(BUSINESS WIRE)-- General Cable Corporation (NYSE: BGC) reported today results for the second quarter ended June 27, 2014. For the second quarter of 2014, excluding certain items, the Company recorded adjusted income per share of $0.29 and adjusted operating income of $57 million. For the second quarter of 2014, reported loss per share was ($0.51) and reported operating income was $14 million. A reconciliation of adjusted earnings per share to reported loss per share and adjusted operating income to reported operating income is included on page 3 of this press release.
Highlights
Immediate action taken under the Company’s restructuring program with the announced closure of three manufacturing facilities
Adjusted operating income of $57 million and adjusted EPS of $0.29 per share were both within management’s guidance range for the second quarter
Submarine turnkey project business delivered better than expected results as key project milestones were achieved in the second quarter
Gregory B. Kenny, President and Chief Executive Officer, said, “Our restructuring program is off to a fast start as planned. While difficult, we have taken prompt action announcing the closure of the India and Peru greenfield locations in Rest of World (“ROW”) as well as the closure of one manufacturing facility in North America. The closure of these three facilities is expected to generate around $12 million in annual savings and result in one-time pre-tax charges in the range of $50 million including approximately $12 million of cash. Overall, the wire and cable industry has been wading through an uneven and lengthy global economic recovery over the past several years and these actions are important initial steps to improve our profitability and return on invested capital. Our top priority is the execution of our restructuring program while at the same time delivering perfect customer service and capturing market opportunities. We intend to support our important market position in Peru utilizing regional manufacturing facilities. In India, we will maintain a sales team focused on higher value added products such as extra high voltage power cables that we manufacture in France and Thailand.”
Q2 2014 versus Q2 2013 Net sales for the second quarter of 2014 of $1,531 million were down 7% as compared to the second quarter of 2013 on a metal adjusted basis. Global unit volume for the second quarter of 2014 was also down 5% year over year. This decline principally reflects lower shipments of aerial transmission cables and construction products in North America and Latin America as well as the impact of ongoing challenges in Spain and Thailand. As a result of these trends, adjusted operating income for the second quarter of 2014 of $57 million decreased $8 million or 12% from $65 million in the second quarter of 2013 (excluding Venezuela from both periods). Partially offsetting these trends were adjusted operating results in Europe & Med which were up year over year primarily due to the performance of the Company’s submarine turnkey project business.
Q2 2014 versus Q1 2014 Net sales for the second quarter of 2014 increased 8% as compared to the first quarter of 2014 as global unit volume increased 3% principally due to seasonal demand patterns. Excluding Venezuela, adjusted operating income for the second quarter of 2014 increased $34 million or 148% from the first quarter of 2014 principally due to seasonal demand trends as well as the strong performance of the Company’s submarine turnkey project business which helped to offset the impact of selling higher average cost inventory into a lower cost metal environment and ongoing challenges in Spain and Thailand.
Other income Other income was $4 million in the second quarter of 2014, which principally reflects gains of $4 million due to the remeasurement of the local balance sheet in Venezuela as the SICAD I rate appreciated slightly during the second quarter. Excluding the impact of Venezuela, mark to market gains of $4 million on derivative instruments accounted for as economic hedges which are used to manage currency and commodity risk principally on the Company’s project business globally were offset by foreign currency transaction losses of $4 million.
Liquidity Net debt was $1,256 million at the end of the second quarter of 2014, an increase of $104 million from the end of the first quarter of 2014. The increase in net debt is principally the result of normal seasonal trends as the Company funded higher working capital requirements in the second quarter of 2014. The Company continues to maintain adequate liquidity to fund operations, internal growth, and continuing product expansion opportunities.
The Company’s share repurchase authorization remains at $75 million under its current program as the Company did not repurchase any shares during the second quarter. The Company may utilize this authorization in the context of economic conditions as well as the then prevailing market price of the common stock of the Company, regulatory requirements, financial covenants and alternative deployments of capital.
Full Year 2014 and Third Quarter Outlook excluding Venezuela Management reconfirms its outlook for adjusted operating income for 2014 in the range of $200 to $230 million, which excludes the impact of Venezuela. Global unit volume is expected to be flat to down low single digits year over year due to the lack of consistent momentum in utility and construction spending in North America and Latin America as well as ongoing challenges in Spain and Thailand. The Company expects to generate $135 to $165 million of operating cash flow in 2014 with capital spending below depreciation. The revised operating cash flow outlook principally reflects funding higher working capital for 2014. The Company’s full year and third quarter outlook assumes copper (COMEX) and aluminum (LME) prices of $3.21 and $0.90, respectively. Management expects the business in Venezuela to generate $0 to $10 million in pre-tax income for the full year.
Revenues in the third quarter are expected to be in the range of $1.5 to $1.55 billion as volume is anticipated to increase in the low single digit range sequentially. The Company anticipates adjusted operating income to be in the range of $60 to $75 million as the burden of selling higher average cost inventory subsides due to the relatively higher metal price environment. This expected result, at the midpoint, represents an improvement in adjusted operating income for the third quarter of 2014 of 52% as compared to the third quarter of 2013. Adjusted earnings per share are expected to be in the range of $0.35 to $0.55 per share. The third quarter outlook does not include the impact of Venezuela.
To view the full release including the table, please click here
Contacts
General Cable Corporation
Len Texter, Vice President, Investor Relations, 859-572-8684
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