Mar 23, 2019   SOURCE: BusinessWire

International Wire Announces Results for the Fourth Quarter and Full Year 2018

International Wire Group Holdings, Inc. (the “Company”) (OTCMKTS: ITWG) today announced results for the fourth quarter and full year ended December 31, 2018. Both fourth quarter and year end December 31, 2018 operating results were below the comparable 2017 levels.

“We were pleased with fourth quarter results as demand remained strong in our largest markets served. Industrial and energy, consumer appliance and HPC Medical Products demand remained strong in the quarter. Aerospace and electronics/data communications demand also remained firm in the quarter, while our Engineered Wire Products segment in Europe experienced continued softness in demand.” said Edwin J. Flynn, Chief Executive Officer of International Wire Group Holdings, Inc.

Fourth Quarter Results

Net sales for the quarter ended December 31, 2018 were $129.3 million, a decrease of $27.1 million, or 17.3%, compared to $156.4 million for the same period in 2017. This decrease was due to a higher proportion of tolled copper and a lower 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 lower copper prices, net sales increased $4.8 million, or 3.9%, versus the same period in 2017. This increase resulted from $2.7 million of higher sales and $2.5 million of higher customer pricing/mix, partially offset by $0.4 million from the effects of unfavorable foreign currency exchange rates. Total pounds of product sold in the fourth quarter of 2018 increased by 3.2% compared to the fourth quarter of 2017.

Operating income for the three months ended December 31, 2018 was $6.4 million compared to $12.0 million for the 2017 period, a decrease of $5.6 million, or 46.7%, primarily from higher selling, general and administrative expenses and a favorable LIFO liquidation impact in the 2017 period, partially offset by higher sales volume and higher customer pricing/mix.

Net loss of $5.5 million for the three months ended December 31, 2018 decreased by $12.9 million from net income of $7.4 million for the three months ended December 31, 2017. The decrease was due primarily to lower operating income and a higher income tax provision in the 2018 period.

Net loss per basic and diluted share was $1.18 for the three months ended December 31, 2018 and net income per basic and diluted share was $1.59 for the three months ended December 31, 2017.

Full Year Results

Net sales for the year ended December 31, 2018 were $579.1 million, an increase of $19.3 million, or 3.4%, compared to 2017 period sales of $559.8 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 increased $37.9 million, or 7.0%, versus the prior year. This increase resulted from $28.3 million of higher sales, $7.1 million of higher customer pricing/mix and $2.5 million from the effects of favorable foreign currency exchange rates. Total pounds of product sold for the year ended December 31, 2018 increased by 7.4% compared to the year ended December 31, 2017.

Operating income for the year ended December 31, 2018 was $29.0 million compared to $33.3 million for the same period in 2017, a decrease of $4.3 million, or 12.9%, primarily from lower LIFO/copper profits and higher selling, general and administrative expenses, partially offset by higher sales volume.

Net loss of $5.9 million was lower than net income of $6.9 million in the 2017 period, primarily from lower operating income and a higher tax provision in the 2018 period.

Net loss per basic and diluted share was $1.26 for the year ended December 31, 2018 and net income per basic and diluted share was $1.49 for the year ended December 31, 2017.

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 provision/(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, 2018 and December 31, 2017 is also presented below. In $ millions:

   

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

 
4Q 2018   4Q 2017
Net (loss)/income $ (5.5) $ 7.4
Interest expense 7.1 7.2
Income tax expense/(benefit) 4.5 (3.0)
Depreciation & amortization 3.8 4.6
Amortization of deferred financing costs 0.3 0.4
Stock-based compensation (0.2) (2.1)
Impairment charge — 0.7
Other adjustments 0.1   0.2
Adjusted EBITDA $ 10.1 $ 15.4
 

Full Year

2018

Full Year

2017

Net (loss)/income $ (5.9) $ 6.9
Interest expense 28.6 29.4
Income tax expense/(benefit) 4.5 (4.6)
Depreciation & amortization 15.5 16.5
Amortization of deferred financing costs 1.5 1.7
Stock-based compensation (0.2) (1.8)
Loss/(gain) on early extinguishment of debt 0.3 (0.2)
Impairment charge — 0.7
Other adjustments 0.9   0.5
Adjusted EBITDA $ 45.2 $ 49.1
 
Net Debt (unaudited)
                      December 31,   December 31,
2018   2017
Total debt excluding original issue discount $ 275.0 $ 285.3
less cash   2.8   4.9
Net debt $ 272.2 $ 280.4
 

Additional financial information will be made available on or about March 22, 2019 through the Company’s investor website (http://internationalwiregroup.gcs-web.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 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,” “would,” “could,” “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 2018 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.

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