MRO Magazine

International Wire Announces Operating Results for the Second Quarter and the First Six Months of 2015


August 7, 2015
By Business Wire News

CAMDEN, N.Y.

International Wire Group Holdings, Inc. (“the Company”) (OTC Pink: ITWG) today announced results for the second quarter and for the six months ended June 30, 2015. Operating income and net income decreased for the three and six months ended June 30, 2015.

“Second quarter and first six months results reflected uneven demand in our major markets served. Demand was strong in the aerospace, medical device and medical electronics markets during the second quarter. While demand in the automotive market remained strong, increases in bare wire production capacity among our competitors has pressured revenues in that segment. Our customers that serve the coal and the oil and gas markets saw continued softening demand. Our customers that serve general industrial markets also experienced a slowdown in the second quarter, which affected our results for the quarter as well,” said Edwin J. Flynn, Chief Executive Officer of International Wire Group Holdings, Inc.

Second Quarter Results

Net sales for the quarter ended June 30, 2015 were $172.4 million, a decrease of $23.7 million, or 12.1%, compared to $196.1 million for the same period in 2014. This decrease was partly due to a lower selling price of copper partially offset by a lower proportion of tolled copper. Tolled copper is customer-owned copper. The value of tolled copper is not included in net sales and costs of sales. Excluding the effects of lower copper prices and a lower proportion of tolled copper, net sales decreased $21.4 million, or 10.9%, versus the same period in 2014. This decrease resulted from $18.0 million of lower sales volume, $0.6 million of lower customer pricing/mix and $2.8 million from the effects of unfavorable foreign currency exchange rates. Total pounds of product sold in the second quarter of 2015 decreased by 11.3% compared to the second quarter of 2014.

Operating income for the three months ended June 30, 2015 was $11.3 million compared to $13.8 million for the three months ended June 30, 2014, a decrease of $2.5 million, or 18.1%, primarily from lower sales volume, lower silver and non-copper metal profits and less favorable plant utilization, partially offset by higher LIFO/copper profits and lower selling, general and administrative expenses.

Net income of $2.9 million for the three months ended June 30, 2015 decreased by $2.1 million from net income of $5.0 million for the three months ended June 30, 2014. The decrease was due primarily to lower operating income partially offset by a lower income tax provision.

Net income per basic share of $0.62 for the three months ended June 30, 2015 decreased by $0.25 from the 2014 period net income of $0.87 per basic share. Net income per diluted share of $0.61 for the three months ended June 30, 2015 decreased by $0.26 from the 2014 period net income of $0.87 per basic share.

The decrease in net income per basic share resulted from lower net income, partially offset by a decrease in outstanding shares in the 2015 period compared to the 2014 period due to the repurchase of common stock in the 2015 and 2014 periods. The decrease in net income per diluted share resulted from lower net income, partially offset by a decrease in the number of outstanding shares and stock options in the 2015 period compared to the 2014 period due to the repurchase of common stock in the 2015 and 2014 periods and the repurchase of stock options in the 2014 period.

Six Months Results

Net sales for the six months ended June 30, 2015 were $350.0 million, a decrease of $40.4 million, or 10.3%, compared to 2014 period sales of $390.4 million. This decrease was partly due to a lower selling price of copper partially offset by a lower proportion of tolled copper. Tolled copper is customer-owned copper. The value of tolled copper is not included in net sales and costs of sales. Excluding the effects of lower copper prices and a lower proportion of tolled copper, net sales decreased $32.9 million, or 8.4%, versus the prior year. This decrease resulted from $29.0 million of lower sales volume and $5.4 million from the effects of unfavorable foreign currency exchange rates, partially offset by $1.5 million of higher customer pricing/mix. Total pounds of product sold in the first six months of 2015 decreased by 8.5% compared to the first six months of 2014.

Operating income for the six months ended June 30, 2015 was $23.9 million compared to $28.3 million for the same period in 2014, a decrease of $4.4 million, or 15.5%, primarily from lower sales volume, lower silver and non-copper metal profits and less favorable plant utilization, partially offset by higher LIFO/copper profits and lower selling, general and administrative expenses.

Net income of $7.3 million was lower than net income of $10.2 million in the 2014 period, primarily from lower operating income partially offset by a lower income tax provision.

Net income per basic share of $1.43 for the six months ended June 30, 2015 decreased by $0.30 from the 2014 period net income of $1.73 per basic share. Net income per diluted share of $1.41 for the six months ended June 30, 2015 decreased by $0.27 from the 2014 period net income of $1.68 per basic share.

The decrease in net income per basic share resulted from lower net income, partially offset by a decrease in outstanding shares in the 2015 period compared to the 2014 period due to the repurchase of common stock in the 2015 and 2014 periods. The decrease in net income per diluted share resulted from lower net income, partially offset by a decrease in the number of outstanding shares and stock options in the 2015 period compared to the 2014 period due to the repurchase of common stock in the 2015 and 2014 periods and the repurchase of stock options in the 2014 period.

Net debt (total debt less cash) was $272.1 million as of June 30, 2015, a $12.7 million increase from December 31, 2014 primarily from the issuance of $26.0 million of 10.00%/12.00% PIK Notes for the repurchase of common stock in April 2015.

Non-GAAP Results and Net Debt

In an effort to better assist investors and noteholders in understanding the Company’s financial results, as part of this release, the Company is also providing Adjusted EBITDA which is a measure not defined under accounting principles generally accepted in the United States (GAAP). Adjusted EBITDA is net income excluding interest expense, income tax expense, depreciation and amortization expense, impairment charges, stock compensation expense, gain/loss on sale of property, plant and equipment and assets held for sale, amortization of deferred financing costs and loss on early extinguishment of debt. Management uses Adjusted EBITDA as a measure in evaluating the performance of our business. Other companies may define Adjusted EBITDA differently. As a result, our measures of Adjusted EBITDA may not be directly comparable to measures used by other companies. Below is a reconciliation of this non-GAAP financial measure to the most directly comparable financial measures calculated and presented in accordance with GAAP. Net debt as of June 30, 2015 and December 31, 2014 is also presented below. In $ millions:

 

Reconciliation of Net Income to Non-GAAP Adjusted EBITDA (unaudited)

 
   2Q 2015    2Q 2014
Net income $ 2.9 $ 5.0
Interest expense 6.3 5.8
Income tax expense 1.5 2.6
Depreciation & amortization 4.4 4.3
Amortization of deferred financing costs 0.5 0.5
Other adjustments   0.4   0.2
Adjusted EBITDA $ 16.0 $ 18.4
 

First Six
Months
2015

First Six
Months
2014

Net income $ 7.3 $ 10.2
Interest expense 12.0 11.5
Income tax expense 3.7 5.8
Depreciation & amortization 8.8 8.6
Amortization of deferred financing costs 1.0 0.9
Other adjustments   0.4   0.4
Adjusted EBITDA $ 33.2 $ 37.4
 
Net Debt (unaudited)
June 30,December 31,
20152014
Total debt $ 281.9 $ 264.6
less cash   9.8   5.2
Net debt $ 272.1 $ 259.4
 

Additional financial information will be made available on or about August 7, 2015 through the Company’s investor website (http://itwg.client.shareholder.com or http://www.internationalwiregroup.com) in the section titled “Financial Information.”

About International Wire Group Holdings, Inc.

International Wire Group Holdings, Inc., through its subsidiaries, is a manufacturer and marketer of wire products, including bare, silver-plated, nickel-plated and tin-plated copper wire, for other wire suppliers, distributors and original equipment manufacturers. Its products include a broad spectrum of copper wire configurations and gauges with a variety of electrical and conductive characteristics and are utilized by a wide variety of customers primarily in the aerospace, automotive/specialty vehicles, consumer and appliance, electronics and data communications, industrial and energy, medical device and medical electronics markets. The Company has eighteen manufacturing and two distribution facilities located in the United States, Belgium, France, Italy and Poland.

Forward-Looking Information is Subject to Risk and Uncertainty

Certain statements in this release may constitute “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as the words “believes,” “expects,” “may,” “will,” “should,” “seeks,” “pro forma,” “anticipates,” “intends,” “plans,” “estimates,” or the negative of any thereof or other variations thereof or comparable terminology, or by discussions of strategy or intentions. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions as to future events that may not prove to be accurate. Actual outcomes and results may differ materially from what is expressed or forecasted in these forward-looking statements. As a result, these statements speak only as of the date they were made and we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Many important factors could cause our results to differ materially from those expressed in forward-looking statements. These factors include, but are not limited to, fluctuations in our operating results and customer orders, unexpected decreases in demand or increases in inventory levels, changes in the price of copper, tin, nickel and silver, the failure of our acquisitions and expansion plans to perform as expected, the competitive environment, our reliance on our significant customers, lack of long-term contracts, substantial dependence on business outside of the U.S. and changes in exchange rates and risks associated with our international operations, limitations due to our indebtedness, loss of key employees or the deterioration in our relationship with employees, litigation, claims, liability from environmental laws and regulations and other factors.

For additional information regarding the factors that may cause our actual results to differ from those expected by our forward-looking statements, see “Risk Factors” in the Company’s 2014 financial report. This report is accessible on the “Financial Information” page on the Investor Relations portion of the Company’s website, available at http://itwg.client.shareholder.com or http://www.internationalwiregroup.com.

ITWG-G

International Wire Group Holdings, Inc.
Donald F. DeKay, 315-245-3800
Senior Vice-President, Chief Financial Officer and Secretary