FORT LEE, N.J., March 31, 2015 /PRNewswire/ --
- Net Sales Increase 23% from Fourth Quarter
of 2013 to $138.1 Million; Full Year
2014 Sales Rise 21% to $582.3
Million
- Operating Income of $2.3 Million Is Up 54% from 2013 Fourth Quarter;
Increases 52% for 2014
- GAAP Net Income per Diluted Share for 2014
Fourth Quarter Is $0.09; Non-GAAP Net
Income per Diluted Share Rises by 200% to $0.06 from $0.02
- Full Year 2014 GAAP Net Income per Diluted
Share Increases 52%, to $0.41 and
Non-GAAP Net Income per Diluted Share More than Doubles to
$0.55
Empire Resources, Inc. (NASDAQ: ERS), a distributor of
value added, semi-finished metal products, announced today that net
sales for the fourth quarter of 2014 were $138.1 million, an increase of 23% from the
fourth quarter of 2013. The increase in revenue was primarily
driven by a strong growth in sales in the Americas and Europe.
Gross profit for the fourth quarter of 2014 increased 22% from
the fourth quarter of 2013 to $5.5
million, or 4.0% of sales, compared with $4.5 million, or 4.0% of sales, in the fourth
quarter of 2013.
Operating income for the fourth quarter of 2014 was $2.3 million, an increase of 54% over the
operating income of $1.5 million
reported in the fourth quarter of 2013.
Net interest expense for the fourth quarter of 2014 was
$1.1 million, in line with the fourth
quarter of 2013.
The Company recognized a non-cash non-operating gain of
$1.1 million in the fourth quarter of
2014 related to the change in fair market valuation of the
derivative feature of its convertible subordinated note. That
compares with a non-cash non-operating gain of $0.4 million in the fourth quarter of 2013.
Fair value accounting requires that changes in derivative
liabilities related to the Company's convertible notes be charged
or credited to income during each accounting period. The changes in
valuation have several drivers, primary among them is the change in
the Company's stock price, with increases in the stock price
causing losses on the derivative liability, while decreases in the
stock price produce gains on the derivative liability. Such losses
are not tax deductible, and likewise any recoveries of such losses
are not taxable upon recovery. Accordingly, no tax effect was
given to the non-cash non-operating gain of $1.1 million in the fourth quarter of 2014 or the
non-cash non-operating gain of $0.4
million in the fourth quarter of 2013. The resultant
effective tax rate for the fourth quarter of 2014 was 15% and 40%
for the fourth quarter of 2013.
Non-GAAP net income for the fourth quarter of 2014, excluding
the effect of the change in fair market valuation of the derivative
liability and the associated tax treatment, increased by 203% to
$0.7 million, or $0.06 per diluted share, compared with
non-GAAP net income of $0.2 million,
or $0.02 per diluted share, in the
fourth quarter of 2013.
On a GAAP basis, the Company reported net income for the fourth
quarter of 2014 of $2.0 million, or
$0.09 per diluted share, compared
with net income of $0.5 million, or
$0.04 per diluted share, in the
fourth quarter of 2013.
For full year 2014, net sales increased by 21% to $582.3 million compared with $482.7 million for full year 2013. On a
GAAP basis, net income for 2014 was $3.7
million, or $0.41 per diluted
share, compared with $2.4 million, or
$0.27 per diluted share, for
2013. On a non-GAAP basis, net income for 2014 increased by
113% to $5.0 million, or $0.55 per diluted share, compared with non-GAAP
net income of $2.3 million, or
$0.26 per diluted share, in 2013.
The Company noted that there was a temporary increase in
inventory at December 31, 2014 due to
third quarter delayed supplier deliveries, combined with
usual, on-time deliveries during the 2014 fourth quarter.
The Company uses the non-GAAP measures internally, which exclude
the effect of the non-cash non-operating gains and losses due to
the quarterly changes in the valuation of the derivative liability,
to evaluate its operating performance and believes that this is a
useful measure also used by investors.
Nathan Kahn, President and CEO,
commented, "Our increasing geographic and product diversity and
solid execution by our team were key drivers of our strong growth
in 2014. Among the full year highlights were a 13% increase
in our sales in the U.S., including our established aluminum
products along with our newer steel products. We also
realized solid growth in our long-standing market in the
Australia/New Zealand region. Our ongoing initiatives in
Europe enabled us to more
than double sales there and overcome local economic
softness."
About Empire Resources, Inc.
Empire Resources, Inc. is a distributor of a wide range of
semi-finished metal products to customers in the transportation,
automotive, housing, appliance and packaging industries in the
U.S., Canada, Latin America, Australia, New
Zealand and Europe. The
Company maintains supply contracts with mills in various parts of
the world.
Use of Non-GAAP Financial Measures
To supplement the Company's consolidated financial statements
presented on a GAAP basis, the Company discloses non-GAAP net
income, because management uses this supplemental non-GAAP
financial measure to evaluate performance period over period, to
analyze the underlying trends in its business, and to establish
operational goals. In addition, the Company believes investors
already use this non-GAAP measure to monitor the Company's
performance. Non-GAAP net income is defined by the Company as net
income excluding non-cash, non-operating changes in value of
derivative liability related to the conversion option on its
convertible debt.
Generally, a non-GAAP financial measure is a numerical measure
of a company's performance, financial position or cash flow that
either excludes or includes amounts that are not normally excluded
or included in the most directly comparable measure calculated and
presented in accordance with GAAP. The non-GAAP measure discussed
above, however, should be considered in addition to, and not as a
substitute for, or superior to net income or other measures of
financial performance prepared in accordance with GAAP. A
reconciliation of non-GAAP to GAAP net income is set forth in the
table below.
The Company believes that providing this information assists
investors in understanding the Company's operating performance and
the methodology used by management to evaluate and measure such
performance.
Forward-Looking Statements:
This press release contains "forward-looking statements."
Such statements may be preceded by the words "intends," "may,"
"will," "plans," "expects," "anticipates," "projects," "predicts,"
"estimates," "aims," "believes," "hopes," "potential" or similar
words. Forward-looking statements are not guarantees of future
performance, are based on certain assumptions and are subject to
various known and unknown risks and uncertainties, many of which
are beyond the Company's control, and cannot be predicted or
quantified and consequently, actual results may differ materially
from those expressed or implied by such forward-looking statements.
Such risks and uncertainties include, without limitation, risks and
uncertainties associated with (i) the loss or default of one or
more suppliers; (ii) the loss or default of one or more significant
customers; (iii) a default by counterparties to derivative
financial instruments; (iv) changes in general, national or
regional economic conditions; (v) an act of war or terrorism that
disrupts international shipping; (vi) changes in laws, regulations
and tariffs; (vii) the imposition of anti-dumping duties on
products the Company imports; (viii) changes in the size and nature
of the Company's competition; (ix) changes in interest rates,
foreign currencies or spot prices of aluminum; (x) the loss of one
or more key executives; (xi) increased credit risk from customers;
(xii) the Company's failure to grow internally or by acquisition
and (xiii) the Company's failure to improve operating margins and
efficiencies. More detailed information about the Company and the
risk factors that may affect the realization of forward-looking
statements is set forth in the Company's filings with the
Securities and Exchange Commission (SEC), including the Company's
Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q.
Investors and security holders are urged to read these documents
free of charge on the SEC's web site at http://www.sec.gov. The
Company assumes no obligation to publicly update or revise its
forward-looking statements as a result of new information, future
events or otherwise.
Consolidated
Statements of Income (In thousands except per share
amounts)
|
|
Three Months Ended
December 31,
2014
2013
(Unaudited)
|
|
Year Ended
December 31,
2014
2013
|
Net sales
|
$
|
138,080
|
|
$
|
112,395
|
|
$
|
582,279
|
|
$
|
482,683
|
Cost of goods
sold
|
|
132,549
|
|
|
107,861
|
|
|
555,777
|
|
|
460,944
|
Gross
profit
|
|
5,531
|
|
|
4,534
|
|
|
26,502
|
|
|
21,739
|
Selling, general and
administrative expenses
|
|
3,215
|
|
|
3,031
|
|
|
13,815
|
|
|
13,392
|
Operating
income
|
|
2,316
|
|
|
1,503
|
|
|
12,687
|
|
|
8,347
|
Interest
expense, net
|
|
1,128
|
|
|
1,111
|
|
|
4,351
|
|
|
4,514
|
Income before other
expenses
|
|
1,188
|
|
|
392
|
|
|
8,336
|
|
|
3,833
|
Other
expenses
|
|
|
|
|
|
|
|
|
|
|
|
Change
in value of derivative liability
|
|
1,126
|
|
|
400
|
|
|
(1,113)
|
|
|
(52)
|
Loss
related to extinguishment of debt
converted into common
stock
|
|
-
|
|
|
-
|
|
|
(164)
|
|
|
-
|
Income before income
taxes
|
|
2,314
|
|
|
792
|
|
|
7,059
|
|
|
3,781
|
Income
taxes
|
|
340
|
|
|
319
|
|
|
3,325
|
|
|
1,385
|
Net
income
|
$
|
1,974
|
|
$
|
473
|
|
$
|
3,734
|
|
$
|
2,396
|
Weighted average
shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
8,956
|
|
|
8,581
|
|
|
8,768
|
|
|
8,583
|
Diluted
|
|
12,069
|
|
|
11,850
|
|
|
9,030
|
|
|
8,852
|
Earnings per
share:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$0.22
|
|
|
$0.06
|
|
|
$0.43
|
|
|
$0.28
|
Diluted
|
|
$0.09
|
|
|
$0.04
|
|
|
$0.41
|
|
|
$0.27
|
See notes to
consolidated financial statements
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Consolidated Statements of Income (Unaudited)
(In thousands except per share amounts)
|
|
Three Months Ended
December 31,
2014
2013
|
|
Year Ended
December 31,
2014
2013
|
GAAP income before
income taxes
|
|
2,314
|
|
|
792
|
|
|
7,059
|
|
|
3,781
|
Elimination of the
change in value of
derivative liability
|
|
(1,126)
|
|
|
(400)
|
|
|
1,113
|
|
|
52
|
Non-GAAP net income
before taxation
|
|
1,188
|
|
|
392
|
|
|
8,172
|
|
|
3,833
|
Income
taxes
|
|
463
|
|
|
153
|
|
|
3,187
|
|
|
1,495
|
Non-GAAP net
income
|
$
|
725
|
|
$
|
239
|
|
$
|
4,985
|
|
$
|
2,338
|
Weighted average
shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
8,956
|
|
|
8,581
|
|
|
8,768
|
|
|
8,583
|
Diluted
|
|
12,069
|
|
|
11,850
|
|
|
9,030
|
|
|
8,852
|
Non-GAAP earnings
per share:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$0.08
|
|
|
$0.03
|
|
|
$0.57
|
|
|
$0.27
|
Diluted
|
|
$0.06
|
|
|
$0.02
|
|
|
$0.55
|
|
|
$0.26
|
Consolidated
Balance Sheets (In thousands except share and per share
amounts)
|
|
December 31,
2014
|
|
December 31,
2013
|
ASSETS
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash
|
$
|
1,130
|
|
$
|
2,477
|
Trade accounts receivable
(less allowance for doubtful
accounts of $562 and
$562)
|
|
89,693
|
|
|
52,696
|
Inventories
|
|
192,064
|
|
|
139,752
|
Deferred tax
assets
|
|
3,911
|
|
|
3,217
|
Advance to supplier, net of
imputed interest of $66 and $176
|
|
3,277
|
|
|
3,147
|
Other current assets,
including derivatives
|
|
18,605
|
|
|
6,081
|
Total current assets
|
|
308,680
|
|
|
207,370
|
Advance to supplier, net of
imputed interest of $- and $56,
and net of current
maturities
|
|
-
|
|
|
3,287
|
Preferential supply
agreement, net
|
|
321
|
|
|
641
|
Long-term financing costs,
net of amortization
|
|
1,024
|
|
|
358
|
Property and equipment,
net
|
|
4,258
|
|
|
3,949
|
Deferred tax
assets
|
|
-
|
|
|
215
|
Total
assets
|
$
|
314,283
|
|
$
|
215,820
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Notes payable -
banks
|
$
|
201,088
|
|
$
|
107,922
|
Current maturities of
mortgage payable
|
|
-
|
|
|
1,290
|
Trade accounts
payable
|
|
42,626
|
|
|
44,058
|
Income taxes
payable
|
|
4,190
|
|
|
2,042
|
Accrued expenses and
derivative liabilities
|
|
4,137
|
|
|
2,844
|
Dividends payable
|
|
449
|
|
|
215
|
Total current liabilities
|
|
252,490
|
|
|
158,371
|
|
|
|
|
|
|
Subordinated
convertible debt net of unamortized discount
of $803 and $1,368 respectively
|
|
10,197
|
|
|
10,632
|
Derivative liability
for embedded conversion option
|
|
2,734
|
|
|
2,048
|
Deferred taxes
payable
|
|
51
|
|
|
-
|
Total Liabilities
|
|
265,472
|
|
|
171,051
|
|
|
|
|
|
|
Commitments (Note
R)
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
Common stock $0.01 par
value, 20,000,000 shares authorized
and 11,749,651 shares
issued
at December 31, 2014 and
December 31, 2013
|
|
117
|
|
|
117
|
Additional paid-in
capital
|
|
13,678
|
|
|
11,937
|
Retained earnings
|
|
40,805
|
|
|
38,178
|
Accumulated other
comprehensive (loss)/income
|
|
(334)
|
|
|
51
|
Treasury stock, 2,843,717
and 3,177,708 shares
at December 31, 2014 and
December 31, 2013, respectively
|
|
(5,455)
|
|
|
(5,514)
|
Total stockholders' equity
|
|
48,811
|
|
|
44,769
|
Total liabilities and
stockholders' equity
|
$
|
314,283
|
|
$
|
215,820
|
See notes to
consolidated financial statements
|
|
|
|
|
|
Consolidated
Statements of Cash Flows (In
thousands)
|
|
Year Ended December 31,
2014
2013
|
Cash flows -
operating activities:
|
|
|
|
|
|
Net income
|
$
|
3,734
|
|
$
|
2,396
|
Adjustments to reconcile net
income to net cash (used in)/provided
by operating
activities:
|
|
|
|
|
|
Depreciation and amortization
|
|
598
|
|
|
697
|
Change in value of derivative liability
|
|
1,113
|
|
|
52
|
Loss related to extinguishment of debt converted into
common stock
|
|
164
|
|
|
-
|
Amortization of convertible note discount
|
|
481
|
|
|
566
|
Imputed interest on vendor advance
|
|
(177)
|
|
|
(293)
|
Provision for doubtful accounts
|
|
31
|
|
|
33
|
Amortization of supply agreement
|
|
321
|
|
|
321
|
Deferred income taxes
|
|
(448)
|
|
|
(356)
|
Foreign exchange loss/(gain) and other
|
|
455
|
|
|
(29)
|
Loss on sale of marketable securities
|
|
-
|
|
|
31
|
Stock-based compensation
|
|
630
|
|
|
-
|
Changes in:
|
|
|
|
|
|
Trade accounts receivable
|
|
(37,867)
|
|
|
981
|
Inventories
|
|
(53,304)
|
|
|
5,969
|
Other current assets
|
|
(12,533)
|
|
|
(2,121)
|
Trade accounts payable
|
|
(1,421)
|
|
|
8,008
|
Income taxes payable
|
|
2,156
|
|
|
(994)
|
Accrued expenses and derivative liabilities
|
|
1,409
|
|
|
(1,893)
|
Net cash (used in)/provided by operating
activities
|
|
(94,658)
|
|
|
13,368
|
Cash flows -
investing activities:
|
|
|
|
|
|
Repayment related to supply agreement
|
|
3,333
|
|
|
3,333
|
Net proceeds from sale of marketable securities
|
|
-
|
|
|
6
|
Purchases of property and equipment
|
|
(430)
|
|
|
(95)
|
Net cash provided by investing activities
|
|
2,903
|
|
|
3,244
|
Cash flows -
financing activities:
|
|
|
|
|
|
Proceeds from/(repayment of)
notes payable – banks
|
|
94,126
|
|
|
(16,361)
|
Repayments - mortgage
payable
|
|
(1,290)
|
|
|
(171)
|
Deferred financing
costs
|
|
(1,143)
|
|
|
(60)
|
Dividends
paid
|
|
(872)
|
|
|
(644)
|
Proceeds from stock options
exercised
|
|
15
|
|
|
-
|
Treasury stock
purchased
|
|
(352)
|
|
|
(64)
|
Net cash provided by/(used in) financing activities
|
|
90,484
|
|
|
(17,300)
|
Net decrease in
cash
|
|
(1,271)
|
|
|
(688)
|
Effect of
exchange rate
|
|
(76)
|
|
|
29
|
Cash at beginning of
period
|
|
2,477
|
|
|
3,136
|
Cash at end of the
period
|
$
|
1,130
|
|
$
|
2,477
|
Supplemental
disclosures of cash flow information:
|
|
|
|
|
|
Cash paid during the period
for:
|
|
|
|
|
|
Interest
|
$
|
4,520
|
|
$
|
3,739
|
Income taxes
|
$
|
3,388
|
|
$
|
2,553
|
Non cash financing
activities:
|
|
|
|
|
|
Dividend declared but
not yet paid
|
$
|
449
|
|
$
|
215
|
Treasury stock issued
on conversion of subordinated debt
|
$
|
1,507
|
|
|
-
|
See notes to
consolidated financial statements
|
|
|
|
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/empire-resources-reports-strong-year-over-year-growth-for-fourth-quarter-2014-and-full-year-300058151.html
SOURCE Empire Resources, Inc.