HIGHLAND HEIGHTS, Ky. - Saturday, August 4th 2012 [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 June 29, 2012. Non-GAAP adjusted earnings per share of $0.74 and adjusted operating income of $78.7 million were within management’s range of expectations as global volume measured in metal pounds sold for the second quarter increased 2% sequentially and 5% year over year. Diluted earnings per share and reported operating income for the second quarter of 2012 were $0.43 and $72.6 million, respectively. A reconciliation of Non-GAAP earnings per share to GAAP earnings per share and adjusted operating income to reported operating income are included on page 4 of this release.
Highlights
Adjusted earnings per share of $0.74 within management’s guidance of $0.65 to $0.75 and up 54% sequentially
Adjusted operating income of $78.7 million within management’s guidance range and up 47% sequentially
Global volume as measured in metal pounds in the first half of 2012 increased 4% as compared to the first half of 2011 and 5% as compared to the second half of 2011
Signed definitive agreement to acquire Alcan Cable, the wire and cable business of Rio Tinto plc for $185 million in cash
Signed definitive agreement to acquire a majority interest (60%) in Procables S.A. for total consideration of $45 million
Second Quarter Results
Net sales for the second quarter of 2012 were $1,478.1 million, an increase of $66.6 million, or 5%, compared to the second quarter of 2011 on a metal-adjusted basis. Volume based on metal pounds sold increased 5% in the second quarter of 2012 compared to 2011 principally due to the ongoing strength in global aerial transmission product shipments. Sequentially, volume based on metal pounds sold increased 2% principally due to demand in France and the Mediterranean as well as stable demand in most ROW and North American businesses as compared to the first quarter.
Adjusted operating income in the second quarter of 2012 increased to $78.7 million or 47% compared to $53.4 million in the first quarter of 2012. Despite the second quarter average copper and aluminum price declining 6% and 7%, respectively, from the first quarter average price, adjusted operating income for the second quarter of 2012 improved sequentially in all three segments. The sequential improvement in operating income principally reflects improved performance in the Company’s North American telephone and electric utility businesses; strong global aerial transmission project activity; improving domestic conditions in Thailand following the severe flooding in the fourth quarter of 2011; strong mining activity in Chile; and ongoing grid investment in France. On a metal adjusted basis, adjusted operating margin of 5.3% in the second quarter of 2012 was up 140 basis points as compared to the first quarter of 2012 and relatively flat as compared to the second quarter of 2011, which benefited from a rising rather than a declining metal price environment as well as better operating results in Spain.
Gregory B. Kenny, President and Chief Executive Officer of General Cable, said, “Aided by normal seasonal trends, we experienced broad-based improvement in a number of our businesses resulting in each segment reporting sequentially better operating results. Despite the prevailing lower metal cost environment experienced during the second quarter, adjusted operating income in North America and ROW was generally in line with our expectations. In Europe, operating results improved despite the negative macro environment and intermittent delays on certain submarine and land based turnkey projects. These intermittent delays and shifting of project activity and milestones between quarters are typical as these projects are highly complex. Project activity for the full year remains on track. A principal source of strength during the second quarter was demand for medium voltage cables in France where reliability work on the grid continues. In Spain, operating results improved from the first quarter as we have expanded our served market well beyond Spain itself. We also continue to lower our breakeven in Spain by increasing our production flexibility and reducing our labor and other manufacturing costs. Overall, we are encouraged by our results over the first half of 2012 but recent global economic trends, a slowing U.S. economy and ongoing uncertainty in Europe remain a concern as second quarter global volume, in part due to declining metal prices, fell short of expectations across all geographies.”
In North America, volume as measured in metal pounds sold for the second quarter of 2012 increased 2% as compared to the second quarter of 2011 and was up 1% sequentially when compared to the first quarter of 2012. Excluding telephone and electric utility cables, volume increased 4% as compared to the second quarter of 2011 and was up 1% sequentially as demand for industrial and networking products improved marginally as compared to the first quarter. Demand for specialty cables, including those used in natural resource extraction applications, continued to be a source of stability. Volumes were below expectation across most business units as an industrial slowdown stalled demand for wire and cable products in the second quarter. In addition, the impact of the relatively mild winter and stronger wind farm activity may have pulled forward demand into the first quarter for electric utility distribution and other cables.
In ROW, volume as measured in metal pounds sold increased 7% in the second quarter of 2012 compared to the second quarter of 2011 and was up 1% sequentially when compared to the first quarter of 2012. Excluding metal pounds attributable to aerial transmission project shipments in Brazil, volume was flat year over year and decreased sequentially 2% as compared to the first quarter of 2012. Sequentially, stronger electrical infrastructure investment and construction activity in Latin America as well as the ongoing recovery of demand patterns in Thailand following the severe flooding experienced in the fourth quarter of 2011 were more than offset by rod mill customers and distributors postponing orders due to declining metal prices. Overall, volume was lower than expected as the Company experienced delays in aerial transmission projects in Brazil and high voltage projects for export from Thailand. More broadly, there was a general softening in order rates partly due to declining metal prices affecting the buying behavior of rod mill OEM customers and electrical distributors. The cables for the projects in Brazil and Thailand are expected to ship in the third quarter. Excluding metal pounds attributable to aerial transmission project shipments in Brazil, the Company continues to expect full year volume growth in ROW despite uneven quarterly demand patterns. Volume growth is expected to be driven by higher spending on electrical infrastructure investment as well as construction and mining activity in Central and South America. Growth in Thailand is expected as recovery efforts continue and investments in the grid advance.
In Europe and Mediterranean, volume as measured in metal pounds sold increased 6% in the second quarter of 2012 compared to the second quarter of 2011 and was up 4% sequentially when compared to the first quarter of 2012. Sequentially, the second quarter of 2012 principally reflects strong demand for medium voltage cables in France where reliability work on the grid continues as well as demand for aluminum based electric utility products in the Mediterranean as investments in the grid advanced during the quarter. The Company’s backlog was around $650 million for submarine and land-based turnkey cable projects at the end of the second quarter.
Other expense was $13.5 million in the second quarter of 2012 which primarily consists of $10.2 million of mark to market losses on derivative instruments accounted for as economic hedges which are used to manage currency and commodity risk on the Company’s project business globally and $3.3 million of foreign currency transaction losses.
Liquidity
Net debt was $708.1 million at the end of the second quarter of 2012, an increase of $20.6 million from the end of the first quarter of 2012. The increase in net debt is principally due to the impact of funding $41.0 million of copper purchases made during the second quarter of 2012 in Venezuela as the Company received authorization to import copper that will be used 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 resulting from higher raw material cost inputs, internal growth and continuing product and geographic expansion opportunities as well as its stock repurchase program.
Preferred Stock Dividend
X 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, 2012 to preferred stockholders of record as of the close of business on July 31, 2012. The Company expects the quarterly dividend payment to be less than $0.1 million.
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Contacts
General Cable Corporation
Len Texter, Manager,
Investor Relations, 859-572-8684
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