TCP Reports 2014 Fourth Quarter and Full Year Financial Results
AURORA, Ohio, April 15, 2015 /PRNewswire/ -- TCP International Holdings Ltd. (NYSE: TCPI), a leading global manufacturer and distributor of energy efficient lighting technologies, today announced its 2014 fourth quarter and full year financial results.
Net sales for the fourth quarter of 2014 were $153.1 million, a 25% increase compared with $122.9 million in the third quarter of 2014 and a 34% increase compared with $114.5 million in the fourth quarter of 2013. Net income in the fourth quarter was $2.1 million, or $0.07 per diluted share, compared to $4.5 million, or $0.16 per diluted share, in the third quarter of 2014 and a loss of $1.6 million, or $0.08 per diluted share, in the fourth quarter of 2013. Adjusted earnings per share were $0.13 for the fourth quarter of 2014, compared to $0.16 in the third quarter of 2014
Net sales for the full year 2014 were $489.5 million, a 14% increase compared with $428.9 million in 2013. Net income for 2014 was $12.4 million, or $0.52 per diluted share, compared to $8.2 million, or $0.40 per diluted share, in 2013.
"We continued to see solid demand for TCP's lighting technology in the fourth quarter. We finished the year with strong CFL sales as The Home Depot replenished their inventory levels following our packaging changeover, and we continued to see gains within our LED product portfolio. While the higher CFL sales had an unfavorable impact on margins in the short-term, we remain focused on executing our cost reduction roadmaps to support our profitability and improve our margins moving forward," said Ellis Yan, TCP's Chairman and CEO.
Mr. Yan continued, "Strong demand for our products continued into the first two months of 2015, although March sales reflected our decision to delay shipment for some products. As previously announced, we have completed testing on substantially all of our fastest moving SKUs, and with quality and safety affirmed and shipments resumed, sales trends are returning to more normalized levels. We have been very pleased with the support we are receiving from customers and remain confident in the business and TCP's competitive position."
Fourth Quarter 2014 Summary
Following is a summary of certain key financial measures for the fourth quarter of 2014:
- Net sales were $153.1 million, an increase of $30.2 million, or 25%, from the third quarter of 2014 and an increase of $38.6 million, or 34%, from the fourth quarter of 2013.
- LED sales were $54.9 million, an increase of $1.6 million, or 3%, from the third quarter of 2014 and an increase of $20.1 million, or 58%, from the fourth quarter of 2013, driven by increased sales in the commercial and industrial, or C&I, channel and with Walmart in the retail channel.
- CFL sales were $90.5 million, an increase of $30.9 million, or 52% from the third quarter of 2014 and $17.8 million, or 24%, from the fourth quarter of 2013, primarily due to the replenishment of CFL inventories by The Home Depot.
- Gross margin was 17.7%, down from 21.7% in the third quarter of 2014 and 18.1% in the fourth quarter of 2013, due to an increase in retail CFL sales and a $4.5 million charge for the write-down of Connected by TCP™ inventory.
- Selling, general and administrative expenses were $21.1 million, an increase of $1.7 million from the third quarter of 2014 and $3.8 million from the fourth quarter of 2013, primarily due to share-based compensation expenses associated with restricted share units granted in connection with our IPO and an increase in marketing costs.
- Net income was $2.1 million, a decrease from $4.5 million in the third quarter of 2014, and an increase from a loss of $1.6 million in the fourth quarter of 2013. Diluted net income per share was $0.07, a decrease from diluted net income per share of $0.16 in the third quarter of 2014.
- Adjusted EPS was $0.13, compared to $0.16 in the third quarter of 2014.
At December 31, 2014, cash and cash equivalents were $31.4 million, down from $60.4 million at September 30, 2014, as a result of debt repayments of $34.0 million during the fourth quarter. Combined short-term loans and long-term debt was $80.2 million at December 31, 2014, down from $113.9 million at September 30, 2014.
Full Year 2014 Summary
Following is a summary of certain key financial measures for the full year of 2014:
- Net sales were $489.5 million, an increase of $60.6 million, or 14%, from $428.9 million in 2013.
- LED sales were $190.6 million, an increase of $83.5 million, or 78%, from $107.1 million in 2013 attributable to our continued focus on this product line within our C&I channel and with Walmart in the United States and Canada, as well as retail customers in Asia and EMEA.
- CFL sales were $268.9 million, a decrease of $20.4 million, or 7%, from $289.3 million in 2013. The decline was led by reduced sales to OEM customers and lower CFL sales to The Home Depot.
- Gross margin was 21.2%, roughly flat from 21.5% in 2013. The favorable shift in product mix to LED products was offset by increased provisions for excess and obsolete inventory and a stronger Chinese yuan.
- Selling, general and administrative expenses were $77.8 million, an increase of $13.5 million from $64.3 million in 2013. This increase was primarily due to payroll increases and share-based compensation expense.
- Net income was $12.4 million, an increase of $4.2 million from $8.2 million in 2013.
- Adjusted EPS was $0.57, compared to $0.70 in 2013.
Conference Call and Webcast Information
The Company will host a conference call on Thursday, April 16, 2015, at 8:00 a.m. Eastern Time. The call will be available, live, to interested parties by dialing 888-211-0193. For international callers, please dial 913-312-0951. The Conference ID number is 2111529. 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 income (loss) before interest expense, income taxes, depreciation and amortization, and Adjusted EBITDA as EBITDA before net foreign exchange (gains) losses, litigation settlements, share-based compensation expense and other nonrecurring items.
We define Adjusted EPS as net income (loss) per share, diluted, from continuing operations excluding net foreign exchange (gains) losses, 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 (gains) losses, 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
[email protected]
Mike Funari
Sapphire Investor Relations, LLC
415-471-2700
[email protected]
| TCP INTERNATIONAL HOLDINGS LTD. AND SUBSIDIARIES Consolidated Balance Sheets (Unaudited) (Amounts in thousands, except per share data) |
|||||||
| December 31, |
December 31, |
||||||
| Assets |
|||||||
| Current assets: |
|||||||
| Cash and cash equivalents |
$ |
31,354 |
$ |
21,903 |
|||
| Restricted cash |
7,367 |
3,404 |
|||||
| Accounts receivable, net |
95,089 |
59,574 |
|||||
| Inventories |
122,342 |
119,477 |
|||||
| Prepaids and other current assets |
28,393 |
14,415 |
|||||
| Deferred income taxes |
17,557 |
10,551 |
|||||
| Total current assets |
302,102 |
229,324 |
|||||
| Property, plant and equipment, net |
72,037 |
74,558 |
|||||
| Land rights, net |
4,126 |
4,244 |
|||||
| Deferred costs |
16,145 |
18,732 |
|||||
| Finance receivable from related party |
— |
1,915 |
|||||
| Intangible assets, net |
2,345 |
2,993 |
|||||
| Deferred income taxes, long-term |
7,094 |
7,758 |
|||||
| Other long-term assets |
1,737 |
1,741 |
|||||
| Total assets |
$ |
405,586 |
$ |
341,265 |
|||
| Liabilities and Shareholders' Equity |
|||||||
| Current liabilities: |
|||||||
| Short-term loans and current portion of long-term debt |
$ |
74,813 |
$ |
122,840 |
|||
| Accounts payable |
129,194 |
105,742 |
|||||
| Accrued expenses and other current liabilities |
77,826 |
62,539 |
|||||
| Total current liabilities |
281,833 |
291,121 |
|||||
| Long-term debt, net of current portion |
5,340 |
7,553 |
|||||
| Income taxes payable, long-term |
7,891 |
7,043 |
|||||
| Legal settlements, net of current portion |
24,311 |
30,941 |
|||||
| Other long-term liabilities |
508 |
427 |
|||||
| Total liabilities |
319,883 |
337,085 |
|||||
| Commitments and contingencies |
|||||||
| Shareholders' equity: |
|||||||
| Common stock |
30,101 |
22,048 |
|||||
| Additional paid-in capital |
68,063 |
901 |
|||||
| Accumulated other comprehensive income |
9,290 |
13,721 |
|||||
| Retained deficit |
(21,751) |
(32,490) |
|||||
| Total shareholders' equity |
85,703 |
4,180 |
|||||
| Total liabilities and shareholders' equity |
$ |
405,586 |
$ |
341,265 |
|||
| TCP INTERNATIONAL HOLDINGS LTD. AND SUBSIDIARIES Consolidated Statements of Comprehensive Income (Unaudited) (Amounts in thousands, except per share data) |
|||||||||||||||
| Three Months Ended December 31, |
Year Ended December 31, |
||||||||||||||
| 2014 |
2013 |
2014 |
2013 |
||||||||||||
| Net sales |
$ |
153,061 |
$ |
114,452 |
$ |
489,517 |
$ |
428,925 |
|||||||
| Cost of goods sold |
126,035 |
93,691 |
385,560 |
336,819 |
|||||||||||
| Gross profit |
27,026 |
20,761 |
103,957 |
92,106 |
|||||||||||
| Selling, general and administrative expenses |
21,065 |
17,312 |
77,780 |
64,252 |
|||||||||||
| Litigation settlements |
400 |
3,032 |
100 |
3,032 |
|||||||||||
| Operating income |
5,561 |
417 |
26,077 |
24,822 |
|||||||||||
| Other expense (income): |
|||||||||||||||
| Interest expense |
1,884 |
1,880 |
8,699 |
6,542 |
|||||||||||
| Interest income |
(58) |
(116) |
(196) |
(483) |
|||||||||||
| Foreign exchange (gains) losses, net |
847 |
1,293 |
(460) |
5,929 |
|||||||||||
| Income before income taxes |
2,888 |
(2,640) |
18,034 |
12,834 |
|||||||||||
| Income tax expense (benefit) |
819 |
(1,028) |
5,589 |
4,662 |
|||||||||||
| Net income (loss) |
$ |
2,069 |
$ |
(1,612) |
$ |
12,445 |
$ |
8,172 |
|||||||
| Other comprehensive income (loss): |
|||||||||||||||
| Foreign currency translation adjustments |
(1,183) |
(3,535) |
(4,431) |
2,155 |
|||||||||||
| Comprehensive income (loss) |
$ |
886 |
$ |
(5,147) |
$ |
8,014 |
$ |
10,327 |
|||||||
| Net income (loss) per share-basic and diluted |
$ |
0.07 |
$ |
(0.08) |
$ |
0.52 |
$ |
0.40 |
|||||||
| TCP INTERNATIONAL HOLDINGS LTD. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (Unaudited) (Amounts in thousands) |
|||||||
| Year ended December 31, |
|||||||
| 2014 |
2013 |
||||||
| Cash flows from operating activities: |
|||||||
| Net income |
$ |
12,445 |
$ |
8,172 |
|||
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: |
|||||||
| Depreciation and amortization |
8,604 |
8,142 |
|||||
| Deferred income tax benefit |
(6,394) |
(2,831) |
|||||
| Share-based compensation expense |
3,963 |
— |
|||||
| Loss on disposal of equipment |
829 |
294 |
|||||
| Changes in operating assets and liabilities: |
|||||||
| Accounts receivable |
(34,729) |
(5,147) |
|||||
| Inventories |
(3,712) |
(40,658) |
|||||
| Prepaid expenses and other assets |
(12,301) |
(2,560) |
|||||
| Accounts payable |
27,354 |
15,353 |
|||||
| Accrued and other liabilities |
12,410 |
2,923 |
|||||
| Net cash provided by (used in) operating activities |
8,469 |
(16,312) |
|||||
| Cash flows from investing activities: |
|||||||
| Purchases of property, plant and equipment |
(11,445) |
(12,997) |
|||||
| (Increase) decrease in restricted cash |
(3,965) |
1,082 |
|||||
| Repayment of related party finance receivables |
— |
538 |
|||||
| Other investing activities, net |
292 |
745 |
|||||
| Net cash used in investing activities |
(15,118) |
(10,632) |
|||||
| Cash flows from financing activities: |
|||||||
| Proceeds from initial public offering, net of offering costs |
70,206 |
— |
|||||
| Borrowings under foreign short-term bank loans |
120,747 |
153,826 |
|||||
| Repayments of foreign short-term bank loans |
(154,581) |
(110,363) |
|||||
| (Repayment) borrowings on line of credit agreement, net |
(13,704) |
4,309 |
|||||
| Borrowings of long-term debt |
588 |
— |
|||||
| Repayments of long-term debt |
(901) |
(256) |
|||||
| Payment of related party finance liability |
(124) |
(282) |
|||||
| Payment of contingent consideration |
— |
(823) |
|||||
| Payment of debt issuance costs |
(1,097) |
(170) |
|||||
| Decrease in related party payable |
— |
(36,941) |
|||||
| Net cash provided by financing activities |
21,134 |
9,300 |
|||||
| Effect of exchange rate changes on cash and cash equivalents |
(5,034) |
867 |
|||||
| Increase (decrease) in cash and cash equivalents |
9,451 |
(16,777) |
|||||
| Cash and cash equivalents at beginning of period |
21,903 |
38,680 |
|||||
| Cash and cash equivalents at end of period |
$ |
31,354 |
$ |
21,903 |
|||
| TCP INTERNATIONAL HOLDINGS LTD. AND SUBSIDIARIES Net Sales by Region and by Product Line (Unaudited) (Amounts in thousands) |
|||||||||||||||||||
| Three Months Ended |
Year Ended |
||||||||||||||||||
| December 31, |
September 30, |
December 31, |
December 31, |
December 31, |
|||||||||||||||
| United States and Canada |
$ |
135,061 |
$ |
102,369 |
$ |
92,937 |
$ |
416,764 |
$ |
353,292 |
|||||||||
| Asia |
6,258 |
7,029 |
6,848 |
29,248 |
21,845 |
||||||||||||||
| EMEA |
9,680 |
10,511 |
9,830 |
32,338 |
32,856 |
||||||||||||||
| Latin America |
2,062 |
2,966 |
4,837 |
11,167 |
20,932 |
||||||||||||||
| Total net sales |
$ |
153,061 |
122,875 |
114,452 |
$ |
489,517 |
$ |
428,925 |
|||||||||||
| Three Months Ended |
Year Ended |
||||||||||||||||
| December 31, |
September 30, |
December 31, |
December 31, |
December 31, |
|||||||||||||
| CFL |
$ |
90,456 |
59,552 |
72,663 |
$ |
268,881 |
$ |
289,315 |
|||||||||
| LED |
54,932 |
53,369 |
34,875 |
190,632 |
107,130 |
||||||||||||
| Linear and fixtures |
2,487 |
2,889 |
4,222 |
12,289 |
20,678 |
||||||||||||
| Other |
5,186 |
7,065 |
2,692 |
17,715 |
11,802 |
||||||||||||
| Total net sales |
$ |
153,061 |
122,875 |
114,452 |
$ |
489,517 |
$ |
428,925 |
|||||||||
| 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 |
Year Ended |
||||||||||||||||||
| December 31, |
September 30, |
December 31, |
December 31, |
December 31, |
|||||||||||||||
| Net income (loss) |
$ |
2,069 |
$ |
4,502 |
$ |
(1,612) |
$ |
12,445 |
$ |
8,172 |
|||||||||
| Adjustments: |
|||||||||||||||||||
| Interest expense, net |
1,826 |
2,116 |
1,764 |
8,503 |
6,059 |
||||||||||||||
| Income tax expense |
819 |
1,186 |
(1,028) |
5,589 |
4,662 |
||||||||||||||
| Depreciation and amortization |
2,099 |
2,138 |
2,114 |
8,604 |
8,142 |
||||||||||||||
| EBITDA |
6,813 |
9,942 |
1,238 |
35,141 |
27,035 |
||||||||||||||
| Adjustments: |
|||||||||||||||||||
| Foreign exchange losses (gains), net |
847 |
— |
1,293 |
(460) |
5,929 |
||||||||||||||
| Litigation settlements |
400 |
(490) |
3,032 |
100 |
3,032 |
||||||||||||||
| Share-based compensation expense |
1,962 |
1,395 |
— |
3,963 |
— |
||||||||||||||
| Refund of U.S. Customs import tariffs |
(550) |
(294) |
— |
(993) |
— |
||||||||||||||
| Adjusted EBITDA |
$ |
9,472 |
$ |
10,553 |
$ |
5,563 |
$ |
37,751 |
$ |
35,996 |
|||||||||
| Three Months Ended December 31, 2014 |
Three Months Ended September 30, 2014 |
Three Months Ended |
||||||||||||||||||
| Net Income |
Per Share (Diluted) |
Net Income |
Per Share (Diluted) |
Net Income (Loss) |
Per Share (Diluted) |
|||||||||||||||
| Net income (loss) and net income (loss) per share, diluted |
$ |
2,069 |
$ |
0.07 |
$ |
4,502 |
$ |
0.16 |
$ |
(1,612) |
$ |
(0.08) |
||||||||
| Adjustments, net of tax: |
||||||||||||||||||||
| Foreign exchange losses (gains), net |
447 |
0.01 |
(280) |
(0.01) |
786 |
0.04 |
||||||||||||||
| Litigation settlements |
254 |
0.01 |
(310) |
(0.01) |
1,986 |
0.10 |
||||||||||||||
| Share-based compensation expense |
1,275 |
0.05 |
854 |
0.03 |
— |
— |
||||||||||||||
| Refund of U.S. Customs import tariffs |
(351) |
(0.01) |
(186) |
(0.01) |
— |
— |
||||||||||||||
| Adjusted net income and Adjusted EPS |
$ |
3,694 |
$ |
0.13 |
$ |
4,580 |
$ |
0.16 |
$ |
1,160 |
$ |
0.06 |
||||||||
| Year Ended |
Year Ended |
||||||||||||
| Net |
Per Share (Diluted) |
Net |
Per Share (Diluted) |
||||||||||
| Net income and net income per share, diluted |
$ |
12,445 |
$ |
0.52 |
$ |
8,172 |
$ |
0.40 |
|||||
| Adjustments, net of tax: |
|||||||||||||
| Foreign exchange losses (gains), net |
(769) |
(0.03) |
4,110 |
0.20 |
|||||||||
| Litigation settlements |
64 |
— |
1,986 |
0.10 |
|||||||||
| Share-based compensation expense |
2,543 |
0.11 |
— |
— |
|||||||||
| Refund of U.S. Customs import tariffs |
(631) |
(0.03) |
— |
— |
|||||||||
| Adjusted net income and Adjusted EPS |
$ |
13,652 |
$ |
0.57 |
$ |
14,268 |
$ |
0.70 |
|||||
SOURCE TCP International Holdings Ltd.
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