEASE:
HUNTCO REPORTS RESULTS FOR THIRD QUARTER. $.035 COMMON DIVIDEND DECLARED.
TOWN & COUNTRY, MISSOURI, February 14, 1997 . . . . . Huntco Inc. (NYSE: HCO)
today announced results of operations for its third quarter ended January 31,
1997. Net sales were $73.4 million, an increase of 7.2% in comparison to the
prior year's third quarter net sales of $68.5 million. The Company reported
net income of $.1 million, or $.02 per share, for the quarter ended January
31, 1997, which compares to net income of $2.2 million, or $.24 per share, for
the prior year third quarter.
Net sales for the nine months ended January 31, 1997 were a record $235.8
million, an increase of 27.0% in comparison to net sales of $185.7 million for
the comparable period of the prior year. The Company reported net income for
the nine months ended January 31, 1997 of $5.1 million, or $.57 per share,
which compares to a net loss of $1.6 million, or $.18 per share, for the nine
month period ended January 31, 1996. Included in the net loss for the nine
months ended January 31, 1996 was a charge for a lower of cost or market
inventory adjustment of $5.0 million, net of income tax benefits, or $.56 per
share.
The Company declared a dividend of $.035 per common share for shareholders of
record on February 28, 1997, payable on March 10, 1997. The Company also
declared a dividend on the 225,000 shares of its Series A Preferred Stock,
which shares were issued on January 30, 1997 in connection with the Company's
recently announced acquisition of certain assets of Coil-Tec, Inc., of
approximately $.07 per share for its preferred shareholders of record as of
February 24, 1997, payable on March 1, 1997.
The improvement in net sales is primarily attributable to increased levels of
tons processed. The Company processed 210,864 tons of steel in the quarter
ended January 31, 1997, an increase of 5.6% in comparison to the quarter ended
January 31, 1996. The Company processed a record 680,902 tons of steel in the
nine months ended January 31, 1997, an increase of 23.8% in comparison to
prior year amounts. Approximately 22.2% of the tons processed in the three
and nine month periods ended January 31, 1997, represented customer-owned
material processed on a per ton, fee basis.
The Company indicated that its gross profit margins came under pressure late
in its second quarter of fiscal 1997 and that this margin pressure extended
into the third quarter. This narrowing of gross profit margins was primarily
due to higher domestic prices for its primary raw material, hot rolled steel
coils, as significant quantities of lower priced imported material were
available in its market territories. The Company's gross profit margins were
also negatively impacted during the three months ended January 31, 1997, due
to lower absorption of operating costs, reflecting slower sales activity
during much of the Company's third quarter. Net sales for the third quarter
declined from the record levels attained in the second quarter of fiscal 1997
because of lower shipping volume due to two primary factors. First, shipments
declined due to lower sales activity surrounding the November and December
holiday periods, when the midweek holidays of 1996 effectively limited the
number of shipping days and resulted in lower sales volume levels. Second,
and more importantly, shipments declined during November and December as Coil-
Tec liquidated a substantial amount of hot-rolled steel inventories both at
its Blytheville, Arkansas and Bessemer, Alabama plants prior to the sale of
certain of its assets to the Company on January 30, 1997. This lower level of
third quarter sales activity, when combined with narrowing gross profit
margins during most of the quarter, depressed the Company's gross profit and
operating margins, resulting in the Company reporting nominal earnings per
share for its third quarter of $.02 per share.
Looking ahead to the fourth quarter, the Company expects that its net sales
will reach record levels, ahead of second quarter amounts, resulting in
shipping volumes for the full fiscal year near 925,000 tons. While gross
profit margins have begun to slowly recover, they are expected to remain under
pressure during the quarter as the Company continues to shift its supplier
base to lower its relative raw material costs. This process should be largely
accomplished during the fourth quarter. Further, the Company commenced
operations at its new facility in South Carolina during January, 1997 and is
currently completing the start-up of the doubling of its capacity at its cold
rolling operations in Blytheville, Arkansas. The Company also will install
and start-up a new coil slitting line at its South Carolina facility during
March, 1997. In light of these factors and current market conditions, gross
profit margins in the fourth quarter are only expected to increase to around
9%.
Those who make use of any forward-looking data contained herein are encouraged
to make reference to the discussion found under the title "Risk Factors - 1997
Forecast" included within Item 7, Management's Discussion and Analysis of
Financial Condition and Results of Operations, of the Company's Annual Report
on Form 10-K for the year ended April 30, 1996, as filed with the Securities
and Exchange Commission on July 26, 1996.
Huntco Inc. is an intermediate steel processor, specializing in the processing
of flat rolled carbon steel.
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HUNTCO INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share amounts)
<TABLE>
<CAPTION>
Nine Months Three Months
Ended January 31 Ended January 31
1997 1996 1997 1996
------- ------- ------ ------
<S> <C> <C> <C> <C>
Net sales $235,805 $185,664 $73,392 $68,486
Cost of sales 211,830 176,342 67,616 60,458
------- ------- ------ ------
Gross profit 23,975 9,322 5,776 8,028
Selling, general and
administrative expenses 11,205 9,629 3,762 3,537
------- ------- ------ ------
Income (loss) from operations 12,770 (307) 2,014 4,491
Interest expense, net (4,483) (2,188) (1,788) (1,052)
------- ------- ------ ------
Income (loss) before
income taxes 8,287 (2,495) 226 3,439
Provision (benefit) for
income taxes 3,161 (901) 86 1,286
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Net income (loss) $ 5,126 $ (1,594) $ 140 $ 2,153
Preferred dividends - - - -
------- ------- ------ ------
Net income (loss) available
to common shareholders $ 5,126 $ (1,594) $ 140 $ 2,153
======= ======= ====== ======
Earnings (loss) per common share $ .57 $ (.18) $ .02 $ .24
===== ===== ===== =====
Weighted average
common shares outstanding 8,952 8,940 8,942 8,940
===== ===== ===== =====
</TABLE>
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HUNTCO INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
January 31, April 30,
1997 1996
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(unaudited) (audited)
<S> <C> <C>
ASSETS
Current assets:
Cash $ 3,161 $ 2,737
Accounts receivable, net 38,968 36,804
Inventories 78,902 53,964
Other current assets 2,612 1,926
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123,643 95,431
Property, plant and equipment, net 137,941 120,338
Other assets 8,453 6,668
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$270,037 $222,437
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LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 34,327 $ 29,003
Accrued expenses 2,062 3,934
Current maturities of long-term debt 189 189
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36,578 33,126
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Long-term debt 105,424 73,066
Deferred income taxes 7,973 4,879
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113,397 77,945
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Shareholders' equity:
Series A preferred stock (issued and outstanding
225 and none, stated at liquidation value) 4,500 -
Common stock:
Class A (issued and outstanding, 5,292) 53 53
Class B (issued and outstanding, 3,650) 37 37
Additional paid-in-capital 86,531 86,567
Retained earnings 28,941 24,709
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120,062 111,366
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$270,037 $222,437
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</TABLE>
