FORT LEE, N.J., March 31, 2017 /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 2016 were $100.6
million, compared with $97.0
million in the fourth quarter of 2015 an increase of
3.7% from the fourth quarter of 2015, comprised of increases in
sales across all regions except Canada and the Pacific region.
Gross profit for the fourth quarter of 2016 was $5.1 million, or 5.1% of sales, compared with
$4.7 million, or 4.8% of sales, in
the fourth quarter of 2015. Reduced inventories and storage costs
contributed to this improvement in gross profit margin.
Operating income for the fourth quarter of 2016 was $1.3 million, compared with $0.8 million for the fourth quarter of 2015.
Net interest expense for the fourth quarter of 2016 decreased to
$0.8 million from $1.3 million in the fourth quarter of 2015, as a
result of decreased bank loans reflecting reduced inventory levels
as well as reduced interest expense due to the repayment of our
convertible debt. The Company has focused on reducing inventories
which totaled $157.0 million at
December 31, 2015, $133.0 million at December
31, 2016.
As a result of the repayment of the Company's subordinated debt,
there was no gain or loss in the fourth quarter of 2016 related to
the change in fair market valuation of the derivative feature of
the convertible subordinated note compared to a non-cash
non-operating gain of $0.6 million in
the 2015 fourth quarter. 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. 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 2016, which
reflects no change in fair market valuation of the derivative
liability and the associated tax treatment, was $0.3 million, or $0.04 per diluted share, compared with a loss of
$(0.5) million, or $(0.06) per diluted share in the fourth quarter
of 2015.
On a GAAP basis, the Company reported net income for the fourth
quarter of 2016 of $0.3 million, or
$0.04 per diluted share, compared
with net income of $35 thousand, or
$0.00 per diluted share, in the
fourth quarter of 2015.
For the full year 2016, net sales decreased 12.1% to
$458.9 million and net income was
$3.3 million, or $0.29 per diluted share, on a GAAP basis, and
$2.5 million, or $0.26 per diluted share, on a non-GAAP
basis. For the 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 $0.11 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.
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 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,
2016
2015
(Unaudited)
|
|
Year Ended
December 31,
2016
2015
|
Net sales
|
$
|
100,629
|
|
$
|
97,047
|
|
$
|
458,864
|
|
$
|
521,736
|
Cost of goods
sold
|
|
95,514
|
|
|
92,393
|
|
|
437,050
|
|
|
498,881
|
Gross
profit
|
|
5,115
|
|
|
4,654
|
|
|
21,814
|
|
|
22,855
|
Selling, general and
administrative expenses
|
|
3,820
|
|
|
3,887
|
|
|
13,738
|
|
|
14,519
|
Operating
income
|
|
1,295
|
|
|
767
|
|
|
8,076
|
|
|
8,336
|
Interest
expense, net
|
|
773
|
|
|
1,335
|
|
|
3,901
|
|
|
6,000
|
Income/(loss) before
other expenses
|
|
522
|
|
|
(568)
|
|
|
4,175
|
|
|
2,336
|
Other
expenses
|
|
|
|
|
|
|
|
|
|
|
|
Change
in value of derivative liability
|
|
-
|
|
|
608
|
|
|
942
|
|
|
1,792
|
Loss on
sale of property and equipment
|
|
-
|
|
|
(244)
|
|
|
-
|
|
|
(244)
|
Income/(loss) before
income taxes
|
|
522
|
|
|
(204)
|
|
|
5,117
|
|
|
3,884
|
Income
taxes
|
|
220
|
|
|
(239)
|
|
|
1,816
|
|
|
1,075
|
Net
income
|
$
|
302
|
|
$
|
35
|
|
$
|
3,301
|
|
$
|
2,809
|
Weighted average
shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
8,513
|
|
|
8,882
|
|
|
8,465
|
|
|
8,669
|
Diluted
|
|
8,548
|
|
|
8,911
|
|
|
9,713
|
|
|
11,685
|
Earnings per
share:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$0.04
|
|
|
$0.00
|
|
|
$0.39
|
|
|
$0.32
|
Diluted
|
|
$0.04
|
|
|
$0.00
|
|
|
$0.29
|
|
|
$0.20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Consolidated Statements of Income (Unaudited)
(In thousands except per share amounts)
|
|
Three Months Ended
December 31,
2016
2015
|
|
Year Ended
December 31,
2016
2015
|
GAAP income/(loss)
before income taxes
|
|
522
|
|
|
(204)
|
|
|
5,117
|
|
|
3,884
|
Elimination of the
change in value of
derivative liability
|
|
-
|
|
|
(608)
|
|
|
(942)
|
|
|
(1,792)
|
Non-GAAP
income/(loss) before taxation
|
|
522
|
|
|
(812)
|
|
|
4,175
|
|
|
2,092
|
Income
taxes
|
|
204
|
|
|
(317)
|
|
|
1,628
|
|
|
816
|
Non-GAAP net
income (loss)
|
$
|
318
|
|
$
|
(495)
|
|
$
|
2,547
|
|
$
|
1,276
|
Weighted average
shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
8,513
|
|
|
8,882
|
|
|
8,465
|
|
|
8,669
|
Diluted
|
|
8,548
|
|
|
8,911
|
|
|
9,713
|
|
|
11,685
|
Non-GAAP earnings
(loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$0.04
|
|
|
($0.06)
|
|
|
$0.30
|
|
|
$0.15
|
Diluted
|
|
$0.04
|
|
|
($0.06)
|
|
|
$0.26
|
|
|
$0.11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
Balance Sheets
(In thousands except share and per share
amounts)
|
|
December 31,
2016
|
|
December 31,
2015
|
ASSETS
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash
|
$
|
4,065
|
|
$
|
7,315
|
Trade accounts receivable
(less allowance for doubtful
accounts of $1,198 and
$1,190)
|
|
52,810
|
|
|
60,525
|
Inventories
|
|
133,031
|
|
|
157,025
|
Deferred tax
assets
|
|
3,993
|
|
|
5,101
|
Other current assets,
including derivatives
|
|
4,342
|
|
|
10,601
|
Total current assets
|
|
198,241
|
|
|
240,567
|
Property and equipment,
net
|
|
7,309
|
|
|
7,340
|
Total
assets
|
$
|
205,550
|
|
$
|
247,907
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Notes payable - banks, net
of unamortized financing costs of $242 and $629
|
$
|
121,449
|
|
$
|
138,517
|
Current maturities of
mortgage payable
|
|
265
|
|
|
265
|
Subordinated convertible
debt net of unamortized discount of $216
|
|
-
|
|
|
10,784
|
Trade accounts
payable
|
|
21,926
|
|
|
35,741
|
Income taxes
payable
|
|
913
|
|
|
2,092
|
Accrued expenses and
derivative liabilities
|
|
6,084
|
|
|
6,177
|
Derivative liability for
embedded conversion option
|
|
-
|
|
|
942
|
Dividends payable
|
|
336
|
|
|
213
|
Total current liabilities
|
|
150,973
|
|
|
194,731
|
|
|
|
|
|
|
Mortgage payable, net
of current maturities
|
|
4,704
|
|
|
4,969
|
Deferred taxes
payable
|
|
155
|
|
|
8
|
Total liabilities
|
|
155,832
|
|
|
199,708
|
|
|
|
|
|
|
Commitments
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
Common stock $0.01 par
value, 20,000,000 shares authorized
and 11,749,651 shares
issued
at December 31, 2016
and 2015
|
|
117
|
|
|
117
|
Additional paid-in
capital
|
|
13,037
|
|
|
13,037
|
Retained earnings
|
|
44,824
|
|
|
42,749
|
Accumulated other
comprehensive loss
|
|
(673)
|
|
|
(666)
|
Treasury stock, 3,349,196
and 3,218,691 shares
at December 31, 2016
and 2015, respectively
|
|
(7,587)
|
|
|
(7,038)
|
Total stockholders' equity
|
|
49,718
|
|
|
48,199
|
Total liabilities and
stockholders' equity
|
$
|
205,550
|
|
$
|
247,907
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
Statements of Cash Flows
(In thousands)
|
|
Year Ended
December 31,
2016
2015
|
Cash flows -
operating activities:
|
|
|
|
|
|
Net income
|
$
|
3,301
|
|
$
|
2,809
|
Adjustments to reconcile net
income to net cash provided by operating
activities:
|
|
|
|
|
|
Depreciation and amortization
|
|
726
|
|
|
737
|
Loss on sale of property and equipment
|
|
-
|
|
|
244
|
Change in value of derivative liability
|
|
(942)
|
|
|
(1,792)
|
Amortization of convertible note discount
|
|
216
|
|
|
586
|
Imputed interest on vendor advance
|
|
-
|
|
|
(56)
|
Provision for doubtful accounts
|
|
4
|
|
|
649
|
Amortization of supply agreement
|
|
-
|
|
|
321
|
Deferred income taxes
|
|
1,255
|
|
|
(1,233)
|
Foreign exchange loss and other
|
|
1,360
|
|
|
676
|
Changes in:
|
|
|
|
|
|
Trade accounts receivable
|
|
7,226
|
|
|
27,793
|
Inventories
|
|
22,853
|
|
|
33,898
|
Other current assets
|
|
6,226
|
|
|
7,986
|
Trade accounts payable
|
|
(13,811)
|
|
|
(6,866)
|
Income taxes payable
|
|
(1,430)
|
|
|
(2,089)
|
Accrued expenses and derivative liabilities
|
|
225
|
|
|
2,123
|
Net cash provided by operating activities
|
|
27,209
|
|
|
65,786
|
Cash flows -
investing activities:
|
|
|
|
|
|
Repayment related to supply agreement
|
|
-
|
|
|
3,333
|
Proceeds from sale of property and equipment
|
|
-
|
|
|
3,768
|
Purchases of property and equipment
|
|
(160)
|
|
|
(7,278)
|
Net cash (used in) investing activities
|
|
(160)
|
|
|
(177)
|
Cash flows -
financing activities:
|
|
|
|
|
|
Repayment of notes payable –
banks
|
|
(17,084)
|
|
|
(61,078)
|
Repayment of subordinated
convertible notes payable
|
|
(11,000)
|
|
|
-
|
Proceeds from mortgage loan
for new warehouse
|
|
-
|
|
|
5,300
|
Repayments of mortgage
loan
|
|
(265)
|
|
|
(66)
|
Deferred financing
costs
|
|
(148)
|
|
|
(158)
|
Dividends
paid
|
|
(1,104)
|
|
|
(1,101)
|
Treasury stock
purchased
|
|
(549)
|
|
|
(1,583)
|
Purchase of stock
options
|
|
-
|
|
|
(922)
|
Excess tax benefit related
to stock options purchased
|
|
-
|
|
|
281
|
Net cash (used in) financing activities
|
|
(30,150)
|
|
|
(59,327)
|
Net
increase/(decrease) in cash
|
|
(3,101)
|
|
|
6,282
|
Effect of
exchange rate
|
|
(149)
|
|
|
(97)
|
Cash at beginning of
year
|
|
7,315
|
|
|
1,130
|
Cash at end of
year
|
$
|
4,065
|
|
$
|
7,315
|
Supplemental
disclosures of cash flow information:
|
|
|
|
|
|
Cash paid during the period
for:
|
|
|
|
|
|
Interest
|
$
|
3,770
|
|
$
|
5,561
|
Income taxes
|
$
|
2,081
|
|
$
|
2,657
|
Non cash financing
activities:
|
|
|
|
|
|
Dividend declared but
not yet paid
|
$
|
336
|
|
$
|
213
|
|
|
|
|
|
|
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-2016-300432529.html
SOURCE Empire Resources, Inc.