General Cable Misses on Earnings - Analyst Blog
May 02 2013 - 8:50AM
Zacks
General Cable Corporation(BGC) reported
first-quarter 2013 non-GAAP earnings per share of 23 cents, 11.5%
below the Zacks Consensus Estimate of 26 cents. However, earnings
were well within management’s range of expectations. On the same
date the Board of Directors also declared a regular quarterly
preferred stock dividend of approximately $0.72 per share. The
dividend is payable on May 24, 2013 to the shareholders of record
as on April 30, 2013. The Company expects the quarterly dividend
payment to be less than $0.1 million.
On GAAP basis the company reported a net loss of 46.5 million or
94 cents per share compared to a net income of 22.7 million or 45
cents per share in the year-ago quarter.
Revenue
Net sales for the quarter were $1.5 billion, reflecting a 10%
rise over last quarter’s revenue of $1.4 billion. Total volume
based on metal pounds sold also showed an increase of 20% year over
year, resulting from the recent acquisitions and strong demand for
metal intensive products in North America.
However, net sales of metal pounds declined 5% in the quarter on
an adjusted basis compared to fourth quarter 2012. This was
accompanied by a volume reduction of 4% sequentially. The
quarter-over-quarter decline was due to seasonal demand trends.
Geographical Volume Growth
In North America, volume was down 6%
sequentially and 4% year over year. The year over year sales
declined in comparison with the exceptionally high sales volume a
year ago due to a strong demand in the company’s utility cables for
construction work. Excluding this, volume increased 12% year over
year. Demand for aerial transmission products as measured in metal
pounds sold increased 8% year over year. This was an all-time
quarterly high. Excluding this, volume increased 3% sequentially,
driven by a strong demand for construction and electrical
infrastructure products.
In ROW (Rest Of The World), volume decreased
22% year over year and 13% sequentially. Seasonal decline in Latin
America fully offset the benefit of the high demand in Asia
Pacific. Order trends in Thailand and the Philippines were derived
from construction activities in the region. In spite of the adverse
effects of political and economic uncertainty, stronger demands
were experienced in Venezuela. The company also benefited from
strong shipment orders in Brazil and Chile.
In Europe and the Mediterranean, volume
decreased 5% year over year and 2% sequentially. Strong electric
utility products shipment in the Mediterranean partially offset the
adverse effect of demand weakness in major domestic markets of
Europe. On the other hand, the company experienced increased
exports of Spanish facilities. This resulted in increased sales
volume sequentially.
Income and Expenses
Adjusted operating income in the quarter was $46.2 million,
reflecting a $5.7 million or an 11% year over year decline from the
previous year’s first quarter income of $51.9 million. However, it
was well within management’s expectations.The decline in operating
income is attributable to revised profitability estimates due to
Venezuelan currency devaluation. Strong contributions from
acquisitions partially offset the effects of seasonal demand
weakness in major markets.
Debt and Cash Flow
The company’s net debt was $1048.2 million at the end of
the quarter, an increase of $236.3 million from the end of the
fourth quarter of 2012. Working capital requirement increased
during the quarter, as a result of an increase in demand due to
seasonal demand patters. Moreover the Venezuelan currency
devaluation also increased net debt since the value of cash held in
the region was reduced by $45.1 million during the quarter.
However, value of the company’s net cash and cash equivalents was
$499.8 million at the end of the quarter, i.e., a decrease of
$138.4 million from that at the end of earlier quarter.
Outlook
Concurrent with the earnings release, management provided
guidance for the second quarter and full year 2013. The company’s
second quarter 2013 revenues are expected to be in the range of
$1.7 to $1.75 billion assuming current metal prices on volume
improvement ranging from 10% to 15% sequentially.
Volume has been revised to be flat to marginally high for the
full year 2013. The adjusted operating income is expected to be in
the range of $70 million to $80 million for second quarter
2013.
Adjusted earnings are expected to be in the range of 50 cents to
60 cents per share. The guidance excludes the impact of non-cash
convertible debt interest expense and mark-to-market gains or
losses on derivative instruments. The company expects comparatively
better second quarter results with an improvement in seasonal
trends.
The second quarter outlook reflects a flat seasonal trend in
North America and ROW along with ongoing sharp improvement in
demand for electric utility. Construction and installation work,
particularly in Venezuela is expected to be seasonally better in
the second quarter. The work will gradually improve as the weather
changes in spring and summer.
General Cable currently has a Zacks Rank #5 (Strong Sell). Other
participants in the sector include Insteel Industries
Inc. (IIIN) and China Merchants Holdings
(International) Company Limited (CMHHY) both having a
Zacks Rank #1 (Strong Buy) and Crane Co. (CR),
which has a Zacks Rank #2 (Buy).
GENL CABLE CORP (BGC): Free Stock Analysis Report
CHINA MERCHANTS (CMHHY): Get Free Report
CRANE CO (CR): Free Stock Analysis Report
INSTEEL INDS (IIIN): Free Stock Analysis Report
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