TCP INTERNATIONAL HOLDINGS LTD AURORA, Ohio, May 4, 2015 /PRNewswire/ -- TCP International Holdings Ltd. (NYSE: TCPI), a leading global manufacturer and distributor of energy efficient lighting technologies, today announced financial results for its first quarter ended March 31, 2015.
Net sales for the first quarter of 2015 were $98.8 million, a 35% decrease compared with $153.1 million in the fourth quarter of 2014 and a 2% decrease compared with $101.1 million in the first quarter of 2014. Net loss in the first quarter of 2015 was $1.2 million, or $0.04 per diluted share, compared to net income of $2.1 million, or $0.07 per diluted share, in the fourth quarter of 2014 and net income of $3.9 million, or $0.19 per diluted share, in the first quarter of 2014. Adjusted earnings per share were $0.00 for the first quarter of 2015, compared to $0.13 in the fourth quarter of 2014.
"While revenues were tempered by our decision to perform a safety review of all products shipped in March, we were pleased that our cost reduction roadmap resulted in strong margins for the quarter, demonstrating TCP's position as a market leader in energy-efficient lighting," said Ellis Yan, TCP's Chairman and CEO.
First Quarter 2015 Summary
Following is a summary of certain key financial measures for the first quarter of 2015:
-- Net sales were $98.8 million, a decrease of $54.3 million, or 35%, from
the fourth quarter of 2014 and a decrease of $2.3 million, or 2%, from
the first quarter of 2014.
-- LED sales were $40.6 million, a decrease of $14.3 million, or 26%,
from the fourth quarter of 2014, largely due to reduced sales from
seasonal buying practices among all sales channels, as well as lower
volume in 2015 attributable to voluntary shipping delays associated
with our product validation review. Our LED sales increased $4.3
million, or 12%, compared with the first quarter of 2014, driven by
higher sales with Walmart and higher sales in our C&I channel.
-- CFL sales were $52.6 million, a decrease of $37.9 million, or 42%
from the fourth quarter of 2014, primarily due to significantly
lower sales with The Home Depot, and a decrease of $6.9 million, or
12%, from the first quarter of 2014, mainly due to lower sales in
our C&I channel and with Walmart.
-- Gross margin was 24.5%, an increase from 17.7% in the fourth quarter of
2014, and level with the first quarter of 2014. The increase from the
fourth quarter of 2014 mainly is due to favorable product and channel
mix from a higher proportion of LED and C&I sales, as well as the
non-recurrence of a write-down of Connected by TCP(TM) inventory, which
adversely impacted gross margin in fourth quarter of 2014.
-- Selling, general and administrative expenses were $21.0 million, flat
with the fourth quarter of 2014, but an increase of $4.0 million from
the first quarter of 2014. The increase from the first quarter of 2014
is primarily due to share-based compensation expense associated with
restricted share units granted in connection with our IPO and an
increase in professional fees largely related to our previously
disclosed litigation.
-- Our effective income tax rate of 229.2% primarily was due to a $1.3
million shortfall charged to income tax expense from the issuance of
common shares underlying RSUs with a fair value at issuance that was
less than the fair value at grant date.
-- Net loss was $1.2 million, compared with net income of $2.1 million in
the fourth quarter of 2014 and net income of $3.9 million in the first
quarter of 2014. Diluted net loss per share was $0.04, compared with
diluted net income per share of $0.07 in the fourth quarter of 2014 and
diluted net income per share of $0.19 in the first quarter of 2014.
At March 31, 2015, cash and cash equivalents were $58.0 million, up from $31.4 million at December 31, 2014, primarily resulting from the collections of account receivables from record 2014 fourth quarter sales. Combined short-term loans and long-term debt was $90.3 million at March 31, 2015, up from $80.0 million at December 31, 2014 largely due to additional borrowings used to finance our anticipated working capital needs.
Conference Call and Webcast Information
The Company will host a conference call today, May 4, 2015, at 4:30 p.m. Eastern Time. Chief Executive Officer Ellis Yan and Chief Financial Officer Brian Catlett will present an overview of the first quarter 2015 financial results, discuss current business conditions, and respond to questions. The call will be available, live, to interested parties by dialing (888) 220-8746. For international callers, please dial (913) 312-0653. The Conference ID number is 8265677. A live webcast will also be available in the Investors Relations section of the TCP website at: http://investors.tcpi.com. A replay of the webcast will be available through the Investor Relations section of the Company's web site approximately two hours after the conclusion of the call and remain available for approximately 30 calendar days.
Non-GAAP Adjusted EBITDA and Adjusted EPS
We present the non-GAAP financial measures "Adjusted EBITDA" and "Adjusted EPS" as supplemental measures of our performance. These non-GAAP financial measures are not measures of financial performance or liquidity calculated in accordance with accounting principles generally accepted in the United States, referred to herein as U.S. GAAP, and should be viewed as a supplement to, not a substitute for, our results of operations and balance sheet information presented on the basis of U.S. GAAP.
We define EBITDA as net (loss) income before interest expense, income taxes, depreciation and amortization, and Adjusted EBITDA as EBITDA before net foreign exchange losses (gains), litigation settlements, share-based compensation expense and other nonrecurring items.
We define Adjusted EPS as net (loss) income per share, diluted, from continuing operations excluding net foreign exchange losses (gains), litigation settlements, share-based compensation expense and other nonrecurring items.
Adjusted EBITDA and Adjusted EPS are not necessarily comparable to similarly titled measures reported by other companies. Adjusted EBITDA may exclude certain financial information that some may consider important in evaluating our financial performance. Adjusted EBITDA and Adjusted EPS may not be indicative of historical operating results, and we do not intend for either of them to be predictive of future results of operations. We believe that our use of Adjusted EBITDA and Adjusted EPS as metrics assists our board, management and investors in comparing our operating performance on a consistent basis. Factors in this determination include removing the impact of our capital structure (specifically interest expense, net), asset base (specifically depreciation and amortization) and tax structure, as well as certain items that affect inter-period comparability, such as variability due to unrealized foreign exchange losses (gains), litigation settlements, non-cash share-based compensation expense and other nonrecurring items, which affect results in a given period or periods.
About TCP
TCP is a leading global manufacturer and distributor of energy efficient lighting technologies. TCP's extensive product offerings include LED and CFL lamps and fixtures, internet-based lighting control solutions and other energy efficient lighting products. TCP has the largest combined number of LED and CFL ENERGY STAR® compliant lighting products. TCP's products are currently offered through thousands of retail and C&I distributors. Since TCP's inception, it has sold more than one billion energy efficient lighting products. For more information, visit http://www.tcpi.com.
Forward Looking Statements
Certain statements in this release may constitute "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 based on management's current opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results. Forward looking statements in this press release include, but are not limited to, the Company's expectation regarding its future profitability. These forward-looking statements are only predictions, not historical fact, and involve certain risks and uncertainties, as well as assumptions. Actual results, levels of activity, performance, achievements and events could differ materially from those stated, anticipated or implied by such forward-looking statements. While TCP believes that its assumptions are reasonable, it is very difficult to predict the impact of known factors, and, of course, it is impossible to anticipate all factors that could affect actual results. There are a number of risks and uncertainties that could cause actual results to differ materially from forward-looking statements made herein. Such forward-looking statements are made only as of the date of this release. TCP expressly disclaims any obligation or undertaking to release any updates or revisions to any forward-looking statements contained herein to reflect any change in its expectations with regard thereto or changes in events, conditions or circumstances on which any statement is based.
Contact
Brian Catlett
Chief Financial Officer
330-954-7689
ir@tcpi.com
Mike Funari
Sapphire Investor Relations, LLC
415-471-2700
ir@tcpi.com
TCP INTERNATIONAL HOLDINGS LTD. AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
(Amounts in thousands, except per share data)
March 31, December 31,
2015 2014
---- ----
Assets
Current assets:
Cash and cash equivalents $57,967 $31,354
Restricted cash 6,885 7,367
Accounts receivable, net 62,154 95,089
Inventories 126,801 122,342
Prepaids and other current assets 15,663 28,217
Deferred income taxes 14,152 17,557
------ ------
Total current assets 283,622 301,926
Property, plant and equipment, net 70,925 72,037
Land rights, net 4,085 4,126
Deferred costs 16,360 16,145
Intangible assets, net 2,127 2,345
Deferred income taxes, long-term 7,360 7,094
Other long-term assets 1,629 1,737
----- -----
Total assets $386,108 $405,410
======== ========
Liabilities and Shareholders' Equity
Current liabilities:
Short-term loans and current portion
of long-term debt $85,003 $74,637
Accounts payable 117,763 129,194
Accrued expenses and other current
liabilities 58,285 77,826
------ ------
Total current liabilities 261,051 281,657
Long-term debt, net of current
portion 5,288 5,340
Income taxes payable, long-term 8,076 7,891
Legal settlements, net of current
portion 24,404 24,311
Other long-term liabilities 501 508
--- ---
Total liabilities 299,320 319,707
------- -------
Commitments and contingencies
Shareholders' equity:
Common stock 30,587 30,101
Additional paid-in capital 69,333 68,063
Treasury shares (418) -
Accumulated other comprehensive
income 10,272 9,290
Retained deficit (22,986) (21,751)
------- -------
Total shareholders' equity 86,788 85,703
------ ------
Total liabilities and shareholders'
equity $386,108 $405,410
======== ========
TCP INTERNATIONAL HOLDINGS LTD. AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income
(Unaudited)
(Amounts in thousands, except per share data)
Three Months Ended March 31,
----------------------------
2015 2014
---- ----
Net sales $98,775 $101,117
Cost of goods sold 74,617 76,330
------ ------
Gross profit 24,158 24,787
Selling, general and administrative
expenses 21,000 16,963
Litigation settlements 90 100
--- ---
Operating income 3,068 7,724
Other expense (income):
Interest expense 1,651 2,307
Interest income (89) (27)
Foreign exchange losses (gains), net 550 (674)
--- ----
Income before income taxes 956 6,118
Income tax expense 2,191 2,197
----- -----
Net (loss) income $(1,235) $3,921
======= ======
Other comprehensive (loss) income:
Foreign currency translation adjustments 982 (656)
--- ----
Comprehensive (loss) income $(253) $3,265
===== ======
Net (loss) income per share-basic and
diluted $(0.04) $0.19
======
Diluted average shares outstanding 27,837 20,553
====== ======
TCP INTERNATIONAL HOLDINGS LTD. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(Amounts in thousands)
Three Months Ended March 31,
----------------------------
2015 2014
---- ----
Cash flows from operating activities:
Net (loss) income $(1,235) $3,921
Adjustments to reconcile net (loss) income to net
cash provided by (used in) operating activities:
Depreciation and amortization 2,131 2,190
Deferred income tax expense 2,969 790
Share-based compensation expense 1,756 -
Loss on disposal of equipment 15 18
Changes in operating assets and liabilities:
Accounts receivable 33,758 432
Inventories (5,082) 3,002
Prepaid expenses and other
assets 12,910 2,132
Accounts payable (8,272) (11,860)
Accrued and other liabilities (19,059) (10,117)
------- -------
Net cash provided by (used in)
operating activities 19,891 (9,492)
------ ------
Cash flows from investing activities:
Purchases of property, plant and
equipment (3,824) (4,084)
Decrease (increase) in
restricted cash 455 (2,062)
Repayment of related party
finance receivables - 84
Other investing activities, net - 2
--- ---
Net cash used in investing
activities (3,369) (6,060)
------ ------
Cash flows from financing activities:
Borrowings under foreign short-
term bank loans 52,877 43,627
Repayments of foreign short-
term bank loans (28,884) (32,994)
(Repayment) borrowings on line
of credit agreement, net (13,432) 6,372
Repayments of long-term debt (51) (67)
Payment of related party finance
liability - (74)
Payment of debt issuance costs (245) -
---- ---
Net cash provided by financing
activities 10,265 16,864
Effect of exchange rate changes
on cash and cash equivalents (174) (194)
---- ----
Increase in cash and cash
equivalents 26,613 1,118
Cash and cash equivalents at
beginning of period 31,354 21,903
------ ------
Cash and cash equivalents at end
of period $57,967 $23,021
======= =======
TCP INTERNATIONAL HOLDINGS LTD. AND SUBSIDIARIES
Net Sales by Region and by Product Line
(Unaudited)
(Amounts in thousands)
Three Months Ended
------------------
March 31, December 31, March 31,
2015 2014 2014
---- ---- ----
United States
and Canada $84,864 $135,061 $85,271
Asia 4,684 6,258 6,659
EMEA 6,024 9,680 5,859
Latin America 3,203 2,062 3,328
----- ----- -----
Total net sales $98,775 $153,061 $101,117
======= ======== ========
Three Months Ended
------------------
March 31, December 31, March 31,
2015 2014 2014
---- ---- ----
CFL $52,555 $90,456 $59,405
LED 40,611 54,932 36,322
Linear and
fixtures 2,089 2,487 3,687
Other 3,520 5,186 1,703
----- ----- -----
Total net sales $98,775 $153,061 $101,117
======= ======== ========
TCP INTERNATIONAL HOLDINGS LTD. AND SUBSIDIARIES
Reconciliation of EBITDA and Adjusted EBITDA to Net Income
and Adjusted EPS to Diluted EPS
(Unaudited)
(Amounts in thousands)
Three Months Ended
------------------
March 31, December 31, March 31,
2015 2014 2014
---- ---- ----
Net (loss) income $(1,235) $2,069 $3,921
Adjustments:
Interest expense, net 1,562 1,826 2,280
Income tax expense 2,191 819 2,197
Depreciation and amortization 2,131 2,099 2,190
----- ----- -----
EBITDA 4,649 6,813 10,588
Adjustments:
Foreign exchange losses (gains), net 550 847 (674)
Litigation settlements 90 400 100
Share-based compensation expense 1,756 1,962 -
Refund of U.S. Customs import tariffs (1,042) (550) -
------ ---- ---
Adjusted EBITDA $6,003 $9,472 $10,014
====== ====== =======
Three Months Ended Three Months Ended Three Months Ended
March 31, 2015 December 31, 2014 March 31, 2014
-------------- ----------------- --------------
Net Per Net Per Net Per
Loss Share Income Share Income Share
(Diluted) (Diluted) (Diluted)
-------- -------- --------
Net (loss) income and net (loss) income per share, diluted $(1,235) $(0.04) $2,069 $0.07 $3,921 $0.19
Adjustments, net of tax:
Foreign exchange losses (gains), net 595 0.02 447 0.01 (522) (0.03)
Litigation settlements 57 - 254 0.01 63 -
Share-based compensation expense 1,187 0.04 1,275 0.05 - -
Refund of U.S. Customs import tariffs (662) (0.02) (351) (0.01) - -
---- ----- ---- ----- --- ---
Adjusted net (loss) income and Adjusted EPS $(58) $ - $3,694 $0.13 $3,462 $0.16
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SOURCE TCP International Holdings Ltd.
