General Cable Corporation (BGC) reported third-quarter 2011 earnings per share of 7 cents, below the Zacks Consensus Estimate of 72 cents. The earnings per share were below the prior-year earnings per share of 35 cents.
Excluding the impact of 10 cents per share of non-cash convertible debt interest expense and 16 cents per share of mark to market losses on financial derivatives, adjusted non-GAAP earnings per share came in at 33 cents in the quarter.
Foreign currency transaction losses due to the strengthening of the US dollar against major currencies in the latter half of the quarter negatively affected earnings per share by 23 cents. Further, earnings in the quarter were affected by an additional tax expense of 13 cents, resulting from increased effective tax rate.
Total Revenue
Total revenue, on a metal-adjusted basis, in the quarter increased by 14% year over year to $1,517.8 million. Excluding positive effect from foreign currency exchange rate of $58.5 million, sales on metal-adjusted basis increased by 10%.
Volume based on metal pounds sold surged 6% year over year driven by demand for aluminum based product shipments for metal intensive, and aerial transmission projects in Brazil. On a sequential basis, volume inched up 2% during the quarter due to raised volume of 15% in General Cable’s ROW segment, partially offset by decline in North America and Europe and Mediterranean segments.
Sales volume in North America, measured in terms of metal pounds sold, was down 4% year over year, in Europe and in Mediterranean upped 6% and in ROW climbed 14%.
Income and Expenses
Operating income in the quarter was $63.4 million, down 21% year over year. Selling, general and administrative expenses were $93.0 million compared with $83.2 million.
Balance Sheet
Cash and cash equivalents were $416.6 million at the end of the quarter, with long-term debt of $880.6 million and shareholders equity of $1.59 billion.
Outlook
The company expects operating income to be in the range of $38 million to $50 million. Total revenue is expected to be in the range of $1.40 billion to $1.45 billion. During the quarter, revenue is expected to be negatively impacted by selling higher average cost inventory in a lower and volatile metal price environment. Volume is expected to remain flat sequentially. Seasonal declines in North America and ROW will be mitigated by the company’s penetration in the emerging markets as well as its transmission projects.
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 recommendation).
