International Wire Group, Inc. Reports Results for the Second Quarter and First Six Months of 2002
ST. LOUIS--August 14, 2002--International Wire Group, Inc. today reported its financial results for the second quarter and first six months ended June 30, 2002. During the second quarter, earnings before interest, taxes, depreciation and amortization and other unusual charges ("EBITDA") was $14.2 million, an increase of $2.0 million, or 16.8 %, from the first quarter of 2002 as the result of increased sales demand and lower operating costs. Second quarter EBITDA decreased by $4.4 million, or 23.7%, from the second quarter of 2001 and EBITDA for the first six months of $26.4 million was $9.5 million, or 26.3%, below comparable 2001 levels. These decreases were primarily from the effects of reduced customer demand in markets impacted by lower levels of business capital spending in the United States.David M. Sindelar, Chief Executive Officer, said, "Sales demand in our major markets has been mixed. Consumer driven automotive and appliance sales have been strong and improving. Demand for our products, dependent upon higher U.S. business capital spending, remains weak. Our low cost structure is being enhanced from our 2001 plant consolidations and operating expense reductions. In addition, our new Mexican facility is expected to begin shipping to customers in the third quarter of this year. Quarter over quarter performance continues to increase."
Net sales for the second quarter were $107.6 million, an increase of $7.1 million, or 7.1%, compared to the first quarter of 2002 from increased demand in all of our major markets served. The largest sales increases were in the automotive and appliance markets. Net sales decreased by $8.1 million, or 7.0%, compared to the three months ended June 30, 2001. This decrease in sales was the result of reduced demand from customers supplying the electronics/data communications and industrial/energy markets and lower copper prices, which were partially offset by higher sales to the appliance market. In general, the Company prices its wire products based on a spread over the cost of copper. The average price of copper based on the New York Mercantile Exchange, Inc. ("COMEX") decreased to $0.74 per pound during the quarter ended June 30, 2002 from $0.75 per pound in the quarter ended June 30, 2001.
The Company's loss before income tax benefit and change in accounting principle was $2.3 million for both the second quarters of 2002 and 2001. The 2001 results includes unusual, one-time charges of $2.6 million, before tax benefit, related to the realignment of production, including certain plant closings. There were no such charges in the second quarter of 2002.
The net loss for the second quarter of 2002 was $1.8 million compared to a net loss of $1.3 million during the second quarter of 2001.
Net sales for the six months ended June 30, 2002, were $208.0 million, a decrease of $32.4 million, or 13.5%, compared to the six months ended June 30, 2001. The decrease was primarily the result of reduced demand from customers supplying the electronics/data communication and industrial/energy market and lower copper prices, which were partially offset by higher sales to the appliance industry. The average price of copper based on COMEX declined from $0.79 per pound during the six months June 30, 2001 to $0.73 per pound during the six months ended June 30, 2002.
EBITDA as a percentage of sales decreased to 12.7% during the first six months of 2002 from 14.9% for the comparable 2001 period. The main contributing factors included product mix, competitive pricing pressures and operating inefficiencies associated with lower production levels partially offset by favorable effects of the 2001 plant consolidations and realignment actions and lower selling, general and administrative expenses.
The discussion above reports EBITDA. Please refer to the attached schedule that reconciles EBITDA to General Accepted Accounting Principles ("GAAP") net loss and to our Form 10-Q, filed August 14, 2002.
The Company's loss before income tax benefit and change in accounting principle was $6.5 million and $5.9 million for the first six months ended June 30, 2002 and 2001, respectively. Included in the 2001 results were unusual, one-time charges of $5.7 million, before tax benefit, related to the realignment of production including plant closings. There were no such charges in the 2002 period.
The net loss for the six months of 2002 was $57.6 million compared to a net loss of $3.4 million during the comparable period of 2001. The 2002 period net loss included a first quarter $54.5 million non-cash impairment charge, net of $19.4 million tax benefit, related to a change in accounting principle from the adoption of Statement of Financial Accounting Standards ("SFAS") No. 142, "Goodwill and Other Intangible Assets."
International Wire will be hosting a conference call at 10:00 a.m. CDT on August 16, 2002. The phone number is 800-450-0818 for domestic calls and 612-332-0226 for international calls. Reference "International Wire second quarter conference call."
This press release contains forward-looking statements as defined by the federal securities laws and such statements are based on International Wire Group, Inc.'s current expectations and assumptions, which are inherently subject to various risks and uncertainties that could cause actual results to differ from those anticipated, projected or implied. Certain factors that could cause actual results to differ are indicated in International Wire Group, Inc.'s filings with the Securities and Exchange Commission.
International Wire Group, Inc., headquartered in St. Louis, Missouri, is a leading manufacturer and marketer of wire products, including bare and tin-plated copper wire and insulated copper wire. The Company's products include a broad spectrum of copper wire configurations and gauges with a variety of electrical and conductive characteristics that are utilized by a wide variety of customers primarily in the appliance, automotive, electronics/data communications and general industrial/energy industries. The Company manufactures and distributes its products in 23 facilities strategically located in the United States, Italy, France and the Philippines. The Company will begin operations in a new facility in Mexico during 2002.
Reconciliation of EBITDA to Net Loss per GAAP
Three Months Ended Six Months Ended
June 30, June 30,
2002 2001 2002 2001
-------- -------- -------- -------
(in millions) (in millions)
EBITDA $14.2 $18.6 $26.4 $35.9
Depreciation and amortization (7.0) (9.2) (13.9) (18.1)
Impairment, unusual and plant
closing charges - (2.6) - (5.7)
Interest expense (9.0) (8.8) (18.0) (17.3)
Amortization of deferred
financing fees (0.5) (0.3) (1.0) (0.7)
Income tax benefit 0.5 1.0 3.4 2.5
Change in accounting for
goodwill, net of tax benefit - - (54.5) -
-------- -------- -------- -------
Net loss per GAAP ($1.8) ($1.3) ($57.6) ($3.4)
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