HIGHLAND HEIGHTS, Ky.--(BUSINESS WIRE)--May 1, 2007--General Cable
Corporation (NYSE:BGC) reported today revenues and earnings for the
first quarter. Revenues were $1,009.2 million compared to $804.3
million in the prior year, an increase of 25%. Adjusted for the impact
of charges related to the Company's tender offer for substantially all
of its $285 million 9.5% Senior Notes, net income applicable to common
shareholders for the first quarter of 2007 was $53.6 million compared
to net income of $21.3 million in the first quarter of 2006. Reported
earnings per share for the first quarter of 2007 were $0.71. Excluding
the impact of charges related to the Company's tender offer for its
$285 million Senior Notes, earnings per share on a diluted basis for
the first quarter ended March 30, 2007 were $1.01 per share compared
to $0.41 per share in the first quarter of 2006.
In the first quarter of 2007, the Company completed a tender offer
for its $285 million 9.5% Senior Notes due 2010. As part of this
tender, the Company recorded approximately $25.1 million in pretax
charges or, $0.30 earnings per share on a diluted basis, principally
related to the tender premium required to redeem the Notes early and
the write-off of existing prepaid bank fees. In addition, the Company
completed a private placement of $325 million of new Senior Notes,
comprised of $200 million in aggregate principal amount of 7.125%
Senior Fixed Rate Notes due 2017 and $125 million aggregate principal
amount of Senior Floating Rate Notes due 2015. Proceeds of the new
notes were used principally to finance the tender for the $285 million
notes and resulted in an approximately 200 basis point reduction in
the Company's effective interest rate.
First Quarter Highlights
-- Increased year-over-year first quarter operating margins by
420 basis points, on a metal-adjusted basis.
-- Completed a tender offer for substantially all of the
Company's $285 million 9.5% fixed rate notes.
-- Issued $325 million fixed and floating notes in a private
placement.
-- Acquired a specialty cable manufacturer in China.
-- Experienced strong electric utility revenue growth.
First Quarter Results
Net sales for the first quarter of 2007 were $1,009.2 million, and
represent an increase of $131.8 million or 15% compared to the first
quarter of 2006 on a metal-adjusted basis. Revenues from recent
acquisitions contributed $28.5 million in the first quarter, while
changes in foreign exchange rates contributed about $26.4 million.
Without the impact of these items, organic revenue growth was
approximately 9% in the first quarter of 2007 compared to 2006. The
average price per pound of copper in the first quarter was $2.70, a
decrease of $0.49, or 15% from the fourth quarter of 2006, and an
increase of $0.45 or 20% from the first quarter of 2006. The average
price per pound of aluminum in the first quarter was $1.30, an
increase of $0.02, or 2% from the fourth quarter of 2006, and $0.15 or
13% from the first quarter of 2006.
First quarter 2007 operating income was $91.1 million compared to
$42.2 million in the first quarter of 2006, an increase of $48.9
million or 116%. Operating margin was 9.0% in the first quarter of
2007, an increase of approximately 420 basis points from the
metal-adjusted operating margin percentage of 4.8% in the first
quarter of 2006.
Major Market Update
Net sales of the Company's global electric utility products were
up 25% on a metal-adjusted basis from the first quarter of 2006,
including approximately nine percentage points of growth related to
ECN which was acquired in the third quarter of 2006. North American
transmission cable volumes, as measured by metal pounds sold, were up
25% in the first quarter of 2007 compared to 2006. "This growth is on
top of the 36% increase reported for the full year 2006," said Gregory
B. Kenny, President and Chief Executive Officer of General Cable.
"Over the last several quarters, we have reported North American
transmission growth rates from the low 20% range to over 60%. It is
likely that over time, growth rates for these products will continue
to be highly variable depending on the approval and funding cycle
times for large projects." Operating earnings for the Company's global
electric utility businesses increased 121% to $40.9 million in the
first quarter of 2007 versus 2006. As a percentage of metal adjusted
revenues, operating margins grew about 440 basis points to 10.1% in
the first quarter of 2007 compared to 2006. "The Company continues to
experience increasing demand, particularly for overhead transmission
cable in the US and Europe, as well as better pricing realization for
high voltage products from Silec. Combined with tight supply in the
market for utility products, this has produced increasing prices and
is allowing manufacturing improvements to fall to the bottom line,"
Kenny said.
Net sales of the Company's global electrical infrastructure
products were up 14% on a metal-adjusted basis from the first quarter
of 2006. Operating earnings for the Company's electrical
infrastructure businesses increased 162%, to $31.4 million, in the
first quarter of 2007 versus 2006. As a percentage of metal-adjusted
revenue, operating margins grew about 540 basis points to 9.5% in the
first quarter of 2007 compared to 2006. The increase in operating
margin for the Company's global electrical infrastructure businesses
is primarily a result of increasing end-market demand in certain
sectors (particularly in the mining, oil, gas, and petrochemical
markets), and increased pricing for the Company's products in these
markets. Improvements in North American inventory stocking levels and
the resulting shorter delivery lead times have led to additional
pricing realization. Operating margin for the North American
electrical infrastructure business has improved to 8.6% in the first
quarter of 2007 from 1.5% in the first quarter of 2006. "During the
first quarter, electrical distributors began to restock in
anticipation of the construction season and a rebound in metals
prices," Kenny said. In international markets, particularly Spain,
strong project business and product pricing continue to drive
operating margin improvement, more than offsetting some weakness for
low voltage products used in residential and non-residential
construction. Operating margin as a percent of metal adjusted revenues
for the international electrical infrastructure business has grown by
470 basis points from 5.1% in the first quarter of 2006 to 9.8% in
2007.
In the communications market, demand for high-bandwidth data
networking cables continues to show strength. After a pause in the
fourth quarter of 2006, distributor inventory levels appear to be
rebalanced with demand. Net sales for networking cables were up 35% in
the first quarter of 2007 compared to 2006. This increase is a result
of continuing improvements in distributor purchases, increased market
prices and a continuing mix shift toward higher end networking
products, including shielded and unshielded category 6 and 10-gigabit
cables. As a result of these market improvements as well as continuing
lean initiatives, operating margin in the networking segment has
improved over 1,000 basis points to 6.7% in the first quarter of 2007
compared to a negative 3.4% in 2006. Sales of data networking products
in international markets have been accelerating and now represent 37%
of networking segment revenues.
On a sequential basis, volumes of telecommunications cables sold
have improved 15% from the fourth quarter of 2006 on a metal pound
sold basis. While the business continues to report a decline in
year-over-year sales volumes, the sequential improvement is
encouraging. "The Company has gone through a significant transition
over the last 10 years. Telecommunications cables in the 1990's
defined General Cable and now represent only about 8% of our revenues.
While we never like to see businesses in decline, we believe we made
timely strategic adjustments to diversify our product and geographic
mix to take advantage of global growth opportunities such as energy
infrastructure products. Despite the decline in this business over the
last five years, we expect it to continue to meaningfully contribute
to our earnings and cash generation which we will use to invest in
areas of fresh opportunity," said Kenny.
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, 2007 to preferred
stockholders of record as of the close of business on April 30, 2007.
The Company expects the quarterly dividend payment to approximate $0.1
million.
Acquisitions
During the first quarter and more recently in April, the Company
announced a series of transactions which will open up two major
geographic markets, China and India, and greatly expand our capability
to service our submarine cable and systems customer base.
-- Purchased Norddeutsche Seekabelwerke GmbH & Co. KG (NSW) based
in Nordenham, Germany. NSW is a leading global supplier of
offshore cables and systems. They are also a European leader
in aerial network communication and control cables for
electric utilities.
-- Purchased Jiangyin Huaming Specialty Cable Co. Ltd., a Chinese
manufacturer of specialty automotive and industrial cable
products, based in Jiangsu province. We expect to expand its
production capabilities and capacity as well as diversify our
product offering to include transportation, mining, and
nuclear generation cables for the Chinese market. We continue
to look for additional investment opportunities in China.
-- Formed joint ventures with Plaza Cable Group of Companies
headquartered in New Delhi, which will ultimately incorporate
all of Plaza's existing wire and cable assets. Plaza currently
manufactures low and medium voltage energy and construction
cables for the Indian market. Over the next two years, the
Company plans to invest up to an additional $40 million in
India. This investment will include a green-field site and
will expand production of low and medium voltage cables and
introduce high voltage electric utility cable capability as
well.
Second Quarter 2007 Outlook
Commenting on the outlook for the second quarter of 2007, Kenny
said, "Recent copper price volatility greatly complicates short term
forecasting as we must estimate the metal direction and recovery
timing principally to our distribution and retail channel partners
which represent about 40% of our revenues. Overall, for the second
quarter we expect revenues to approach $1.1 billion and diluted
earnings per share are expected to be $1.00 or higher. In the second
quarter of 2006, we earned an adjusted $0.61 per share, excluding tax
related benefits and metal gains noted in our release at that time.
The second quarter seasonal peak of revenue and earnings that we have
historically experienced appear to be moderating. We believe this is
due principally to the geographic and product expansion we have made
over the last few years coupled with a reduction in our exposure to
telecommunications cable demand, traditionally our most seasonal
business."
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 $3.7 billion of revenues and 8,000 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, 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.
General Cable Corporation and Subsidiaries
Consolidated Statements of Operations
(in millions, except per share data)
(unaudited)
-------------------------
Three Fiscal Months Ended
-------------------------
March 30, March 31,
2007 2006
------------ -----------
Net sales $1,009.2 $804.3
Cost of sales 849.4 706.7
------------ -----------
Gross profit 159.8 97.6
Selling, general and administrative expenses 68.7 55.4
------------ -----------
Operating income 91.1 42.2
Other income - 0.8
Interest income (expense):
Interest expense (8.9) (10.1)
Interest income 3.0 0.5
Loss on extinguishment of debt (25.1) 0.0
------------ -----------
(31.0) (9.6)
------------ -----------
Income before income taxes 60.1 33.4
Income tax provision (22.2) (12.0)
------------ -----------
Net income 37.9 21.4
Less: preferred stock dividends (0.1) (0.1)
------------ -----------
Net income applicable to common shareholders $37.8 $21.3
============ ===========
Earnings per share
---------------------------------------------
Earnings per common share - basic $0.74 $0.43
============ ===========
Weighted average common shares - basic 51.1 50.0
============ ===========
Earnings per common share - assuming dilution $0.71 $0.41
============ ===========
Weighted average common shares - assuming
dilution 53.1 51.6
============ ===========
GENERAL CABLE CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(in millions, except share data)
ASSETS March 30, December 31,
2007 2006
--------------------------------------------- ----------- ------------
Current Assets: (unaudited)
Cash and cash equivalents $299.0 $310.5
Receivables, net of allowances of $10.8
million at March 30, 2007 and $10.0 million
at December 31, 2006 821.9 723.7
Inventories 569.4 563.1
Deferred income taxes 112.2 104.1
Prepaid expenses and other 42.0 32.9
----------- ------------
Total current assets 1,844.5 1,734.3
Property, plant and equipment, net 426.5 416.7
Deferred income taxes 21.3 28.8
Other non-current assets 39.0 38.9
----------- ------------
Total assets $2,331.3 $2,218.7
=========== ============
LIABILITIES AND SHAREHOLDERS' EQUITY
---------------------------------------------
Current Liabilities:
Accounts payable $684.3 $655.4
Accrued liabilities 272.1 284.3
Current portion of long-term debt 41.2 55.5
----------- ------------
Total current liabilities 997.6 995.2
Long-term debt 734.1 685.1
Deferred income taxes 12.3 13.2
Other liabilities 117.5 90.8
----------- ------------
Total liabilities 1,861.5 1,784.3
----------- ------------
Shareholders' Equity:
Redeemable convertible preferred stock, at
redemption value
(liquidation preference of $50.00 per
share)
March 30, 2007 - 101,949 outstanding
shares
December 31, 2006 - 101,949 outstanding
shares 5.1 5.1
Common stock, $0.01 par value, issued and
outstanding shares:
March 30, 2007 - 52,133,939 (net of
5,041,096 treasury shares)
December 31, 2006 - 52,002,052 (net of
4,999,035 treasury shares) 0.6 0.6
Additional paid-in capital 251.2 245.5
Treasury stock (55.0) (53.0)
Retained earnings 257.9 238.8
Accumulated other comprehensive income
(loss) 10.0 (2.6)
----------- ------------
Total shareholders' equity 469.8 434.4
----------- ------------
Total liabilities and shareholders' equity $2,331.3 $2,218.7
=========== ============
CONTACT: General Cable Corporation
Michael P. Dickerson, 859-572-8684
Vice President of Finance and Investor Relations
SOURCE: General Cable Corporation
