HIGHLAND HEIGHTS, Ky.--(BUSINESS WIRE)--July 29, 2008--General
Cable Corporation (NYSE: BGC), one of the most geographically
diversified industrial companies, reported today revenues and earnings
for the second quarter ended June 27, 2008. Diluted earnings per share
for the second quarter of 2008 were $1.37, an increase of 28.0% from
the adjusted earnings per share of $1.07 in the second quarter of
2007. Reported earnings per share for the second quarter of 2007 were
$1.15 including approximately an $0.08 per share tax benefit primarily
from the reduction of certain state deferred tax asset valuation
allowances.
Second Quarter Highlights
- Record quarterly revenues of $1,742.8 million, including
$478.7 million from acquisitions completed in the last twelve
months
- Operating income increased $27.6 million or 26.8%
- Acquired in May, 70% of Enica Biskra, an Algerian manufacturer
of low and medium voltage power and construction cables
- Completed transaction to increase ownership in Phelps Dodge
Philippines from 40% to 60% on June 30, 2008.
- PDIC operating above expectations; integration smooth and
synergies being realized
- Won 2008 North American Frost & Sullivan Award for Growth
Excellence in the Energy Cables Market
Second Quarter Results
Net sales for the second quarter of 2008 were $1,742.8 million, an
increase of $513.3 million or 41.7% compared to the second quarter of
2007 on a metal-adjusted basis. This growth was principally due to the
acquisition of Phelps Dodge International Corporation (PDIC) in the
fourth quarter of 2007, the Company's exposure to global electrical
infrastructure markets and favorable foreign exchange translation
partially offset by lower demand as a result of ongoing weak economic
conditions primarily in the United States and Spain which are major
markets for the Company.
Second quarter 2008 operating income was $130.6 million compared
to operating income of $103.0 million in the second quarter of 2007,
an increase of $27.6 million or 26.8%. The increase in operating
earnings was principally a result of the addition of PDIC and strong
global markets for energy and industrial infrastructure products,
partially offset by lower demand and pricing in North America and
ongoing weakness in Spanish construction. Operating margin was 7.5% in
the second quarter of 2008, a decrease of approximately 90 basis
points from the operating margin of 8.4% in the second quarter of 2007
on a metal-adjusted basis. This decline was principally due to the
reduction in profitability of electric utility and communications
cable products in North America.
Gregory B. Kenny, President and Chief Executive Officer of General
Cable, said, "I am pleased that we have been able to deliver, on an
adjusted basis, 28% year-over-year earnings growth despite difficult
economic conditions in two of our major markets, the United States and
Spain. The growth we have achieved is a direct result of the
continuing internal investments in new product development,
acquisitions we have made over the last several years and ongoing
continuous improvement initiatives. The Company is generating about
70% of its revenues outside the United States with a high and growing
proportion of revenue generated in markets such as Latin America, the
Middle East, Asia and Africa. The recent promotion of Gregory J.
Lampert to President and Chief Executive Officer of North America will
allow me to intensify my focus on global operating excellence,
coordination and growth."
Segment Results
Revenue in the Company's Europe and North Africa segment increased
$69.9 million or 13.2% on a metal-adjusted basis. The increase in
revenue is primarily due to the favorable impact of foreign currency
translation, the acquisition of Enica Biskra, and strong demand for
the Company's utility and energy infrastructure products, partially
offset by declining demand for construction products in the Spanish
market. Operating earnings in the segment grew by 16.1% to $49.1
million in the second quarter of 2008 compared to the prior year.
Operating margin increased to 8.2% in the second quarter of 2008
compared to 8.0% in the prior year on a metal-adjusted basis.
Revenue in the Rest of World segment was $513.9 million, an
increase of $461.0 million, principally related to the acquisition of
PDIC which was completed during the fourth quarter of 2007. Operating
earnings were $49.0 million, an increase of $45.0 million from the
second quarter of 2007. "Demand for cable products in the developing
regions of the world is being driven by high levels of energy
infrastructure, construction and mining activities. Particular
strength is coming from government sponsored infrastructure projects
in Latin America and Southeast Asia. Additionally, the core
infrastructure investment required for the upcoming 2010 World Cup
soccer event in South Africa has added pressure to an already taxed
energy grid that is also supporting growing mining activities in the
region, resulting in increased spending for energy transmission and
distribution as well as construction," said Mathias Sandoval,
President and Chief Executive Officer, General Cable Latin America,
Sub-Saharan Africa and Mideast/Asia Pacific.
In North America, revenue decreased 2.7% in the second quarter of
2008 compared to 2007 on a metal-adjusted basis while metal pounds
sold were down 7.7% in the second quarter compared to the prior year.
The decrease in metal pounds sold is principally due to the reduction
in year-over-year demand for high metal content copper
telecommunications cables and aluminum low voltage utility cables.
Operating earnings decreased $24.2 million in the second quarter
compared to the year ago period. "Demand has slowed and margins were
pressured in the second quarter versus a very strong prior year period
across a broad spectrum of product lines in North America, as a result
of the weak construction environment, competitive dynamics and surging
raw material and energy input costs. The year-over-year comparison
gets somewhat easier toward the fourth quarter as the slowdown for
many products began in that timeframe," Kenny said.
Recent Corporate Developments
On May 21, 2008, the Company entered a joint venture for majority
ownership of Enica Biskra, an Algerian state-owned manufacturer of low
and medium voltage power and construction cables. Enica Biskra is a
leading provider of utility cables to the principal Algerian
state-owned power utility and gas producer. In 2007, the business
generated over $100 million of revenue. The Company plans to
aggressively invest in this business, primarily for the fast growing
Middle East and North African regions. The Company's investment plan
over the next few years is expected to exceed $30 million and focus on
upgrading and expanding the product capabilities for medium voltage
utility cables as well as cables for industrial applications for both
the domestic market and export into neighboring North African and
European markets. Additionally, the Company will be investing in
training for the associates in the areas of continuous improvement and
manufacturing efficiency.
On June 30, 2008, the Company completed a transaction to increase
its equity ownership in Phelps Dodge Philippines, Inc. (PDP) from 40%
(acquired in the acquisition of PDIC) to 60%. PDP is a joint venture
established in 1955 by Anscor, a Philippine public holding company
with diverse investments, and PDIC. PDP operates one of the largest
wire and cable manufacturing facilities in the Philippines with
leading market positions supporting the construction sector of the
Philippine economy. The investment complements General Cable's
strategy in the region by providing a platform for further penetration
into Southeast Asian markets as well as supporting ongoing operations
in Australia, the Middle East and South Africa. Additionally, with the
sharing of new products and technology from General Cable around the
world, PDP expects to penetrate other segments of the Philippine and
regional wire and cable markets, including the power cable sector.
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 August 22, 2008 to
preferred stockholders of record as of the close of business on July
31, 2008. The Company expects the quarterly dividend payment to
approximate $0.1 million.
Third Quarter 2008 Outlook
"The Company has continued to deliver significant year-over-year
earnings improvement despite a challenging economic environment,
particularly in the United States, coupled with inflation in the cost
of raw materials and logistics. In the third quarter of 2008, we again
expect to show strong earnings per share growth versus the prior year.
For the third quarter, the Company expects to report earnings per
share in the range of $1.17 to $1.27 compared to adjusted earnings per
share of $1.03 in the third quarter of 2007, an increase of 14% to
23%, on revenues of approximately $1.675 to $1.725 billion. In the
third quarter, we expect our ROW segment to be our most profitable,"
Kenny concluded. Reported diluted earnings per share in the third
quarter of 2007 were $1.11 and consistent with the second quarter,
included an $0.08 per share tax benefit from the reduction in certain
state deferred tax asset valuation allowances.
General Cable will discuss second quarter results on a conference
call and webcast at 8:30 a.m. ET tomorrow, July 30, 2008. 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; compliance with foreign and U.S. laws applicable to our
international operations; potential adverse impact from environmental
liabilities; risks from liabilities assumed in acquisitions;
substantial indebtedness could adversely affect our business and
financial condition; potential cross-defaults on our financing
arrangements if we fail to comply with covenants and other provisions
of financing arrangements; impact of a downgrade in our financial
strength; 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 February 29, 2008 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 Six Fiscal Months Ended
------------------------- -----------------------
June 27, June 29, June 27, June 29,
2008 2007 2008 2007
------------ ------------ ----------- -----------
Net sales $ 1,742.8 $ 1,172.5 $ 3,311.2 $ 2,181.7
Cost of sales 1,515.5 999.4 2,871.2 1,848.8
------------ ------------ ----------- -----------
Gross profit 227.3 173.1 440.0 332.9
Selling, general and
administrative
expenses 96.7 70.1 194.1 138.8
------------ ------------ ----------- -----------
Operating income 130.6 103.0 245.9 194.1
Other expense (1.8) (1.5) (0.4) (1.5)
Interest income
(expense):
Interest expense (16.2) (10.6) (31.2) (19.5)
Interest income 3.5 3.9 6.3 6.9
Loss on
extinguishment
of debt - - - (25.1)
------------ ------------ ----------- -----------
(12.7) (6.7) (24.9) (37.7)
------------ ------------ ----------- -----------
Income before income
taxes 116.1 94.8 220.6 154.9
Income tax provision (38.9) (31.9) (75.0) (54.1)
Minority interests
in consolidated
subsidiaries (3.2) - (6.8) -
Equity in net
earnings of
affiliated
companies 1.7 - 2.8 -
------------ ------------ ----------- -----------
Net income 75.7 62.9 141.6 100.8
Less: preferred
stock dividends (0.1) (0.1) (0.2) (0.2)
------------ ------------ ----------- -----------
Net income
applicable to
common shareholders $ 75.6 $ 62.8 $ 141.4 $ 100.6
============ ============ =========== ===========
Earnings per share
--------------------
Earnings per common
share - basic $ 1.47 $ 1.23 $ 2.75 $ 1.97
============ ============ =========== ===========
Weighted average
common shares -
basic 51.6 51.2 51.5 51.1
============ ============ =========== ===========
Earnings per common
share-
assuming dilution $ 1.37 $ 1.15 $ 2.57 $ 1.87
============ ============ =========== ===========
Weighted average
common shares-
assuming dilution 55.4 54.7 55.0 53.8
============ ============ =========== ===========
General Cable Corporation and Subsidiaries
Consolidated Statements of Operations
Segment Information
(in millions)
(unaudited)
------------------- -------------------
Three Fiscal Months Six Fiscal Months
Ended Ended
-------------------- -------------------
June 27, June 29, June 27, June 29,
2008 2007 2008 2007
--------- --------- --------- ---------
Revenues (as reported)
-----------------------------
North America $ 628.6 $ 615.2 $1,169.3 $1,160.3
Europe and North Africa 600.3 506.7 1,153.6 932.7
Rest of World 513.9 50.6 988.3 88.7
--------- --------- --------- ---------
Total $1,742.8 $1,172.5 $3,311.2 $2,181.7
========= ========= ========= =========
Revenues (metal adjusted)
-----------------------------
North America $ 628.6 $ 646.2 $1,169.3 $1,246.5
Europe and North Africa 600.3 530.4 1,153.6 996.0
Rest of World 513.9 52.9 988.3 94.9
--------- --------- --------- ---------
Total $1,742.8 $1,229.5 $3,311.2 $2,337.4
========= ========= ========= =========
Metal Pounds Sold
-----------------------------
North America 102.8 111.4 195.1 219.1
Europe and North Africa 85.7 90.1 172.6 174.6
Rest of World 104.7 7.2 202.8 12.7
--------- --------- --------- ---------
Total 293.2 208.7 570.5 406.4
========= ========= ========= =========
Operating Income
-----------------------------
North America $ 32.5 $ 56.7 $ 63.7 $ 103.5
Europe and North Africa 49.1 42.3 98.2 81.6
Rest of World 49.0 4.0 84.0 9.0
--------- --------- --------- ---------
Total $ 130.6 $ 103.0 $ 245.9 $ 194.1
========= ========= ========= =========
Return on Metal Adjusted
Sales
-----------------------------
North America 5.2% 8.8% 5.4% 8.3%
Europe and North Africa 8.2% 8.0% 8.5% 8.2%
Rest of World 9.5% 7.6% 8.5% 9.5%
Total Company 7.5% 8.4% 7.4% 8.3%
Capital Expenditures
-----------------------------
North America $ 12.4 $ 9.7 $ 21.4 $ 13.8
Europe and North Africa 25.2 17.4 46.3 29.7
Rest of World 13.8 1.5 25.3 2.2
--------- --------- --------- ---------
Total $ 51.4 $ 28.6 $ 93.0 $ 45.7
========= ========= ========= =========
Depreciation & Amortization
-----------------------------
North America $ 9.3 $ 9.3 $ 18.1 $ 17.5
Europe and North Africa 8.0 3.9 15.0 10.0
Rest of World 7.7 0.6 15.3 1.2
--------- --------- --------- ---------
Total $ 25.0 $ 13.8 $ 48.4 $ 28.7
========= ========= ========= =========
Revenues by Major Product
Lines
-----------------------------
Electric Utility $ 593.4 $ 422.3 $1,138.4 $ 807.4
Electrical Infrastructure 432.7 322.1 827.7 581.4
Construction 419.3 210.1 806.8 387.6
Communications 220.0 218.0 422.5 405.3
Rod Mill Products 77.4 - 115.8 -
--------- --------- ---------- ---------
Total $1,742.8 $1,172.5 $3,311.2 $2,181.7
========= ========= ========== =========
CONTACT: General Cable Corporation
Michael P. Dickerson, Vice President of Finance and
Investor Relations, 859-572-8684
SOURCE: General Cable Corporation
