Horsehead Holding (ZINC) Reports Q1 Loss Per Share of 34c, Offers Outlook

Horsehead Holding (NASDAQ: ZINC) reported Q1 EPS of ($0.34), $0.09 worse than the analyst estimate of ($0.25). Revenue for the quarter came in at $102.1 million versus the consensus estimate of $96.5 million.

Business Outlook

Demolition of all of the structures on the Monaca, Pennsylvania site, undertaken pursuant to the agreement with Shell Chemical, has been completed. Final site activities that are the responsibility of Horsehead to manage should be completed in May. Sale of the property is expected to be scheduled to occur within the next few months.

During the first quarter, EAF dust tons processed increased approximately 12% compared with the first quarter of 2014 but declined by 4% compared with the fourth quarter of 2014. The decline over the sequential quarter was primarily due to some slowing of steel production and severe cold weather conditions which affected logistics and equipment reliability. Steel industry capacity utilization decreased from 76.3% to 73.2% over the sequential quarters according to published statistics. We are seeing signs that steel production is starting to recover in the second quarter. We have been intermittently idling one of our kilns to balance capacity with supply. We have also used this lull in steel output to reduce system-wide inventory of recyclable zinc units. Based upon the expected rate of ramp up at Mooresboro, we expect to continue to produce zinc calcine from excess waelz oxide during the second quarter. We recently finalized zinc hedge positions for the second quarter of 2015 at an average LME price of $0.97/lb and have begun to add hedge positions for the third quarter of 2015 at $1.07/lb and for the fourth quarter of 2015 at $1.08/lb on approximately half of our expected zinc shipments to reduce volatility in our cash flow during the continued ramp-up of the Mooresboro facility.

Zochem’s earnings before taxes for the quarter were $2.1 million, a reduction compared with the prior year’s first quarter, due primarily to a lower volume of shipments as Zochem sold the remaining Monaca inventory in the prior year’s quarter and the lag-effect of higher LME–based raw material costs from the fourth quarter of 2014 carried over into the current quarter. This was partially offset by the favorable effect of lower conversion cost per pound as production increased 24% compared to the prior year’s quarter and higher realized premiums on oxide sales.

INMETCO’s earnings before taxes were $0.8 million for the quarter, a reduction of $0.9 million versus the prior year’s quarter, due primarily to the annual maintenance outage which had been deferred from the fourth quarter of 2014 to January 2015. INMETCO returned to full operation for the balance of the quarter. In March 2015, we announced plans to spend up to $10 million to expand capacity at INMETCO by 15%.

For earnings history and earnings-related data on Horsehead Holding (ZINC) click here.

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