General Cable Corporation
NYSE : BGC

General Cable Corporation

August 02, 2005 16:01 ET

General Cable Corporation Reports Second Quarter Results and Declares Dividend on Preferred Stock

HIGHLAND HEIGHTS, Ky.--(CCNMatthews - Aug 2, 2005) -

General Cable Corporation (NYSE:BGC) reported net income after preferred stock dividends for the second quarter ended July 1, 2005 of $10.3 million, which was $0.23 on a diluted per share basis. These results were up from net income of $3.7 million in the second quarter of 2004. Included in the results for the 2005 second quarter were pre-tax charges of $3.5 million associated with the previously announced closure of certain of the Company's manufacturing facilities. These costs reduced reported earnings per share by $0.04 in the second quarter.

Highlights

-- Net sales of $608.6 million were up 9.0% in comparison to metal-adjusted sales in the second quarter of 2004, the 9th consecutive quarter of positive year-over-year revenue growth.

-- Net operating margin increased 180 basis points in the second quarter of 2005 in comparison to metal-adjusted results in the second quarter of 2004, excluding plant rationalization costs.

-- Operating income for the third quarter of 2005, excluding rationalization costs, is forecasted to be up 20 to 25% in comparison to the third quarter of 2004.

In accordance with the terms of the Company's 5.75% Series A Convertible Redeemable Preferred Stock, the Board of Directors has declared a preferred stock dividend of approximately $0.72 per share for the three-month period ending August 24, 2005. The dividend is payable on August 24, 2005 to preferred stockholders of record as of July 31, 2005.

General Cable will discuss second quarter results on a conference call and webcast at 10:00 a.m. EDT tomorrow, August 3. Call information is available at www.generalcable.com.

"Despite a continued increase in the cost of copper, which rose to a record high monthly average in June of $1.62 per pound, we were able to continue to expand our operating margins and deliver operating profit about 70% higher than the same quarter last year, excluding plant rationalization charges," commented Gregory B. Kenny, President and Chief Executive Officer of General Cable. "We have now delivered year-over-year margin expansion for the last four quarters, which shows that our focus on rapid material and other cost recovery coupled with continuous improvement is working."

"Our focus on continuous improvement also resulted in three General Cable plants being recently selected as finalists for `IndustryWeek's' North American 2005 Best Plants award," added Kenny. "This recognition, which is not specific to any one industry or line of business, is a testimony to the hard work and dedication our North American Manufacturing team, under the leadership of Larry Fast, has to Lean Manufacturing and the utilization of Six-Sigma quality improvement tools."

Second Quarter Results

Net sales for the second quarter of 2005 were $608.6 million, an increase of 9% versus metal-adjusted net sales in the 2004 second quarter. The average price per pound of copper and aluminum increased $0.30 and $0.04, respectively, from the second quarter 2004 to the second quarter 2005. The 2004 net sales have been increased in this comparison to put them on a consistent metal-adjusted basis with 2005 net sales. Overall net sales for the quarter were positively affected by about 3% as a result of favorable changes in foreign currency exchange rates for the Company's international operations.

Contributing to the 9% increase in metal-adjusted net sales was a 9% increase in Energy cables, where North American sales increased due to demand for transmission cables and pricing actions implemented over the last several quarters on both transmission and distribution cables to offset raw material inflation. International energy cable sales were up due to demand for distribution cables, particularly in Spain, and favorable foreign currency exchange rates. Industrial & Specialty cables revenue was up 5% due to strong demand globally as well as favorable foreign currency exchange rates. Revenue for Communications cables increased 15%, reflecting additional revenue from the recent acquisition of certain assets within Draka Comteq's North American business as well as increased sales in all product segments, including telephone exchange cables, LAN cables, electronics and OEM assemblies. For the fourth quarter in a row, volume to traditional RBOC telecom customers fell in comparison to the same period in 2004. In response to this trend of declining demand for telephone cable, the Company announced the closure of one of its three telephone cable manufacturing plants in June 2005.

Selling, general and administrative expenses were $43.3 million in the second quarter of 2005, up from $38.1 million in the second quarter of 2004. The increase in SG&A was due in part to professional fees related to the Company's compliance activities, expenses associated with certain assets recently acquired from Draka Comteq's North American business and changes in foreign currency exchange rates. SG&A was 7.1% of net sales in the second quarter of 2005, up slightly from 6.8% on a metal-adjusted basis in the same period of 2004.

The second quarter 2005 operating income of $28.0 million was up from $17.1 million in the second quarter of 2004. The results in 2005 include $3.5 million of pre-tax charges related to the rationalization of certain manufacturing facilities. The 2004 results also included a $1.6 million pre-tax charge related to rationalization of manufacturing facilities. Operating income for the second quarter of 2005 benefited from pricing actions put in place over the last several quarters.

The Company's effective tax rate for the second quarter of 2005 was approximately 37.6%.

Third Quarter Outlook

"For the third quarter of 2005 we should deliver our tenth straight quarter of year-over-year top-line growth with sales up approximately three to five percent in comparison to metal-adjusted sales in the third quarter of 2004. Operating income (excluding plant rationalization charges which should approximate $20 million on a pre-tax basis), should increase between twenty and twenty five percent," commented Kenny. "On a diluted per share basis, excluding the plant rationalization charges, earnings should approximate $0.20 to $0.24 with copper in the $1.60 to $1.65 per pound range. Copper has recently moved up sharply from the second quarter average of $1.53 per pound reaching a historic high of about $1.70 per pound. As a result, the Company has announced price increases to its non-contractual customers and may need to issue future increases to recapture these higher costs."

General Cable (NYSE:BGC), headquartered in Highland Heights, Kentucky, is a leader in the development, design, manufacture, marketing and distribution of copper, aluminum and fiber optic wire and cable products for the energy, industrial, specialty and communications markets. Visit our website at www.GeneralCable.com.

Certain statements in this press release, including without limitation, statements regarding future financial results and performance, plans and objectives, capital expenditures and the Company's or management's beliefs, expectations or opinions, are forward-looking statements. Actual results may differ materially from those statements as a result of factors, risks and uncertainties over which the Company has no control. Such factors include economic and political consequences resulting from the September 2001 terrorist attack and the war with Iraq, domestic and local country price competition, particularly in certain segments of the power cable market and other competitive pressures; general economic conditions, particularly in construction; changes in customer or distributor purchasing patterns in our business segments; the Company's ability to increase manufacturing capacity and productivity; the financial impact of any future plant closures; the Company's ability to successfully complete and integrate acquisitions and divestitures; the Company's ability to negotiate extensions of labor agreements on acceptable terms; the Company's ability to service debt requirements and maintain adequate domestic and international credit facilities and credit lines; the Company's ability to pay dividends on its preferred stock; the impact of unexpected future judgments or settlements of claims and litigation; the Company's ability to achieve target returns on investments in its defined benefit plans; the Company's ability to avoid limitations on utilization of net losses for income tax purposes; the cost of raw materials, including copper and aluminum; the Company's ability to increase its selling prices during periods of increasing raw material costs; the impact of foreign currency fluctuations; the impact of technological changes; and other factors which are discussed in the Company's Report on Form 10-K filed with the Securities and Exchange Commission on March 30, 2005, as well as periodic reports filed with the Commission.



TABLES TO FOLLOW


General Cable Corporation and Subsidiaries
Consolidated Statements of Operations
(in millions, except per share data)
(unaudited)

-------------------- ------------------
Three Fiscal Six Fiscal
Months Ended Months Ended
-------------------- -------------------
July 1, June 30, July 1, June 30,
2005 2004 2005 2004
-------- --------- -------- --------
Net sales $ 608.6 $ 517.5 $1,162.8 $ 996.1
Cost of sales 537.3 462.3 1,024.1 895.5
-------- --------- -------- --------
Gross profit 71.3 55.2 138.7 100.6

Selling, general and
administrative expenses 43.3 38.1 86.5 76.8
-------- --------- -------- --------
Operating income 28.0 17.1 52.2 23.8
Other expense - (0.4) (0.1) (0.9)
Net interest expense (9.1) (9.0) (19.0) (18.3)
-------- --------- -------- --------

Income before income taxes 18.9 7.7 33.1 4.6
Income tax provision (7.1) (2.5) (12.3) (1.3)
-------- --------- -------- --------
Net income 11.8 5.2 20.8 3.3
Less: preferred stock
dividends (1.5) (1.5) (3.0) (3.0)
-------- --------- -------- --------
Net income applicable to
common shareholders $ 10.3 $ 3.7 $ 17.8 $ 0.3
======== ========= ======== ========
Earnings per share
-----------------------------
Earnings per common share $ 0.26 $ 0.09 $ 0.45 $ 0.01
======== ========= ======== ========
Weighted average common
shares 39.4 39.3 39.3 39.2
======== ========= ======== ========
Earnings per common share-
assuming dilution $ 0.23 $ 0.09 $ 0.41 $ 0.01
======== ========= ======== ========
Weighted average common
shares-
assuming dilution 50.9 39.9 50.8 39.9
======== ========= ======== ========


General Cable Corporation and Subsidiaries
Consolidated Statements of Operations
Segment Information
(in millions)
(unaudited)

------------------- -------------------
Three Fiscal Six Fiscal
Months Ended Months Ended
------------------- -------------------
July 1, June 30, July 1, June 30,
2005 2004 2005 2004
-------- -------- -------- --------
Revenues (as reported)
-----------------------------
Energy Segment $ 212.4 $ 184.6 $ 408.9 $ 351.1
Industrial & Specialty
Segment 220.3 191.4 437.9 387.1
Communications Segment 175.9 141.5 316.0 257.9
-------- -------- -------- --------
Total $ 608.6 $ 517.5 $1,162.8 $ 996.1
======== ======== ======== ========

Revenues (metal adjusted)
-----------------------------
Energy Segment $ 212.4 $ 194.7 $ 408.9 $ 373.5
Industrial & Specialty
Segment 220.3 210.3 437.9 422.6
Communications Segment 175.9 153.5 316.0 278.1
-------- -------- -------- --------
Total $ 608.6 $ 558.5 $1,162.8 $1,074.2
======== ======== ======== ========

Metal Pounds Sold
-----------------------------
Energy Segment 75.2 74.7 145.8 146.3
Industrial & Specialty
Segment 60.3 58.0 118.0 124.5
Communications Segment 38.4 37.3 70.6 70.6
-------- -------- -------- --------
Total 173.9 170.0 334.4 341.4
======== ======== ======== ========

Operating Profit (Loss)
-----------------------------
Energy Segment $ 15.4 $ 9.9 $ 27.7 $ 17.4
Industrial & Specialty
Segment 7.8 6.7 15.5 9.5
Communications Segment 8.3 2.1 12.5 1.2
-------- -------- -------- --------
Subtotal 31.5 18.7 55.7 28.1
Corporate (3.5) (1.6) (3.5) (4.3)
-------- -------- -------- --------
Total $ 28.0 $ 17.1 $ 52.2 $ 23.8
======== ======== ======== ========

Return on Metal Adjusted
Sales
-----------------------------
Energy Segment 7.3% 5.1% 6.8% 4.7%
Industrial & Specialty
Segment 3.5% 3.2% 3.5% 2.2%
Communications Segment 4.7% 1.4% 4.0% 0.4%
Total Company 4.6% 3.1% 4.5% 2.2%

Capital Expenditures
-----------------------------
Energy Segment $ 3.7 $ 4.5 $ 6.9 $ 7.2
Industrial & Specialty
Segment 3.4 3.9 6.0 6.5
Communications Segment 1.4 1.6 2.8 3.1
-------- -------- -------- --------
Total $ 8.5 $ 10.0 $ 15.7 $ 16.8
======== ======== ======== ========

Depreciation & Amortization
-----------------------------
Energy Segment $ 2.7 $ 1.4 $ 4.6 $ 3.8
Industrial & Specialty
Segment 3.0 2.5 5.8 5.1
Communications Segment 4.6 4.0 8.9 8.7
-------- -------- -------- --------
Subtotal 10.3 7.9 19.3 17.6
Corporate (1) 2.9 0.9 2.9 2.3
-------- -------- -------- --------
Total $ 13.2 $ 8.8 $ 22.2 $ 19.9
======== ======== ======== ========

(1) Relates to the rationalization of certain plant locations.



GENERAL CABLE CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(in millions, except share data)

July 1, December 31,
ASSETS 2005 2004
------ ----------- ------------
Current Assets: (unaudited)
Cash $ 35.6 $ 36.4
Receivables, net of allowances of $16.4
million at July 1, 2005 and $16.0 million
at December 31, 2004 423.3 350.9
Inventories 333.1 315.5
Deferred income taxes 22.9 23.0
Prepaid expenses and other 29.8 38.8
--------- ---------
Total current assets 844.7 764.6
Property, plant and equipment, net 340.7 356.0
Deferred income taxes 63.5 65.7
Other non-current assets 33.3 34.5
--------- ---------
Total assets $ 1,282.2 $ 1,220.8
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current Liabilities:
Accounts payable $ 381.5 $ 357.4
Accrued liabilities 120.3 108.1
Current portion of long-term debt 3.6 1.1
--------- ---------
Total current liabilities 505.4 466.6
Long-term debt 400.4 373.8
Deferred income taxes 13.4 15.3
Other liabilities 64.3 63.7
--------- ---------
Total liabilities 983.5 919.4
--------- ---------
Shareholders' Equity:
Redeemable convertible preferred stock,
2,070,000 shares at redemption value
(liquidation preference of $50.00 per
share) 103.5 103.5
Common stock, $0.01 par value,
issued and outstanding shares:
July 1, 2005 - 39,626,340 (net of
4,968,755 treasury shares)
December 31, 2004 - 39,335,754 (net of
4,885,823 treasury shares) 0.4 0.4
Additional paid-in capital 147.2 144.1
Treasury stock (52.2) (51.0)
Retained earnings 104.7 86.4
Accumulated other comprehensive income 1.0 22.4
Other shareholders' equity (5.9) (4.4)
--------- ---------
Total shareholders' equity 298.7 301.4
--------- ---------
Total liabilities and shareholders'
equity $ 1,282.2 $ 1,220.8
========= =========



Contact Information

  • General Cable Corporation
    Paul M. Montgomery, 859-572-8684