General Cable Corporation (BGC)

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General Cable (BGC)

Q4 2012 Earnings Call

February 25, 2013 10:00 am ET

Executives

Len Texter - Director of Investor Relations

Brian J. Robinson - Chief Financial Officer, Principal Accounting Officer, Executive Vice President and Treasurer

Gregory B. Kenny - Chief Executive Officer, President and Director

Analysts

Shawn M. Harrison - Longbow Research LLC

Richard Wesolowski - Sidoti & Company, LLC

Anthony C. Kure - KeyBanc Capital Markets Inc., Research Division

Noelle C. Dilts - Stifel, Nicolaus & Co., Inc., Research Division

Presentation

Operator

Good morning. My name is Martina, and I'll be your conference facilitator. I would like to welcome everyone to General Cable Corporation's Third Quarter 2012 Earnings Conference Call. This conference call is being recorded at the request of General Cable. Should you have any objections, you may disconnect at this time. [Operator Instructions] General Cable, you may begin your conference.

Len Texter

Good morning, everyone, and welcome to General Cable's Fourth Quarter 2012 Earnings Conference Call. I'm Len Texter, Director, Investor Relations at General Cable. Joining me this morning are Greg Kenny, our President and Chief Executive Officer; Brian Robinson, our Chief Financial Officer; and Bob Siverd, our General Counsel.

Many of you have already seen a copy of our press release issued this morning. For those of you who have not, it is available on First Call and on our website at generalcable.com. Today's call will be accompanied by a slide presentation also available on our website. If you have not downloaded a copy, we recommend that you do so as we will refer to the presentation throughout our prepared remarks today. Due to the timing and final preparation of the company's restated financial statements, we have provided select financial data in today's materials.

The format of today's call will first be an overview by Brian Robinson of our fourth quarter results, followed by comments on the company's outlook for the first quarter. Secondly, Greg Kenny will provide additional comments on 2013, including full year business trends, followed by a question-and-answer period.

Before we get started, I want to call your attention to our Safe Harbor provisions regarding forward-looking statements and company-defined non-GAAP financial measures, as defined on Slide #2, as we may refer to adjusted operating income and adjusted EBITDA in today's call.

To begin, please turn to Slide #5, where we have included a reconciliation of our previously communicated outlook.

With that, I will turn the call over to Brian Robinson. Brian?

Brian J. Robinson

Thank you, Len. Good morning. We are pleased to report that our adjusted operating income for the fourth quarter was slightly above our previous communication provided a couple of weeks ago. As we discussed then, and as shown on Slide 5, typical seasonal patterns in the fourth quarter were partially offset by strong contributions from our recent acquisitions, housing-related utility and construction product shipments in the U.S., a record level of quarterly metal pounds sold in our legacy General Cable transmission business and strong results in Asia Pacific, driven by construction and electrical infrastructure investments.

Overall, global unit volume was in line with our expectations for the fourth quarter. Metal pounds attributable to our recent acquisitions more than offset typical seasonal declines in many of our base businesses. Net sales were slightly below our expectations, principally due to lower average copper costs during the fourth quarter and a slightly greater mix of aluminum-based product shipments.

The company's effective tax rate for the full year was adversely impacted by valuation allowances recorded against losses in certain European business units and one-off tax charges in connection with the legal entity restructuring to integrate Alcan Cable Canada. Due to the timing of these charges and the mechanics of the quarterly computation under applicable tax rules, the tax benefit was recognized in the fourth quarter. We have removed this tax benefit so as to present the fourth quarter at an adjusted effective tax rate of 38.5%. For 2013, the company expects its full year effective tax rate to be in the range of 36%.

Moving to Slide 7, our credit profile remains strong, with the financial flexibility to fund our working capital requirements and capitalize on global opportunities. In the fourth quarter, the company continued its balance sheet transition by calling all of its outstanding $200 million of 7.125% senior fixed rate notes due in 2017 and retiring all of its outstanding $11 million of 1% senior convertible notes due in 2012 using part of the proceeds from the September 2012 $600 million issuance.

In addition, once the financial restatements are complete, the company will consider whether to tender for all of the outstanding $355 million convertible notes or retain a portion of the proceeds [ph] to repay the 2013 convertible notes at maturity later this year. In the interim, part of the proceeds from the issuance have been used to reduce the ABL borrowings to 0.

Net debt for the fourth quarter was unchanged from the end of the third quarter. The company made no common share repurchases during the fourth quarter under its $125 million share repurchase program authorization, which expires at the end of October of 2013. The company will utilize this buyback authority in the context of economic conditions, as well as the then-prevailing market price of the common stock of the company, regulatory requirements and alternative capital investment opportunities. The company will not make any repurchases under the stock repurchase program before its restated financial statements are filed with the SEC.

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