International Wire Announces Operating Results for the Fourth Quarter and Full Year 2015

CAMDEN, N.Y.--()--International Wire Group Holdings, Inc. (the “Company”) (OTC Pink: ITWG) today announced results for the fourth quarter and full year ended December 31, 2015. Operating income and net income decreased for the fourth quarter and year ended December 31, 2015 compared to the 2014 period.

“Fourth quarter and full year results reflect challenging environments for our customers, which created uneven demand for our products in our largest markets served. In particular, many customers in the U.S. industrial, energy and specialty cable markets cited a strong dollar, weak global demand, and the large decline in oil and gas drilling as causes of a slowdown in the demand for U.S. exports. Full year electronics and data communications market revenues improved as a result of some successful share recapture and customer de-integration projects. Light vehicle manufacturing demand held solid but was offset by a slowdown in commercial vehicle demand while our aerospace and medical markets remained firm,” said Edwin J. Flynn, Chief Executive Officer of International Wire Group Holdings, Inc.

Fourth Quarter Results

Net sales for the quarter ended December 31, 2015 were $134.9 million, a decrease of $42.0 million, or 23.7%, compared to $176.9 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 $24.5 million, or 13.8%, versus the same period in 2014. This decrease resulted from $21.2 million of lower sales volume, $1.7 million of lower customer pricing/mix and $1.6 million from the effects of unfavorable foreign currency exchange rates. Total pounds of product sold in the fourth quarter of 2015 decreased by 15.9% compared to the fourth quarter of 2014.

Operating income for the three months ended December 31, 2015 was $7.0 million compared to $9.2 million for the three months ended December 31, 2014, a decrease of $2.2 million, or 23.9%, primarily from lower sales volume and less favorable plant utilization, partially offset by higher LIFO/copper profits and lower selling, general and administrative expenses.

Net income of $0.7 million for the three months ended December 31, 2015 decreased by $1.1 million from net income of $1.8 million for the three months ended December 31, 2014. The decrease was due primarily to lower operating income partially offset by a lower income tax provision.

Net income per basic and diluted share of $0.13 for the three months ended December 31, 2015 decreased by $0.20 from the 2014 period net income of $0.33 per basic and diluted 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 since the 2014 period. 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.

Full Year Results

Net sales for the year ended December 31, 2015 were $639.0 million, a decrease of $127.5 million, or 16.6%, compared to 2014 period sales of $766.5 million. This decrease was partly due to a lower selling price of copper partially offset by a lower proportion of tolled copper. Excluding the effects of lower copper prices and a lower proportion of tolled copper, net sales decreased $85.1 million, or 11.1%, versus the prior year. This decrease resulted from $74.0 million of lower sales volume, $9.1 million from the effects of unfavorable foreign currency exchange rates and $2.0 million of lower customer pricing/mix. Total pounds of product sold for the year ended December 31, 2015 decreased by 11.6% compared to the year ended December 31, 2014.

Operating income for the year ended December 31, 2015 was $36.9 million compared to $49.5 million for the same period in 2014, a decrease of $12.6 million, or 25.5%, 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 $8.5 million was lower than net income of $15.9 million in the 2014 period, primarily from lower operating income partially offset by a lower income tax provision.

Net income per basic share of $1.74 for the year ended December 31, 2015 decreased by $1.01 from the 2014 period net income of $2.75 per basic share. Net income per diluted share of $1.74 for the year ended December 31, 2015 decreased by $0.95 from the 2014 period net income of $2.69 per diluted 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 since the 2014 period. 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.

Net debt (total debt less cash) was $253.5 million as of December 31, 2015, a $5.9 million decrease from December 31, 2014 primarily due to lower accounts receivable and inventory and higher accrued interest, partially offset by cash used for repurchase of common stock and stock options during the period.

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 (benefit)/provision, depreciation and amortization expense, amortization of deferred financing costs, stock-based compensation expense, impairment charges, gain/loss on sale of property, plant and equipment, loss on early extinguishment of debt and extraordinary non-recurring gains and losses. 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 December 31, 2015 and December 31, 2014 is also presented below. In $ millions:

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

 
        4Q 2015     4Q 2014
Net income $ 0.7 $ 1.8
Interest expense 6.0 5.7
Income tax (benefit)/provision (0.2 ) 1.2
Depreciation & amortization 4.6 4.5
Amortization of deferred financing costs 0.5 0.5
Stock-based compensation 0.3 0.3
Other adjustments       (0.6 )
Adjusted EBITDA $ 11.9   $ 13.4  
 
 
 

Full Year
2015

Full Year
2014

Net income $ 8.5 $ 15.9
Interest expense 24.2 22.9
Income tax provision 2.1 8.9
Depreciation & amortization 17.6 17.1
Amortization of deferred financing costs 2.0 1.8
Stock-based compensation 3.3 1.0
Other adjustments (1)   1.1     (0.7 )
Adjusted EBITDA $ 58.8   $ 66.9  
 

(1) Includes a $1.0 million extraordinary non-recurring scrap charge.

 

 
 
Net Debt (unaudited)
December 31, December 31,
2015 2014
Total debt $ 263.1 $ 264.6
less cash   9.6     5.2  
Net debt $ 253.5   $ 259.4  
 

Additional financial information will be made available on or about March 11, 2016 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, engineered wire products and high performance conductors, 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 industries. The Company has eighteen manufacturing facilities and one distribution facility located in the United States, 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 “may,” “will,” 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. These statements are based on management’s beliefs and assumptions and on information currently available to management 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 2015 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

Contacts

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

Contacts

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