Exhibit 99.1
General Cable Corporation Reports First Quarter Results
HIGHLAND HEIGHTS, Ky.--(BUSINESS WIRE)--April 20, 2004--General
Cable Corporation (NYSE:BGC) reported a net loss after preferred stock
dividends for the first quarter ended March 31, 2004 of $(3.4) million
which was $(0.09) on a diluted per share basis. These results were
down from net income of $0.1 million in the first quarter of 2003.
Included in the results for the 2004 first quarter were pre-tax
charges of $2.7 million associated with the previously announced
rationalization of certain of the Company's industrial cable
manufacturing facilities and a $0.5 million pre-tax foreign currency
transaction loss. These costs reduced reported earnings per share by
$0.05 in the first quarter.
Highlights
-- Double digit sales growth versus a weak prior year period.
-- Unit growth improving across the board particularly in the
North American industrial, MRO and communications markets.
-- Price increases implemented for non-contractual customers to
offset very sharp metals and other raw material cost
escalation.
-- Productivity and lean manufacturing as well as industrial
restructuring effort on track.
-- Industry consolidation continuing to provide opportunity.
Net sales for the first quarter of 2004 of $478.6 million
increased 18.9% from metal-adjusted net sales of $402.5 million in the
first quarter of 2003, as a result of both a significant increase in
demand across all product segments and favorable foreign currency
exchange rates. Total metal pounds sold increased 20.3% in the first
quarter of 2004 from the first quarter of 2003 and by 15.2%
sequentially. As long as the product mix stays relatively constant,
this metric is a good measure of sales volume since it removes the
impact of the increases in the selling prices of metals and changes in
foreign currency exchange rates.
Management Comments
"In early March we communicated a view that, as a result of
rapidly increasing metal costs that would not in the short term be
fully recovered in our selling prices, we expected our loss to
approximate $0.05 to $0.06 per share in the first quarter of 2004,
excluding charges associated with the rationalization of certain of
our industrial cable manufacturing plants. We also anticipated that
sales would increase, measured in metal pounds sold, by 10% to 15% in
comparison to the first quarter of 2003. As a result of improving
demand in our end markets, perhaps coupled with some forward buying by
contractors facing uncertain cable prices, we exceeded our earlier
expectations for both sales volume and net earnings," commented
Gregory B. Kenny, President and Chief Executive Officer of General
Cable. "However, as expected, the rapid increase in metal costs,
particularly copper, as well as inflation in insulating compounds,
wood, paper, steel and transportation costs during the quarter more
than offset the positive trends we experienced in sales volume and
manufacturing productivity. Depending upon the product, over the last
several months we have announced price increases of 15-30% for
non-contractual customers."
"During the first quarter, we made significant progress in our
drive to outsource non-core intermediate manufacturing operations. The
wind down of our Taunton, Massachusetts facility was completed. We
also announced our intent to close our South Hadley, Massachusetts
facility, and sell our rod mill operation in Plano, Texas. These
actions will, over the intermediate term, liberate capital as well as
immediately generate substantial savings," said Kenny. "Unfortunately,
as a result of these actions a number of good people will leave the
Company. For their hard work and dedication to the very end, they have
our thanks and respect."
"On a positive note, I'm pleased to report that we may have found
a path to restore our Marion, Indiana industrial products plant to
profitability. Improving demand, partially as a result of the recent
failure of a major competitor, a refocusing and streamlining of the
business, and most importantly, the tremendous flexibility and
determination of our hourly and salaried workforce have combined to
offer the potential to achieve cost leadership and profitability for
this segment," said Kenny.
First Quarter Results
Net sales for the first quarter of 2004 were $478.6 million, an
increase of 18.9% versus metal-adjusted net sales in the 2003 first
quarter. The average price per pound of copper and aluminum increased
$0.48 and $0.10, respectively, from the first quarter 2003 to the
first quarter 2004. The 2003 net sales have been increased in this
comparison to put them on a consistent metal-adjusted basis with 2004
net sales. Overall net sales for the quarter were positively affected
by about 7.0% as a result of a favorable change in foreign currency
exchange rates for the Company's international operations.
Net sales in the Energy segment increased 8.9% in the first
quarter of 2004 versus metal-adjusted net sales in the first quarter
of 2003. North American sales were up 8.1% driven largely by strong
demand from power utilities for primary and secondary distribution
cables, compared to a relatively weak first quarter of 2003.
International sales were up 10.6%, driven largely by favorable foreign
currency exchange rates.
Net sales in the Industrial & Specialty segment were up 33.2%
versus metal-adjusted net sales in the first quarter of 2003. This
increase was driven by a 23.3% increase in North America where net
sales of ignition wire sold to the automotive aftermarket grew 19.1%
and industrial cables utilized in maintenance, repair and plant
operations (MRO) grew 14.6% compared to the first quarter of 2003 with
the addition of a major new customer. Significantly, for the second
quarter in a row, net sales of cables utilized primarily in industrial
construction increased year-over-year, up 31.2% versus the first
quarter of 2003. International sales were up 44.3% versus 2003 due in
part to increased sales of flexible zero-halogen cables in Spain and
the favorable impact of foreign currency exchange rates.
Net sales in the Communications segment increased 13.3% in the
first quarter of 2004 versus metal-adjusted net sales in the same
quarter of 2003. This increase was driven by a 14.7% increase in North
America where net sales were up year-over-year in all business units
in this segment. Net sales of telephone exchange cables increased
13.9% versus 2003, the third consecutive quarter of positive
year-over-year comparisons. The Company also experienced a
year-over-year increase in sales of electronic cables, which grew
19.4% versus the first quarter of 2003 behind sustained penetration
into targeted niche markets. Significantly, net sales of LAN cables
increased for the first time in five quarters, up 6.6% compared to the
first quarter of 2003.
Selling, general and administrative expenses were $38.7 million in
the first quarter of 2004, up from $31.0 million in the first quarter
of 2003. The increase in SG&A was due in part to changes in foreign
currency exchange rates, increased variable selling expenses due to
higher sales volumes, and a change in the reporting of the results of
the Company's fiber optics joint venture. Beginning in the first
quarter of this year, the Company consolidated the results of its
NextGen joint venture, which had previously been accounted for on an
equity basis. This change in reporting increased SG&A by $1.0 million
but had no impact on overall operating results. Year-over-year on an
equivalent basis, SG&A remained at roughly 7.8% of metal-adjusted net
sales.
The first quarter 2004 operating income of $6.7 million was down
from $11.4 million in the first quarter of 2003. The results in 2004
include $2.7 million of pre-tax charges related to the rationalization
of certain industrial cable manufacturing facilities. Operating income
for the first quarter of 2004 was also down year-over-year as a result
of the rapidly increasing raw material costs, particularly copper and
aluminum, which outpaced the Company's ability to raise prices and
recover these cost increases. The metal cost increases were only
partially offset by the increased sales volume and lower manufacturing
costs as a result of the Company's Lean initiatives as well as changes
in foreign currency exchange rates.
During the first quarter of 2004 the Company realized a $0.5
million pre-tax loss resulting from an unfavorable foreign currency
transaction. This loss reduced reported earnings per share by $0.01 in
the quarter.
Net interest expense was $9.3 million for the first quarter of
2004, down $2.0 million from the same period in 2003 as a result of
the Company's refinancing in the fourth quarter of 2003. During the
quarter, the Company also accrued approximately $1.5 million in
dividends on its preferred stock.
The Company's effective tax rate for the first quarter of 2004 was
approximately 36.4%.
Management Comments
"The broad based increase in our metal-adjusted net sales suggests
that we are indeed experiencing a recovery in our end markets.
Additionally, we continue to see significant merger and acquisition
activity among our competitors which often results in the removal of
high cost capacity," commented Kenny. "The rapid increase in the cost
of copper and aluminum that we experienced during the first quarter
put pressure on short term results. However, metal prices appear to
have recently stabilized with copper prices currently trading in the
$1.30 to $1.35 per pound range. Stable metal prices will allow us to
ameliorate this earnings pressure as our previously announced price
increases take hold and catch-up with the higher cost of metals and
other raw materials."
"The ongoing structural change in our industry is also creating
additional opportunity for us. I am pleased to announce that we have
entered into a commercial and technological strategic alliance for our
data communications products with Panduit, a leading manufacturer of
high-quality products and solutions for communications and electrical
connectivity," said Kenny. "We are excited about this relationship and
the potential for synergies in new product development and commercial
collaboration that we will derive from our partnership."
"The strong demand for our products that we experienced in the
first quarter of this year has in general continued into the second
quarter as well. Currently we are forecasting that sales unit volume,
as measured in metal pounds sold, should be up by about 8-10% compared
to the second quarter of 2003, and about 3-4% sequentially," added
Kenny. "Fully diluted earnings per share, excluding charges related to
the rationalization of certain of our industrial cable plants, should
be in the range of $0.05 to $0.10 as we more fully capture the higher
metal and raw material costs with our price increases. This outcome
assumes that metal costs remain at roughly their current level during
the remainder of the quarter."
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. The Company offers competitive strengths in
such areas as breadth of product line, brand recognition, distribution
and logistics, sales and service and operating efficiency.
Energy cables include low-, medium- and high-voltage power
distribution and power transmission products. The Industrial and
Specialty segment is comprised of application-specific cables for uses
such as electrical power generation (traditional fuels, alternative
and renewable sources, and distributed generation), the oil, gas and
petrochemical industries, mining, industrial automation, marine,
military and aerospace applications, power applications in the
telecommunications industry, and other key industrial segments.
Communications wire and cable products transmit low-voltage signals
for voice, data, video and control applications. 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 12, 2004, 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 Months
Ended March 31
---------------
2004 2003
------- -------
Net sales $478.6 $352.6
Cost of sales 433.2 310.2
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Gross profit 45.4 42.4
Selling, general and
administrative expenses 38.7 31.0
------- -------
Operating income 6.7 11.4
Other expense (0.5) -
Interest income (expense):
Interest expense (9.5) (11.4)
Interest income 0.2 0.1
------- -------
(9.3) (11.3)
------- -------
Earnings (loss) before income taxes (3.1) 0.1
Income tax benefit 1.2 -
------- -------
Net income (loss) (1.9) 0.1
Less: preferred stock dividends (1.5) -
------- -------
Net income (loss) applicable to common shareholders $(3.4) $0.1
------- -------
------- -------
Earnings (loss) per share
- -------------------------
Earnings (loss) per common share $(0.09) $ -
------- -------
------- -------
Weighted average common shares 39.2 33.1
------- -------
------- -------
Earnings (loss) per common share-
assuming dilution $(0.09) $ -
------- -------
------- -------
Weighted average common shares-
assuming dilution 39.2 33.1
------- -------
------- -------
General Cable Corporation and Subsidiaries
Consolidated Statements of Operations
Segment Information
(in millions)
(unaudited)
-------------------
Three Months Ended
March 31
-------------------
2004 2003
--------- --------
Revenues (as reported)
- ----------------------
Energy Segment $166.5 $132.8
Industrial & Specialty Segment 195.7 129.4
Communications Segment 116.4 90.4
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Total $478.6 $352.6
--------- --------
--------- --------
Revenues (metal adjusted)
- -------------------------
Energy Segment $166.5 $152.9
Industrial & Specialty Segment 195.7 146.9
Communications Segment 116.4 102.7
--------- --------
Total $478.6 $402.5
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Metal Pounds Sold
- -----------------
Energy Segment 82.8 78.5
Industrial & Specialty Segment 53.8 36.3
Communications Segment 32.3 25.6
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Total 168.9 140.4
--------- --------
--------- --------
Operating Profit (Loss)
- -----------------------
Energy Segment $7.5 $8.6
Industrial & Specialty Segment 2.8 2.2
Communications Segment (0.9) 0.6
--------- --------
Subtotal 9.4 11.4
Corporate (2.7) -
--------- --------
Total $6.7 $11.4
--------- --------
--------- --------
Return on Metal Adjusted Sales
- ------------------------------
Energy Segment 4.5% 5.6%
Industrial & Specialty Segment 1.4% 1.5%
Communications Segment -0.8% 0.6%
--------- --------
Total 1.4% 2.8%
--------- --------
--------- --------
Capital Expenditures
- --------------------
Energy Segment $2.7 $1.0
Industrial & Specialty Segment 2.6 1.9
Communications Segment 1.5 0.5
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Total $6.8 $3.4
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Depreciation & Amortization
- ---------------------------
Energy Segment $2.4 $1.6
Industrial & Specialty Segment 2.6 2.7
Communications Segment 4.7 3.9
--------- --------
Subtotal 9.7 8.2
Corporate(1) 1.4 -
--------- --------
Total $11.1 $8.2
--------- --------
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(1) Relates to the rationalization of certain Industrial plant
locations.
GENERAL CABLE CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(in millions, except share data)
ASSETS March 31, Dec. 31,
- ------ 2004 2003
----------- ---------
Current Assets: (unaudited)
Cash $ 16.3 $ 25.1
Receivables, net of allowances of $16.5
million at March 31, 2004 and
$15.6 million at December 31, 2003 335.3 268.9
Inventories 263.1 256.7
Deferred income taxes 13.5 13.5
Prepaid expenses and other 28.5 24.9
----------- ---------
Total current assets 656.7 589.1
Property, plant and equipment, net 333.9 333.3
Deferred income taxes 82.2 76.5
Other non-current assets 46.9 50.6
----------- ---------
Total assets $1,119.7 $1,049.5
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LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current Liabilities:
Accounts payable $ 295.3 $ 250.6
Accrued liabilities 104.0 99.6
Current portion of long-term debt 2.8 2.3
----------- ---------
Total current liabilities 402.1 352.5
Long-term debt 360.9 338.1
Deferred income taxes 9.5 9.6
Other liabilities 112.8 109.2
----------- ---------
Total liabilities 885.3 809.4
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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:
March 31, 2004 - 39,254,673 (net of
4,828,225 treasury shares)
December 31, 2003 - 38,908,512 (net of
4,828,225 treasury shares) 0.4 0.4
Additional paid-in capital 143.6 140.8
Treasury stock (50.4) (50.4)
Retained earnings 51.1 54.5
Accumulated other comprehensive loss (7.8) (5.5)
Other shareholders' equity (6.0) (3.2)
----------- ---------
Total shareholders' equity 234.4 240.1
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Total liabilities and shareholders' equity $1,119.7 $1,049.5
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CONTACT: General Cable Corporation
Paul M. Montgomery, 859-572-8684