International Wire Announces Operating Results for the Second Quarter and the First Six Months of 2014

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, 2014. Operating income for the second quarter and first six months of 2014 were both above comparable 2013 results.

“Solid second quarter and first six months results were driven by higher demand across most markets in our Bare Wire segment, increased plant utilization and lower medical costs,” said Rodney D. Kent, Chief Executive Officer of International Wire Group Holdings, Inc.

Second Quarter Results

Net sales for the quarter ended June 30, 2014 were $196.1 million, a decrease of $1.1 million, or 0.6%, compared to $197.2 million for the same period in 2013. This decrease was primarily 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 increased $1.2 million, or 0.6%, versus the same period in 2013. This increase resulted from $4.0 million of higher customer pricing/mix and $0.8 million from the effects of favorable foreign currency exchange rates, partially offset by $3.6 million of lower sales volume. Total pounds of product sold in the second quarter of 2014 increased by 3.1% compared to the second quarter of 2013.

Operating income for the three months ended June 30, 2014 was $13.8 million compared to $13.2 million for the three months ended June 30, 2013, an increase of $0.6 million, or 4.5%, primarily from higher plant utilization, lower medical costs and lower depreciation and amortization, partially offset by higher selling, general and administrative expenses.

Net income of $5.0 million for the three months ended June 30, 2014 increased by $0.5 million from the prior year results of $4.5 million. The increase was due primarily to higher operating income partially offset by a higher income tax provision.

Net income per basic and diluted share of $0.87 for the three months ended June 30, 2014 increased by $0.13 per basic share and $0.16 per diluted share from the prior year period level of $0.74 per basic share and $0.71 per diluted share. The increase in net income per basic and diluted share in the 2014 period compared to the 2013 period resulted from higher net income and a decrease in weighted-averages shares outstanding in the 2014 period compared to the 2013 period due to the repurchase of common stock and stock options in the first six months of 2014.

Six Months Results

Net sales for the six months ended June 30, 2014 were $390.4 million, a decrease of $7.9 million, or 2.0%, compared to 2013 period sales of $398.3 million. This decrease was primarily 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 increased $6.7 million, or 1.7%, versus the prior year. This increase resulted from $3.8 million of higher sales volume, $1.5 million of higher customer pricing/mix and $1.4 million from the effects of favorable foreign currency exchange rates. Total pounds of product sold in the first six months of 2014 increased by 5.5% compared to the first six months of 2013.

Operating income for the six months ended June 30, 2014 was $28.3 million compared to $26.3 million for the 2013 period, an increase of $2.0 million, or 7.6%, primarily from higher plant utilization, lower medical costs and lower depreciation and amortization, partially offset by higher selling, general and administrative expenses.

Net income of $10.2 million was higher than net income in the 2013 period of $9.2 million, primarily from higher operating income partially offset by a higher income tax provision.

Net income per basic share of $1.73 for the six months ended June 30, 2014 increased by $0.22 from the prior year level of $1.51. Net income per diluted share of $1.68 for the six months ended June 30, 2014 increased by $0.22 from the 2013 period of $1.46. The increase in net income per basic and diluted share in the 2014 period compared to the 2013 period resulted from higher net income and a decrease in weighted-averages shares outstanding in the 2014 period compared to the 2013 period due to the repurchase of common stock and stock options in the first six months of 2014.

Net debt (total debt less cash) was $263.7 million as of June 30, 2014, a $0.5 million increase from December 31, 2013 primarily from higher working capital requirements to support increased sales levels in the second quarter of 2014 as compared to the fourth quarter of 2013.

Non-GAAP Results and Net Debt

In an effort to better assist investors and debt holders 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 taxes, 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 fees 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. For reconciliations of the non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP, see the financial information set forth below. Net debt as of June 30, 2014 and December 31, 2013 is also presented below. In $ millions:

     

Reconciliation of Net Income to Non-GAAP Adjusted EBITDA

 
 
2Q 2014     2Q 2013
Net income

$

5.0

$ 4.5
Interest expense 5.8 5.8
Income tax expense 2.6 2.3
Depreciation & amortization 4.3 4.8
Amortization of deferred financing costs 0.5 0.4
Other adjustments   0.2   0.3
Adjusted EBITDA

$

18.4

$ 18.1
 

First Six
Months

2014

First Six
Months

2013

Net income

$

10.2

$ 9.2
Interest expense 11.5 11.5
Income tax expense 5.8 4.6
Depreciation & amortization 8.6 9.5
Amortization of deferred financing costs 0.9 0.8
Other adjustments   0.4   0.5
Adjusted EBITDA

$

37.4

$ 36.1
 

Net Debt

June 30, December 31,
2014   2013
Total debt

$

277.4

$ 281.6
less cash   13.7   18.4
Net debt

$

263.7

$ 263.2
 

Additional financial information is available 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 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 2013 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