International Wire Announces Record Third Quarter and First Nine Month Operating Results
International Wire Announces Record Third Quarter and First Nine Month Operating Results
CAMDEN, N.Y.--(BUSINESS WIRE)-- International Wire Group Holdings, Inc. ("the Company") (OTC Pink: ITWG) today announced record results for the third quarter and for the first nine months ended September 30, 2012 with operating income and net income at all-time highs and well above comparable 2011 results.
"Customer demand in the third quarter was solid but mixed by major market. For the first nine months, increased sales demand in the automotive, consumer and appliance and industrial/energy markets outpaced declines in our other markets including Europe. Continued higher demand for our bare wire products and increased plant utilization in our high performance conductors business were the major contributing factors to record operating results for the third quarter and first nine months," said Rodney D. Kent, Chief Executive Officer of International Wire Group Holdings, Inc.
As previously announced, on October 4, 2012 subsequent to the end of the third quarter, the Company's wholly owned subsidiary, International Wire Group, Inc. ("IWG"), issued $250 million of its 8.500% Senior Secured Notes due 2017 and amended its revolving credit facility to, among other things, increase the maximum permitted borrowings from $150 million to $175 million. In connection with the transactions, the Company has redeemed all of its outstanding 11.50%/12.25% Senior PIK Toggle Notes due 2015 and IWG repurchased and redeemed all of its 9.75% Senior Secured Notes due 2015.
Third Quarter Results
Net sales for the quarter ended September 30, 2012 were $170.9 million, a decrease of $50.0 million, or 22.6%, compared to $220.9 million for the same period in 2011. This decrease was primarily due to the lower selling price of copper, a higher proportion of tolled copper (customer-owned copper, the value of which is excluded from net sales and cost of sales), lower customer pricing/mix (including silver, nickel and tin prices) and an unfavorable foreign currency exchange effect, partially offset by increased sales volume. Excluding the effects of lower copper prices and a higher proportion of tolled copper, net sales decreased $5.0 million, or 2.8%, versus the same period in 2011. Lower customer pricing/mix of $6.2 million and $1.8 million from unfavorable currency exchange rates in Europe contributed to this decrease but were partially offset by increased sales volume of $3.0 million. Total pounds of product sold in the third quarter of 2012 increased by 5.7% compared to the third quarter of 2011.
Operating income for the three months ended September 30, 2012 was $12.1 million compared to $11.3 million for the three months ended September 30, 2011, an increase of $0.8 million, or 7.1%, primarily due to higher sales in the Bare Wire Division and increased plant utilization in the High Performance Conductors segment partially offset by lower sales volume in both the High Performance Conductors (primarily silver-plated products) and Engineered Wire Products-Europe segments and higher depreciation and amortization.
Net income of $5.0 million, or $0.51 per basic and diluted share, for the three months ended September 30, 2012 increased by $2.8 million, or $0.29 per basic and diluted share, from the prior year results of $2.2 million, or $0.22 per basic and diluted share. The increase was due primarily to higher operating income and a lower income tax provision.
Nine Month Results
Net sales for the nine months ended September 30, 2012 were $572.3 million, a decrease of $107.0 million, or 15.8%, compared to 2011 period net sales of $679.3 million. This decrease was primarily due to a lower selling price of copper, a higher proportion of tolled copper in the 2012 period, lower customer pricing/mix (including silver, nickel and tin prices) and an unfavorable foreign currency exchange rate, partially offset by increased sales volume. Excluding the effects of lower copper prices and a higher proportion of tolled copper, net sales increased $5.5 million, or 1.0%, versus the prior year. This increase resulted from $25.3 million of increased volume, partially offset by $15.1 million of lower customer pricing/mix and $4.7 million from the effects of unfavorable foreign currency exchange rates. Total pounds of product sold in the first nine months of 2012 increased by 7.8% compared to the first nine months of 2011.
Operating income for the nine months ended September 30, 2012 was $44.9 million compared to $42.5 million for the 2011 period, an increase of $2.4 million, or 5.6%, primarily from higher sales in the Bare Wire Division and increased plant utilization in the High Performance Conductors segment, partially offset by lower sales volume in the High Performance Conductors and Engineered Wire Products-Europe segments and higher depreciation and amortization.
Net income of $17.9 million, or $1.83 per basic and diluted share for the first nine months of 2012, was higher than net income of $16.5 million, or $1.68 per basic share and $1.65 per diluted share in the 2011 period, primarily from increased operating income and a lower income tax provision partially offset by higher interest expense from the Company's June 2011 debt refinancing.
Net debt (total debt less cash) was $198.8 million as of September 30, 2012, a $24.2 million decrease from December 31, 2011 primarily from strong operating results and lower working capital requirements.
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 expense, 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 costs 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. Below is a reconciliation of this non-GAAP financial measure to the most directly comparable financial measures calculated and presented in accordance with GAAP. Net debt as of September 30, 2012 and December 31, 2011 is also presented below. In $ millions:
Reconciliation of Net Income to Non-GAAP Adjusted EBITDA
|3Q 2012||3Q 2011|
|Income tax expense||0.7||2.0|
|Depreciation & amortization||4.3||3.9|
|Amortization of deferred financing costs||0.5||0.5|
|Loss on early extinguishment of debt||—||0.1|
|Income tax expense||7.4||10.0|
|Depreciation & amortization||13.2||12.1|
|Amortization of deferred financing costs||1.6||1.3|
|Loss on early extinguishment of debt||—||0.5|
Additional financial information will be made available on or about November 12, 2012 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 wholly-owned subsidiary International Wire Group, Inc., 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, original equipment manufacturers and distributors. 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, consumer and appliances, electronics and data communications, industrial/energy and medical electronics and medical device industries. The Company currently manufactures and distributes its products at 20 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 of our industry, 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 2011 financial report. This report is accessible on the "Additional 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.
International Wire Group Holdings, Inc.
Glenn J. Holler, 314-238-1322
Senior Vice-President, Chief Financial Officer and Secretary
KEYWORDS: United States North America New York
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