FORT LEE, N.J., March 30, 2016 /PRNewswire/ -- Empire
Resources, Inc. (NASDAQ: ERS), a distributor of value added,
semi-finished metal products, announced today that net sales for
the fourth quarter of 2015 were $97.0
million, compared with $138.1
million in the fourth quarter of 2014, a decrease of
$41.0 million. This decrease was
driven by lower metal prices and the decreased sales in
Brazil.
Gross profit for the fourth quarter of 2015 was $4.7 million, or 4.8% of sales, compared with
$5.5 million, or 4.0% of sales, in
the fourth quarter of 2014.
Operating income for the fourth quarter of 2015 was $0.8 million, compared with $2.3 million for the fourth quarter of 2014,
which was negatively impacted by an increase to our reserve for bad
debt and reduced sales for the quarter.
Net interest expense for the fourth quarter of 2015 was
$1.3 million compared with
$1.1 million in the fourth quarter of
2014, as the average borrowings for the fourth quarter of 2015 were
approximately $13 million higher than
the fourth quarter of 2014.
The Company recognized a non-cash non-operating gain of
$0.6 million in the fourth quarter of
2015 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 $1.1 million in the fourth quarter of 2014.
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, increasing the value of the derivative liability,
while decreases in the stock price produce gains, reducing the
value of the derivative liability. Such losses are not tax
deductible, and likewise any recoveries of such losses are not
taxable upon recovery.
Non-GAAP net income for the fourth quarter of 2015, excluding
the effect of the change in fair market valuation of the derivative
liability and the associated tax treatment, was $(0.5) million, or $(0.06) per diluted share, compared with
$0.7 million, or $0.06 per diluted share, in the fourth quarter of
2014.
On a GAAP basis, the Company reported net income for the fourth
quarter of 2015 of $35.0 thousand, or
$0.00 per diluted share, compared
with a net gain of $2.0 million, or
$0.09 per diluted share, in the
fourth quarter of 2014.
For full year 2015, net sales were $521.7
million and net income was $2.8
million, or $0.20 per diluted
share, on a GAAP basis, and $1.3
million, or $0.06 per diluted
share, on a non-GAAP basis. For the full year 2014, net sales
were $582.3 million and net income
was $3.7 million, or $0.41 per diluted share, on a GAAP basis, and
$5.0 million or $0.55 per diluted share, on a non-GAAP basis.
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, "2015 was a challenging year, however, we moved ahead
constructively in several areas. Our effort to reduce
inventory resulted in an improvement of $34
million year on year and our bank debt was reduced
$61 million year on year. Our
purchase of a new, larger Baltimore County distribution facility in
the fourth quarter of 2015 will reduce our outside storage costs
going forward and increase our efficiency in servicing our
customers. Our effort to expand our footprint in Europe is continuing and we expect to see
positive results during 2016."
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, Australia, New
Zealand, Europe and
Latin America. 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,
|
|
Year Ended
December 31,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
(unaudited)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
|
97,047
|
|
$
|
138,080
|
|
$
|
521,736
|
|
$
|
582,279
|
Cost of goods
sold
|
|
92,393
|
|
|
132,549
|
|
|
498,881
|
|
|
555,777
|
Gross
profit
|
|
4,654
|
|
|
5,531
|
|
|
22,855
|
|
|
26,502
|
Selling, general and
administrative expenses
|
|
3,887
|
|
|
3,215
|
|
|
14,519
|
|
|
13,815
|
Operating
income
|
|
767
|
|
|
2,316
|
|
|
8,336
|
|
|
12,687
|
Interest
expense, net
|
|
1,335
|
|
|
1,128
|
|
|
6,000
|
|
|
4,351
|
(Loss)/income before
other expenses
|
|
(568)
|
|
|
1,188
|
|
|
2,336
|
|
|
8,336
|
Other
expenses
|
|
|
|
|
|
|
|
|
|
|
|
Change
in value of derivative liability
|
|
608
|
|
|
1,126
|
|
|
1,792
|
|
|
(1,113)
|
Loss on
sale of property and equipment
|
|
(244)
|
|
|
|
|
|
(244)
|
|
|
-
|
Loss
related to extinguishment of debt
converted into common
stock
|
|
-
|
|
|
|
|
|
-
|
|
|
(164)
|
(Loss)/income before
income taxes
|
|
(204)
|
|
|
2,314
|
|
|
3,884
|
|
|
7,059
|
Income
taxes
|
|
(239)
|
|
|
340
|
|
|
1,075
|
|
|
3,325
|
Net
income
|
$
|
35
|
|
$
|
1,974
|
|
$
|
2,809
|
|
$
|
3,734
|
Weighted average
shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
8,882
|
|
|
8,956
|
|
|
8,669
|
|
|
8,768
|
Diluted
|
|
8,911
|
|
|
12,069
|
|
|
11,685
|
|
|
9,030
|
Earnings/(loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$0.00
|
|
|
$0.22
|
|
|
$0.32
|
|
|
$0.43
|
Diluted
|
|
$0.00
|
|
|
$0.09
|
|
|
$0.20
|
|
|
$0.41
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Consolidated Statements of Income
(In thousands except per share amounts)
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
Year Ended
December 31,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP (loss)/income
before income taxes
|
|
(204)
|
|
|
2,314
|
|
|
3,884
|
|
|
7,059
|
Elimination of the
change in value of
derivative liability
|
|
(608)
|
|
|
(1,126)
|
|
|
(1,792)
|
|
|
1,113
|
Non-GAAP net
(loss)/income before taxation
|
|
(812)
|
|
|
1,188
|
|
|
2,092
|
|
|
8,172
|
Income
taxes
|
|
(317)
|
|
|
463
|
|
|
816
|
|
|
3,187
|
Non-GAAP net
(loss)/income
|
$
|
(495)
|
|
$
|
725
|
|
$
|
1,276
|
|
$
|
4,985
|
Weighted average
shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
8,882
|
|
|
8,956
|
|
|
8,669
|
|
|
8,768
|
Diluted
|
|
8,911
|
|
|
12,069
|
|
|
11,685
|
|
|
9,030
|
Non-GAAP
(loss)/earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
($0.06)
|
|
|
$0.08
|
|
|
$0.15
|
|
|
$0.57
|
Diluted
|
|
($0.06)
|
|
|
$0.06
|
|
|
$0.06
|
|
|
$0.55
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
Balance Sheets (In thousands except share and per share
amounts)
|
|
December 31,
2015
|
|
December 31,
2014
|
ASSETS
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash
|
$
|
7,315
|
|
$
|
1,130
|
Trade accounts receivable
(less allowance for doubtful
accounts of $1,190 and
$562)
|
|
60,525
|
|
|
89,693
|
Inventories
|
|
157,025
|
|
|
192,064
|
Deferred tax
assets
|
|
5,101
|
|
|
3,911
|
Advance to supplier, net of
imputed interest of $66
|
|
-
|
|
|
3,277
|
Other current assets,
including derivatives
|
|
10,601
|
|
|
18,605
|
Total current assets
|
|
240,567
|
|
|
308,680
|
Preferential supply
agreement, net
|
|
-
|
|
|
321
|
Long-term financing costs,
net of amortization
|
|
629
|
|
|
1,024
|
Property and equipment,
net
|
|
7,340
|
|
|
4,258
|
Total
assets
|
$
|
248,536
|
|
$
|
314,283
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Notes payable -
banks
|
$
|
139,146
|
|
$
|
201,088
|
Current maturities of
mortgage payable
|
|
265
|
|
|
-
|
Subordinated convertible
debt net of unamortized discount of $216
|
|
10,784
|
|
|
-
|
Trade accounts
payable
|
|
35,741
|
|
|
42,626
|
Income taxes
payable
|
|
2,092
|
|
|
4,190
|
Accrued expenses and
derivative liabilities
|
|
6,177
|
|
|
4,137
|
Derivative liability for
embedded conversion option
|
|
942
|
|
|
-
|
Dividends payable
|
|
213
|
|
|
449
|
Total current liabilities
|
|
195,360
|
|
|
252,490
|
|
|
|
|
|
|
Subordinated
convertible debt
net of unamortized discount of
$803
|
|
-
|
|
|
10,197
|
Derivative liability
for embedded conversion option
|
|
-
|
|
|
2,734
|
Mortgage payable, net
of current maturities
|
|
4,969
|
|
|
-
|
Deferred taxes
payable
|
|
8
|
|
|
51
|
Total liabilities
|
|
200,337
|
|
|
265,472
|
|
|
|
|
|
|
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, 2015
and 2014
|
|
117
|
|
|
117
|
Additional paid-in
capital
|
|
13,037
|
|
|
13,678
|
Retained earnings
|
|
42,749
|
|
|
40,805
|
Accumulated other
comprehensive loss
|
|
(666)
|
|
|
(334)
|
Treasury stock, 3,218,691
and 2,843,717 shares
at December 31, 2015
and 2014, respectively
|
|
(7,038)
|
|
|
(5,455)
|
Total stockholders' equity
|
|
48,199
|
|
|
48,811
|
Total liabilities and
stockholders' equity
|
$
|
248,536
|
|
$
|
314,283
|
See notes to
consolidated financial statements
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
Statements of Cash Flows (In thousands)
|
|
Year Ended
December 31,
|
|
2015
|
|
2014
|
Cash flows -
operating activities:
|
|
|
|
|
|
Net income
|
$
|
2,809
|
|
$
|
3,734
|
Adjustments to reconcile net
income to net cash provided by/(used in) operating
activities:
|
|
|
|
|
|
Depreciation and amortization
|
|
737
|
|
|
598
|
Loss on sale of property and equipment
|
|
244
|
|
|
-
|
Change in value of derivative liability
|
|
(1,792)
|
|
|
1,113
|
Amortization of convertible note discount
|
|
586
|
|
|
481
|
Imputed interest on vendor advance
|
|
(56)
|
|
|
(177)
|
Loss related to extinguishment of debt converted into common
stock
|
|
-
|
|
|
164
|
Provision for doubtful accounts
|
|
649
|
|
|
31
|
Amortization of supply agreement
|
|
321
|
|
|
321
|
Deferred income taxes
|
|
(1,233)
|
|
|
(448)
|
Foreign exchange loss and other
|
|
676
|
|
|
455
|
Stock-based compensation
|
|
-
|
|
|
630
|
Changes in:
|
|
|
|
|
|
Trade accounts receivable
|
|
27,793
|
|
|
(37,867)
|
Inventories
|
|
33,898
|
|
|
(53,304)
|
Other current assets
|
|
7,986
|
|
|
(12,533)
|
Trade accounts payable
|
|
(6,866)
|
|
|
(1,421)
|
Income taxes payable
|
|
(2,089)
|
|
|
2,156
|
Accrued expenses and derivative liabilities
|
|
2,123
|
|
|
1,409
|
Net cash provided by/(used in) operating
activities
|
|
65,786
|
|
|
(94,658)
|
Cash flows -
investing activities:
|
|
|
|
|
|
Repayment related to supply agreement
|
|
3,333
|
|
|
3,333
|
Proceeds from sale of property and equipment
|
|
3,768
|
|
|
-
|
Purchases of property and equipment
|
|
(7,278)
|
|
|
(430)
|
Net cash (used in) /provided by investing activities
|
|
(177)
|
|
|
2,903
|
Cash flows -
financing activities:
|
|
|
|
|
|
(Repayment of)/proceeds from
notes payable – banks
|
|
(61,078)
|
|
|
94,126
|
Proceeds from mortgage loan
for new warehouse
|
|
5,300
|
|
|
-
|
Repayments of mortgage
loan
|
|
(66)
|
|
|
(1,290)
|
Deferred financing
costs
|
|
(158)
|
|
|
(1,143)
|
Dividends
paid
|
|
(1,101)
|
|
|
(872)
|
Treasury stock
purchased
|
|
(1,583)
|
|
|
(352)
|
Purchase of stock
options
|
|
(922)
|
|
|
-
|
Proceeds from stock options
exercised
|
|
-
|
|
|
15
|
Excess tax benefit related
to stock options purchased
|
|
281
|
|
|
-
|
Net cash (used in)/provided by financing activities
|
|
(59,327)
|
|
|
90,484
|
Net
increase/(decrease) in cash
|
|
6,282
|
|
|
(1,271)
|
Effect of
exchange rate
|
|
(97)
|
|
|
(76)
|
Cash at beginning of
year
|
|
1,130
|
|
|
2,477
|
Cash at end of
year
|
$
|
7,315
|
|
$
|
1,130
|
Supplemental
disclosures of cash flow information:
|
|
|
|
|
|
Cash paid during the period
for:
|
|
|
|
|
|
Interest
|
$
|
5,561
|
|
$
|
4,520
|
Income taxes
|
$
|
2,657
|
|
$
|
3,388
|
Non cash financing
activities:
|
|
|
|
|
|
Dividend declared but
not yet paid
|
$
|
213
|
|
$
|
449
|
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-results-for-full-year-and-fourth-quarter-of-2015-300243039.html
SOURCE Empire Resources, Inc.