CAMDEN, N.Y.--(BUSINESS WIRE)--International Wire Group Holdings, Inc. (the “Company”) (OTC Pink:ITWG) today announced results for the quarter ended March 31, 2017. First quarter 2017 operating income was lower than in the first quarter of 2016.
“First quarter results reflect mixed demand and continued competitive pricing pressures in our largest markets served. The U.S. industrial and energy segment remained flat during the quarter, while electronics and aerospace improved. Medical sales were strong in the quarter. Demand in the automotive segment reflects a slowdown in light vehicle production rates combined with continued surplus capacity for the Mexican automotive market. As announced last quarter, we proactively initiated the temporary idling of our Santa Teresa, New Mexico facility. This action was completed in a seamless fashion by the end of the first quarter and our automotive capacity is now more closely aligned with current market demand,” said Edwin J. Flynn, Chief Executive Officer of International Wire Group Holdings, Inc.
First Quarter Results
Net sales for the quarter ended March 31, 2017 were $136.2 million, a decrease of $3.4 million, or 2.4%, compared to $139.6 million for the same period in 2016. This decrease was partly due to a higher proportion of tolled copper, partially offset by a higher selling price of 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 a higher proportion of tolled copper and higher copper prices, net sales decreased $9.4 million, or 6.5%, versus the same period in 2016. This decrease resulted from $11.9 million of lower sales and $0.4 million from the effects of unfavorable foreign currency exchange rates, partially offset by $2.9 million of higher customer pricing/mix. Total pounds of product sold in the first quarter of 2017 decreased by 11.2% compared to the first quarter of 2016.
Operating income for the three months ended March 31, 2017 was $6.9 million compared to $9.7 million for the 2016 period, a decrease of $2.8 million, or 28.9%, primarily from lower sales volume and less favorable plant utilization, partially offset by more favorable customer pricing/mix and lower selling, general and administrative expenses.
Net loss of $0.4 million for the three months ended March 31, 2017 was a decrease of $2.4 million from net income of $2.0 million for the three months ended March 31, 2016. The decrease was due primarily to lower operating income and higher interest expense, partially offset by a lower income tax provision.
Net loss per basic and diluted share of $0.09 for the three months ended March 31, 2017 decreased by $0.53 from the 2016 period net income of $0.44 per basic and diluted share.
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 (loss)/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 Net (loss)/income, the most directly comparable financial measure calculated and presented in accordance with GAAP. Net debt as of March 31, 2017 and December 31, 2016 is also presented below. In $ millions:
Reconciliation of Net Income to Non-GAAP Adjusted EBITDA (unaudited)
|1Q 2017||1Q 2016|
|Income tax (benefit)/provision||(0.5||)||1.1|
|Depreciation & amortization||4.2||4.5|
|Amortization of deferred financing costs||0.4||0.5|
Net Debt (unaudited)
|March 31,||December 31,|
|Total debt excluding original issue discount||$||283.5||$||283.5|
Additional financial information will be made available on or about May 12, 2017 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 industrial and energy, electronics and data communications, automotive/specialty vehicles, aerospace and defense, medical products and consumer and appliance industries. The Company has eighteen manufacturing facilities and one distribution facility located throughout 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 “expect,” “may,” “will,” “anticipate” or the negative of any thereof or other variations thereof or comparable terminology, or by discussions of strategy or intentions. Undue reliance should not be placed on any forward-looking statements. These statements are based on management’s current beliefs and assumptions and on information currently available to management as of the date they were made. 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. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Many 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, developments in the competitive environments of the markets we serve, our reliance on our significant customers, lack of long-term contracts, our substantial dependence on business outside of the U.S. and changes in exchange rates and other risks associated with our international operations, limitations due to our indebtedness, potential 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 2016 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.