International Wire Announces Fourth Quarter and Record Full Year 2012 Results
Mar 22nd 2013 8:11PM
Updated Mar 22nd 2013 8:16PM
International Wire Announces Fourth Quarter and Record Full Year 2012 Results
CAMDEN, N.Y.--(BUSINESS WIRE)-- International Wire Group Holdings, Inc. ("the Company") (Pink Sheets: ITWG) today announced its results for the fourth quarter and full year ended December 31, 2012. Fourth quarter operating results were strong despite lower sales. Full year 2012 operating income was at a record level.
"Our strong full year operating results were driven by increased customer demand in our bare wire business, primarily from the automotive/specialty vehicles market. Demand was flat to down in our other major markets. Greater plant utilization and on-going cost reduction initiatives in our high performance conductors and European businesses as well as the favorable LIFO effects resulting from lower inventory levels also contributed to our results. We are also pleased with our debt refinancing in October of 2012 and the success of our stock tender offer," said Rodney D. Kent, Chief Executive Officer of International Wire Group Holdings, Inc.
Fourth Quarter Results
Net sales for the quarter ended December 31, 2012 were $161.7 million, a decrease of $29.3 million, or 15.3%, compared to $191.0 million for the same period in 2011. This decrease was primarily due to a higher proportion of tolled copper (customer-owned copper, the value of which is not included in net sales and cost of sales) shipped in the 2012 period compared to the 2011 period, lower sales volume, and unfavorable currency exchange rates in Europe. These factors were partially offset by a slightly higher selling price of copper and higher customer pricing/mix. Excluding the effects of higher copper prices and a higher proportion of tolled copper, net sales decreased $9.7 million, or 5.7%, versus the 2011 period. Contributing to this decrease were lower sales volume of $11.4 million and $0.6 million from unfavorable currency rates in Europe, partially offset by $2.3 million from higher customer pricing/mix. Total pounds of product sold in the fourth quarter of 2012 decreased by 3.6% compared to the fourth quarter of 2011.
Operating income for the quarter ended December 31, 2012 was $12.6 million compared to $11.5 million for the quarter ended December 31, 2011, an increase of $1.1 million, or 9.6%, due in part to the LIFO liquidation of $2.9 million in the 2012 period resulting from lower inventory levels at year-end which was partially offset by lower sales volume.
Net loss of $7.1 million, or $0.77 per basic share and $0.76 per diluted share, for the quarter ended December 31, 2012 decreased by $10.7 million, or $1.15 per basic share and $1.13 per diluted share, from the prior year period net income of $3.6 million, or $0.38 per basic share and $0.37 per diluted share. The decrease was due primarily to the loss on early extinguishment of debt related to our debt refinancing in October 2012, partially offset by higher operating income and a lower income tax rate.
Full Year Results
Net sales for the year ended December 31, 2012 were $733.9 million, a decrease of $136.3 million, or 15.7%, compared to 2011 net sales of $870.2 million. This decrease was primarily due to a lower selling price of copper, a higher proportion of tolled copper in 2012 compared to 2011, unfavorable currency exchange rates, and lower customer pricing/mix (including silver, nickel and tin prices). These factors were partially offset by higher sales volume. Excluding the effects of lower copper prices and a higher proportion of tolled copper, net sales decreased by $4.1 million, or 0.6%, versus the prior year. Increased sales volume of $13.9 million was offset by $12.7 million of lower customer pricing/mix and $5.3 million from unfavorable currency rates in Europe. Total pounds of product sold in 2012 increased by 5.3% compared to 2011.
Operating income for the full year ended December 31, 2012 was $57.5 million, a record level, compared to $54.0 million for the 2011 period, an increase of $3.5 million, or 6.5%. This increase was primarily due to higher sales levels in the bare wire business, greater plant utilization and ongoing cost reduction initiatives in the high performance conductors and European businesses and the favorable fourth quarter 2012 LIFO impact resulting from reduced inventory levels.
Net income of $10.8 million, or $1.12 per basic share and $1.11 per diluted share, for the year ended December 31, 2012 was lower than net income in 2011 of $20.1 million, or $2.06 per basic share and $2.03 per diluted share, primarily as a result of an increased loss on early extinguishment of debt related to our debt refinancing in October 2012 and higher interest expense related to the Company's debt refinancing in June 2011. These factors were partially offset by increased operating income and a lower effective tax rate.
Net debt (total debt less cash) was $253.6 million as of December 31, 2012, representing a $30.6 million increase from December 31, 2011 primarily as a result of the Company's debt financing in October 2012 and the related $60.0 million of common stock repurchases, partially offset by increased cash flows from operations.
Non-GAAP Results and Net Debt
In an effort to assist debt holders and other investors 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 taxes, 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. For reconciliations of the non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP, see the financial information set forth below. Net debt as of December 31, 2012 and 2011 are also presented below. Dollars in millions:
|Reconciliation of Non-GAAP Adjusted EBITDA|
|Income tax expense||(3.8||)||3.6||0.8||10.8|
|Loss on early extinguishment of debt||17.2||17.2||0.4||0.9|
|Depreciation & amortization||4.8||18.0||4.7||16.8|
Additional financial information will be made available on or about March 25, 2013 through the Company's investor website (http://itwg.client.shareholder.com or http://www.internationalwiregroup.com) in the section titled "Additional 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, 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, medical device and medical electronics industries. The Company has eighteen manufacturing facilities and two distribution 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, 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 2012 financial report. This report will be 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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