HIGHLAND HEIGHTS, Ky.-- (BUSINESS WIRE /ME NewsWire)-- General Cable Corporation (NYSE: BGC) reported today results for the fourth quarter ended December 31, 2016. For the quarter, reported diluted loss per share was $2.10 and reported operating loss was $97 million. The Company generated adjusted earnings per share for the quarter of $0.05 and adjusted operating income of $27 million. See page 3 of this press release for the reconciliation of reported to adjusted results and related disclosures.
Michael T. McDonnell, President and Chief Executive Officer, said, “In 2016 we achieved significant progress in the execution of our strategic roadmap designed to transform the Company into a more focused, efficient and innovative organization, including the strengthening of the General Cable global management team. We are especially pleased with what we have accomplished in North America, which has been a primary focus of the roadmap during the first year of our three year plan. In 2017, we expect to complete most of the North American initiatives and make substantial progress in Europe and Latin America. Fourth quarter results were at the low end of our expectations as stronger than expected results in North America driven by demand for construction and electric utility products were more than offset by a continued weak economic environment in Latin America and a delayed implementation of a restructuring project in Europe. We also delivered significant operating cash flow in the fourth quarter of $89 million through timely customer collections and continued tight management of inventory levels. We maintain a positive outlook for 2017 and are encouraged by our performance and continued execution as we head into the year.”
- Reported operating loss of $97 million largely due to settlement of FCPA-related investigation and the reclassification of accumulated other comprehensive non-cash currency translation expense of $28 million related to the closure of our South African facilities
- Adjusted operating income of $27 million benefitted from strong performance in North America and favorable metal prices which nearly offset lower subsea turnkey project activity compared to last year and continued weak economic conditions in Latin America
- Generated operating cash flow of $89 million driven by the continued tight management of working capital
- Maintained significant liquidity with $399 million of availability on the Company’s asset based credit facility and applied cash proceeds from divestitures to reduce outstanding borrowings
- Impact of metal prices was a $5 million benefit compared to a negative $8 million impact in the prior year period
North America – Unit volume was up 10% year over year as stronger demand for construction and electric utility cables more than offset the continuing weak demand for industrial and specialty products tied to oil and gas end markets.
Europe – Unit volume was up 6% year over year driven by demand for electric utility products including land-based turnkey projects as well as energy cables.
Latin America – Unit volume was up 9% year over year primarily driven by rod products. Excluding rod products, unit volume was flat year over year.
Overall, for the full year 2016, North America end market demand was up 1%. Demand in electric utility distribution and non-residential construction markets in North America was up year over year while demand for industrial and specialty products tied to oil and gas markets continued to weaken throughout the year and was down year over year 4% and 52%, respectively. In Europe, end market demand was flat year over year. Latin America (excluding Venezuela) end market demand was up 2% driven by rod products and shipments of aerial transmission cables, while the balance of the portfolio remains under pressure due to reduced spending on electric infrastructure and construction projects. Excluding rod products, unit volume was down 4% year over year in Latin America.
At the end of the fourth quarter 2016 and the end of the fourth quarter of 2015, total debt was $939 million and $1,080 million, respectively, and cash and cash equivalents were $101 million and $112 million, respectively. The decrease in net debt was principally due to cash proceeds from divestitures being used to reduce outstanding borrowings and the efficient management of working capital, including tight management of inventory levels.
We announced on December 29, 2016, that we had entered into agreements with the SEC and the DOJ that bring to a conclusion those agencies’ respective investigations relating to the FCPA and to the SEC’s separate accounting investigation related to our financial statements from fiscal years 2012 and prior. As a result, fines, disgorgement, and pre-judgment interest will be paid to the SEC and DOJ in the amount of $82.3 million in 2017. We recorded a charge of approximately $49.3 million in the fourth quarter of 2016.
As previously disclosed, the minority shareholders in the Company’s business in Colombia (Procables) elected to exercise a contractual right to sell their 40% interest to the Company. In the fourth quarter of 2016, the Company paid $18.0 million to the minority shareholders for their 40% interest and now owns 100% of the business.
First Quarter 2017 Outlook
Revenues in the first quarter are expected to be in the range of $850 to $900 million. Unit volume is anticipated to be up low-single digits year over year. Reported operating income is anticipated to be in the range of $15 to $30 million and adjusted operating income is anticipated to be in the range of $25 to $40 million for the first quarter. Reported diluted earnings per share are anticipated to be in the range of ($0.05) to $0.10 per share and adjusted earnings per share are expected to be in the range of $0.05 to $0.20 per share for the first quarter. The first quarter outlook assumes copper (COMEX) and aluminum (LME) prices of $2.60 and $0.81, respectively. Foreign currency exchange rates are assumed constant in the first quarter outlook. The first quarter outlook for adjusted operating results does not include results from Asia Pacific and Africa.
Non-GAAP Financial Measures
Adjusted operating income (defined as operating income before extraordinary, nonrecurring or unusual charges and other certain items), adjusted earnings per share (defined as diluted earnings per share before extraordinary, nonrecurring or unusual charges and other certain items) and net debt (defined as long-term debt plus current portion of long-term debt less cash and cash equivalents) are “non-GAAP financial measures” as defined under the rules of the Securities and Exchange Commission. Metal adjusted revenues, adjusted operating income and return on metal-adjusted sales on a segment basis, non-GAAP financial measures, are also provided herein. See “Segment Information.”
These Company-defined non-GAAP financial measures exclude from reported results those items that management believes are not indicative of our ongoing performance and are being provided herein because management believes they are useful in analyzing the operating performance of the business and are consistent with how management reviews our operating results and the underlying business trends. Use of these non-GAAP measures may be inconsistent with similar measures presented by other companies and should only be used in conjunction with the Company’s results reported according to GAAP. Adjusted results, for periods prior to the fourth quarter of 2015, reflect the removal of the impact of our Venezuelan operations on a standalone basis. Effective as of the end of the third quarter 2015, we deconsolidated our Venezuelan subsidiary and began accounting for our investment in our Venezuelan subsidiary using the cost method of accounting. Historical segment adjusted operating results are disclosed in the Fourth Quarter 2016 Investor Presentation available on the Company’s website.
A reconciliation of GAAP operating income (loss) and diluted earnings (loss) per share to adjusted operating income and earnings (loss) per share follows:
Fourth Quarter of 2016 versus Fourth Quarter of 2015 and Third Quarter of 2016
General Cable Corporation
Gavin Bell, 859-572-8684
Vice President, Investor Relations