FORT LEE, N.J., Aug. 14, 2014 /PRNewswire/ -- Empire Resources, Inc. (NASDAQ: ERS), a distributor of value added, semi-finished metal products, announced today that net sales for the second quarter of 2014 were $146.5 million, representing an increase of 33% from the second quarter of 2013, and 6% higher sequentially.  The improvement compared with the second quarter of 2013 reflected increased sales across all geographic regions, led by a four-fold increase in sales to Latin America and a tripling of sales in Europe.  Strong sales growth in North America drove the increase in sales as compared to the first quarter of 2014.

Gross profit for the second quarter of 2014 also increased 33% from the second quarter of 2013 to $7.0 million, or 4.8% of sales, compared with $5.3 million, or 4.8% of sales, in the second quarter of 2013. In the first quarter of 2014, gross profit was $6.5 million, or 4.7% of sales. 

Operating income for the second quarter of 2014 was $3.5 million, which is double the operating income of $1.8 million reported in the second quarter of 2013 and up 11% from  operating income of $3.2 million in the first quarter of 2014.    

Net interest expense for the second quarter of 2014 was $1.1 million, which is level with both the second quarter of 2013 and the first quarter of 2014. 

The Company recognized a non-cash non-operating gain of $0.2 million in the second quarter of 2014 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 loss of $0.04 million in the second quarter of 2013, and a non-cash non-operating loss of $0.4 million in the first quarter of 2014.  

For the second quarter of 2014, net income was $1.6 million, or $0.15 per diluted share, compared with net income of $0.4 million, or $0.04 per diluted share, in the second quarter of 2013, and net income of $1.0 million, or $0.12 per diluted share, in the first quarter of 2014.   

Non-GAAP net income for the second quarter of 2014, which excludes changes in the value of the derivative liability, net of tax, increased 279% to $1.5 million, or $0.17 per diluted share, compared with non-GAAP net income of $0.4 million, or $0.04 per diluted share, in the second quarter of 2013.  Non-GAAP net income was $1.3 million, or $0.15 per diluted share, in the first quarter of 2014. 

For the first six months of 2014, net sales were $284.8 million and net income was $2.7 million, or $0.28 per diluted share, on a GAAP basis, and $2.8 million, or $0.31 per diluted share, on a non-GAAP basis.  For the first six months of 2013, net sales were $243.9 million and net income was $0.5 million, or $0.05 per diluted share, on a GAAP basis, and $1.8 million, or $0.20 per diluted share, on a non-GAAP basis.    

The Company uses the non-GAAP measures, which exclude the effect of the non-cash non-operating gains and losses due the quarterly change in derivatives valuation, internally to evaluate its operating performance and believes that this is a useful measure also used by investors.

Nathan Kahn, President and CEO, commented, "The recovery that began in our first quarter this year continued in the second quarter, yielding our highest level of sales since the second quarter of 2012 and our highest operating income since the third quarter of 2010.  In combination, the benefits of our product and geographic diversification, our investment in our sales team, the continued sharp focus of our team on executing our strategy, and improved market conditions in the U.S. enabled us to achieve this additional progress."

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, Latin America, 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.

SOURCE Empire Resources, Inc.