General Cable Corporation (BGC)

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General Cable Corporation (BGC)

Q4 2009 Earnings Call

February 12, 2010 8:30 am ET


Michael Dickerson – President of Finance, Investor Relations

Gregory Kenny – President, Chief Executive Officer

Brian Robinson – Chief Financial Officer


Richard Wesolowski – Sidoti & Co.

Matthew McCall – BB&T Capital Markets

Jeffrey Beach – Stifel & Nicolaus

Nat Kellogg – Next Generation

Anthony Kure – Keybanc Capital Markets

Brent Thielman – D.A. Davidson

Shawn Harrison – Longbow Research

Keith Johnson – Morgan Keegan

Stuart Bush – RBC Capital Markets

Michael Coleman – Stern, Agee & Leach

[Kevin Scarscani – Legend Merchant]

[Steve Gambuza – Longbow Capital]



I would like to welcome everyone to General Cable Corporation’s fourth quarter 2009 earnings conference call. (Operator Instructions)

Michael Dickerson

Good morning everyone and welcome to General Cable’s fourth quarter 2009 earnings conference call. I’m Michael Dickerson, President of Finance and 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 Siebert, our General Council.

Many of you will have already seen a copy of our press release last night. For those of you who have not, it is available on First Call and on our website at

I want to call your attention to our safe harbor provision for forward-looking statements that can be found at the end of our press release. The safe harbor provision identifies risk factors that may cause actual results to differ materially from the content of our forward-looking statements. Our current Form 10-KA report and other periodic filings with the SEC provide further detail about the risk factors related to our business.

During the call we may refer to adjusted operating income and adjusted EBITDA which is defined as earnings before interest, taxes, depreciation, amortization, plant rationalizations, lower cost of market and rightful inventory adjustments and other restructuring items. These non-GAAP company defined measures are being provided because management believes they are useful in analyzing the operating performance and cash flow before the impact of various reorganizational and other charges. A reconciliation of adjusted operating income and EBITDA to GAAP net income is available on the investor relations section of our website at

The format for today’s call will first be some discussion by Greg Kenny about the current business environment. Secondly, Brian Robinson will discuss some further details about the fourth quarter. And finally, Greg will provide some comments on the company’s first quarter 2010 outlook and business trends, followed by a question and answer period.

Finally, due to the number of participants on today’s call, I would ask that you limit yourself to one question and perhaps one follow up. You are of course welcome to get back in the queue.

With that I will now turn the call over to Greg Kenny.

Gregory Kenny

Thank you Mike and good morning. Overall results for the fourth quarter were roughly in line with our expectations. Adjusted earnings per share were $0.24 which brings 2009 adjusted earnings per share to $2.81 for the year.

Revenues in the quarter were above our guided range as both copper and aluminum continued to run higher throughout the quarter. Volumes as measured by metal pounds sold in the fourth quarter were up slightly on a sequential basis from the third quarter, somewhat better than the volumes we expected for the quarter.

While overall results either beat or were in line with our guidance, at the operating unit level we experienced better results in the quarter in Venezuela and France and worse than expected conditions in the United States, particularly in the electric utility products.

During the fourth quarter, the company was able to generate an additional $178.9 million of cash flow from operations. This brings the total cash flow from operating activities to $544 million for the full year. To put this in perspective, this is nearly as much as we reported for the full years of 2006, 2007 and 2008 combined. It’s been a phenomenal year for cash generation as we focus on lowering our investment and working capital, particularly inventory.

Despite the fact that we are in the most difficult economic period since the depression, the company has maintained solid profitability, a strong balance sheet and we continue to look long term as we plan and invest.

The company has recently taken new actions both on the defensive side in response to ongoing weak market conditions and on the offensive side to improve our capacity to continue to expand our business around the world where we see additional product specific or geographic growth opportunities.

We discussed at the end of last quarter our intention to close two manufacturing facilities in Canada and extend maintenance and the holiday shut down schedules. We did those things during the fourth quarter as planned.

We went a step further in December and announced to the employees at our Energy Cable plant in Moosejaw, Saskatchewan, Canada that the plant would not be reopened following the shutdown. While this facility was highly efficient and performed exceptionally well, due to its small size there were limited opportunities to leverage these strengths from this geographically challenged location.

The costs associated with this action are minimal and the ongoing cost savings are also minimal due to the plants’ highly efficient fixed cost structure. The equipment will be relocated to take advantage of markets in the developing world.

Our focus on continuous cost reduction and lean thinking is a big part of our corporate culture and extends into our back office functions and management of working capital as well. Since the end of 2008, in order to balance production with end market demand and reduce operating expenses, the company has reduced its labor force by over 1,600 associates.

While much of this is direct labor, some of this reduction has been focused on selling and general and administrative and other fixed costs. The company has been absorbing the cost related to head count reductions through its P&L throughout the year.

In addition to personnel reductions, cost reduction efforts have also included salary freezes, reductions in discretionary expenses and the like. Much of this benefit can be seen in a reduction of the SG&A line of the income statement over the last several quarters.

We were running about $95 million per quarter through 2008 and are currently running approximately $80 million per quarter. While some of this reduction is variable selling expenses, we expect that the company will be able to retain much of these savings as volume recovers.

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