Schuff International Announces Financial Results for Third Quarter 2009

http://www.businesswire.com/news/home/20091026005346/en

PHOENIX--(Business Wire)--
Schuff International, Inc. (OTC:SHFK), a family of companies providing fully
integrated steel construction services, today reported financial results for the
third quarter ended October 4, 2009.

Schuff's third quarter 2009 financial results were attributable to ongoing
weakness in the commercial construction sector throughout the U.S., partially
offset by higher revenues derived from healthcare-related and industrial
projects in the western U.S. and, to a lesser extent, industrial and energy
projects, particularly in the Gulf Coast region.

Third Quarter 2009 Results:

Revenues for the third quarter ended October 4, 2009 were $107.4 million, a
decrease of 40.6 percent over record year-ago revenues of $180.7 million. The
decline in year-over-year revenues resulted primarily from the reduction in the
number of major new casino projects in Las Vegas compared with the previous year
and general softness in the commercial construction end market,
financing-related delays of major projects throughout the company`s geographic
segments, and softness in the joist business. Schuff benefited from higher
demand for healthcare-related and industrial projects in the western U.S.

Gross profit as a percentage of revenue was 24.4 percent for the period ended
October 4, 2009, compared with 23.9 percent for the year-ago period.

Operating income for the quarter was $13.4 million, down 47.9 percent from $25.7
million in the third quarter of 2008. Operating margin decreased to 12.5 percent
from 14.2 percent in the year-ago period. The year-over-year decline in
operating profit and margin resulted primarily from the higher proportion of
lower-revenue and lower-margin projects in the third quarter of 2009.

Net income for the quarter was $7.8 million, or $0.85 per diluted share, versus
$16.3 million, or $1.69 per diluted share, a year ago.

Schuff International`s backlog was $215.8 million ($162.9 million under
contracts or purchase orders and $52.9 million under letters of intent) at
October 4, 2009 compared with $247.1 million ($223.8 million under contracts or
purchase orders and $23.3 million under letters of intent) at July 5, 2009.
Approximately $80.6 million, representing 37.3 percent of the company's backlog
at October 4, 2009, was attributable to five contracts, letters of intent,
notices to proceed or purchase orders.

Nine Months 2009 Results:

Revenues for the nine months ended October 4, 2009 were $340.3 million, a
decrease of 35.0 percent over year-ago revenues of $523.9 million.

Gross profit as a percentage of revenue was 23.6 percent for the nine months
ended October 4, 2009, compared with 22.8 percent for the year-ago period.

Operating income for the nine months of 2008 was $42.7 million, down 40.8
percent from $72.2 million for the nine months of 2009. Operating margin
decreased to 12.6 percent from 13.8 percent in the year-ago period.

Net income for the nine months ended October 4, 2009 was $25.4 million, or $2.73
per diluted share, versus $44.8 million, or $4.66 per diluted share, a year ago.

"Weakness in the general economy, particularly commercial construction, hampered
our results in the third quarter of 2009, as it has for the past several
quarters. Construction demand was soft across all of our geographic segments and
product lines, with the exception of the industrial and healthcare projects in
the West," said Scott A. Schuff, president and CEO.

"Our focus in this period of anemic commercial and gaming construction demand
continues to be on managing costs and working capital. We`re pleased with the
cash generation performance of the company during the nine months of 2009; at
October 4, we had more than $129 million of cash and equivalents on hand, a
record for the company. We will continue to apply our industry-leading product
and services offerings to projects that are moving forward, especially in the
areas of infrastructure, energy and healthcare," concluded Schuff.

About Schuff International, Inc.:

Schuff International, Inc. (OTC:SHFK) and its family of steel companies is the
largest steel fabrication and erection company in the United States. The 33-year
old company constructs major projects throughout the country. Schuff offers
integrated steel construction services from a single source. Professional
services include design-build, design-assist, engineering, BIM participation, 3D
steel modeling/detailing, fabrication, advanced field erection, joist and joist
girder manufacturing, project management, and single-source steel management
systems. Major market segments include industrial, public works, bridges, health
care, gaming and hospitality, convention centers, stadiums, mixed-use and
retail, transportation, and international projects. Schuff International, Inc.,
which is headquartered in Phoenix, AZ, owns and operates nine steel fabrication
plants and two steel joist-manufacturing plants. Companies include Schuff Steel
Company located in AZ, NV and CA; Schuff Steel-Midwest Division located in
Overland Park, KS, Ottawa, KS, Chicago, IL and Denver, CO; Schuff Steel-Gulf
Coast, Inc., located in Houston, TX; Schuff Steel-Atlantic, Inc., located in
Orlando, FL, Albany, GA and Atlanta, GA; Schuff Steel Management
Company-Southwest, Inc., located in Gilbert, AZ; and Quincy Joist Company
located in Quincy, FL and Buckeye, AZ. Schuff employs approximately 1,500 people
throughout the country. For more information, visit www.schuff.com.

Certain statements in this news release may contain forward-looking information
within the meaning of the Private Securities Litigation Reform Act of 1995, and
are subject to the safe harbor created by those rules. All statements, other
than statements of fact, included in this release, including, without
limitation, statements regarding potential future plans and objectives of the
company are forward-looking statements that involve risks and uncertainties.
There can be no assurance that such statements will prove to be accurate and
actual results and future events could differ materially from those anticipated
in such statements. These risks and uncertainties, some of which are beyond the
control of the company, include, but are not limited to, the company's ability
to successfully and timely complete construction projects; the company`s ability
to convert backlog into revenue; the potential delay, suspension, termination,
or reduction in scope of a construction project; the continuing validity of the
underlying assumptions and estimates of total forecasted project revenues, costs
and profits and project schedules; the outcomes of pending or future litigation,
arbitration or other dispute resolution proceedings; the availability of
borrowed funds on terms acceptable to the company; the ability to retain certain
members of management; the ability to obtain surety bonds to secure its
performance under certain construction contracts; possible labor disputes or
work stoppages within the construction industry; the ability of project owners
to obtain and/or continue to maintain financing for projects; possible changes
or developments in domestic and worldwide financial, political and social
circumstances; and actions taken or not taken by third parties, including the
company`s customers, suppliers, business partners, and competitors and
legislative, regulatory, judicial and other governmental authorities and
officials. The company cautions that these forward-looking statements are
further qualified by other factors. The company undertakes no obligation to
publicly update or revise any statements in this release, whether as a result of
new information, future events or otherwise.

SCHUFF INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

Three months ended Nine months ended
October 4, September 30, October 4, September 30,
2009 2008 2009 2008
(in thousands, except per share data)

Revenues $ 107,373 $ 180,711 $ 340,296 $ 523,866
Cost of revenues 81,200 137,460 259,911 404,616
Gross profit 26,173 43,251 80,385 119,250

General and administrative expenses 12,782 17,544 37,648 47,085
Operating income 13,391 25,707 42,737 72,165
Interest expense (940 ) (1,156 ) (3,024 ) (3,583 )
Other (expense) income (173 ) 100 323 712
Income before income taxes 12,278 24,651 40,036 69,294
Income tax provision (4,435 ) (8,355 ) (14,641 ) (24,487 )
Net income $ 7,843 $ 16,296 $ 25,395 $ 44,807

Income per share:
Basic $ 1.10 $ 2.26 $ 3.58 $ 6.24
Diluted $ 0.85 $ 1.69 $ 2.73 $ 4.66

Weighted average shares used in computation:
Basic 7,122 7,216 7,094 7,185
Diluted 9,663 9,857 9,655 9,825

SCHUFF INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

October 4, January 4,

2009 2009

(in thousands)
Assets
Current assets:
Cash and cash equivalents $ 129,169 $ 39,985
Restricted funds on deposit - 912
Receivables 99,083 148,848
Income tax receivable 892 140
Costs and recognized earnings in excess of billings on uncompleted contracts 10,822 30,015
Inventories 16,655 23,403
Deferred tax asset 1,313 1,142
Prepaid expenses and other current assets 1,306 1,428
Total current assets 259,240 245,873

Property and equipment, net 53,735 55,012
Goodwill, net 17,115 17,115
Other assets 4,933 5,228
$ 335,023 $ 323,228
Liabilities and stockholders` equity
Current liabilities:
Accounts payable $ 25,322 $ 35,857
Accrued payroll and employee benefits 16,134 6,617
Accrued interest 587 124
Other current liabilities 9,358 7,357
Billings in excess of costs and recognized earnings on uncompleted contracts 42,115 51,406
Current portion of long-term debt 2,895 7,440
Total current liabilities 96,411 108,801

Long-term debt 37,165 39,337
Deferred income taxes 3,313 3,119
Other liabilities 282 301
40,760 42,757

Stockholders` equity:
Preferred stock, $.001 par value - authorized 1,000,000 shares; none issued - -
Common stock, $.001 par value - 20,000,000 shares authorized; 7,535,057 and 7,534,057 issued and 7,122,924 and 7,080,992 outstanding, respectively 7 7
Additional paid-in capital 19,115 18,648
Accumulated earnings 183,386 157,991
Treasury stock - 412,133 and 453,065 shares, in 2009 and 2008, respectively, at cost (4,656 ) (4,976 )
Total stockholders` equity 197,852 171,670
$ 335,023 $ 323,228

SCHUFF INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Nine months ended
October 4, September 30,
2009 2008
(in thousands)
Operating activities
Net income $ 25,395 $ 44,807
Adjustment to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 5,550 4,114
Loss on disposal of property and equipment 6 14
Loss from extinguishment of debt 113 62
Deferred income taxes 24 (49 )
Stock compensation 6 12
Compensation expense - restricted stock grant 1,289 1,289
Changes in working capital components:
Restricted funds on deposit 912 (777 )
Receivables 49,765 (17,834 )
Costs and recognized earnings in excess of billings on uncompleted contracts 19,193 (5,792 )
Inventories 6,748 (5,754 )
Prepaid expenses and other assets 122 202
Accounts payable (10,535 ) (4,472 )
Accrued payroll and employee benefits 9,517 8,164
Accrued interest 463 325
Income taxes receivable/payable (752 ) (7,685 )
Other current liabilities 2,001 873
Billings in excess of costs and recognized earnings on uncompleted contracts (9,291 ) 2,073
Other liabilities (19 ) (9 )
Net cash provided by operating activities 100,507 19,563

Investing activities
Acquisition of property and equipment (3,955 ) (23,781 )
Proceeds from disposals of property and equipment 73 56
Decrease (increase) in other assets 191 (334 )
Net cash used in investing activities (3,691 ) (24,059 )

Financing activities
Proceeds from revolving line of credit and long-term debt - 1,873
Principal payments on revolving line of credit and long-term debt (6,716 ) (6,029 )
Payment of debt issue costs (408 ) (38 )
Purchase of treasury stock (512 ) (789 )
Proceeds from issuance of common stock 4 -
Net cash used in financing activities (7,632 ) (4,983 )

Increase in cash and cash equivalents 89,184 (9,479 )
Cash and cash equivalents at beginning of period 39,985 38,979
Cash and cash equivalents at end of period 129,169 $ 29,500

Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest $ 2,161 $ 2,898
Income taxes $ 15,354 $ 32,221

Schuff International, Inc.
Michael R. Hill, Vice President/CFO, 602-417-8865

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