Phoenix Services International LLC – Q3 Review 2011
Doug Lane, President and Chief Executive
Phoenix Services International LLC – Q2 Review 2011
Doug Lane, President and Chief Executive
Phoenix Services International LLC (“Phoenix Services” or the “Company”) reported an OSHA recordable rate of 3.0 for the 12 months ended June 2011, compared to the national slag industry standard of 5.0. The Company reported its most profitable quarter and first half in its 4-plus-year history.
A significant contributor to the record quarterly performance was the restart of the Company’s operations at the Sparrows Point, Md., steel mill in May 2011 following a sale of the mill by Severstal to the Renco Group. Phoenix Services provides slag handling, scrap recovery and scrap yard management at Sparrows Point and views the purchase as a positive development, suggesting a long-term commitment by Renco to the operation of the mill. The Company also commenced operations under its mill services contract at Warren, Ohio, in Q2 2011.
The Company’s operation in Galati, Romania, continues to run at full speed and provide an attractive contribution to the Company’s overall results. Phoenix Services continues to build on its international momentum, having recently been awarded a pair of ArcelorMittal mill services contracts in South Africa.
Domestic steel industry capacity utilization through the first half of the year has averaged 75%, a 5% increase from the same period last year, and a vast improvement from a cyclical low of 34% in December 2008. The current capacity utilization rate remains below the 25-year average of 82%, as well as below the post-consolidation restructured domestic steel industry average of 85% from 2002-08. Increased steel production across our portfolio of steel mill clients will continue to benefit Phoenix Services.
The Company continues to focus on operational excellence and attractive growth opportunities and has the capitalization needed to execute its plans. We remain extremely optimistic about the prospective performance and growth at Phoenix Services.
Phoenix Services International LLC – Q1 Review 2011
Doug Lane, President and Chief Executive
Phoenix Services reported an OSHA recordable rate of 3.4 for the 12 months ended March 2011, 32% below the national slag industry standard of 5.0. In Q1 2011, Phoenix Services also reported its most profitable quarter in its 4-year history.
The Company’s prospects remain strong and will be aided by the anticipated restart of the Sparrows Point, Md., steel mill in May, where the Company performs a variety of contractual services, including slag handling, scrap recovery and scrap yard management. Further, during Q1 2011, Phoenix Services began its slag bank operations in Johnstown, Pa., and its mill services operation in Georgetown, S.C., both of which are exceeding forecast profitability.
The domestic steel industry capacity utilization rate increased to 75% by the end of March 2011 from a cyclical low of 34% in December 2008. The current capacity utilization rate remains below the 25-year average of 82%, as well as below the post-consolidation restructured domestic steel industry average of 85% from 2002 to 2008. Increased steel production across our portfolio of steel mill clients will continue to benefit Phoenix Services.
The Company is exploring a host of additional opportunities, predominantly in North America and Europe, and has the capitalization needed to execute its growth plans. We remain extremely optimistic about the continuation of strong performance and growth at Phoenix Services.
Phoenix Services International LLC – Q3 Review 2010
Doug Lane, President and Chief Executive
Phoenix Services International LLC (“Phoenix Services” or the “Company”) experienced an OSHA recordable rate of 3.4 in Q3 2010, with a lost/restricted workday rate of 1.2. Year to date, the Company has averaged an OSHA recordable rate of 3.8 relative to a slag industry standard of 5.0 and a steel industry standard of 3.7.
The domestic steel industry has seen a falloff in production since the end of Q2 2010, with weekly production falling by approximately 10% and many mills curtailing production or announcing temporary shutdowns.
The Company recorded positive EBITDA in Q3 2010. However, performance was impacted by the temporary shutdown of the Sparrows Point facility, where the Company performs a variety of contractual services, including slag handling, scrap recovery and scrap yard management.
The financial impact of the Sparrows Point shutdown has been mitigated by cost reduction measures implemented at the site, as well as the commencement of mill service operations at the Arcelor Mittal Galati mill in Romania, which marks the launch of Phoenix Services’ international operations.
Phoenix Services continues to experience strong demand for its services, both in the U.S. and internationally. The Company is currently exploring a host of additional opportunities, predominantly in North America and Eastern Europe, and has the capitalization needed to execute its growth plans. We remain extremely optimistic about the continuation of strong performance and growth at Phoenix Services.
Phoenix Services International LLC – Q2 Review 2010
Doug Lane, President and Chief Executive Officer
Phoenix Services LLC provides mission-critical steel mill services to premier steel clients, including ArcelorMittal, Gerdau and Severstal. The company had its most profitable quarter in its history. The increase in profitability is largely attributable to the ramping of operations at ArcelorMittal’s Indiana Harbor-West complex and increasing steel production across the industry, including the client steel mills of Phoenix Services.
The company is continuing to realize the impact of spreading corporate infrastructure over an expanding revenue base. For the year-to-date period ended June 30, 2010, Phoenix Services’ corporate expense represented 7.3% of revenues. For the same period of 2009, corporate expense represented 14.9% of revenues.
The company continues to grow rapidly and has expanded its operations internationally, having recently initiated mill services for ArcelorMittal’s Galati, Romania mill. Phoenix Services is currently exploring a host of additional opportunities, predominantly in North America (including Mexico) and Eastern Europe, and has the “dry powder” provided by the refinancing completed in Q1 2010 to execute its growth plans. We remain extremely optimistic about the continuation of strong performance and growth at Phoenix Services.
Phoenix Services International LLC (formerly Atlas Industrial Services LLC) – Q1 Review 2010
Doug Lane, President and Chief Executive Officer
Phoenix provides mission-critical steel mill services to premier steel clients, including ArcelorMittal, Gerdau and Severstal. Phoenix’s prospects for continued growth are strong, having recently signed its first international mill service contract in Poland and reporting its most profitable quarter in the company’s history.
Global steel markets continue to improve, with Phoenix benefitting from this trend. Worldwide steel production was 108 million metric tons in February 2010, a 24% increase from February 2009 levels. Consistent with this ramp-up, ArcelorMittal announced expectations to restart operations at its Indiana Harbor West site in April 2010, for which Phoenix is the contracted mill services provider. Indiana Harbor West will provide incremental profitability at the Indiana Harbor site, the company’s largest single contract and the largest steelmaking facility in North America.
Internationally, Phoenix signed a 10-year contract with Gurex Ferrochrome in Poland to process an old slag bank and recover low-carbon and high-carbon ferrochrome. In addition, Phoenix expects to finalize a new contract with ArcelorMittal to provide steel mill services to its facility in Galati, Romania.
In April 2010, Atlas Holdings finalized an add-on financing with Olympus Partners. The financing provides Phoenix with $15 million of additional liquidity to fuel growth, mitigates the risk of excessive dilution to the equity interests of Atlas and management by modifying the terms of the April 2009 financing, and has the added benefit of opening additional sources of senior financing by simplifying the company’s capital structure.
Atlas Industrial Services LLC (Phoenix Services LLC) – Q4 Review 2009
Doug Lane, President and Chief Executive Officer
Phoenix continues to display operational excellence and provide outstanding value to customers, and its prospects for continued growth are strong.
The three-year-old business provides on-site services to steel mills, including slag handling, metal recovery, equipment rental and a variety of other related services. Despite its youth, Phoenix commands 16% of the domestic steel services market.
Phoenix now provides services at 10 locations in the U.S. and will launch international operations in 2010. It has in excess of $800 million in future revenues under contract and is pursuing additional opportunities in Egypt, Mexico, Spain and Italy, having already won contracts for future startups at four locations – in Alabama, Ohio, Pennsylvania and Romania – in 2009. The $50 million in new capital that Phoenix secured from Olympus Partners in 2009 will facilitate this rapid expansion. The global annual steel mill services market is approximately $30 billion, providing Phoenix Services ample room to continue its growth trajectory.
Atlas Industrial Services LLC (Phoenix Services LLC) – Q3 Review 2009
Doug Lane, President and Chief Executive Officer
In the face of challenging conditions in the steel industry, Phoenix Services continued its strong performance in Q3 based on new contract wins, expanded scope of services at existing sites, aggressive cost management and continued refinement of its world-class operating practices. In addition, Phoenix’s focused efforts to sign contracts with strategically important mills and the unique “take or pay” components of its customer contracts have mitigated some of the impact of the current recessionary climate.
Phoenix began operations in Q3 at the largest steelmaking facility in North America – ArcelorMittal’s Indiana Harbor complex. The Indiana Harbor-East operation is providing strong cash generation as Phoenix’s operations at Harbor-West continue to ramp up. In the meantime, Phoenix’s customers reported modest improvements in demand for automotive-related steel because of the “Cash for Clunkers” program, although it appears that the benefits of this stimulus measure will be short lived.
The Company’s strong liquidity position as a result of Q2’s $50 million investment by Olympus Partners has allowed Phoenix to continue to capitalize on incremental contract opportunities, both domestically and internationally. One such international company, ThyssenKrupp, has signed a joint venture with Phoenix to provide services at its Mobile, AL, mill currently under construction. Operation is expected to begin at the mill in Q2 2010.
Atlas Industrial Services LLC (Phoenix Services LLC) – Q2 Review 2009
Doug Lane, President and Chief Executive Officer
Market conditions for Phoenix customers continued to be challenging in Q2 with steel mills observing no material improvement in demand from the automotive, commercial construction, infrastructure and energy sectors. Steel production rates in North America were approximately 43% of capacity, the lowest level since 1994. We expect continued weak demand for steel as the impact of the Chrysler, GM and other manufacturers’ bankruptcies continue to ratchet through the supply chain.
Fortunately, Phoenix’s steel mill customers operated at reasonable production levels that, in combination with aggressive cost management and certain minimum revenue components in its contracts, allowed the company to generate substantial profits in Q2. In addition, Phoenix took over service responsibility for the Sparrows Point scrap yard and secured a $147 million contract with ArcelorMittal to provide services to its Indiana Harbor West mill.
The next phase of Phoenix’s aggressive growth plan will be supported by a $50-million investment from our friends at Olympus Partners, a Stamford, CT-based private equity investor. Olympus Partners, with
approximately $3.1 billion under management, invests in market-leading companies with opportunities for growth. Olympus Partners’ investment underscores the growth and market success AIS has achieved to date.
With its strong balance sheet, weakened competitors and strong service record, the company is negotiating several new contracts to expand its North American operations. In addition, Phoenix opened an office in Krakow, Poland, to bring its industry-leading service model to steel mills in Europe.
Atlas Industrial Services LLC (Phoenix Services LLC) – Q1 Review 2009
Doug Lane, President and Chief Executive Officer
Atlas Industrial Services (AIS), through its subsidiary Phoenix Services LLC, experienced a rapid expansion by securing major contracts with some of the world’s largest steel producers during the first three quarters of 2008. Then, in November and December, steel demand collapsed and customers curtailed operations.
In the first quarter of 2009, global steel demand improved modestly as inventory destocking moderated. As a result, our customers resumed operations and Phoenix’s financial performance improved significantly. In addition, Phoenix landed an important new contract with Severstal for its Sparrows Point Scrap Yard Maintenance Services.
