General Cable Corporation ( BGC )
reported second-quarter 2012 adjusted non-GAAP earnings per share
of 74 cents, 4.2% above the Zacks Consensus Estimate of 71 cents.
The earnings per share were up 54% compared to the prior-year
GAAP earnings for the quarter was 43 cents a share, which
includes the impact of 10 cents per share of non-cash convertible
debt interest expense, 13 cents per share of mark-to-market gains
on financial derivatives and a one-time non-cash pension
Total Revenue and Volume
Total revenue, on a metal-adjusted basis in the quarter
increased 5% year over year to $1,478.1 million.
Volume based on metal pounds sold increased 5% year over year,
driven by shipment of aerial transmission products globally. Demand
improvement in France and the Mediterranean increased volume by 2%
Geographical Volume Growth
In North America, volume in metal pounds sold for the second
quarter increased 2% year over year and was up 1% sequentially.
Excluding telephone and electric utility cables, volume increased
4% year over year and was up 1% sequentially as demand for
industrial and networking products improved marginally as compared
to the first quarter.
In the rest of the world (ROW), volume in metal pounds sold
increased 7% year over year and grew 1% sequentially. Excluding
metal pounds attributable to aerial transmission project shipments
in Brazil, volume was flat year over year and decreased
sequentially 2% compared to the first quarter of 2012.
Sequentially, stronger electrical infrastructure investment and
construction activity in Latin America and the ongoing recovery of
demand patterns in Thailand following the severe flooding were more
than offset by rod mill customers and distributors postponing
orders due to declining metal prices.
In Europe and Mediterranean, volume in metal pounds sold
increased 6% year over year and was grew 4% sequentially. On a
sequential basis, the second quarter reflects strong demand for
medium voltage cables in France, where reliability work on the grid
continues and demand for aluminum based electric utility products
in the Mediterranean as investments in the grid advanced during the
Income and Expenses
Operating income in the quarter was $78.7 million in the
quarter, reflecting a 47% sequential increase over $53.4 million in
the first quarter of 2012. The sequential improvement in operating
income is attributable to improved performance in the North
American telephone and electric utility businesses, strong global
aerial transmission project activity, improving domestic conditions
in Thailand following the severe flooding in the fourth quarter of
2011, strong mining activity in Chile and ongoing grid investment
On a metal adjusted basis, operating margin for the quarter was
up 140 basis points (bps) sequentially to 5.3% but was almost flat
year over year. Prior-year operating margin benefited from a rising
metal price environment and operating results in Spain.
Cash and cash equivalents were $438.8 million at the end of the
quarter. Net debt for the reported quarter was $708.1 million as of
June 29 2012, reflecting 30% increase from $687.5 million at the
end of the first quarter of 2012. The increase was attributable to
the impact of funding of $41.0 million of copper purchases made
during the quarter in Venezuela, as the company received
authorization to import copper that will be used in production over
the second half of the year.
Exiting the quarter, the company had a long term debt of $918.2
million with a debt-to-capital ratio of 37.2%.
Concurrent with the earnings release, management provided
guidance for the third quarter and fiscal 2012. Revenue for the
third quarter are expected to be in the range of $1.43 billion to
$1.48 billion, assuming average metal prices for the 30-day period
ending July 30 on flat to slightly lower volume sequentially.
Adjusted operating income is expected to be in the range of $65
million to $75 million, while adjusted earnings per share are
expected to be in the range of 60 cents to 70 cents before the
impact of non-cash convertible debt interest expense and mark to
market gains or losses on derivative instruments.
However, given the current economic uncertainty and metal cost
volatility, the company has lowered its guidance for full fiscal
2012. Adjusted operating income is now expected to be in the
range of $260 million to $280 million compared to its previous
guidance range of $270 million to $300 million.
The company has also narrowed its unit volume guidance for 2012
lowering the range to an increase of 2-4% compared to 3% to 7%
Headquartered in Highland Heights, Kentucky, General Cable is
engaged in the development, design, manufacture, marketing and
distribution of copper, aluminum and fiber optic wire and cable
products for the energy, industrial, specialty and communications
markets. The company offers competitive strengths in areas, such as
breadth of product line, brand recognition, distribution and
logistics, sales and service, and operating efficiency.
General Cable Corporation holds a Zacks #3 Rank (short-term Hold
GENL CABLE CORP (BGC): Free Stock Analysis
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