Ormet Reports Third Quarter and Year to Date 2010 Financial Results

Ormet had net income of $2.7 million with EPS of $0.15 for the third quarter and net income of $8.0 million and EPS of $0.43 for the year to date ended September 30, 2010

HANNIBAL, Ohio, Nov 11, 2010 （BUSINESS WIRE） -- Ormet Corporation, an independent U.S. producer of aluminum, announced its results of operations for the three and nine month periods ended September 30, 2010. Results for the three months ended September 30, 2010 were a net profit of $2.7 million compared to a net profit of $28.6 million for the same period of 2009. Net income for the nine months ended September 30, 2010 totaled $8.0 million compared to $42.5 million for the same period of 2009. The 2010 nine month results include one-time charges of $5.0 million associated with the March 2, 2010 refinancing of the long term debt （"Term Loan"） and credit facility （"ABL"） plus non-recurring other income of $3.2 million associated with a litigation settlement. The 2009 three and nine month results include the $31.1 million arbitration settlement with Glencore received in August 2009.

Results of Operations for the three months ended September 30, 2010

Net sales from continuing operations for the three months ended September 30, 2010 were $111.1 million compared to $87.2 million for the same period in 2009. The increase is primarily attributed to higher average realized selling prices of approximately $581/tonne for the 2010 period compared to the 2009 period partially attributable to the tolling agreement in 2009. Revenue for 2010 also benefited from the fixed pre priced contacts which were approximately $182/tonne above the average LME for the three months ended September 30, 2010. The monthly average cash settlement price on the LME including the Midwest premium was $2,231/tonne and $1,924/tonne during the third quarters of 2010 and 2009, respectively. Total volume of sow sold was 45,713 tonnes and 47,081 tonnes （which includes 27,307 tonnes tolled） for the three month period ended September 30, 2010 and 2009, respectively. During the third quarter of 2010 the Ormet smelter operated four of six lines while in 2009 the Company reduced its operating level from five lines at the start of the third quarter to 4 lines in August 2009.

The gross profit for the three months ended September 30, 2010 was $ 12.9 million compared to a gross profit of $6.2 million for the same period in 2009. Cost of goods sold for the three month period ended September 30, 2010 of $98.2 million was $17.2 million higher compared the same period in 2009. Higher alumina costs of $20.8 million in 2010 （due to the absence of the tolling agreement） were offset by the effect from lower production totaling $1.3 million. The effect of higher unit costs for anodes contributed an unfavorable $2.1 million that was offset by the effect of lower power unit costs totaling $10.1 million

Operating expenses for the three months ended September 30, 2010 totaled $4.6 million, versus $5.9 million for the same period in 2009. Lower legal and professional fees in 2010 of $1.0 million were primarily responsible.

For the three months ended September 30, 2010, the Company reported an $8.3 million operating profit compared to an operating profit of $0.4 million in the same period of 2009.

Non operating expense totaled $4.5 million versus non operating income of $28.9 million for the three months ended September 30, 2010 and 2009, respectively. The decrease was due to the absence of the arbitration settlement with Glencore of $31.1 million and increased interest expense of $1.3 million.

As a result of its net operating loss carry-forward, the Company did not record any tax expense or tax benefit. As of September 30, 2010, the Company had approximately $182.4 million of net operating losses （'NOL"） to carry-forward and apply to income tax liabilities in future years. The Company recorded certain valuation reserves and, as a result, no deferred tax assets or deferred tax liabilities are reflected on the balance sheet. As a result of a change of control, as defined in Section 382 of the Internal Revenue Code, in May 2007 NOL of $49.0 million were estimated to be subject to an annual Section 382 limitation of $12.6 million as of September 30, 2010. Unrestricted NOL as of September 30, 2010 was estimated to be approximately $133.4 million.

The cost for discontinued operations of $1.1 million for the three months ended September 30, 2010 compared to $0.6 million for the same period in 2009 principally reflect an increase of long term employee benefit expenses.

The average number of shares of common stock issued and outstanding during the three months ended September 30, 2010 and 2009 was 18,503,154 and 18,461,952, respectively. The resulting income from continuing operations for the three month period ended September 30, 2010 was $0.20 per share compared to income from continuing operations for the three month period ended September 30, 2009 of $1.59 per share. Net income per share was $0.15 during the three month period ended September 30, 2010 compared to a net income for the three month period ended September 30, 2009 of $1.55 per share.

The Company spent $1.8 million on capital expenditures during the three months ended September 30, 2010 including $1.4 million for relining 18 pots during the period. All capital expenditures were incurred at the aluminum smelter in Hannibal, Ohio. The ABL facility limits the Company's ability to make capital expenditures at its facilities. The limit for the year 2010 is $20.0 million.

Results of Operations for the nine months ended September 30, 2010

Net sales from continuing operations for the nine months ended September 30, 2010 were $319.6 million related to the sale of 134,747 tonnes compared to $329.8 million for 173,851 tonnes （136,083 tonnes tolled） for the same period in 2009, a $10.2 million decrease. The decrease is attributed to the reduction in operations that began in May 2009 due to the contractual dispute with Glencore which had a negative volume impact of $74.8 million. The volume reduction was offset by the effect of higher average realized selling prices in 2010 of $64.6 million as we moved from a toll fee based revenue stream to a sale of aluminum on a pre-priced basis.

The gross profit for the nine months ended September 30, 2010 was $35.9 million compared to a gross profit of $42.6 million for the same period in 2009. The sales decline of $10.2 million from 2009 was partially offset by lower cost of goods sold in 2010. Cost of goods sold for the first nine months of 2010 of $283.7 million was $3.5 million lower than cost of goods sold of $287.2 million in the same period of 2009. Raw material costs were impacted by a $77.2 million increase in alumina costs due to the absence of alumina costs the first seven months of 2009 as Glencore provided the alumina under the tolling agreement. This was offset by a $46.3 million decrease from lower unit costs of anodes and power in 2010 from 2009. Reduced operations from 2010 versus 2009 accounted for an additional $34.3 million lower material and conversion costs.

Operating expenses for the nine months ended September 30, 2010 totaled $14.0 million versus $20.0 million from the same period in 2009. The reduction was mainly due to lower legal and professional expenses of $4.7 million and stock compensation costs of $0.5 million.

For the nine months ended September 30, 2010, the Company reported a $21.9 million operating profit compared to an operating profit of $22.6 million in the same period of 2009.

Non operating expense totaled $12.1 million versus non operating income of $22.0 million for the nine months ended September 30, 2010 and 2009, respectively. The $34.1 million decrease was due to the absence of the arbitration settlement with Glencore of $31.2 million and increased interest expenses associated with the refinancing of the Company's long term debt of $6.5 million, partially offset by the reversal of a contingent liability of $3.2 million associated with a litigation settlement.

As a result of its net operating loss carry-forward, the Company did not record any tax expense or tax benefit. As of September 30, 2010, the Company has approximately $182.4 million of net operating losses （'NOL"） to carry-forward and apply to income tax liabilities in future years. The Company recorded certain valuation reserves and, as a result, no deferred tax assets or deferred tax liabilities are reflected on the balance sheet. As a result of a change of control, as defined in Section 382 of the Internal Revenue Code in May 2007, NOL of $49.0 million were estimated to be subject to an annual Section 382 limitation of $12.6 million as of September 30, 2010. Unrestricted NOL as of September 30, 2010 was estimated to be approximately $133.4 million.

The cost of discontinued operations of $1.9 million for the nine months ended September 30, 2010 compared to the $2.1 million cost for the same period in 2009 reflects a decrease in long term employee benefit expense.

The average number of shares of common stock issued and outstanding during the nine months ended September 30, 2010 and 2009 was 18,475,837 and 18,461,952, respectively. The resulting income from continuing operations for the nine month period ended September 30, 2010 was $0.53 per share compared to income from continuing operations for the nine month period ended June 30, 2009 of $2.42 per share. Net income per share was $0.43 and $2.30 during the nine month periods ended September 30, 2010 and 2009, respectively.

Company spent $5.1 million on capital expenditures during the nine months ended September 30, 2010 including $4.3 million for relining 56 pots during the period. All capital expenditures were incurred at the aluminum smelter in Hannibal, Ohio. The ABL facility limits the Company's ability to make capital expenditures at its facilities. The limit for the year 2010 is $20.0 million.