CAMDEN, N.Y.--(BUSINESS WIRE)--
International Wire Group Holdings, Inc. (the “Company”) (OTC Pink: ITWG) today announced results for the fourth quarter and full year ended December 31, 2016. Operating income and net income decreased for both the fourth quarter and year ended December 31, 2016 compared to the 2015 period.
“Fourth quarter and full year results reflect continued challenging demand in our largest markets served. The U.S. industrial and energy segment softened further from the third quarter. Demand in the automotive segment was mixed. Light vehicle production rates held steady, but demand in commercial truck markets remained weak. Further, as a result of surplus capacity for the Mexican automotive market, we have elected to temporarily idle our Santa Teresa, New Mexico facility. Electronics product sales demand remained firm in the quarter, while aerospace market sales improved.” said Edwin J. Flynn, Chief Executive Officer of International Wire Group Holdings, Inc.
Fourth Quarter Results
Net sales for the quarter ended December 31, 2016 were $120.2 million, a decrease of $14.7 million, or 10.9%, compared to $134.9 million for the same period in 2015. 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 $5.1 million, or 4.1%, versus the same period in 2015. This decrease resulted from $6.5 million of lower sales volume and $0.1 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 fourth quarter of 2016 decreased by 4.4% compared to the fourth quarter of 2015.
Operating income for the three months ended December 31, 2016 was $5.7 million compared to $7.0 million for the three months ended December 31, 2015, a decrease of $1.3 million, or 18.6%, from lower sales volume, lower silver profits and higher selling, general and administrative expenses, partially offset by higher LIFO/copper profits and more favorable plant utilization.
Net loss of $0.8 million for the three months ended December 31, 2016 was a decrease of $1.5 million from net income of $0.7 million for the three months ended December 31, 2015. The decrease was due primarily to lower operating income and higher interest expense, partially offset by a higher income tax benefit.
Net loss per basic and diluted share of $0.18 for the three months ended December 31, 2016 decreased by $0.31 from the 2015 period net income of $0.13 per basic and diluted share.
Full Year Results
Net sales for the year ended December 31, 2016 were $526.0 million, a decrease of $113.0 million, or 17.7%, compared to 2015 period sales of $639.0 million. This decrease was partly due to a lower selling price of copper and a higher proportion of tolled copper. Excluding the effects of lower copper prices and a lower proportion of tolled copper, net sales decreased $52.4 million, or 9.1%, versus the same period in 2015. This decrease resulted from $52.2 million of lower sales volume, $0.1 million of less favorable customer pricing/mix and $0.1 of unfavorable changes in foreign currency exchange rates. Total pounds of product sold for the year ended December 31, 2016 decreased by 9.8% compared to the year ended December 31, 2015.
Operating income for the year ended December 31, 2016 was $28.6 million compared to $36.9 million for the same period in 2015, a decrease of $8.3 million, or 22.5%, primarily from lower sales volume and lower LIFO/copper profits, partially offset by higher silver profits and lower selling, general and administrative expenses.
Net loss of $2.3 million for the year ended December 31, 2016 was a decrease of $10.8 million from net income of $8.5 million for the year ended December 31, 2015. The decrease was due primarily from lower operating income and higher loss on early extinguishment of debt partially offset by a lower income tax provision.
Net loss per basic and diluted share of $0.50 for the year ended December 31, 2016 was a decrease of $2.24 from the 2015 period net income of $1.74 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 2016 period compared to the 2015 period due to the repurchase of common stock since the 2015 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 2016 period compared to the 2015.
Net debt (total debt less cash) was $277.3 million as of December 31, 2016, a $23.8 million increase from December 31, 2015 primarily due to higher inventory and prepaid expenses and other, lower account payable and the impact of the issuance of $260.0 million of 10.750% Senior Secured Notes due 2021, the proceeds which, together with advances under the revolving credit facility and cash on the balance sheet, were used to redeem all of the outstanding 8.50% Secured Senior Notes due 2017 and also fund the repurchase of all of the outstanding 10.00%/12.0% PIK Notes due 2020, partially offset by lower accounts receivable. This also reflects the repurchase of $16.7 million principal amount of the newly issued 10.750% Senior Secured Notes due 2021 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 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 December 31, 2016 and December 31, 2015 is also presented below. In $ millions:
Reconciliation of Net Income to Non-GAAP Adjusted EBITDA (unaudited)
|4Q 2016||4Q 2015|
|Net (loss)/income|| |
|Income tax benefit||(1.6||)||(0.2||)|
|Depreciation & amortization||4.3||4.6|
|Amortization of deferred financing costs||0.5||0.5|
|Loss on early extinguishment of debt||0.1||—|
|Adjusted EBITDA|| |
|Net (loss)/income|| |
|Income tax (benefit)/expense||(4.8||)||2.1|
|Depreciation & amortization||17.2||17.6|
|Amortization of deferred financing costs||2.0||2.0|
|Loss on early extinguishment of debt||6.8||—|
|Other adjustments (1)||0.3||1.1|
|Adjusted EBITDA|| |
(1) Includes a $1.0 million extraordinary non-recurring scrap charge.
|Net Debt (unaudited)|
|December 31,||December 31,|
|Total debt excluding original issue discount|| |
|Net debt|| |
Additional financial information will be made available on or about March 17, 2017 through the Company’s investor website (http://itwg.client.shareholder.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. At this point in time, 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 2017.
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 and medical products 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 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 current 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, except as required by law. 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, 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.