EX-99.1 2 exh99-1_14139.txt PRESS RELEASE DATED FEBRUARY 3, 2006 EXHIBIT 99.1 ------------ NEWS RELEASE NORTH AMERICAN GALVANIZING & COATINGS, INC. 2250 East 73rd Street Suite 300 Tulsa, OK 74136 (918) 494-0964 Fax: (918) 494-3999 FOR IMMEDIATE RELEASE Contact: Beth B. Hood Phone: (918) 524-1512 North American Galvanizing & Coatings Reports Fourth Quarter and Fiscal 2005 Earnings Tulsa, Oklahoma, February 3, 2006 - North American Galvanizing & Coatings, Inc. (AMEX: NGA) today reported quarterly net income of $254,000, or $.03 per diluted share, for the fourth quarter of 2005. For the year ended December 31, 2005, the company's net income was $644,000 or $.08 per diluted share, compared to net income of $397,000 or $.05 per diluted share for 2004. The increase in net income is primarily a result of the increase in sales volume. Revenues for the year ended December 31, 2005 increased 34% over the prior year due primarily to contribution from the Canton, Ohio galvanizing facility that was purchased February 28, 2005. Same plant revenues for the year improved 14% over 2004. North American Galvanizing's same plants started the year with a period of slow demand in the first two months. A general increase in demand due to increased commercial spending and higher construction activity led to a positive trend in same plant revenues continuing throughout the remainder of 2005. Sales volumes at same plants for the fourth quarter of 2005 were 19% higher than the fourth quarter of 2004 and 43% higher in total, including the Ohio plant. Sales volumes at same plants during 2005 were 11% higher than 2004 and 30% higher in total, including Ohio. Cash provided by operating activities increased to $6,640,000 for the year ended December 31, 2005, compared to $2,581,000 for 2004. Management's focus on improving working capital resulted in increased cash flow over the prior year. The company's investment of $4,200,000 to purchase the Canton, Ohio galvanizing plant during the first quarter of 2005 was financed primarily by debt; however, due to strong operating cash flow, debt levels at December 31, 2005 were $832,000 lower than the debt levels at December 31, 2004. Commenting on the results for the fourth quarter and fiscal 2005, Ronald J. Evans, president and chief executive officer, said, "Fourth quarter earnings improvement of $.05 per share over the prior year was achieved primarily through volume increases. We believe the market is recognizing our earlier capital investment programs to improve operating efficiencies, and our management team dedicated to providing quality product and service. Our goal is to continue that trend of improved efficiencies into 2006 and implement similar programs at the Ohio facility, purchased in 2005. Although SG&A expenses, including the incremental costs associated with the Canton purchase, declined as a percent of sales, Sarbanes Oxley compliance costs, audit fees, and legal fees associated with defending litigation were significantly higher than prior year. Programs to control these expenses are being reviewed." Evans continued, "Rapidly rising zinc prices are of concern from both a management of gross margin and competitive product substitution perspective." North American Galvanizing is a leading provider of hot-dip galvanizing and coatings for corrosion protection of fabricated steel products. The Company conducts its galvanizing and coating business through a network of plants located in Canton, Ohio; Denver, Hurst (Dallas/Forth Worth), Houston, Kansas City, Louisville, Nashville, St. Louis and the Tulsa area. Hot-dip galvanizing provides metals corrosion protection for many product applications used in commercial, construction and industrial markets. Our home page is: www.nagalv.com. Cautionary Statement. This press release contains statements, estimates, or projections that constitute "forward-looking statements" as defined under U.S. securities laws, including, but not limited to, statements made concerning the acquisition of assets from Gregory Galvanizing and the financial impacts thereof. Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from such forward-looking statements and management's present expectations or projections. These risks and uncertainties include the risk factors described in the Company's SEC filings including the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 14, 2005. - MORE - NORTH AMERICAN GALVANIZING & COATINGS, INC. AND SUBSIDIARY Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited)
Three Months Ended Twelve Months Ended December 31, December 31, ------------------- ------------------- (Dollars in Thousands Except per Share Amounts) 2005 2004 2005 2004 ----------------------------------------------- -------- -------- -------- -------- Sales $ 13,102 $ 8,583 $ 47,870 $ 35,822 Cost of sales 9,715 6,449 35,969 25,814 Selling, general & administrative expenses 1,987 1,530 7,196 5,917 Depreciation expense 667 633 2,532 2,701 -------- -------- -------- -------- Total Costs and Expenses 12,369 8,612 45,697 34,432 -------- -------- -------- -------- Operating Income 733 (29) 2,173 1,390 Interest expense, net 286 199 1,074 764 Other income -- -- -- (25) -------- -------- -------- -------- Income before income taxes 447 (228) 1,099 651 Income tax expense 193 (86) 455 248 -------- -------- -------- -------- Net Income 254 (142) 644 403 -------- -------- -------- -------- Other Comprehensive Income (Loss) Unrealized holding gain on investment -- -- -- 12 Less: reclassification adjustment for realized gain included in net income -- -- -- (18) -------- -------- -------- -------- Other Comprehensive Income (Loss) -- -- -- (6) -------- -------- -------- -------- Comprehensive Income $ 254 ($ 142) $ 644 $ 397 -------- -------- -------- -------- Net Income Per Common Share Net Income: Basic $ 0.04 ($ 0.02) $ 0.09 $ 0.06 Diluted $ 0.03 ($ 0.02) $ 0.08 $ 0.05