Handy & Harman Ltd. (NASDAQ: HNH), a diversified global
industrial company, today announced operating results for the first
quarter ended March 31, 2017, as summarized in the following
paragraphs. For a full discussion of the results, please see the
Company's Form 10-Q as filed with the U.S. Securities and Exchange
Commission, which can be found at www.handyharman.com.
HNH reported that net sales for the 2017 first quarter increased
to $234.6 million from $160.8 million for the same period in 2016.
Income before tax and equity investment was $8.2 million in the
first quarter of 2017, compared with $8.9 million in the 2016
period. Net income for the 2017 first quarter rose to $6.9 million,
or $0.56 per basic and diluted common share, from $0.5 million, or
$0.04 per basic and diluted common share, for the same period in
2016.
HNH generated Adjusted EBITDA of $25.8 million for the first
quarter of 2017, compared with $19.1 million for the same period in
2016, an increase of 35.4%. See "Note Regarding Use of Non-GAAP
Financial Measurements" below for the definition of Adjusted
EBITDA.
"Results for our first quarter reflected contributions from the
prior year's acquisitions, including cost savings from the
successful integration of new operations, as we implement the Steel
Business System and invest in facilities and new products for
future growth," said Bill Fejes, President and CEO of Handy &
Harman Group Ltd. "We have expanded our customer base, further
enhanced our brand offerings and are continuing to focus on
creating value for our stockholders."
Based on current information, the Company's outlook for the 2017
second quarter is net sales between $224 million and $274 million
and Adjusted EBITDA between $32 million and $39 million. The
Company's outlook for the full 2017 year is net sales between $896
million and $1.043 billion and Adjusted EBITDA between $116 million
and $136 million.
Financial
Summary
Three Months Ended (in thousands, except
per share) March 31, 2017 2016 Net
sales $ 234,642 $ 160,797 Gross profit 68,583 43,717 Gross profit
margin 29.2 % 27.2 % Operating income 11,744 10,282 Income before
tax and equity investment 8,151 8,944 Tax provision 3,093 3,860
(Gain) loss from associated company, net of tax (1,809 ) 4,628
Net income $ 6,867 $ 456
Basic and diluted
income per share of common stock Net income per
share $ 0.56 $ 0.04
Segment
Results
Income Statement Data Three Months
Ended (in thousands) March 31, 2017
2016 Net sales: Joining Materials $ 46,541 $ 42,671 Tubing
18,004 20,270 Building Materials 68,298 58,302 Performance
Materials 25,376 24,783 Electrical Products 61,386 — Kasco 15,037
14,771 Total net sales $ 234,642 $ 160,797
Segment operating income: Joining Materials $ 5,420 $ 4,415
Tubing 2,684 4,211 Building Materials 9,060 7,353 Performance
Materials 1,574 293 Electrical Products 3,689 — Kasco 685
980 Total segment operating income 23,112 17,252
Unallocated corporate expenses and non-operating units
(8,824 ) (4,983 ) Unallocated pension expense (2,653 ) (2,151 )
Gain from asset dispositions 109 164 Operating income
11,744 10,282 Interest expense (2,930 ) (1,070 )
Realized and unrealized loss on derivatives (360 ) (123 ) Other
expense (303 ) (145 ) Income before tax and equity investment $
8,151 $ 8,944
Supplemental
Non-GAAP Disclosures
Adjusted EBITDA Three Months Ended (in
thousands) March 31, 2017 2016 Net income
$ 6,867 $ 456 (Deduct) Add: (Gain) loss from associated company,
net of tax (1,809 ) 4,628 Tax provision 3,093 3,860 Interest
expense 2,930 1,070 Non-cash derivative and hedge loss on precious
metal contracts 360 123 Non-cash adjustment to precious metal
inventory valued at LIFO 110 380 Depreciation and amortization
10,563 5,686 Non-cash pension expense 2,653 2,151 Non-cash
stock-based compensation 232 672 Other items, net 803 27
Adjusted EBITDA $ 25,802 $ 19,053
Note Regarding Use of Non-GAAP
Financial Measurements
The financial data contained in this press release includes
certain non-GAAP financial measurements as defined by the U.S.
Securities and Exchange Commission ("SEC"), including "Adjusted
EBITDA." The Company is presenting Adjusted EBITDA because it
believes that it provides useful information to investors about
HNH, its business, and its financial condition. The Company defines
Adjusted EBITDA as net income or loss before the effects of gains
or losses from investment in associated company, realized and
unrealized gains or losses on derivatives, interest expense, taxes,
depreciation and amortization, LIFO liquidation gains or losses,
and non-cash pension expense, and excludes certain non-recurring
and non-cash items. The Company believes Adjusted EBITDA is useful
to investors because it is one of the measures used by the
Company's Board of Directors and management to evaluate its
business, including in internal management reporting, budgeting,
and forecasting processes, in comparing operating results across
the business, as an internal profitability measure, as a component
in evaluating the ability and the desirability of making capital
expenditures and significant acquisitions, and as an element in
determining executive compensation.
However, Adjusted EBITDA is not a measure of financial
performance under generally accepted accounting principles in the
U.S. ("U.S. GAAP"), and the items excluded from Adjusted EBITDA are
significant components in understanding and assessing financial
performance. Therefore, Adjusted EBITDA should not be considered a
substitute for net income or cash flows from operating, investing,
or financing activities. Because Adjusted EBITDA is calculated
before recurring cash charges, including realized losses on
derivatives, interest expense, and taxes, and is not adjusted for
capital expenditures or other recurring cash requirements of the
business, it should not be considered as a measure of discretionary
cash available to invest in the growth of the business. There are a
number of material limitations to the use of Adjusted EBITDA as an
analytical tool, including the following:
- Adjusted EBITDA does not reflect gains
or losses from the Company's investment in associated company;
- Adjusted EBITDA does not reflect the
Company's net realized and unrealized gains and losses on
derivatives and any LIFO liquidations of its precious metal
inventory;
- Adjusted EBITDA does not reflect the
Company's interest expense;
- Adjusted EBITDA does not reflect the
Company's tax provision or the cash requirements to pay its
taxes;
- Although depreciation and amortization
are non-cash expenses in the period recorded, the assets being
depreciated and amortized may have to be replaced in the future,
and Adjusted EBITDA does not reflect the cash requirements for such
replacement;
- Adjusted EBITDA does not include
non-cash charges for pension expense and stock-based
compensation;
- Adjusted EBITDA does not include
discontinued operations; and
- Adjusted EBITDA does not include
certain other non-recurring and non-cash items.
The Company compensates for these limitations by relying
primarily on its U.S. GAAP financial measures and by using Adjusted
EBITDA only as supplemental information. The Company believes that
consideration of Adjusted EBITDA, together with a careful review of
its U.S. GAAP financial measures, is the most informed method of
analyzing HNH.
The Company reconciles Adjusted EBITDA to net income or loss,
and that reconciliation is set forth above. Because Adjusted EBITDA
is not a measurement determined in accordance with U.S. GAAP and is
susceptible to varying calculations, Adjusted EBITDA, as presented,
may not be comparable to other similarly titled measures of other
companies. Revenues and expenses are measured in accordance with
the policies and procedures described in the Company's Annual
Report on Form 10-K for the year ended December 31, 2016.
About Handy & Harman
Ltd.
Handy & Harman Ltd. is a diversified manufacturer of
engineered niche industrial products with leading market positions
in many of the markets it serves. Through its wholly-owned
operating subsidiaries, HNH focuses on high margin products and
innovative technology and serves customers across a wide range of
end markets. HNH's diverse product offerings are marketed
throughout the U.S. and internationally.
HNH's companies are organized into six businesses: Joining
Materials, Tubing, Building Materials, Performance Materials,
Electrical Products, and Kasco.
The Company sells its products and services through direct sales
forces, distributors, and manufacturer's representatives. HNH
serves a diverse customer base, including the construction,
electrical, electronics, transportation, power control, utility,
medical, oil and gas exploration, aerospace and defense, and food
industries.
The Company's business strategy is to enhance the growth and
profitability of the HNH business units and to build upon their
strengths through internal growth, the Steel Business System, and
strategic acquisitions. Management expects HNH to continue to focus
on high margin products and innovative technology. Management has
evaluated and will continue to evaluate, from time to time,
potential strategic and opportunistic acquisition opportunities, as
well as the potential sale of certain businesses and assets.
The Company is based in New York, N.Y., and its common stock is
listed on the NASDAQ Capital Market under the symbol HNH. Website:
www.handyharman.com
Forward-Looking
Statements
This press release contains certain "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, that reflect HNH's current expectations and projections
about its future results, performance, prospects, and
opportunities. HNH has tried to identify these forward-looking
statements by using words such as "may," "should," "expect,"
"hope," "anticipate," "believe," "intend," "plan," "estimate," and
similar expressions. These forward-looking statements are based on
information currently available to the Company and are subject to a
number of risks, uncertainties, and other factors that could cause
its actual results, performance, prospects, or opportunities in
2017 and beyond to differ materially from those expressed in, or
implied by, these forward-looking statements. These factors
include, without limitation, HNH's need for additional financing
and the terms and conditions of any financing that is consummated,
customers' acceptance of its new and existing products, the risk
that the Company will not be able to compete successfully, the
possible volatility of the Company's stock price, and the potential
fluctuation in its operating results. Although HNH believes that
the expectations reflected in these forward-looking statements are
reasonable and achievable, such statements involve significant
risks and uncertainties, and no assurance can be given that the
actual results will be consistent with these forward-looking
statements. Investors should read carefully the factors described
in the "Risk Factors" section of the Company's filings with the
SEC, including the Company's Form 10-K for the year ended
December 31, 2016, for information regarding risk factors that
could affect the Company's results. Except as otherwise required by
Federal securities laws, HNH undertakes no obligation to publicly
update or revise any forward-looking statements, whether as a
result of new information, future events, changed circumstances, or
any other reason.
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version on businesswire.com: http://www.businesswire.com/news/home/20170502006848/en/
PondelWilkinson Inc.Roger S. Pondel,
310-279-5965rpondel@pondel.com
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