International Wire Group, Inc. Reports Results for Second Quarter
17 August 1999
International Wire Group, Inc. Reports Results for Second Quarter and First Six Months of 1999
ST. LOUIS--Aug. 16, 1999--International Wire Group, Inc., today announced its financial results for the second quarter ended June 30, 1999. Earnings before interest, taxes, depreciation and amortization (EBITDA) increased 3.6% to $33.0 million during the quarter from $31.9 million for the comparable 1998 period. This increase was primarily due to increased sales volume to the appliance industry and lower operating costs.Net sales for the quarter were $168.3 million, a $4.6 million, or 2.8%, increase over the second quarter of 1998. Increases in Wire Harness Segment sales were partially offset by the impact of a decrease in the average cost and selling price of copper and a decrease in Wire Segment sales. In general, the Company prices its wire products based on a spread over the cost of copper, which results in a decreased dollar value of sales when copper costs decrease. The average price of copper based on the New York Mercantile Exchange, Inc. ("COMEX") decreased to $0.67 per pound during the quarter from $0.78 per pound during the three months ended June 30, 1998.
Wire Segment sales during the quarter were $115.8 million, a decrease of $4.9 million, or 4.1%, compared to the 1998 second quarter, a result of the lower costs and selling price of copper and a decrease in volume to industrial customers, primarily mass transit, mining and oil exploration suppliers. This decrease was partially offset by an increase in sales of appliance lead wire and an increase in demand within the electronics/data communications market. Within the Wire Harness Segment, net sales for the quarter were $52.5 million, a $9.5 million, or 22.0%, increase compared to the second quarter of 1998. The increase in sales resulted from growth in consumer demand and production within the appliance industry along with additional volume from new and existing customers.
Income before income tax provision and net income for the quarter were $9.0 million and $5.2 million, respectively, compared to income before income tax provision of $8.3 million and net income of $4.9 million during the 1998 period.
Net sales for the six months ended June 30, 1999 were $329.2 million, a $8.5 million, or 2.5%, decrease compared to the first half of 1998. Increases in unit volume in the Wire Harness Segment were offset by the impact of a decrease in the average cost and selling price of copper and a reduction in sales volume in the Wire Segment. The average price for copper based on COMEX decreased to $0.65 per pound during the six months ended June 30, 1999 from $0.78 per pound for the six months ended June 30, 1998.
Wire Segment sales for the six months ended June 30, 1999 were $227.1 million, a decrease of $22.9 million, or 9.2%, compared to the 1998 six-month period as a result of lower copper costs and selling prices and a decrease in the sales of automotive lead wire in the first quarter. Within the Wire Harness Segment, net sales for the six-month period were $102.1 million, a $14.4 million, or 16.5%, increase compared to the 1998 six-month period. This increase is the result of high consumer demand and production levels within the appliance industry and additional volume from new and existing customers.
EBITDA for the six-month period was $63.7 million, an increase of $2.0 million, or 3.3%, over the 1998 six-month period. EBITDA as a percentage of sales improved to 19.3% during the six-month period from 18.3% during the 1998 six-month period. This improvement reflected cost reductions achieved from material savings, improved operating efficiencies, equipment upgrades and the impact of lower copper prices.
Income before income tax provision and cumulative effect of change in accounting principle and net income for the six-month period were $16.0 million and $7.0 million, respectively, compared to income before income tax provision of $15.0 million and net income of $8.9 million during the 1998 period. Effective January 1, 1999, the Company adopted Statement of Position 98-5, Reporting on the Cost of Start-Up Activities, resulting in a $2.3 million cumulative charge to income.
James N. Mills, Chairman, said, "International Wire's solid operating and financial performance during the second quarter and first half of the year reflects our strong market presence and our commitment to cost savings. During the remainder of the year, our focus will be on expanding sales within the major markets that we serve along with a continued emphasis on reducing and containing operating costs."
International Wire Group, Inc., headquartered in St. Louis, Missouri, is a leading designer, manufacturer and marketer of wire products, including bare and tin-plated copper wire and insulated copper wire, and wire harnesses. 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, computer and data communications and industrial equipment industries.
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.
For further information, please contact David M. Sindelar, Senior Vice President and Chief Financial Officer, at (314) 727-1701, or Mark Semer of Kekst and Company at (212) 521-4800.