WEBC Webco Industrial Inc (PK)

Webco Industries, Inc. (OTC: WEBC) today reported results for its fiscal 2011 fourth quarter and fiscal year ended July 31, 2011.

For its fiscal 2011 fourth quarter, the Company reported net income of $5.6 million, or $7.23 per diluted share, compared to net income of $1.7 million, or $2.21 per diluted share, for the same quarter in fiscal 2010. Net sales for the fourth quarter of fiscal 2011 were $130.0 million, a 33.7 percent increase from the $97.2 million of sales in last year’s fourth quarter. The current quarter results reflect a $2.7 million non-cash pre-tax loss related to interest swap contracts, whereas the prior year same quarter included a $1.5 million pre-tax loss on the contracts. The improvement in current quarter results reflects an improved business environment, along with continued productivity gains.

For fiscal year 2011, the Company generated net income of $24.8 million, or $31.98 per diluted share, compared to net income of $3.3 million, or $4.34 per diluted share, for fiscal 2010. Net sales for current fiscal year amounted to $465.6 million, a 49.0 percent increase over the $312.6 million in sales for fiscal year 2010. Results for the current fiscal year reflect a $1.3 million non-cash pre-tax loss related to interest swap contracts, whereas the prior year’s same period included a $2.5 million pre-tax loss on the contracts.

Dana S. Weber, Chief Executive Officer, commented, “Our facilities are operating at a high level of productivity, thanks to the efforts of our employees. We continue to deploy capital in pursuit of organic growth opportunities that are consistent with our long-term niche strategy.”

Gross profit for the fourth quarter of fiscal 2011 was $19.7 million, or 15.1 percent of net sales, compared to $8.7 million, or 9.0 percent of net sales, for the fourth quarter of fiscal 2010. Gross profit for fiscal 2011 was $70.5 million, or 15.1 percent of net sales, compared to $28.4 million, or 9.1 percent of net sales, in fiscal year 2010. The fiscal year 2011 gross profit percentage increased from fiscal year 2010 because of high productivity in the current periods, as well as the impact of selling high cost inventories in the prior year periods.

Selling, general and administrative expenses in the fourth quarter of fiscal 2011 were $6.8 million, compared to $3.8 million in the fourth quarter of the prior year. SG&A costs for fiscal year 2011 increased to $27.8 million, from the $17.1 million reported for fiscal year 2010. SG&A for all current year periods are higher than the prior year periods because improved results have increased company-wide incentive compensation and cost reduction strategies that were necessary in the prior year have given way to longer term management objectives.

Interest expense was $1.1 million in the current year fourth quarter and $1.0 million in prior year fourth quarter. Interest expense totaled $4.3 million in fiscal 2011 and $3.8 million in fiscal 2010. The Company is party to arrangements that swap the variable interest rate for $75 million of the Company’s debt to a fixed rate through May 2017. Monthly swap settlements are included in interest expense. The Company records interest swap contracts at fair value and non-cash changes in value are reported in Gains or Losses on Interest Contracts.

Capital expenditures incurred amounted to $10.2 million for the fourth quarter and $24.7 million for the full fiscal year 2011. The Company has commenced construction of a new manufacturing facility in Oklahoma that will broaden its technical capabilities, enhance quality and increase capacity for carbon steel tubing. Capital spending in fiscal 2012 is expected to be in the range of $50 to $55 million.

Webco is a manufacturer and value added distributor of high-quality carbon steel, stainless steel and other metal tubular products designed to industry and customer specifications. Webco's tubing products consist primarily of pressure tubing and specialty tubing for use in durable and capital goods. Webco's long-term strategy involves the pursuit of niche markets within the metal tubing industry through the deployment of leading-edge manufacturing and information technology. Webco has six production facilities in Oklahoma and Pennsylvania and five value-added distribution facilities in Oklahoma, Texas, Illinois and Michigan, serving more than 1,500 customers globally.

Forward-looking statements: Certain statements in this release, including, but not limited to, those preceded by or predicated upon the words "anticipates," "appears," "believes," “can,” “considering,” "expects," "hopes," "plans," “projects,” “pursue,” "should," "would," or similar words constitute "forward-looking statements." Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of the Company, or industry results, to differ materially from any future results, performance or achievements expressed or implied herein. Such risks, uncertainties and factors include the factors discussed above and, among others: general economic and business conditions, including the continuing global recession and disruptions in the global credit markets, competition from imports, changes in manufacturing technology, banking environment, including availability of adequate financing, monetary policy, raw material costs and availability, industry capacity, domestic competition, loss of significant customers and customer work stoppages, customer claims, technical and data processing capabilities, and insurance costs and availability. The Company assumes no obligation to update publicly such forward-looking statements, whether as a result of new information, future events or otherwise.

  WEBCO INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands, except per share data)

(Unaudited)

    Three Months Ended

July 31,

  Fiscal Year Ended

July 31,

  2011     2010   2011     2010   Net sales $ 129,995 $ 97,198 $ 465,648 $ 312,602 Cost of sales   110,303   88,472   395,151   284,236   Gross profit 19,692 8,726 70,497 28,366 Selling, general & administrative   6,847   3,785   27,824   17,061   Income from operations 12,846 4,941 42,673 11,305 Interest expense 1,085 970 4,270 3,825 (Gain) loss on interest contracts   2,694   1,508   1,304   2,473

Income before income taxes

9,067

2,463

37,099

5,007

Income tax expense   3,449   763   12,337   1,681   Net income $ 5,617 $ 1,700 $ 24,762 $ 3,326

 

Net income per common share: Basic $ 7.34 $ 2.22 $ 32.30 $ 4.35 Diluted $ 7.23 $ 2.21 $ 31.98 $ 4.34   Weighted average common shares outstanding: Basic   765,000   766,000   767,000   765,000 Diluted   777,000   770,000   774,000   767,000  

Totals may not foot due to rounding.

  WEBCO INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET HIGHLIGHTS

(Dollars in thousands)

(Unaudited)

    July 31,

2011

July 31,

2010

  Accounts receivable, net $ 73,411 $ 41,310 Inventories, net 147,925 116,631 Other current assets   15,484   7,952 Total current assets 236,820 165,893   Net property, plant and equipment 81,710 65,594 Other long-term assets   5,074   7,301   Total assets $ 323,604 $ 238,788   Other current liabilities $ 57,020 $ 42,836 Current portion of long-term debt   96,521   63,903 Total current liabilities 153,541 106,739   Long-term debt 18,643 8,750 Deferred income tax liability 14,593 11,117   Total equity   136,827   112,182   Total liabilities and equity $ 323,604 $ 238,788   CASH FLOW DATA

(Dollars in thousands)

(Unaudited)

      Three Months Ended

July 31,

Fiscal Year Ended

July 31,

  2011       2010     2011     2010   Net cash provided by (used in)

operating activities

$

(23,119

)

$

(10,270

)

$

(13,705

)

$

(20,202

)

  Depreciation and amortization $ 2,364   $ 2,005   $ 8,885   $ 7,945     Cash (used) for capital expenditures $ (8,365 ) $ (3,346 ) $ (23,162 ) $ (9,088 )  

Totals may not foot due to rounding.