HIGHLAND HEIGHTS, Ky - Monday, May 5th 2014 [ME NewsWire]
(BUSINESS WIRE) General Cable Corporation (NYSE: BGC) reported today results for the first quarter ended March 28, 2014. For the first quarter of 2014, excluding certain items, the Company recorded adjusted loss per share of ($0.05) and adjusted operating income of $27 million. For the first quarter of 2014, reported loss per share was ($6.42) and reported operating loss was ($237) million. A reconciliation of adjusted earnings per share to reported earnings per share and adjusted operating income to reported operating income is included on page 3 of this press release.
Reconfirmed full year outlook for adjusted operating income for 2014 excluding Venezuela
Productivity and asset optimization plans on track
Submarine turnkey project business delivers stable performance for the fourth consecutive quarter
Repurchased $31 million or 2% of common shares in the first quarter
Gregory B. Kenny, President and Chief Executive Officer of General Cable, said, “We anticipated a sluggish seasonal start to the year but the uncertainty in Venezuela, the extreme winter weather in North America and declining copper prices had a pronounced impact on our first quarter results. We are managing through these challenges as we generated adjusted operating income at the upper end of our revised outlook for the first quarter. We are prepared for the construction season and continue to focus on executing on our submarine turnkey projects which together we expect will drive a sharp improvement in adjusted operating income as we move into the second and third quarters. At the same time, we are focused on driving productivity and asset optimization throughout our manufacturing footprint.”
Q1 2014 versus Q1 2013 Net sales for the first quarter of 2014 of $1,430 million were down 3% as compared to the first quarter of 2013 on a metal adjusted basis. Global unit volume for the first quarter of 2014 was also down 3% year over year principally due to the extreme winter weather experienced in North America. Adjusted operating income for the first quarter of 2014 of $27 million decreased 43% as compared to the first quarter of 2013 principally due to the impact of the social unrest in Venezuela and Thailand and the extreme winter weather experienced across North America. Partially offsetting the impact of these items was stronger year over year results in Europe & Med primarily driven by the continued execution of the submarine turnkey project business.
Q1 2014 versus Q4 2013 Net sales for the first quarter of 2014 declined 14% as compared to the fourth quarter of 2013 as global unit volume decreased 10% principally due to seasonal demand patterns. Additionally, in North America, the impact of the extreme winter hampered business activity across the region in the first quarter as compared to the fourth quarter when the Company shipped near record high volume of aerial transmission cables. Sequentially, adjusted operating income for the first quarter of 2014 reflects the impact of the social unrest and pricing controls in Venezuela, seasonally slower production and installation activity in the Company’s submarine turnkey project business in Europe and the impact of seasonally lower global unit volume.
Other expense Other expense was $98 million in the first quarter of 2014, which consists of $83 million related to the Venezuelan currency exchange rate change from 6.3 bolivar to each US dollar to 10.8. This charge reflects the remeasurement of the Venezuelan balance sheet on March 28, 2014 as previously announced by the Company on April 17, 2014. Also included in other expense were $11 million of mark to market losses 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, and $4 million of foreign currency transaction losses.
Liquidity Net debt was $1,152 million at the end of the first quarter of 2014, an increase of $184 million from the end of the fourth quarter of 2013. The increase in net debt is principally the result of higher working capital requirements due to normal seasonal trends as the Company invested in inventory in its North American and ROW segments during the first quarter of 2014. The impact of the change in the Venezuelan currency exchange rate also contributed to the increase in net debt as the value of the Company’s cash held in bolivars in Venezuela was reduced by $81 million in the first quarter of 2014.
The Company repurchased 1.0 million shares, 2% of its common shares or approximately $31 million during the first quarter of 2014 under its $125 million share repurchase authorization which is set to expire at the end of the year. Under its current program, the Company has repurchased 1.6 million shares, 3% of its common shares or approximately $50 million. The Company may utilize the remaining $75 million buyback 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 capital investments.
Full Year 2014 and Second Quarter Outlook excluding Venezuela Management confirms its outlook for adjusted operating income for 2014 as previously communicated on March 27, 2014 at around the low end of the range of $230 million, which excludes any contributions from Venezuela. Management expects the business in Venezuela to generate $0 to $20 million in pre-tax income for the full year due to changes in the currency exchange system, restrictive price controls, ongoing labor negotiations and lingering social unrest, which is down from management’s previously communicated expectation of $30 million. “Adjusted operating income of $230 million (excluding Venezuela) would represent an improvement year over year of approximately 15%. This anticipated growth reflects the concerted effort of our associates globally to drive operating performance improvement across our portfolio. We expect the benefit of seasonal demand patterns through the construction season, productivity gains in North America, continuing submarine turnkey project execution in Europe and progress on the turnaround of Greenfields in ROW to more than offset the impact of near term copper price headwinds expected principally in the second quarter. Our outlook assumes a stronger second half as the copper price headwinds subside and these initiatives continue to gain momentum into the latter half of the year,” Kenny concluded. The Company expects to generate $225 to $275 million of operating cash flow in 2014 with capital spending below depreciation. The Company’s full year and second quarter outlook assumes copper (COMEX) and aluminum (LME) prices of $3.07 and $0.81, respectively.
Revenues in the second quarter are expected to be in the range of $1.575 to $1.625 billion as volume is anticipated to increase in the high single digit range sequentially. With a significant copper price headwind expected in the second quarter, the Company anticipates adjusted operating income to be in the range of $45 to $60 million. Globally, the impact on adjusted operating income of selling higher average cost inventory into a lower price environment on copper based products in the second quarter is estimated to be in the range of $15 to $20 million. Adjusted earnings per share are expected to be in the range of $0.20 to $0.40 per share before the impact of non-cash convertible debt interest expense and mark to market gains or losses on derivative instruments. The second quarter outlook does not include any contributions from Venezuela.
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General Cable Corporation
Len Texter, 859-572-8684
Vice President, Investor Relations