HIGHLAND HEIGHTS, Ky.--(BUSINESS WIRE)--Oct. 31, 2007--General
Cable Corporation (NYSE:BGC) reported today revenues and earnings for
the third quarter. Revenues were $1,135.3 million compared to $948.4
million in the prior year, an increase of 19.7%. Net income applicable
to common shareholders for the third quarter of 2007 was $61.1 million
compared to $37.0 million in the third quarter of 2006. Earnings per
share for the third quarter of 2007 were $1.11, an increase of 56%
from third quarter of 2006.
Third Quarter Highlights
- Improved operating income by 40% from prior year
- Increased year-over-year operating margins by 110 basis
points, on a metal-adjusted basis
- Generated approximately $106 million of cash flow from
operations in the third quarter
Additional Highlights
- Completed the acquisition of Phelps Dodge International
Corporation (PDIC) on October 31, 2007
- Announced realigned global operating management structure;
focusing business leaders geographically, effective November
1, 2007
- Completed offering of $475 million of 1% senior convertible
notes due 2012, on October 2, 2007
Third Quarter Results
Net sales for the third quarter of 2007 were $1,135.3 million, an
increase of $194.0 million or 20.6% compared to the third quarter of
2006 on a metal-adjusted basis. Without the impact of acquisitions,
revenue growth was approximately 12.1% in the third quarter of 2007
compared to 2006. This growth was principally due to the continuing
strength of the Company's global electrical infrastructure and
electric utility businesses, as well as favorable foreign exchange
translation, which together more than offset the impact of declining
telecommunications and residential construction demand. Revenues from
acquired businesses contributed $80.3 million in the third quarter.
The average price per pound of copper in the third quarter was
$3.48, an increase of $0.02 from the second quarter of 2007, and a
decrease of $0.06 or 1.7% from the third quarter of 2006. The average
price per pound of aluminum in the third quarter was $1.19, a decrease
of $0.09, or 7% from the second quarter of 2007, and equal to the
third quarter of 2006.
Third quarter 2007 operating income was $92.3 million compared to
operating income of $65.8 million in the third quarter of 2006, an
increase of $26.5 million or 40.3%. Operating margin was 8.1% in the
third quarter of 2007, an increase of approximately 110 basis points
from the operating margin percentage of 7.0% in the third quarter of
2006 on a metal-adjusted basis. This improvement was principally due
to better price realization in many of the Company's product lines,
operating improvements in acquired businesses, cost improvements from
LEAN initiatives, and approximately $2.4 million in LIFO gains from
the liquidation of lower cost inventory, all of which more than offset
the impact of lower capacity utilization rates for certain
construction and telecommunications product lines.
Included in the earnings results for the third quarter of 2007 was
approximately $0.08 per share of tax benefits resulting from prior
year tax provision true-ups. In addition, the 2007 estimated full year
effective tax rate has been reduced to 36% as a result of the
increasing relative mix of income generated in lower tax rate
countries and the impact of effective tax planning strategies.
Market Update
In North America, revenues increased 9.7% in the third quarter
compared to 2006 on a metal-adjusted basis. This top line improvement
is net of nearly a 20% drop in metal-adjusted revenues for
telecommunications products sold primarily to telephone operating
companies. Without the impact of telecommunications products, North
American metal-adjusted revenue grew at 16.1% in the third quarter of
2007 compared to 2006. Operating margin has increased by 190 basis
points to 8.7%. With the exception of telecommunications products, all
North American businesses reported increased revenues and earnings
during the third quarter of 2007 compared to the prior year. The
Company has continued to benefit from its exposure to a wide range of
strong end markets including electric utility, electrical
infrastructure, networking, and electronics that are more than
offsetting continued telecommunications product declines and the
impact of a weak housing market on certain utility cable product
families. The Company is examining its telecommunications footprint in
the context of various demand scenarios.
European electric utility and electrical infrastructure markets
broadly continue to remain robust with the exception of Spanish
construction. Operating earnings in the Company's European business
grew by 35% to $36.8 million in the third quarter of 2007 compared to
the prior year. Operating margin was 7.5% in the third quarter, equal
to the same period in 2006 on a metal adjusted basis. Revenues were up
35% in the quarter on a metal-adjusted basis. Before the impact of
acquired businesses and favorable changes in exchange rates, organic
growth was 7.5%, despite approximately a 20% decline in demand for
cables used in Spanish residential construction since the end of 2006.
The Company has initiated growth strategies in other European markets
for these low voltage products including the European do-it-yourself
markets. "The Company's European operations are showing strong
results, particularly from businesses recently acquired. NSW is
actively developing products for submarine power and long-haul fiber
optic communications markets and Silec's high voltage solid dielectric
underground cable systems continue to gain momentum globally. Both
businesses are booking projects into the 2009 timeframe. At ECN, we
are nearing completion of an important technology transfer which will
allow ECN to manufacture the Company's trapezoidal design hardened
steel core overhead transmission cable. This cable effectively
provides about 75% more capacity compared to a similar sized cable of
a traditional design, perfect for the congested rights of way in
Europe," Kenny said.
Completion of Acquisition of Phelps Dodge International
Corporation
Today, the Company completed the acquisition of PDIC from
Freeport-McMoRan Copper & Gold Inc. "This is a transformative
transaction for General Cable and one that accelerates our
globalization plans by many years. The developing economies that are
served by PDIC are continuing to grow much faster than the developed
world. During the planning process for the integration of this
acquisition, the management teams of both General Cable and PDIC have
been encouraged by the level of common business philosophies and the
opportunities this transaction presents for more efficient utilization
of our combined manufacturing capacity, the ability to enter new
markets, and improvements in raw material and equipment costs," Kenny
said.
In connection with the acquisition of PDIC, the Company recently
completed an offering of $475 million of 1% Senior Convertible Notes
due 2012. Proceeds from this offering were used to partially fund the
acquisition of PDIC. Additionally, as part of the funding of the
acquisition of PDIC, the Company increased the borrowing capacity of
its United States revolving asset backed loan (ABL) from $300 million
to $400 million, effective October 31, 2007. This increase will
provide additional liquidity to fund future acquisitions and internal
growth opportunities.
Management Announcements
The Company has announced several management changes effective
November 1, 2007, which will align the Company's management structure
along geographic lines. The Company welcomes Mathias Sandoval to
General Cable as Executive Vice President and Chief Executive Officer
of our combined operations in Latin America, Sub-Saharan Africa and
the Middle East/Asia Pacific. This includes the historical General
Cable Asia Pacific and Central and South American businesses of the
Company, as well as Mexico. Domingo Goenaga has been promoted to
Executive Vice President and Chief Executive Officer of General Cable
Europe and North Africa and will continue in his current capacity.
Gregory Lampert has been promoted to Executive Vice President and
Group President of the North American Electrical and Communications
Infrastructure Group. This business includes products supporting data,
telephone, industrial power, assemblies and electronic applications.
J. Michael Andrews has been promoted to Executive Vice President and
Group President of the North American Energy Infrastructure and
Technology Group. This business includes products supporting energy
exploration, production, transmission, and distribution applications.
Roddy Macdonald has been promoted to Executive Vice President of
Global Sales and Business Development. In addition to leading our
North American Sales organization, Mr. Macdonald will work with our
business and sales leaders around the globe to align our commercial
strategies and ensure that we will present one face to global
customers across all regions and businesses. Each of these individuals
will report directly to Gregory B. Kenny.
"Over the last decade, the General Cable management team has
successfully grown the Company from a U.S. centric business focused on
communications and construction cables, to a truly international
Company with approximately two-thirds of its projected revenues
generated outside of the United States and a product range and
geographic diversity second to none," Kenny said. "I expect these
leaders to be relentless in their drive for continuous improvement;
have the vision to identify new markets and business opportunities
before they become popular; and have the strength and wisdom to
profitably navigate the Company into the future through all market
conditions. I believe we have one of the most thoughtful and energetic
management teams in the business that we can continue to leverage as
we expand globally."
Preferred Stock Dividend
In accordance with the terms of the Company's 5.75% Series A
Convertible Redeemable Preferred Stock, the Board of Directors has
declared a regular quarterly preferred stock dividend of approximately
$0.72 per share. The dividend is payable on November 24, 2007 to
preferred stockholders of record as of the close of business on
October 31, 2007. The Company expects the quarterly dividend payment
to approximate $0.1 million
Fourth Quarter 2007 Outlook
The Company continues to benefit from strong global demand for
many of our products. The North American Electric Reliability
Corporation (NERC) recently suggested that many regions in North
America will fall below their target electricity capacity margins
within the next two or three years. Additionally, NERC suggested that
planned transmission projects are significantly higher than projected
a year ago. The Company believes this assessment supports our view of
a continuation of a long-term upgrade cycle for the aging transmission
grid. However, demand for low voltage utility products in North
America will likely continue to be weak as a result of continued new
home construction weakness with particular impact on low voltage
distribution products. As a result, we expect growth in the overall
utility segment to moderate. The Company will be lowering production
levels of certain utility products in North America in the fourth
quarter in an effort to better align its production and inventory mix
with end market demand, which will have the benefit of increasing
operating cash flows. While this will result in some short-term
inefficiency in certain manufacturing facilities, overall the Company
is expected to grow operating earnings by 20% or more in the fourth
quarter compared to the prior year before the benefit of PDIC.
Revenues for the fourth quarter without PDIC are expected to be
approximately $1.05 billion, an increase of 12% from the fourth
quarter of 2006 on a metal adjusted basis. In addition, PDIC will
contribute approximately $220 million of revenues for the balance of
the fourth quarter. For the fourth quarter, the Company expects to
report earnings per share of approximately $0.80 to $0.85, including
estimated contributions from the PDIC operations, the related
financing impact, and purchase accounting related expenses. "Looking
forward, we are increasing our accretion guidance for 2008 related to
the acquisition of PDIC from a range of $0.20 to $0.30 to a range of
$0.40 to $0.50 due to the continuing strength of PDIC's end markets,"
Kenny concluded.
General Cable will discuss third quarter results on a conference
call and webcast at 8:30 a.m. ET tomorrow, November 1, 2007. For more
information please see our website at www.generalcable.com.
General Cable (NYSE:BGC) is a global leader in the development,
design, manufacture, marketing and distribution of copper, aluminum
and fiber optic wire and cable products for the energy, industrial,
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 the economic
strength and competitive nature of the geographic markets that the
Company serves; economic, political and other risks of maintaining
facilities and selling products in foreign countries; changes in
industry standards and regulatory requirements; advancing
technologies, such as fiber optic and wireless technologies;
volatility in the price of copper and other raw materials, as well as
fuel and energy and the Company's ability to reflect such volatility
in its selling prices; interruption of supplies from the Company's key
suppliers; the failure to negotiate extensions of the Company's labor
agreements on acceptable terms; the Company's ability to increase
manufacturing capacity and achieve productivity improvements; the
Company's dependence upon distributors and retailers for non-exclusive
sales of certain of the Company's products; pricing pressures in the
Company's end markets; the Company's ability to maintain the
uncommitted accounts payable or accounts receivable financing
arrangements in its European operations; the impact of any additional
charges in connection with plant closures and the Company's inventory
accounting practices; the impact of certain asbestos litigation,
unexpected judgments or settlements and environmental liabilities; the
ability to successfully identify, finance and integrate acquisitions;
the impact of terrorist attacks or acts of war which may affect the
markets in which the Company operates; the Company's ability to retain
key employees; the Company's ability to service debt requirements and
maintain adequate domestic and international credit facilities and
credit lines; the impact on the Company's operating results of its
pension accounting practices; volatility in the market price of the
Company's common stock all of which are more fully discussed in the
Company's Report on Form 10-K filed with the Securities and Exchange
Commission on March 1, 2007, 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 Months Nine Fiscal Months
Ended Ended
------------------- -------------------
Sept. 28, Sept. 29, Sept. 28, Sept. 29,
2007 2006 2007 2006
--------- --------- --------- ---------
Net sales $1,135.3 $948.4 $3,317.0 $2,739.8
Cost of sales 971.8 826.4 2,820.6 2,390.7
--------- --------- --------- ---------
Gross profit 163.5 122.0 496.4 349.1
Selling, general and
administrative expenses 71.2 56.2 210.0 170.7
--------- --------- --------- ---------
Operating income 92.3 65.8 286.4 178.4
Other income (expense) (1.3) (0.3) (2.8) 0.7
Interest income (expense):
Interest expense (10.2) (8.3) (29.7) (30.7)
Interest income 5.1 0.7 12.0 1.9
Loss on extinguishment of
debt 0.0 0.0 (25.1) 0.0
--------- --------- --------- ---------
(5.1) (7.6) (42.8) (28.8)
--------- --------- --------- ---------
Income before income taxes 85.9 57.9 240.8 150.3
Income tax provision (24.7) (20.8) (78.8) (50.3)
--------- --------- --------- ---------
Net income 61.2 37.1 162.0 100.0
Less: preferred stock
dividends (0.1) (0.1) (0.3) (0.3)
--------- --------- --------- ---------
Net income applicable to common
shareholders $ 61.1 $ 37.0 $ 161.7 $ 99.7
========= ========= ========= =========
Earnings per share
-------------------------------
Earnings per common share -
basic $ 1.19 $ 0.74 $ 3.16 $ 2.00
========= ========= ========= =========
Weighted average common shares
- basic 51.3 50.3 51.1 49.8
========= ========= ========= =========
Earnings per common share -
assuming dilution $ 1.11 $ 0.71 $ 2.99 $ 1.93
========= ========= ========= =========
Weighted average common shares
- assuming dilution 55.0 52.6 54.2 51.9
========= ========= ========= =========
GENERAL CABLE CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(in millions, except share data)
September 28, December 31,
ASSETS 2007 2006
------------------------------------------- --------------------------
Current Assets: (unaudited)
Cash and cash equivalents $ 479.6 $ 310.5
Receivables, net of allowances of $16.7
million at September 28, 2007 and $10.0
million at December 31, 2006 952.6 723.7
Inventories 641.1 563.1
Deferred income taxes 111.3 104.1
Prepaid expenses and other 56.9 32.9
------------- ------------
Total current assets 2,241.5 1,734.3
Property, plant and equipment, net 484.6 416.7
Deferred income taxes 34.2 28.8
Other non-current assets 43.9 38.9
------------- ------------
Total assets $2,804.2 $2,218.7
============= ============
LIABILITIES AND SHAREHOLDERS' EQUITY
-------------------------------------------
Current Liabilities:
Accounts payable $ 785.8 $ 655.4
Accrued liabilities 394.8 284.3
Current portion of long-term debt 97.4 55.5
------------- ------------
Total current liabilities 1,278.0 995.2
Long-term debt 724.1 685.1
Deferred income taxes 13.0 13.2
Other liabilities 164.3 90.8
------------- ------------
Total liabilities 2,179.4 1,784.3
------------- ------------
Shareholders' Equity:
Redeemable convertible preferred stock, at
redemption value
(liquidation preference of $50.00 per
share)
September 28, 2007 - 101,940 outstanding
shares
December 31, 2006 - 101,949 outstanding
shares 5.1 5.1
Common stock, $0.01 par value, issued and
outstanding shares:
September 28, 2007 - 52,334,098 (net of
5,124,278 treasury shares)
December 31, 2006 - 52,002,052 (net of
4,999,035 treasury shares) 0.6 0.6
Additional paid-in capital 265.3 245.5
Treasury stock (60.2) (53.0)
Retained earnings 381.8 238.8
Accumulated other comprehensive income
(loss) 32.2 (2.6)
------------- ------------
Total shareholders' equity 624.8 434.4
------------- ------------
Total liabilities and shareholders'
equity $2,804.2 $2,218.7
============= ============
CONTACT: General Cable Corporation
Michael P. Dickerson, 859-572-8684
Vice President of Finance and Investor Relations
SOURCE: General Cable Corporation
