HIGHLAND HEIGHTS, Ky.--(BUSINESS WIRE)--May 1, 2006--General Cable
Corporation (NYSE:BGC) reported today that revenue for the first
quarter was $804.3 million, its highest quarterly revenue ever
recorded. Net income for the first quarter of 2006 was $21.4 million
compared to $9.0 million in the first quarter of 2005, an increase of
138%. Earnings per share on a diluted per share basis for the first
quarter ended March 31, 2006 was $0.41 compared to $0.18 in the first
quarter of 2005, an increase of 128%.
First Quarter Highlights
- Achieved 12th consecutive quarter of positive year-over-year
metal-adjusted revenue growth.
- Increased year-over-year first quarter operating margins
approximately 150 basis points, on a metal-adjusted basis.
- A $6.0 million year-over-year turnaround in North American
industrial operating income on the strength of market demand,
operating execution and improved pricing.
First Quarter Results
Net sales were up in all reported business segments in the first
quarter of 2006 compared to metal-adjusted net sales in the first
quarter of 2005. Net sales for the first quarter of 2006 were $804.3
million, an increase of 23.4% versus metal-adjusted net sales in the
first quarter of 2005, including $88.6 million of sales attributable
to the newly acquired Silec and Beru businesses. Before the impact of
these acquisitions, net sales for the first quarter would have been
$715.7 million, an increase of 9.8% on a metal-adjusted basis from the
first quarter of 2005. This is net of approximately 2 1/2 points of
unfavorable foreign exchange fluctuations, primarily attributable to
the strength of the dollar against the euro in the first quarter of
2006 compared to the first quarter of 2005. The average price per
pound of copper and aluminum increased $0.78 and $0.21, respectively,
to $2.25 and $1.15 from the first quarter of 2005 to the first quarter
of 2006, and were up $0.22 and $0.16 from the fourth quarter of 2005,
respectively.
First quarter 2006 operating income was $42.2 million compared to
first quarter 2005 operating income of $24.2 million, an increase of
$18.0 million or 74%. Operating earnings as a percent of
metal-adjusted net revenues were 5.2% and 3.7% in the first quarter of
2006 and 2005 respectively, an increase of approximately 150 basis
points.
The improvement in operating earnings was driven primarily by
increased factory utilization, LEAN enabled proficiency and a
reduction in the time required to recover raw material inflation.
Factory utilization improved in many segments led by the North
American and European energy and industrial/specialty segments. In
addition, the restructuring of our North American telecommunications
business completed last fall materially improved our cost structure.
Meanwhile LEAN, championed by our blackbelt and greenbelt trained
leaders is producing meaningful process improvements globally.
"Pricing actions and implementation systems continue to be an area
of focus for our management team," said Gregory B. Kenny, President
and Chief Executive Officer of General Cable. "The market understands
the reality of cost increases that are beyond our control and we have
successfully continued to shorten the window of exposure to
un-recovered raw material and other price inflation for the
non-contractual portion of our business. In addition, we continue to
work closely with our contractual customers to modify contract
language as necessary to ensure that raw material and other price
inflation are dealt with equitably."
Segment Results
The Energy segment metal-adjusted revenues were up 34%, or 16%
before the addition of Silec. This increase was led by North American
bare aluminum transmission cable growth of 23%, as measured by metal
pounds sold, as interconnection project activity increased. Operating
income in the Energy segment was up $6.2 million, and operating margin
improved 65 basis points from the first quarter of 2005, primarily as
a result of the additional leverage of our fixed costs on incremental
volume, recovery of raw material price inflation, and increased spot
market pricing. This result includes approximately $41 million in
Silec revenues which were dilutive to the overall operating margin
percentage but should improve over time through enhanced information
systems, marketing and manufacturing synergies, and the implementation
of LEAN initiatives.
Industrial & Specialty cables metal-adjusted revenue was up 23%,
or 8% before the impact of both acquisitions, due to strong demand,
particularly in North America driven by marine, mining, oil and gas
exploration and production products as well as portable power cables
and cords. Pricing actions in Europe during the last several months of
2005 allowed us to recapture raw material inflation and contributed
nicely to the growth in operating earnings in the first quarter of
2006. Operating earnings for the first quarter were $19.9 million, up
$10.7 million or 116% from the first quarter of 2005 and resulted in
an improvement in operating margins of 240 basis points to 5.6%. This
result includes approximately $43 million in acquired revenues which
were marginally profitable.
Communication cables segment revenues increased 7%, led by a 22%
increase in enterprise networking cable sales in North America. This
is a continuation of the mix shift to high performance, value-added,
networking cables that also drove 20% growth in 2005. Partially
offsetting these increases were continued lower unit demand for
outside plant telecommunications cables. Demand trends from the
traditional regional bell operating companies (RBOC's) are mixed and
dependent on the selected strategy for their broadband rollout. Those
favoring a copper/fiber hybrid model have been showing signs of demand
strength, while those taking a fiber to the home strategy continue to
show weakness in demand for copper telephone cables. Nevertheless, we
continue to see improved pricing in the spot market which has
historically been a good leading indicator for contractual pricing
which is now showing signs of improvement. Despite this slight decline
in outside plant telecommunications revenues, overall segment
operating earnings were up 41% to $3.8 million, and operating margins
have improved by 60 basis points over the first quarter of 2005 to
2.5%
The Company's effective tax rate for the first quarter of 2006 was
36%; lower than the statutory rate, due principally to a true up of
Mexican deferred taxes of approximately $0.5 million. We currently
estimate that our effective tax rate for 2006 should approximate 37%.
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 May 24, 2006 to preferred
stockholders of record as of the close of business on April 30, 2006.
The Company expects the quarterly dividend payment to approximate $0.1
million.
Second Quarter 2006 Outlook
Commenting on the outlook for the second quarter of 2006, Kenny
said, "While it is difficult to determine the exact impact, the mild
winter in North America likely contributed to a level of demand in the
first quarter ahead of what we expected. Some of this was certainly an
acceleration of projects into the first quarter that had been planned
for later in the year. However, we have not seen an increase in
customer inventories and booking activity across all of our served
markets continues to be robust. We are experiencing strong demand in
nearly all of our served markets, especially for products supporting
non-residential industrial, oil, gas, and petrochemical (OGP),
traditional and alternative energy and enterprise networking products
from our customers in North America and Europe. Quoting activity for
energy transmission projects appears to be picking up as well. New
contracts for underground high voltage and extra high voltage projects
are being booked nine to 12 months out at pricing well ahead of
current project prices, helping set the stage for improving margins at
Silec going into 2007," Kenny said.
"Over the last several weeks metal prices have increased
substantially. In addition, we expect aluminum and copper rod supplies
used in the cable manufacturing process to be very tight globally due
to seasonality as well as production and transportation problems
within the refining industry. The recent and rapid increase yet again
in raw material costs and therefore higher working capital
requirements are squeezing manufacturers, wholesalers and contractors.
While we will continue to work openly and fairly with our customers on
these issues, we are committed to full recovery as soon as possible
and to fully hedge firm future deliveries on a non-cancelable basis.
The continued fund interest in metals and other commodities has
created extreme volatility well beyond that inherent in historical
supply/demand and price correlations. As a result, the current copper
price of about $3.40 per pound is well beyond the historical
equilibrium point of less than $1.00 per pound. Aluminum is also
trading about $0.50 per pound above its historical average. What the
new equilibrium prices will be remains unclear, however both metals,
particularly copper, suffer from a decade of underinvestment in mine
development and limited new deposits," Kenny continued.
"As always, we expect our LEAN enabled productivity initiatives,
customer integration, and strategic relationships with key suppliers
to help mitigate the substantial headwind we are facing with the
recent run-up in metals pricing. April copper averaged about $2.97 per
pound while aluminum averaged about $1.25 per pound. Despite
extraordinary metals inflation, earnings per share should approximate
$0.40 to $0.45 on a diluted per share basis on revenues of between
$820 million to $840 million compared to second quarter 2005 adjusted
earnings per share of $0.27. This continuing trend of increasing
quarter over quarter earnings highlights the ongoing strength of our
business model and the markets in which we participate," Kenny
concluded.
General Cable will discuss first quarter results on a conference
call and webcast at 8:30 a.m. ET tomorrow, May 2. For more information
please see our website at www.generalcable.com.
With over $3 billion of annualized revenues and 7,000 employees,
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,
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 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; the Company's ability to avoid
limitations on utilization of net losses for income tax purposes;
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 15, 2006,
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 Ended
-------------------------
March 31, April 1,
2006 2005
------------ ------------
Net sales $ 804.3 $ 554.2
Cost of sales 706.7 486.8
------------ ------------
Total Cost of Sales 706.7 486.8
------------ ------------
Gross profit 97.6 67.4
Selling, general and
administrative expenses 55.4 43.2
------------ ------------
Operating income 42.2 24.2
Other income (expense) 0.8 (0.1)
Interest income (expense):
Interest expense (10.1) (10.3)
Interest income 0.5 0.4
------------ ------------
(9.6) (9.9)
------------ ------------
Income before income taxes 33.4 14.2
Income tax provision (12.0) (5.2)
------------ ------------
Net income 21.4 9.0
Less: preferred stock dividends (0.1) (1.5)
------------ ------------
Net income applicable to common shareholders $ 21.3 $ 7.5
============ ============
Earnings per share
--------------------------------------------
Earnings per common share $ 0.43 $ 0.19
============ ============
Weighted average common shares 50.0 39.2
============ ============
Earnings per common share-
assuming dilution $ 0.41 $ 0.18
============ ============
Weighted average common shares-
assuming dilution 51.6 50.7
============ ============
General Cable Corporation and Subsidiaries
Consolidated Statements of Operations
Segment Information
(in millions)
(unaudited)
--------------------------
Three Fiscal Months Ended
--------------------------
March 31, April 1,
2006 2005
------------ -------------
Revenues (as reported)
-------------------------------------------
Energy Segment $ 300.1 $ 196.5
Industrial & Specialty Segment 354.2 241.2
Communications Segment 150.0 116.5
------------ -------------
Total $ 804.3 $ 554.2
============ =============
Revenues (metal adjusted)
-------------------------------------------
Energy Segment $ 300.1 $ 223.3
Industrial & Specialty Segment 354.2 288.6
Communications Segment 150.0 139.8
------------ -------------
Total $ 804.3 $ 651.7
============ =============
Metal Pounds Sold
-------------------------------------------
Energy Segment 89.5 70.6
Industrial & Specialty Segment 80.3 60.4
Communications Segment 31.8 29.5
------------ -------------
Total 201.6 160.5
============ =============
Operating Income
-------------------------------------------
Energy Segment $ 18.5 $ 12.3
Industrial & Specialty Segment 19.9 9.2
Communications Segment 3.8 2.7
------------ -------------
Subtotal 42.2 24.2
Corporate - -
------------ -------------
Total $ 42.2 $ 24.2
============ =============
Return on Metal Adjusted Sales
-------------------------------------------
Energy Segment 6.2% 5.5%
Industrial & Specialty Segment 5.6% 3.2%
Communications Segment 2.5% 1.9%
Total Company 5.2% 3.7%
Capital Expenditures
-------------------------------------------
Energy Segment $ 3.4 $ 3.2
Industrial & Specialty Segment 3.4 2.8
Communications Segment 1.2 1.2
------------ -------------
Total $ 8.0 $ 7.2
============ =============
Depreciation & Amortization
-------------------------------------------
Energy Segment $ 4.7 $ 1.9
Industrial & Specialty Segment 4.5 3.0
Communications Segment 3.3 4.1
------------ -------------
Subtotal 12.5 9.0
Corporate - -
------------ -------------
Total $ 12.5 $ 9.0
============ =============
GENERAL CABLE CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(in millions, except share data)
March 31, December 31,
ASSETS 2006 2005
-------------------------------------------- ----------- ------------
Current Assets: (unaudited)
Cash $ 63.0 $ 72.2
Receivables, net of allowances of $10.8
million at March 31, 2006 and $8.6 million
at December 31, 2005 639.3 542.9
Inventories 383.6 363.9
Deferred income taxes 41.9 41.9
Prepaid expenses and other 46.6 48.6
----------- ------------
Total current assets 1,174.4 1,069.5
Property, plant and equipment, net 367.9 366.4
Deferred income taxes 49.3 52.5
Other non-current assets 35.5 34.8
----------- ------------
Total assets $ 1,627.1 $ 1,523.2
=========== ============
LIABILITIES AND SHAREHOLDERS' EQUITY
---------------------------------------------
Current Liabilities:
Accounts payable $ 538.1 $ 472.3
Accrued liabilities 189.7 212.2
Current portion of long-term debt 7.1 6.4
----------- ------------
Total current liabilities 734.9 690.9
Long-term debt 465.2 445.2
Deferred income taxes 12.9 13.4
Other liabilities 88.7 80.4
----------- ------------
Total liabilities 1,301.7 1,229.9
----------- ------------
Shareholders' Equity:
Redeemable convertible preferred stock,
March 31, 2006 - 101,949 outstanding shares
December 31, 2005 - 129,916 outstanding
shares (liquidation preference of $50.00
per share) 5.1 6.5
Common stock, $0.01 par value, issued and
outstanding shares:
March 31, 2006 - 50,425,943 (net of
4,991,105 treasury shares)
December 31, 2005 - 49,520,209 (net of
4,968,755 treasury shares) 0.5 0.5
Additional paid-in capital 249.9 246.3
Treasury stock (52.7) (52.2)
Retained earnings 125.1 103.8
Accumulated other comprehensive income (2.5) (6.8)
Other shareholders' equity - (4.8)
----------- ------------
Total shareholders' equity 325.4 293.3
----------- ------------
Total liabilities and shareholders'
equity $ 1,627.1 $ 1,523.2
=========== ============
CONTACT: General Cable Corporation
Michael P. Dickerson, 859-572-8684
SOURCE: General Cable Corporation
