Metals USA ends first quarter with ABL availability of $135.9 million; debt increases by $44.2 million

By Jennifer Lanning Drey

Portland, Ore., April 28 - Metals USA Holdings Corp. ended the first quarter with $135.9 million of availability under its ABL credit facility, which chief executive officer Lourenco Goncalves said provides a comfortable liquidity cushion given the current economic environment and high steel prices.

The company had $334.0 million drawn on the facility at March 31. Debt increased during the quarter by $44.2 million to $887.9 million, with the increase primarily due to an increase in working capital, Goncalves said during Metals USA's first-quarter conference call held Monday.

Net cash used in operating activities during the quarter was $40.8 million. The number was affected by changes in operating assets and liabilities that resulted in a cash outflow of $50.7 million, which was primarily attributable to increases in inventories and accounts receivable, partially offset by an increase in accounts payable.

The company expects to use cash in operating activities again in the second quarter, Robert McPherson, Metals USA's chief financial officer, said in response to a question during the question-and-answer portion of the call.

Also during the question-and-answer session, Goncalves said Metals USA is currently negotiating two potential acquisitions, both of which would be similar to its previous bolt-on acquisitions.

Record adjusted EBITDA

Metals USA posted first-quarter adjusted EBITDA of $40.3 million, representing the company's best-ever first-quarter adjusted EBITDA, Goncalves said. Metals USA forecasts second-quarter EBITDA at more than $57 million, which would represent a record for quarterly adjusted EBITDA.

The company reported a $26.4 million increase in sales revenue for the first quarter of 2008, as compared to the prior-year first quarter. Goncalves said the company prepared for the increasing steel prices by beginning to build inventories in the fourth quarter.

Metals is a Houston-based metals processor and distributor.

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