Horsehead Holding (ZINC) Misses Q3 EPS by 12c

Horsehead Holding (NASDAQ: ZINC) reported Q3 EPS of ($0.45), $0.12 worse than the analyst estimate of ($0.33). Revenue for the quarter came in at $107 million versus the consensus estimate of $102.23 million.

Business Outlook

During the third quarter, EAF dust tons processed decreased 13.7% compared to the third quarter of 2014 and declined 3.4% compared with the second quarter of 2015 due primarily to reduced receipts. We took the opportunity of low dust receipts to take several maintenance related outages during the third quarter. Given our system-wide inventory of recyclable zinc units, we expect to operate all of our kilns entering the fourth quarter but may idle one or more kilns before the end of the year if steel industry output does not increase. Due to the increased demand for Waelz oxide, we expect to sell some of the excess zinc units as Waelz oxide in addition to zinc calcine going forward, potentially allowing us to idle the calcining operation.

Zochem’s Adjusted EBITDA for the quarter was $1.6 million which was $2.9 million lower than the prior year’s third quarter due primarily to the effect of the sharp decline in LME zinc prices during second and third quarter and the attendant lag-effect of higher metal inventory costs flowing through to the cost of finished goods. Conversely, the trend of rising LME zinc prices in the prior year’s quarter had exactly the opposite effect. Based on growing customer interest, Zochem will embark on expanding its existing presence in Europe through a warehouse/distribution center in Rotterdam, The Netherlands.

INMETCO’s Adjusted EBITDA for the quarter was $4.2 million compared to $4.4 million during the prior year’s third quarter, a reduction of 5%, due primarily to a 43% reduction in the LME nickel price partially offset by a 29% increase in production and a 25% increase in shipments. As a result of the upgrades made during the annual outage in January, INMETCO has made steady progress with improving the productivity of its melting facility with two consecutive record production quarters in the second and third quarters of 2015.

We continue to evaluate the feasibility of adding additional EAF dust recycling capacity to serve new EAF steel mill entrants to the market as well as provide for market share growth. We have had very positive discussions with several steel mills. We have started site evaluations and are beginning preliminary engineering work to assess this opportunity.

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

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