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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) September 23, 1998
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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. (the "Company") issued a news release on September 23, 1998, in
order to update certain expectations concerning its operations for the balance
of 1998. 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: September 23, 1998
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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 September 23, 1998
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HUNTCO INC.
14323 SOUTH OUTER FORTY - SUITE 600N
TOWN & COUNTRY, MISSOURI 63017
FOR IMMEDIATE RELEASE:
HUNTCO LOWERS VOLUME AND MARGIN EXPECTATIONS FOR SECOND HALF OF 1998. NET
LOSS EXPECTED FOR THIRD QUARTER.
TOWN & COUNTRY, MISSOURI, September 23, 1998. . . . . Huntco Inc.
(NYSE:"HCO"), an intermediate steel processor, today announced that it expects
that the volume of tons of steel which it will sell in the second half of 1998
will decline approximately 20% from the record volume of tons of steel which
it sold in the first half of 1998 and that it will report a Net Loss per
common share of approximately $.15 for the third quarter.
The reduction in volume expectations reflects lower shipping rates primarily
at the Company's Blytheville, Arkansas facility where the Company has seen a
slow-down in its tolling volume, as well as lower sales levels for processed
hot rolled steel products and cold rolled master coil sales. Tons shipped from
Huntco's facility in Blytheville, Arkansas generally represent up to 50% of
the Company's total shipments.
The reduced level of tolling volume reflects a move to off-shore purchasing by
certain of the Company's tolling customers who traditionally buy from the
Nucor mill at Hickman, Arkansas and use Huntco's Blytheville facility for toll
slitting and pickling.
Sharply lower shipping levels of processed hot rolled products and cold rolled
master coils were experienced at Huntco's Blytheville facility during the
month of August, 1998 and continuing into early September as the Company
installed new computer systems at this facility. Blytheville is the last of
the Company's facilities to be converted to the new computer system.
Also negatively impacting volume levels was the continuing rapid deterioration
in steel prices which is encouraging inventory liquidations and delays in
purchases by the Company's customers. This was especially acute in the
markets served by Huntco's Blytheville facility, reflecting the substantial
disparity between hot rolled steel prices charged by local, domestic suppliers
and the landed cost of imported hot bands.
Despite the rapid declines in steel prices, gross margin spreads, measured
against material costs, have been improving since mid-summer, but these
improvements are currently being offset by the lower shipping and production
volumes which negatively impact fixed cost absorption and which are expected
to result in somewhat lower net margin percentages for the second half of
1998, when compared to the first half of 1998.
The combination of these factors is expected to result in the Company
reporting a Net Loss for its third quarter of approximately $.15 per common
share, with some improvement from third quarter levels expected in the fourth
quarter.
Shipping rates at the Company's Blytheville facility are beginning to recover
as the turmoil caused by the systems conversion lessens and the Company has
begun to see the return of its tolling business subsequent to recent domestic
price reductions. These trends are expected to continue through the fourth
quarter and into 1999. Further, the Company has secured feed stock supply for
its cold mill for much of 1999 at prices which it anticipates will allow it to
operate the cold mill at more adequate levels of profitability. Delays in the
receipt of the early shipments of this feed stock have stalled progress at the
cold mill during much of the third quarter, but improvement late in the
quarter has begun to be realized. In addition, recent improvements to the
cold mill have positioned the Company to participate in markets which have
been less price sensitive than the markets which have been served by Huntco's
cold mill since its opening in 1995. The Company is currently conducting
trials with customers and expects that these new markets could represent a
meaningful portion of the Company's cold rolled sales in 1999. The Company is
also taking aggressive steps to lower its operating expenses, which the
Company anticipates will become more apparent once the steep slide in steel
prices bottoms out. The Company is cautiously optimistic about the business
environment which it sees developing for 1999 and anticipates a return to
profitability in the near future.
This press release contains certain statements that are forward-looking and
involve risks and uncertainties. Words such as "expects," "believes,"
"could," and "anticipates," and variations of such words and similar
expressions are intended to identify such forward-looking statements. These
statements are based on current expectations and projections concerning the
Company's plans for 1998 and about the steel processing industry in general,
as well as assumptions made by Company management and are not guarantees of
future performance. Therefore, actual events, outcomes, and results may
differ materially from what is expressed or forecasted in such forward-looking
statements. The Company encourages those who make use of this forward -
looking data to make reference to a complete discussion of the factors which
may cause the forward-looking data to differ materially from actual results,
which discussion is contained in the Company's Transitional Annual Report and
in Form 10-K, both for the eight month transition period ended December 31,
1997.
Huntco Inc. is a major, intermediate steel processor, specializing in the
processing of flat rolled carbon steel.
