HIGHLAND HEIGHTS, Ky. - Saturday, August 6th 2011 [ME NewsWire]
(BUSINESS WIRE)-- General Cable Corporation(NYSE: BGC), one of the most globally diversified industrial companies, reported today results for the second quarter ended July 1, 2011. Diluted earnings per share for the second quarter of 2011 were $0.68. Included in these results was $0.09 per share of non-cash convertible debt interest expense. Before the impact of this item, adjusted non-GAAP earnings per share for the second quarter of 2011 would have been $0.77.
Highlights
Adjusted earnings per share of $0.77 within the range of management’s earlier communication
Operating income in the second quarter of 2011 increased 33% or $20.0 million compared to the second quarter of 2010, and was up 9% or $6.7 million compared to the first quarter of 2011
Global volume as measured in metal pounds sold in the second quarter of 2011 increased 12% year over year, marking the fourth consecutive quarter of year over year growth
Seasonal demand patterns lift sequential volume as measured in metal pounds sold in North America by 6%
Submarine power cables business advances with three new project wins totaling approximately €150 million, collectively, which are expected to be executed in the 2012 and 2013 timeframe
Completed refinancing of $400 million Senior Secured Credit Facility, at attractive rates and terms, increasing global operating flexibility
General Cable added to the S&P MidCap 400 Index
Second Quarter Results
Net sales for the second quarter of 2011 were $1,532.2 million, an increase of $153.9 million, or 11%, compared to the second quarter of 2010 on a metal-adjusted basis. Before the impact of favorable foreign currency exchange rate changes of $80.3 million, net sales for the second quarter increased 5% compared to the second quarter of 2010. Volume based on metal pounds sold increased 12% in the second quarter of 2011 compared to 2010 partly as a result of aluminum based product shipments for metal intensive, aerial transmission projects in Brazil and North America. Sequentially as compared to the first quarter of 2011, volume in the second quarter was flat as seasonally higher demand in North America was offset by lower volume in the Company’s ROW and Europe and Mediterranean segments.
Operating income in the second quarter of 2011 increased 9% or $6.7 million to $79.8 million compared to $73.1 million in the first quarter of 2011, and was up 33% compared to the second quarter of 2010. The sequential increase in operating income was principally due to the strong performance in North America. This strong performance reflects seasonally stronger demand and better results in electric utility and telecommunications products as well as stable demand and steady momentum on pricing in North America for products tied to information technology, natural resource extraction and electrical infrastructure. Operating income in Rest of World sequentially improved primarily due to the strength of our businesses in Venezuela and Brazil. Partially offsetting these improvements sequentially were lower operating results in the Europe & Mediterranean region and lower absorption of overhead costs as inventory quantities were generally flat during the second quarter, excluding the impact of a forward purchase of copper in Venezuela during the quarter. On a metal adjusted basis, operating margin of 5.2% in the second quarter of 2011 was flat as compared to the first quarter of 2011, and was up 90 basis points as compared to the second quarter of 2010.
Gregory B. Kenny, President and Chief Executive Officer of General Cable, said, “In North America, our results benefited from the impact of seasonally higher demand in our electric utility and telecommunications businesses as well as the carryover of traction gained on pricing in the earlier part of the year in our businesses tied to information technology, natural resource extraction and electrical infrastructure. In ROW, our strategy of introducing a broader product range into developing markets helped to more than offset the impact of lower than expected volume across a number of geographies. The uneven demand experienced during the quarter is largely episodic as we believe the fundamental growth drivers within the emerging markets are solid with volume up during the second quarter 16% year over year. We continue to strengthen our market position and range of products in Colombia, Peru, Australia, South Africa and Mexico. In Mexico, our progress continues and we are encouraged to have recently supplied our first high-voltage cables manufactured at our state of the art facility. We also expect to begin production late in the fourth quarter at our new plant in India. We have seen no material change in our European and Mediterranean markets, which remain weak in terms of demand and pricing. However, during the quarter, we were awarded three meaningful projects in our submarine power cables business, valued at around €150 million, collectively. We expect production and installation of these cables in 2012 and 2013. We are pleased with the momentum we are seeing in our project systems business for both submarine power and terrestrial high and extra-high voltage cables.”
In North America, volume as measured in metal pounds sold increased 15% in the second quarter of 2011 compared to the second quarter of 2010 and was up 6% sequentially when compared to the first quarter of 2011. The sequential increase in volume was principally the result of seasonal demand for the Company’s electric utility and telecommunication products. Excluding these products, volume increased 16% year over year and was flat sequentially. Demand stabilized for the Company’s electrical infrastructure and networking products in the second quarter following the strong growth experienced during the first quarter.
In ROW, volume as measured in metal pounds sold increased 16% in the second quarter of 2011 compared to the second quarter of 2010 and was down 4% sequentially as compared to the first quarter of 2011. Volume was lower than expected across a number of business units throughout ROW. In Southeast Asia and Central America/Mexico, volume declined sequentially 11% and 10%, respectively. These declines were principally due to product mix, electric utility customer order patterns and the competitive landscape. Partially offsetting this weaker volume were better sequential results in Venezuela, Brazil and Zambia where the Company benefited from higher spending on electrical infrastructure and the shipment of aerial transmission cables. In addition, the Company continues to benefit from the diversification and expansion of its product offering in developing markets through the introduction of industrial, specialty and data communication products.
In Europe and Mediterranean, volume as measured in metal pounds sold increased 4% in the second quarter of 2011 compared to the second quarter of 2010 and was down 3% sequentially when compared to the first quarter of 2011. Seasonal demand for electric utility products in France and higher volume principally attributable to the Company’s project business in Germany were more than offset by broader weakness throughout Europe, particularly in Iberia.
Other expense of $3.9 million in the second quarter of 2011 was primarily attributable to foreign currency transaction losses which resulted from changes in exchange rates in the various countries in which the Company operates.
Liquidity
Net debt was $697.1 million at the end of the second quarter of 2011, an increase of $17.3 million from the end of the first quarter of 2011. The increase in net debt includes the impact of funding $39.7 million of copper purchases made during the second quarter of 2011 in Venezuela as the Company received authorization to import copper that will be utilized in production over the second half of the year. The Company continues to maintain adequate liquidity to fund operations, which could include increased working capital requirements as a result of higher raw material cost inputs, internal growth and continuing product and geographic expansion opportunities.
The Company recently completed the refinancing of its asset-based revolving credit facility in the US and Canada by entering into a new 5-year, $400 million asset-based revolving credit facility, maturing in 2016. The Company has the ability to increase the facility size in the future by up to $100 million.
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 24, 2011 to preferred stockholders of record as of the close of business on July 29, 2011. The Company expects the quarterly dividend payment to be less than $0.1 million.
To view the full report including tables please click here.
Contacts
General Cable Corporation
Len Texter,
Manager, Investor Relations,
859-572-8684
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