International Wire Group Holdings, Inc. (ITWG: OTC Pink Limited) | International Wire Announces Results for the Second Quarter and the First Six Months of 2016

OTC

International Wire Announces Results for the Second Quarter and the First Six Months of 2016

Aug 05, 2016

OTC Disclosure News Service

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, 2016. Operating income and net income decreased for the
three and six months ended June 30, 2016 against the three and six
months ended June 30, 2015.

“Second quarter and first six months results reflect challenging demand
in our largest markets served. Sales to our largest U.S. industrial and
energy customers weakened in the second quarter, slightly offset by
improved European industrial sales. In the automotive sector, light
vehicle demand held steady, but year over year sales volumes decreased
as a result of increased competitive capacity supplying the Mexican
automotive market and very weak commercial vehicle demand. Medical
products order rates improved significantly compared to the first
quarter, while demand for standard aerospace products sold through
distribution softened in the quarter. Electronics product sales were
bolstered by a successful customer de-integration project,” said Edwin
J. Flynn, Chief Executive Officer of International Wire Group Holdings,
Inc.

As previously announced, on July 26, 2016 subsequent to the end of the
second quarter, the Company’s wholly owned subsidiary, International
Wire Group, Inc. (“IWG”), issued $260 million of its 10.750% Senior
Secured Notes due 2021 and amended its revolving credit facility to,
among other things, decrease the maximum permitted borrowings from $175
million to $125 million. The Company used the proceeds of this financing
to repurchase all of its outstanding 10.00%/12.00% Senior PIK Toggle
Notes due 2020 and to redeem all of IWG’s outstanding 8.500% Senior
Secured Notes due 2017. Please refer to Note 10 in the 2016 second
quarter financial statements for additional information.

Second Quarter Results

Net sales for the quarter ended June 30, 2016 were $137.1 million, a
decrease of $35.3 million, or 20.5%, compared to $172.4 million for the
same period in 2015. 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 $17.5 million, or 11.3%, versus the same period in 2015. This
decrease resulted from $16.6 million of lower sales volume and $1.2
million of lower customer pricing/mix, partially offset by $0.3 million
from the effects of favorable foreign currency exchange rates. Total
pounds of product sold in the second quarter of 2015 decreased by 12.4%
compared to the second quarter of 2015.

Operating income for the three months ended June 30, 2016 was $7.1
million compared to $11.3 million for the three months ended June 30,
2015, a decrease of $4.2 million, or 37.2%, primarily from lower sales
volume, lower LIFO/copper profits and less favorable plant utilization,
partially offset by higher silver profits and lower selling, general and
administrative expenses.

Net income of $0.4 million for the three months ended June 30, 2016
decreased by $2.5 million from net income of $2.9 million for the three
months ended June 30, 2015. The decrease was due primarily to lower
operating income partially offset by a lower income tax provision.

Net income per basic share of $0.08 for the three months ended June 30,
2016 decreased by $0.54 from the 2015 period net income of $0.62 per
basic share. Net income per diluted share of $0.08 for the three months
ended June 30, 2016 decreased by $0.53 from the 2015 period net income
of $0.61 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 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.

Six Months Results

Net sales for the six months ended June 30, 2016 were $276.7 million, a
decrease of $73.3 million, or 20.9%, compared to 2015 period sales of
$350.0 million. 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 $36.0 million, or 11.5%, versus the prior year. This decrease
resulted from $32.1 million of lower sales volume and $3.9 million of
lower customer pricing/mix. Total pounds of product sold in the first
six months of 2016 decreased by 12.0% compared to the first six months
of 2015.

Operating income for the six months ended June 30, 2016 was $16.7
million compared to $23.9 million for the same period in 2015, a
decrease of $7.2 million, or 30.1%, primarily from lower sales volume,
lower LIFO/copper profits, less favorable plant utilization and higher
selling, general and administrative expenses.

Net income of $2.4 million was lower than net income of $7.3 million in
the 2015 period, primarily from lower operating income partially offset
by a lower income tax provision.

Net income per basic share of $0.52 for the six months ended June 30,
2016 decreased by $0.91 from the 2015 period net income of $1.43 per
basic share. Net income per diluted share of $0.52 for the six months
ended June 30, 2016 decreased by $0.89 from the 2015 period net income
of $1.41 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 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 $256.0 million as of June 30, 2016,
a $2.5 million increase from December 31, 2015 primarily from higher
inventory, partially offset by higher accounts payable.

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 income, the
most directly comparable financial measures calculated and presented in
accordance with GAAP. Net debt as of June 30, 2016 and December 31, 2015
is also presented below. In $ millions:

 

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

 

 

 

 

2Q 2016

 

2Q 2015

Net income

$

0.4

$

2.9

Interest expense

6.0

6.3

Income tax provision

0.2

1.5

Depreciation amortization

4.5

4.4

Amortization of deferred financing costs

0.5

0.5

Other adjustments

 

0.2

 

0.4

Adjusted EBITDA

$

11.8

$

16.0

 

 

 

First Six

Months

2016

First Six

Months

2015

Net income

$

2.4

$

7.3

Interest expense

12.0

12.0

Income tax expense

1.2

3.7

Depreciation amortization

9.0

8.8

Amortization of deferred financing costs

1.0

1.0

Other adjustments

 

0.7

 

0.4

Adjusted EBITDA

$

26.3

$

33.2

 

 

 

Net Debt (unaudited)

June 30,

December 31,

2016

2015

Total debt

$

261.3

$

263.1

less cash

 

5.3

 

9.6

Net debt

$

256.0

$

253.5

 

 

Additional financial information will be made available on or about
August 5, 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 and medical products 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 “expect,” “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, 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, 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

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