WEBC Webco Industrial Inc (PK)

Webco Industries, Inc. (OTC: WEBC) today reported results for its fiscal 2015 first quarter ended October 31, 2014.

For its fiscal 2015 first quarter, the Company reported net income of $0.3 million, or $0.36 per diluted share, compared to a net loss of $0.8 million, or a loss of $1.02 per diluted share, for the first quarter in fiscal 2014. Net sales for the first quarter of fiscal 2015 were $106.1 million, a 3.7 percent increase over the $102.4 million of sales in last year’s first quarter. The current quarter includes a $0.6 million non-cash loss related to the Company’s interest swap contract, whereas the prior year first quarter includes a $0.5 million non-cash loss related to the interest swap contract.

In the first quarter of fiscal year 2015, the Company generated income from operations of $2.0 million, including depreciation of $2.9 million. Income from operations in the first fiscal quarter of the prior year was $0.3 million, with depreciation amounting to $3.5 million. Gross profit for the first quarter of fiscal 2015 was $8.4 million, or 7.9 percent of net sales, compared to $5.9 million, or 5.7 percent of net sales, for the first quarter of fiscal 2014.

Dana S. Weber, Chief Executive Officer, commented, “The industrial economy in general is challenging, burdened with lower demand, less favorable product mix and weak spot market pricing. We are having success adding incremental business, but the accelerating cost and complexity of regulations and legislation is not helping facilitate growth. We are generating cash flow well in excess of debt service, enabling us to continue investing in our business.”

Selling, general and administrative expenses in the first quarter of fiscal 2015 were $6.4 million, increasing from $5.6 million in the first quarter of fiscal 2014.

Interest expense was $0.9 million and $1.0 million in the first quarter of fiscal 2015 and fiscal 2014, respectively. The Company is party to an arrangement that swaps the variable interest rate for $50 million of the Company’s debt to a fixed rate through December 2019. The Company records the interest swap contract at fair value and non-cash changes in value are reported in Gains or Losses on Interest Contracts. Monthly swap settlements are included in interest expense.

Capital expenditures incurred amounted to $3.9 million in the first fiscal quarter ended October 31, 2014.

Webco is a manufacturer and value-added distributor of high-quality carbon steel, stainless steel and other metal tubular products designed to industry and customer specifications. Webco's tubing products consist primarily of pressure tubing and specialty tubing for use in durable and capital goods. Webco's long-term strategy involves the pursuit of niche markets within the metal tubing industry through the deployment of leading-edge manufacturing and information technology. Webco has seven production facilities in Oklahoma and Pennsylvania and five value-added distribution facilities in Oklahoma, Texas, Illinois and Michigan, serving customers globally.

Forward-looking statements: Certain statements in this release, including, but not limited to, those preceded by or predicated upon the words “anticipates,” “appears,” “believes,” “can,” “considering,” “expects,” “hopes,” “plans,” “projects,” “pursue,” “should,” “would,” or similar words constitute “forward-looking statements.” Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of the Company, or industry results, to differ materially from any future results, performance or achievements expressed or implied herein. Such risks, uncertainties and factors include the factors discussed above and, among others: general economic and business conditions, including any global economic downturn or disruptions in the global credit markets, competition from imports, changes in manufacturing technology, banking environment, including availability of adequate financing, monetary policy, tax rates and regulation, raw material costs and availability, industry capacity, domestic competition, loss of significant customers and customer work stoppages, the costs associated with providing healthcare benefits to employees, customer claims, technical and data processing capabilities, and insurance costs and availability. The Company assumes no obligation to update publicly such forward-looking statements, whether as a result of new information, future events or otherwise.

  WEBCO INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except per share data) (Unaudited)   Three Months Ended

October 31,

  2014     2013     Net sales $ 106,110 $ 102,371 Cost of sales   97,706   96,503  

Gross profit

8,403

5,868

Selling, general & administrative   6,411   5,550  

Income from operations

1,992

318

Interest expense 885 1,018 (Gain) loss on interest contracts   622   535  

Income (loss) before income taxes

485

(1,236

)

Income tax expense (benefit)   195   (433 )   Net income (loss) $ 290 $ (803 )     Net income (loss) per common share: Basic $ 0.36 $ (1.02 ) Diluted $ 0.36 $ (1.02 )     Weighted average common shares outstanding: Basic   805,000   790,000  

Diluted

  810,000   790,000    

Note: Amounts may not sum due to rounding.

  WEBCO INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET HIGHLIGHTS (Dollars in thousands) (Unaudited)     October 31,

2014

July 31,

2014

  Cash $ 4,214 $ 4,793 Accounts receivable, net 45,327 44,100 Inventories, net 160,658 153,071 Other current assets   8,665   8,131 Total current assets 218,865 210,095   Net property, plant and equipment 96,529 95,904 Other long-term assets   1,661   1,874   Total assets $ 317,054 $ 307,873   Other current liabilities $ 39,934 $ 36,550 Current portion of long-term debt   86,998   81,405 Total current liabilities 126,932 117,955   Long-term debt 12,000 12,000 Deferred income tax liability 17,767 18,363   Total equity   160,355   159,555   Total liabilities and equity $ 317,054 $ 307,873   CASH FLOW DATA (Dollars in thousands) (Unaudited)   Three Months Ended

October 31,

  2014       2013   Net cash provided by

(used in) operating activities

$

(5,919

)

$

(7,053

)

  Depreciation and amortization $ 2,944   $ 3,630     Cash paid for capital expenditures $ 3,621   $ 1,701    

Note: Amounts may not sum due to rounding.

Webco Industries, Inc.Mike Howard, 918-241-1094Chief Financial Officermhoward@webcoindustries.com