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Industrial Services of America Posts First Quarter Revenue up 43%

Date: April 28, 2011

Source: Industrial Services of America, Inc.

Industrial Services of America, Inc. Reports First Quarter 2011 Results

Industrial Services of America, Inc. (NASDAQ: IDSA), a company that buys, processes and markets ferrous and non-ferrous metals and other recyclable commodities for domestic users and export markets, and offers programs and equipment to help businesses manage wastes, today reported financial results for the first quarter ending March 31, 2011.

For the three months ending March 31, 2011:

  • Total revenue was $106.2 million in the first quarter of 2011, compared with $74.2 million in the first quarter of 2010.

  • Net income was $2,166,782 (basic and diluted earnings of $0.31 per share) in the first quarter of 2011, compared with $1,763,264 (basic and diluted earnings of $0.27 per share) in the first quarter of 2010. Basic and diluted weighted average shares outstanding were 6,885,170 and 6,928,448 respectively in the first quarter of 2011 and were 6,449,522 and 6,487,650 respectively (split-adjusted) for basic and diluted shares in the first quarter of 2010.

  • Earnings before interest, taxes, depreciation and amortization (EBITDA) for the first quarter of 2011 was $5,229,971 compared with EBITDA of $4,132,001 for the first quarter of 2010. (See attached reconciliation.)

Key Highlights for the First Quarter Ending March 31, 2011

  • Revenue up 43% year-over-year

  • Net Income up 23% year-over-year

  • Diluted EPS up 15% year-over-year, despite a 7% increase in diluted shares outstanding

  • EBITDA up 27% year-over-year

Chairman of the Board Harry Kletter commented, "ISA had another record quarter, with revenue up 43% over last year's first quarter. Even though some of this increase was from higher commodity prices, our unit volume was up 37% over the first quarter of 2010. Our earnings also posted strong growth, increasing 23% over the first quarter of 2010. These results are particularly impressive when you consider that they surpass the record results we posted in the first quarter of last year."

Mr. Kletter continued, "We remain focused on improving margins in 2011, and we will work hard to improve margins to that we can increase earnings growth even without substantial growth on the top-line. Our Chief Operating Officer is implementing a number of process improvements and other operating efficiencies designed to expand margins.

"Our balance sheet also continued to strengthen during the first quarter, with our current ratio improving to 3.8x and our leverage ratios decreasing. We expect these trends to continue throughout the remainder of the year."

ISA also reports that Terry Hancock resigned from the Company last month. Brian Donaghy, ISA's President & Chief Operating Officer, is overseeing the operation of ISA Alloys, along with the other 30 members of the Alloys team.

Conference Call to Discuss First Quarter 2011 Results

ISA will host a conference call on Monday, May 2, 2011 at 2:00 PM Eastern time to discuss first quarter results. Participants can access the call by dialing:

U.S. and Canada Dial-in Number: 877-354-6067
Conference ID #62760248

Callers should identify the Industrial Services of America earnings results call.

A replay will be available one hour after the call through midnight May 4, 2011 by calling:

800-642-1687 or 706-645-9291.

ISA's 2010 SEC filings are available for review at the Securities and Exchange Commission web site at www.sec.gov/edgar/searchedgar/companysearch.html.

About ISA

Headquartered in Louisville, Kentucky, Industrial Services of America, Inc., is a publicly traded company whose core business is buying, processing and marketing scrap metals and recyclable materials for domestic users and export markets. Additionally, ISA offers commercial, industrial and business customers a variety of programs and equipment to manage waste. More information about ISA is available at www.isa-inc.com.

This news release contains forward-looking statements that involve risks and uncertainties that could cause actual results to differ from predicted results. Specific risks include fluctuations in the price of recycled materials, varying demand for waste managing systems, equipment and services, competitive pressures in waste managing systems and equipment, competitive pressures in the waste managing business, and loss of customers. Further information on factors that could affect ISA's results is detailed in ISA's filings with the Securities and Exchange Commission. ISA undertakes no obligation to publicly release the results of any revisions to the forward-looking statements.

Industrial Services of America, Inc.
Harry Kletter, 502-366-3452
hklet@isa-inc.com.
or
Alan Schroering, 502-366-3452
aschroering@isa-inc.com
http://www.isa-inc.com.

FINANCIAL INFORMATION
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
INDUSTRIAL SERVICES OF AMERICA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS

               








               
    March 31, 2011
(Unaudited)
  December 31,
2010
 
   

 

 
    (in thousands)  
Current assets              
Cash and cash equivalents   $ 2,209   $ 2,468  
Accounts receivable – trade
(after allowance for doubtful accounts
of $100 thousand in 2011 and 2010)
    30,706     27,449  
Net investment in sales-type leases     35     33  
Inventories     35,667     34,311  
Deferred income taxes     942     942  
Other     423     398  
   

 

 
Total current assets     69,982     65,601  
               
Net property and equipment     26,981     27,554  
               
Other assets              
Net investment in sales-type leases     31     40  
Notes receivable – related party     78     88  
Goodwill     6,840     6,840  
Intangible assets, net     5,587     5,775  
Other assets     224     263  
   

 

 
Total other assets     12,760     13,006  
   

 

 
Total assets   $ 109,723   $ 106,161  
   

 

 

 

INDUSTRIAL SERVICES OF AMERICA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
CONTINUED
LIABILITIES AND STOCKHOLDERS’ EQUITY

               






           
    March 31, 2011
(Unaudited)
  December 31,
2010
 
   
 
 
    (in thousands)  
Current liabilities              
Current maturities of long-term debt (Note 4)   $ 1,827   $ 1,824  
Accounts payable     11,807     11,406  
Income tax payable     3,182     2,909  
Interest rate swap agreement liability (Note 4)     567     650  
Accrued bonuses     713     1,175  
Other current liabilities     418     319  
   

 

 
Total current liabilities     18,514     18,283  
               
Long-term liabilities              
Long-term debt (Note 4)     44,209     43,623  
Deferred income taxes     3,407     3,373  
   

 

 
Total long-term liabilities     47,616     46,996  
               
Shareholders’ equity              
Common stock, $0.0033 par value: 10,000,000 shares authorized,
7,192,500 shares issued in 2011 and 2010, 6,940,517 and 6,454,938
shares outstanding in 2011 and 2010, respectively
    24     24  
Additional paid-in capital     18,282     17,852  
Retained earnings     26,105     23,938  
Accumulated other comprehensive loss     (304 )   (353 )
Treasury stock at cost, 251,983 and 737,562 shares in 2011
and 2010, respectively
    (514 )   (579 )
   

 

 
Total shareholders’ equity     43,593     40,882  
   

 

 
Total liabilities and shareholders’ equity   $ 109,723   $ 106,161  
   

 

 

 

INDUSTRIAL SERVICES OF AMERICA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 2011 AND 2010
(UNAUDITED)

               






               
    2011   2010  
   
 
 
    (in thousands, except per share information)  
Revenue from services   $ 1,371   $ 1,535  
Revenue from product sales     104,816     72,634  
   

 

 
Total Revenue     106,187     74,169  
               
Cost of goods sold for services     1,277     1,351  
Cost of goods sold for product sales     97,075     66,535  
   

 

 
Total Cost of goods sold     98,352     67,886  
               
Selling, general and administrative expenses     3,780     3,201  
   

 

 
               
Income before other income (expense)     4,055     3,082  
               
Other income (expense)              
Interest expense     (671 )   (329 )
Interest income     6     8  
Gain on sale of assets     49     185  
Other income (loss), net         (7 )
   

 

 
Total other income (expense)     (616 )   (143 )
   

 

 
               
Income before income taxes     3,439     2,939  
               
Income tax provision     1,272     1,176  
   

 

 
               
Net income   $ 2,167   $ 1,763  
   

 

 
               
Basic earnings per share   $ 0.31   $ 0.27  
   

 

 
               
Diluted earnings per share   $ 0.31   $ 0.27  
   

 

 
               
Weighted shares outstanding:              
Basic     6,885     6,450  
               
Diluted     6,928     6,488  
               






See accompanying notes to consolidated financial statements.

 

INDUSTRIAL SERVICES OF AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
THREE MONTHS ENDED MARCH 31, 2011
(UNAUDITED)

                                                   


















                                                   
    Common Stock   Additional
Paid-in
Capital
  Retained
Earnings
  Accumulated
Other
Comprehensive
Loss
  Treasury Stock   Total
Shareholders’
Equity
 
   
   
   
    Shares   Amount     Shares   Cost    
   
 
 
 
 
 
 
 
 
(in thousands, except
share information)
                     
Balance as of
December 31, 2010
    7,192,500   $ 24   $ 17,853   $ 23,938   $ (353 )   (402,583 ) $ (579 ) $ 40,883  
                                                   
Net unrealized income on
derivative instruments,
net of tax
                    49             49  
                                                   
Stock bonuses             429             150,600     65     494  
                                                   
Net income                 2,167                 2,167  
   

 

 

 

 

 

 

 

 
                                                   
Balance as of
March 31, 2011
    7,192,500   $ 24   $ 18,282   $ 26,105   $ (304 )   (251,983 ) $ (514 ) $ 43,593  
   

 

 

 

 

 

 

 

 
                                                   


















See accompanying notes to consolidated financial statements.

 

INDUSTRIAL SERVICES OF AMERICA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2011 AND 2010
(UNAUDITED)

               






               
    2011   2010  
   
 
 
    (in thousands)  
Cash flows from operating activities              
Net income   $ 2,167   $ 1,763  
Adjustments to reconcile net income to net
cash from operating activities:
             
Depreciation and amortization     1,119     864  
Stock bonus to employees     494     167  
Loss on sale of property and equipment     (49 )   (185 )
Change in assets and liability              
Receivables     (3,257 )   (15,520 )
Net investment in sales-type leases     8     7  
Inventories     (1,357 )   6,574  
Other assets     137     109  
Accounts payable     401     9,675  
Accrued bonuses     (462 )   337  
Income tax payable     272     540  
Other current liabilities     100     (22 )
   

 

 
Net cash (used in) from operating activities     (427 )   4,309  
               
Cash flows from investing activities              
Proceeds from sale of property and equipment     54     274  
Purchases of property and equipment     (331 )   (525 )
Deposits on equipment     (154 )   (70 )
Payments from related party     10     10  
   

 

 
Net cash used in investing activities     (421 )   (311 )
               
Cash flows from financing activities              
Payments on capital lease obligation         (18 )
Payments on long-term debt     (4,101 )   (4,644 )
Proceeds from long-term debt     4,690     1,087  
   

 

 
Net cash from (used in) financing activities     589     (3,575 )
               
Net (decrease) increase in cash     (259 )   423  
Cash at beginning of year     2,468     713  
   

 

 
               
Cash at end of year   $ 2,209   $ 1,136  
   

 

 
               
Supplemental disclosure of cash flow information:              
Cash paid for interest     671     329  
Cash paid for taxes     1,000     635  
               






 

SEGMENT INFORMATION

The Company’s operations include two primary segments: Recycling and Waste Services. The Company’s two reportable segments are determined by the products and services that each offers. The Recycling segment generates its revenues based on buying and selling of ferrous, non-ferrous, including stainless steel, and fiber scrap. Waste Services’ revenues consist of charges to customers for waste disposal services and equipment sales and lease income. The components of the column labeled “other” are selling, general and administrative expenses that are not directly related to the two primary segments. We evaluate segment performance based on gross profit or loss and the evaluation process for each segment includes only direct expenses and selling, general and administrative costs, omitting any other income and expense and income taxes.

 

                           
FOR THE THREE
MONTHS ENDED
MARCH 31, 2011
  RECYCLING   WASTE
SERVICES
  OTHER   SEGMENT
TOTALS
 

 
 
 
 
 
    (in thousands)  
Recycling revenues   $ 104,238   $   $   $ 104,238  
Equipment sales, service
and leasing revenues
        578         578  
Management fees         1,371         1,371  
Cost of goods sold     (96,862 )   (1,490 )       (98,352 )
Selling, general, and
administrative expenses
    (2,162 )   (194 )   (1,424 )   (3,780 )
   

 

 

 

 
                           
Segment profit (loss)   $ 5,214   $ 265   $ (1,424 ) $ 4,055  
   

 

 

 

 
                           
Segment assets   $ 99,094   $ 2,430   $ 8,199   $ 109,723  
   

 

 

 

 

 

                           
FOR THE THREE
MONTHS ENDED
MARCH 31, 2010
  RECYCLING   WASTE
SERVICES
  OTHER   SEGMENT
TOTALS
 

 
 
 
 
 
    (in thousands)  
Recycling revenues   $ 72,069   $   $   $ 72,069  
Equipment sales, service
and leasing revenues
        565         565  
Management fees         1,535         1,535  
Cost of goods sold     (66,312 )   (1,574 )       (67,886 )
Selling, general, and
administrative expenses
    (1,675 )   (282 )   (1,244 )   (3,201 )
   

 

 

 

 
                           
Segment profit (loss)   $ 4,082   $ 244   $ (1,244 ) $ 3,082  
   

 

 

 

 
                           
Segment assets   $ 69,992   $ 2,510   $ 3,056   $ 75,558  
   

 

 

 

 

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