Coleman Cable, Inc. (Nasdaq:CCIX) (the "Company,"
"Coleman," "we," "us," or "our"), a leading manufacturer and
innovator of electrical and electronic wire and cable products,
announced third-quarter 2013 financial results.
Highlights
- Third-quarter 2013 Adjusted Earnings Per Share (EPS) of $0.40,
a third-quarter record for the Company.
- Third-quarter 2013 Adjusted EBITDA of $24.0 million, a
third-quarter record for the Company.
- Third-quarter and first nine-month 2013 Adjusted EPS growth of
8.1 percent and 16.8 percent, respectively, versus the same periods
last year.
Outlook and Dividend
- For the fourth quarter of 2013, the Company estimates sales
between $225.0 million and $250.0 million and Adjusted EPS between
$0.36 and $0.49.
- Declared quarterly cash dividend of $0.05 per share payable on
November 29, 2013, to stockholders of record as of the close of
business on November 15, 2013.
Third-Quarter 2013 Results
Net sales for the third quarter of 2013 were $229.0 million,
consistent with $229.3 million of net sales for the third quarter
of 2012. Sales volume (measured in total pounds shipped, on a
comparable basis) increased 4.2 percent for the third quarter of
2013 compared to the same period last year, while copper prices
declined 8.5 percent on a year-over-year basis. Compared to last
year, the Company's sales results in the 2013 third quarter mainly
reflect higher sales within the Company's Engineered Solutions and
Distribution segments, offset by lower sales in its OEM
segment.
President and CEO Gary Yetman stated, "For the third quarter of
2013, both our Adjusted EBITDA and Adjusted EPS were third-quarter
records for the Company, while our Adjusted EBITDA results marked
the fourth consecutive quarter of record results dating back to
last year. Further, our results include total volume growth of
4.2 percent driven by increased demand across a variety of
products, particularly within industrial and construction-related
categories. Our strong third-quarter performance continues to
reflect the diversity of our business and the strength of our
operating platform, which have allowed us to achieve strong results
notwithstanding copper price volatility and the negative impact of
the sequestration on TRC's military business in our Engineered
Solutions segment."
Mr. Yetman concluded, "We have been encouraged by double-digit
demand growth from our construction-related products during the
third quarter. This growth, along with the introduction of our
newer industrial products, has us well-positioned to finish what
has already been a strong year of financial results."
On a GAAP basis, the Company recorded earnings of $0.8 million,
or $0.04 per diluted share, for the third quarter of 2013 compared
to $5.5 million, or $0.31 per diluted share, for the third quarter
last year. For the third quarter of 2013, the Company's GAAP
results include a pre-tax, non-cash goodwill impairment charge of
$6.6 million, or $0.36 per diluted share, recorded as the result of
an interim goodwill impairment test performed during the 2013 third
quarter on TRC's military business. As a result of this test,
a non-cash impairment charge was required to reduce the carrying
value of the goodwill associated with TRC's military
business. Since the conclusion of 2012, the Company has
operated this business amidst a general uncertainty involving the
timing and amount of U.S. military spending. This charge has
no impact on the Company's operating cash flow, liquidity, or debt
covenant compliance. GAAP results for the 2013 period also
include restructuring charges and share-based compensation
expense. These items are excluded from the Company's Adjusted
EBITDA and Adjusted EPS results. Please see the discussion of
Non-GAAP results below and the attached schedules for a full
reconciliation of GAAP results to non-GAAP results.
Quarterly Cash Dividend
On November 5, 2013, Coleman's board of directors declared a
quarterly cash dividend of $0.05 per share payable on November 29,
2013, to stockholders of record as of the close of business on
November 15, 2013. Future declarations of quarterly dividends
are subject to approval of the board of directors and may be
adjusted as business needs or market conditions change.
Webcast
Coleman Cable has scheduled its conference call for Friday,
November 8, 2013, at 10:00 a.m. Central time. Hosting the call
will be Gary Yetman, President and CEO, and Alan Bergschneider,
Executive Vice President and CFO. A live broadcast of the
Company's conference call, along with accompanying visuals, will be
available on-line through the Company's Web site at
http://investors.colemancable.com/events.cfm. The webcast will
be archived for 90 days.
Non-GAAP Results
In addition to net income determined in accordance with GAAP, we
use certain non-GAAP measures in assessing our operating
performance. These non-GAAP measures used by management include:
(1) EBITDA, which we define as net income before net interest,
income taxes, depreciation and amortization expense ("EBITDA"), (2)
Adjusted EBITDA, which is our measure of EBITDA adjusted to exclude
the impact of certain specifically identified items ("Adjusted
EBITDA"), and (3) Adjusted EPS, which we calculate as diluted
earnings per share adjusted to exclude the estimated per share
impact of the same specifically identified items used to calculate
Adjusted EBITDA. For the periods presented in this report, the
specifically identified items include asset impairment,
restructuring charges, share-based compensation expense, and
acquisition-related costs.
We believe both EBITDA and Adjusted EBITDA, when presented in
conjunction with comparable GAAP measures, are useful for investors
because we use that information in evaluating the performance of
our business. We use these measures in the preparation of our
annual operating budgets and serve as an indicator of business
performance and management's effectiveness with specific references
to these indicators. We believe both EBITDA and Adjusted EBITDA
allow us to readily view operating trends, perform analytical
comparisons and identify strategies to improve operating
performance. The usefulness of EBITDA and Adjusted EBITDA as
performance measures is limited by the fact that they both exclude
the impact of interest expense, depreciation and amortization
expense, and taxes. Due to these limitations, we do not, and you
should not, use either EBITDA or Adjusted EBITDA as the only
measures of our performance. We also use, and recommend that you
consider, net income in accordance with GAAP as a measure of our
performance. Finally, other companies may define EBITDA and
Adjusted EBITDA differently and, as a result, our measure of EBITDA
and Adjusted EBITDA may not be directly comparable to EBITDA and
Adjusted EBITDA measures of other companies.
Similarly, we believe our use of Adjusted EPS provides an
appropriate measure to use in assessing our performance across
periods given that this measure provides an adjustment for certain
significant items, the magnitude of which may vary significantly
from period to period. However, we do not, and do not recommend
that you solely use Adjusted EPS to assess our financial and
earnings performance. We also use, and recommend that you use,
diluted earnings per share in addition to Adjusted EPS in assessing
our earnings performance. Finally, other companies may define
Adjusted EPS differently and, as a result, our measure of Adjusted
EPS may not be directly comparable to Adjusted EPS measures of
other companies.
About Coleman Cable, Inc.
Coleman Cable, Inc. is a leading manufacturer and innovator of
electrical and electronic wire and cable products for residential
and commercial construction, industrial, OEM, and consumer
applications, with operations in the United States, Honduras, and
Canada. The Company's broad product offering enables it to
provide its customers a single source for many of their wire and
cable requirements. It manufactures the majority of its
products in nine domestic production facilities and sells products
to more than 8,000 active customers in a wide variety of end
markets. It operates three segments: Distribution, OEM,
and Engineered Solutions. For more information, visit
www.colemancable.com.
Various statements included in this release, including those
that express a belief, expectation or intention, as well as those
that are not statements of historical fact constitute
forward-looking statements. These statements include those
made under "Outlook and Dividend" and also may be identified by the
use of forward-looking terminology such as "believes," "plans,"
"anticipates," "expects," "estimates," "continues," "could," "may,"
"might," "potential," "predict," "should," or the negative thereof
or other variations thereon or comparable terminology. In
particular, statements about Coleman Cable's expectations, beliefs,
plans, objectives, assumptions or future events, financial results,
earnings guidance or financial performance contained in this
release are forward-looking statements. Coleman Cable has
based these forward-looking statements on its current expectations,
assumptions, estimates and projections. While Coleman Cable
believes these expectations, assumptions, estimates and projections
are reasonable, such forward-looking statements are only
predictions and involve known and unknown risks and uncertainties,
many of which are beyond our control. These and other
important factors, including those discussed in Coleman
Cable's most recent Annual Report on Form 10-K (available at
www.sec.gov), may cause our actual results, performance or
achievements to differ materially from any future results,
performance or achievements expressed or implied by these
forward-looking statements. Some of the key factors that could
cause actual results to differ from Coleman Cable's expectations
include:
- fluctuations in the supply or price of copper and other
raw materials, including PVC and fuel;
- increased competition from other wire and cable manufacturers,
including foreign manufacturers;
- pricing pressures causing margins to decrease;
- our dependence on indebtedness and our ability to satisfy our
debt obligations;
- failure to identify, finance or integrate acquisitions;
- product liability claims and litigation resulting from the
design or manufacture of our products;
- advancements in wireless technology;
- impairment charges related to our goodwill and long-lived
assets;
- restructuring charges;
- changes in the cost of labor;
- disruption in the importation of raw materials and products
from foreign-based suppliers;
- our ability to maintain substantial levels of inventory;
- increase in exposure to political and economic development,
crises, instability, terrorism, civil strife, expropriation,
and other risks of doing business in foreign markets;
- changes in tax legislation relating to our Honduras subsidiary;
and
- other risks and uncertainties, including those described under
"Item 1A. Risk Factors," in Coleman Cable's most recent Annual
Report on Form 10-K.
In addition, any forward-looking statements represent Coleman's
views only as of today and should not be relied upon as
representing its views as of any subsequent date. While
Coleman may elect to update forward-looking statements at some
point in the future, it specifically disclaims any obligation to do
so, even if its estimates change and, therefore, you should not
rely on these forward-looking statements as representing Coleman's
views as of any date subsequent to today.
CCIX-G
Financial Tables Follow
|
|
|
|
|
COLEMAN CABLE, INC. AND
SUBSIDIARIES |
CONSOLIDATED STATEMENT
OF INCOME |
(Thousands, except per share
data) |
(Unaudited) |
|
|
|
Three Months
Ended September 30, |
Nine Months Ended
September 30, |
|
2013 |
2012 |
2013 |
2012 |
NET SALES |
$ 229,039 |
$ 229,301 |
$ 685,350 |
$ 681,023 |
COST OF GOODS SOLD |
194,911 |
194,948 |
581,285 |
580,018 |
|
|
|
|
|
GROSS PROFIT |
34,128 |
34,353 |
104,065 |
101,005 |
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES |
13,538 |
15,880 |
46,399 |
47,354 |
INTANGIBLE ASSET AMORTIZATION |
1,976 |
2,189 |
6,137 |
5,755 |
ASSET IMPAIRMENT |
6,584 |
— |
6,584 |
— |
RESTRUCTURING CHARGES |
122 |
959 |
491 |
1,314 |
|
|
|
|
|
OPERATING INCOME |
11,908 |
15,325 |
44,454 |
46,582 |
INTEREST EXPENSE |
6,915 |
6,919 |
20,727 |
20,963 |
OTHER LOSS (INCOME) |
103 |
227 |
(129) |
230 |
|
|
|
|
|
INCOME BEFORE INCOME
TAXES |
4,890 |
8,179 |
23,856 |
25,389 |
INCOME TAX EXPENSE |
4,106 |
2,725 |
10,481 |
8,579 |
|
|
|
|
|
NET INCOME |
$ 784 |
$ 5,454 |
$ 13,375 |
$ 16,810 |
|
|
|
|
|
EARNINGS PER COMMON SHARE DATA |
|
|
|
|
NET INCOME PER SHARE: |
|
|
|
|
Basic |
$ 0.04 |
$ 0.32 |
$ 0.75 |
$ 0.98 |
Diluted |
0.04 |
0.31 |
0.75 |
0.96 |
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING |
|
|
|
|
Basic |
18,293 |
17,071 |
17,617 |
17,077 |
Diluted |
18,478 |
17,301 |
17,780 |
17,311 |
CASH DIVIDENDS DECLARED PER COMMON SHARE |
$ 0.04 |
$ 0.02 |
$ 0.10 |
$ 0.04 |
|
|
|
|
|
COLEMAN CABLE, INC. AND
SUBSIDIARIES |
CONSOLIDATED BALANCE
SHEETS |
(Thousands, except per share
data) |
(Unaudited) |
|
|
September 30,
2013 |
December 31,
2012 |
ASSETS |
|
|
CURRENT ASSETS: |
|
|
Cash and cash equivalents |
$ 9,745 |
$ 9,562 |
Accounts receivable, net of allowances of
$2,913 and $3,046, respectively |
128,449 |
125,982 |
Inventories |
123,572 |
112,590 |
Deferred income taxes |
5,206 |
4,271 |
Assets held for sale |
1,072 |
1,074 |
Prepaid expenses and other current
assets |
5,527 |
4,071 |
|
|
|
Total current assets |
273,571 |
257,550 |
|
|
|
PROPERTY, PLANT AND EQUIPMENT, NET |
77,442 |
78,914 |
GOODWILL |
59,896 |
66,535 |
INTANGIBLE ASSETS, NET |
31,278 |
37,417 |
DEFERRED INCOME TAXES |
591 |
329 |
OTHER ASSETS |
9,315 |
8,595 |
|
|
|
TOTAL ASSETS |
$ 452,093 |
$ 449,340 |
|
|
|
LIABILITIES AND SHAREHOLDERS'
EQUITY |
|
|
CURRENT LIABILITIES: |
|
|
Current portion of long-term debt |
$ 28,177 |
$ 35,566 |
Accounts payable |
28,177 |
25,748 |
Accrued liabilities |
32,954 |
38,208 |
|
|
|
Total current liabilities |
89,308 |
99,522 |
|
|
|
LONG-TERM DEBT |
273,451 |
288,273 |
OTHER LONG-TERM LIABILITIES |
4,231 |
3,693 |
DEFERRED INCOME TAXES |
10,197 |
6,687 |
COMMITMENTS AND CONTINGENCIES |
|
|
SHAREHOLDERS' EQUITY: |
|
|
Common stock, par value $0.001; 75,000
authorized; 18,314 and 16,998 issued and outstanding on September
30, 2013 and December 31, 2012, respectively |
18 |
17 |
Treasury stock, at cost: 485 and 443
shares, respectively |
(4,690) |
(3,918) |
Additional paid-in capital |
107,735 |
94,470 |
Accumulated deficit |
(27,838) |
(39,371) |
Accumulated other comprehensive loss |
(319) |
(33) |
|
|
|
Total shareholders' equity |
74,906 |
51,165 |
|
|
|
TOTAL LIABILITIES AND EQUITY |
$ 452,093 |
$ 449,340 |
|
|
COLEMAN CABLE, INC. AND
SUBSIDIARIES |
Non-GAAP
Results |
(Thousands, except per share
data) |
(unaudited) |
|
|
|
|
|
Reconciliation of
Non-GAAP Financial Measures |
|
|
|
|
|
|
Three Months Ended
September 30, |
Nine Months Ended
September 30, |
|
2013 |
2012 |
2013 |
2012 |
Diluted earnings per share, as
determined in accordance with GAAP, to Adjusted EPS |
(unaudited) |
Earnings per share |
$ 0.04 |
$ 0.31 |
$ 0.75 |
$ 0.96 |
Asset impairment |
0.36 |
— |
0.37 |
— |
Restructuring charges |
— |
0.04 |
0.02 |
0.05 |
Share-based compensation expense |
— |
0.02 |
0.11 |
0.04 |
Acquisition-related costs |
— |
— |
— |
0.02 |
|
|
|
|
|
Adjusted diluted earnings per share |
$ 0.40 |
$ 0.37 |
$ 1.25 |
$ 1.07 |
|
|
|
|
|
|
Three Months
Ended September 30, |
Nine Months Ended
September 30, |
|
2013 |
2012 |
2013 |
2012 |
Net income, as determined in
accordance with GAAP, to EBITDA and Adjusted EBITDA |
(unaudited) |
|
(Thousands) |
|
|
|
|
|
Net income |
$ 784 |
$ 5,454 |
$ 13,375 |
$ 16,810 |
Interest expense |
6,915 |
6,919 |
20,727 |
20,963 |
Income tax expense |
4,106 |
2,725 |
10,481 |
8,579 |
Depreciation and amortization expense
(a) |
5,373 |
5,577 |
16,474 |
15,987 |
|
|
|
|
|
EBITDA |
$ 17,178 |
$ 20,675 |
$ 61,057 |
$ 62,339 |
|
|
|
|
|
Asset impairment |
6,584 |
— |
6,584 |
— |
Restructuring charges |
122 |
959 |
491 |
1,314 |
Share-based compensation expense |
134 |
457 |
3,013 |
1,169 |
Acquisition-related costs |
— |
77 |
— |
443 |
|
|
|
|
|
ADJUSTED EBITDA |
$ 24,018 |
$ 22,168 |
$ 71,145 |
$ 65,265 |
|
|
|
|
|
a) Depreciation and
amortization expense shown in the above schedule excludes
amortization of debt issuance costs, which are included as a
component of interest expense. |
|
|
|
|
|
For additional information
regarding our non-GAAP financial measures, see "Non-GAAP
Results." |
|
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|
Reconciliation of
Fourth-Quarter 2013 Earnings Guidance to GAAP |
For the fourth quarter of
2013, the Company is currently estimating diluted Adjusted EPS to
be in the range of $0.36 to $0.49 per share. On a GAAP basis,
the Company is currently estimating diluted EPS to be in the range
of $0.35 to $0.48 per share. |
|
|
|
|
|
* Rounding differences may
occur for various calculated amounts. |
CONTACT: Investor Contacts:
Philip Kranz, Dresner Corporate Services,
312-780-7240, pkranz@dresnerco.com
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