CAMDEN, N.Y.--(BUSINESS WIRE)--International Wire Group Holdings, Inc. (the “Company”) (OTCMKTS:ITWG) today announced results for the fourth quarter and full year ended December 31, 2017. Operating income and net income increased for both the fourth quarter and year ended December 31, 2017 compared to the 2016 period.
“Fourth quarter and full year results reflect improved demand in our largest markets served. Electronics/data communications and consumer/appliance market demand was very strong and the demand in the industrial/energy segment strengthened. Automotive market volumes were down for the full year given the continued surplus capacity serving the Mexican automotive market. As a result, we decided to permanently idle our Santa Teresa, New Mexico facility in the fourth quarter of 2017. Aerospace demand remained firm, while the HPC Medical Products business and our Engineered Wire Products-Europe segment both had very strong years.” said Edwin J. Flynn, Chief Executive Officer of International Wire Group Holdings, Inc.
Fourth Quarter Results
Net sales for the quarter ended December 31, 2017 were $156.4 million, an increase of $36.2 million, or 30.1%, compared to $120.2 million for the same period in 2016. This increase was partly due to a higher selling price of copper and 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 higher copper prices and a lower proportion of tolled copper, net sales increased $14.9 million, or 10.5%, versus the same period in 2016. This increase resulted from $13.0 million of higher sales, $1.1 million of higher customer pricing/mix and $0.8 million from the effects of favorable foreign currency exchange rates. Total pounds of product sold in the fourth quarter of 2017 increased by 8.7% compared to the fourth quarter of 2016.
Operating income for the three months ended December 31, 2017 was $12.0 million compared to $5.7 million for the 2016 period, an increase of $6.3 million, or 110.5%, primarily from higher sales volume, higher LIFO/copper profits, a favorable LIFO liquidation impact and lower selling, general and administrative expenses.
Net income of $7.4 million for the three months ended December 31, 2017 increased by $8.2 million from net loss of $0.8 million for the three months ended December 31, 2016. The increase was due primarily to higher operating income and a higher income tax benefit in the 2017 period.
Net income per basic and diluted share of $1.59 for the three months ended December 31, 2017 increased by $1.77 from the 2016 period net loss of $0.18 per basic and diluted share.
Full Year Results
Net sales for the year ended December 31, 2017 were $559.8 million, an increase of $33.8 million, or 6.4%, compared to 2016 period sales of $526.0 million. This increase was partly due to a higher selling price of copper partially offset by a higher 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 higher copper prices and a higher proportion of tolled copper, net sales decreased $2.7 million, or 0.5%, versus the prior year. This decrease resulted from $8.3 million of lower sales, partially offset by $5.0 million of higher customer pricing/mix and $0.6 million from the effects of favorable foreign currency exchange rates. Total pounds of product sold for the year ended December 31, 2017 decreased by 2.7% compared to the year ended December 31, 2016.
Operating income for the year ended December 31, 2017 was $33.3 million compared to $28.6 million for the same period in 2016, an increase of $4.7 million, or 16.4%, primarily from favorable customer pricing/mix, higher LIFO/copper profits and a favorable LIFO liquidation impact, partially offset by lower sales volume.
Net income of $6.9 million was higher than net loss of $2.3 million in the 2016 period, primarily from higher operating income in the 2017 period and a loss on early extinguishment of debt in the 2016 period.
Net income per basic and diluted share of $1.49 for the year ended December 31, 2017 increased by $1.99 from the 2016 period net loss of $0.50 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 income/(loss) excluding interest expense, income tax benefit, depreciation and amortization expense, amortization of deferred financing costs, stock-based compensation (income)/expense, impairment charges, gain/loss on sale of property, plant and equipment, (gain)/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 income/(loss), the most directly comparable financial measure calculated and presented in accordance with GAAP. Net debt as of December 31, 2017 and December 31, 2016 is also presented below. In $ millions:
Reconciliation of Net Loss to Non-GAAP Adjusted EBITDA (unaudited)
|4Q 2017||4Q 2016|
|Net income/(loss)||$ 7.4||$ (0.8)|
|Income tax benefit||(3.0)||(1.6)|
|Depreciation & amortization||4.6||4.3|
|Amortization of deferred financing costs||0.4||0.5|
|Loss on early extinguishment of debt||—||0.1|
|Adjusted EBITDA||$ 15.4||$ 10.4|
|Net income/(loss)||$ 6.9||$ (2.3)|
|Income tax benefit||(4.6)||(4.8)|
|Depreciation & amortization||16.5||17.2|
|Amortization of deferred financing costs||1.7||2.0|
|(Gain)/loss on early extinguishment of debt||(0.2)||6.8|
|Adjusted EBITDA||$ 49.1||$ 46.9|
Net Debt (unaudited)
|December 31,||December 31,|
|Total debt excluding original issue discount||$ 285.3||$ 283.5|
|Net debt||$ 280.4||$ 277.3|
Additional financial information will be made available on or about March 16, 2018 through the Company’s investor website (http://internationalwiregroup.gcs-web.com or http://www.internationalwiregroup.com) in the section titled “Financial Information.”
Excess Cash Flow Offer
We have performed a calculation of excess cash flow for the prior fiscal year as required under the indenture governing our 10.750% Senior Secured Notes. Currently, we do not anticipate the covenants under the indenture governing our 10.750% Senior Secured Notes will require us to make any excess cash flow offer to repurchase 10.750% Senior Secured Notes in 2018.
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 seventeen 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 2017 financial report. This report is accessible on the “Financial Information” page on the Investor Relations portion of the Company’s website, available at http://internationalwiregroup.gcs-web.com or http://www.internationalwiregroup.com.