Wolverine Tube Announces Third Quarter Earnings Gross Profit
Improves Ninety-Seven Percent HUNTSVILLE, Ala., Oct. 26
/PRNewswire-FirstCall/ -- Wolverine Tube, Inc. (NYSE:WLV) today
reports results for the third quarter and nine months ended October
3, 2004. Loss from continuing operations for the third quarter was
$2.5 million, or $0.17 per share. Included in the loss was $2.1
million of after-tax restructuring and non-recurring charges
related to the write-down of the Company's idled Roxboro property
held for sale and the premium paid and write-off of unamortized
financing fees and bond discount recorded in conjunction with the
repurchase of $14.5 million of our 101/2 percent notes. Excluding
these restructuring and non-recurring charges, loss from continuing
operations would have been $400 thousand or $0.03 per share.
Operating results were further negatively impacted by $2.2 million
after-tax, as a result of a sharp spike in copper prices,
especially in the latter part of the quarter, and the relative
strengthening of the Canadian dollar versus the U.S. dollar. This
rise in copper prices resulted in a loss on the Company's metal
accounting and copper hedge position, which should be offset in the
fourth quarter if the COMEX copper price remains at or below the
current levels. Excluding the impact of the aforementioned metal
accounting, currency translation, restructuring and non-recurring
items, income from continuing operations would have been $1.8
million or $0.12 per share. In the third quarter of 2003 loss from
continuing operations was $31.7 million or $2.58 per share.
Excluding goodwill impairment charge and restructuring charge in
the third quarter of 2003, the loss was $4.3 million or $0.35 per
share. Total pounds of product shipped in the third quarter of 2004
were 84.5 million, an increase of five percent compared to the 80.5
million pounds shipped in 2003. Net sales were $200.0 million in
2004 compared to $144.1 million in the third quarter of 2003.
Average COMEX copper prices for the third quarter of 2004 were
$1.29 per pound compared to $0.80 per pound in the same quarter of
the prior year. Gross profit for the third quarter of 2004
increased to $12.3 million from $6.2 million in the third quarter
of 2003, a 97 percent increase. Results for the first nine months
of 2004 are outlined in the accompanying tables. Commenting on the
announcement, Dennis Horowitz, Chairman, President and Chief
Executive Officer said, "Strength in the overall industrial economy
continues to translate into increased demand for Wolverine
products, which results in significantly improved operating
results. Our value-added commercial segment has continued its
growth and has benefited from Wolverine's broad product, customer
and geographic base. Additionally, our wholesale and rod & bar
product segments continue to improve. The impact of the sharp rise
in copper prices on our copper hedge and weakening U.S. dollar
versus the Canadian dollar had a very significant negative effect
on reported third quarter earnings." Horowitz continued, "However,
excluding these impacts, third quarter earnings are in-line with
our previously announced expectations." Third Quarter Results by
Segment Shipments of commercial products totaled 58.4 million
pounds, a 9.2 percent increase from last year's third quarter
shipments of 53.5 million pounds. Net sales were $147.0 million, up
38.6 percent from last year's third quarter sales of $106.1
million. Gross profit was $11.3 million, up 92.2 percent from last
year's third quarter gross profit of $5.9 million. The third
quarter has benefited from improvements in the HVAC and consumer
appliance markets, continued improvement in commercial construction
and the continuation of favorable outsourcing trends by our
customers to our fabricated products facilities. Shipments of
wholesale products totaled 20.5 million pounds, compared to last
year's third quarter shipments of 22.4 million pounds. This
decrease reflects slower demand due to the hurricanes that impacted
Florida, our largest refrigeration tube market and cautious
purchasing by distributors and wholesalers due to the erratic
copper market. Net sales were $38.2 million, up 34.1 percent from
last year's third quarter sales of $28.5 million. Gross profit was
$198 thousand, as compared to last year's third quarter of $38
thousand, even including the negative impact of the metal
accounting and hedge loss. Approximately 60 percent of the hedge
loss is allocated to the wholesale product segment. Shipments of
rod, bar and other products totaled 5.6 million pounds, a 20
percent increase from last year's third quarter shipments of 4.6
million pounds. Net sales were $14.8 million, up 55.8 percent from
the third quarter of the year-earlier period. Gross profit was $835
thousand, up from last year's $330 thousand. Increased volumes and
pricing were the major drivers of improvement. Outlook Commenting
on the outlook for the Company Horowitz said, "Wolverine benefited
from its broad product, customer and geographic base in the third
quarter, and we expect those benefits to continue in this fourth
quarter. Demand for industrial tube, on the whole should be at
acceptable levels. We are particularly pleased with the growth in
our fabricated products business, as more and more of our OEM
customers are outsourcing to Wolverine." Horowitz continued, "In
total, on a seasonally adjusted basis, technical tube demand is
expected to be stronger quarter over quarter. Technical tube demand
in the United States and Europe is at anticipated levels. China is
lower, to some extent reflecting a slowing in that economy, and
increased competition in lower technology products. The
fundamentals of our wholesale and rod & bar businesses are
unchanged." "In terms of fourth quarter outlook," added Horowitz,
"earnings from continuing operations and before metal and currency
will reflect the normal seasonality of our business. Additionally,
if copper remains at today's prices or lower, we will recapture, at
a minimum, the hedge loss realized in the third quarter. Finally,"
Horowitz stated, "we remain comfortable with our previous
expectation to generate positive free cash flow for the year,
assuming no significant rise in raw materials cost." Third Quarter
Conference Call The Company will hold a conference call this
morning at 9:30 a.m. Central Time (10:30 a.m. ET) to discuss the
contents of this release. Dial in to the conference call line at
(800) 311-9402 Access Code: Wolverine, ten minutes prior to the
scheduled start time. A link to the broadcast can be found on the
Company's website at http://www.wlv.com/ , in the Investor
Relations section under "Conference Calls" link. If you are unable
to participate at this time, a replay will be available through
November 9, 2004, on this website or by calling (877) 919-4059
(pass code: 43136411). Should you have any problems accessing the
call or the replay, please contact the Company at (256) 890-0460.
The tables following the text of this press release provide
financial details that are included in this press release and that
will be discussed on the conference call. This includes a
reconciliation of income from continuing operations to earnings
before interests, taxes, depreciation and amortization. This press
release, including these financial details, is now available on the
Wolverine website at http://www.wlv.com/ in the Investor Relations
section under the heading Press Releases. About Wolverine Tube,
Inc. Wolverine Tube, Inc. is a world-class quality partner,
providing its customers with copper and copper alloy tube,
fabricated products, metal joining products as well as copper and
copper alloy rod, bar & other products. Internet addresses
http://www.wlv.com/ and http://www.silvaloy.com/ . Forward-looking
Statements Forward-looking statements in this press release are
made pursuant to the "Safe Harbor" provisions of the Private
Securities Litigation Reform Act of 1995. These forward-looking
statements use such words as "may," "will," "expect," "believe,"
"plan," "anticipate," and other similar terminologies. This press
release contains forward-looking statements regarding factors
affecting the Company's expectations of future sales, earnings and
cash flows. Such statements are based on current expectations,
estimates and projections about the industry and markets in which
the Company operates, as well as management's beliefs and
assumptions and information currently available. These
forward-looking statements are subject to various risks and
uncertainties that could cause actual results to differ materially
from those stated or implied by such forward-looking statements.
The Company undertakes no obligation to publicly release any
revision of any forward-looking statements contained herein to
reflect events or circumstances occurring after the date hereof or
to reflect the occurrence of unanticipated events. With respect to
expectations of future sales, earnings and cash flows, factors that
could affect actual results include, without limitation, the effect
of currency fluctuations, raw material costs and our ability to
effectively hedge these costs, fluctuation in the COMEX copper
price, the levels of U.S. commercial construction activity,
competitive products and pricing, environmental contingencies,
regulatory pressures, technology, the mix of geographic and product
revenues, product and process development activities, productivity
and efficiency initiatives, global expansion activities including
our Mexico expansion and unanticipated costs or delays in the
ramp-up of production and the level of future customer demand in
the Mexican market, market share penetration efforts, working
capital management programs, completion of anticipated sale of the
Roxboro facility and capital spending, including the investment in
Mexico. A discussion of risks and uncertainties which could cause
actual results to differ from those contained in the
forward-looking statements can be found in the Company's Annual
Report on Form 10-K for the most recently ended fiscal year and
reports filed from time to time with the Securities and Exchange
Commission. WOLVERINE TUBE, INC. FINANCIAL DATA Consolidated
Statements of Operations (Unaudited) Three Months Ended Nine Months
Ended In thousands, except per share 10/03/04 09/28/03 10/03/04
09/28/03 data Pounds shipped 84,477 80,520 269,181 247,285 Net
sales $200,038 $144,099 $619,923 $440,574 Cost of goods sold
187,713 137,857 568,532 407,105 Gross profit 12,325 6,242 51,391
33,469 Selling, general and administrative expenses 9,195 8,105
28,694 23,812 Restructuring charges 862 6,438 1,727 6,438 Operating
income from continuing operations 2,268 (8,301) 20,970 3,219
Interest expense, net 4,922 5,269 15,752 15,739 Amortization and
other, net (22) 244 1,115 1,278 Loss on extinguishment of debt
2,372 0 3,009 0 Goodwill impairment 0 23,153 0 23,153 Income/(loss)
from continuing operations before taxes (5,004) (36,967) 1,094
(36,951) Income tax provision/(benefit) (2,492) (5,245) (1,062)
(5,966) Income (loss) from continuing operations (2,512) (31,722)
2,156 (30,985) Loss from discontinued operations, net of tax (73) 0
(325) 0 Net income/(loss) $(2,585) $(31,722) $1,831 $(30,985) Basic
earnings per share: Continuing operations $(0.17) $(2.58) $0.16
$(2.52) Discontinued operations 0.00 0.00 (0.02) 0.00 Net income
(loss) $(0.17) $(2.58) $0.14 $(2.52) Diluted earnings per share:
Continuing operations $(0.17) $(2.58) $0.16 $(2.52) Discontinued
operations 0.00 0.00 (0.02) 0.00 Net income $(0.17) $(2.58) $0.14
$(2.52) Basic shares outstanding 14,835 12,279 13,246 12,273
Diluted shares outstanding 15,293 12,449 13,577 12,435 Segment
Information (Unaudited) Three Months Ended Nine Months Ended In
thousands 10/03/04 09/28/03 10/03/04 09/28/03 Pounds: Commercial
58,404 53,469 181,776 167,723 Wholesale 20,510 22,415 69,327 65,897
Rod, bar and other 5,563 4,636 18,078 13,665 Total pounds 84,477
80,520 269,181 247,285 Net sales: Commercial $147,020 $106,098
$446,971 $332,099 Wholesale 38,231 28,512 126,914 80,917 Rod, bar
and other 14,787 9,489 46,038 27,558 Total net sales $200,038
$144,099 $619,923 $440,574 Gross profit: Commercial $11,292 $5,874
$42,290 $31,749 Wholesale 198 38 5,446 500 Rod, bar and other 835
330 3,655 1,220 Total gross profit $12,325 $6,242 $51,391 $33,469
WOLVERINE TUBE, INC. Condensed Consolidated Balance Sheets
(Unaudited) In thousands 10/3/04 9/28/03 12/31/03 Assets Cash and
cash equivalents $34,827 $50,059 $46,089 Accounts receivable
108,555 87,469 86,825 Inventory 126,572 96,396 108,005 Other
current assets 12,702 10,207 12,782 Property, plant and equipment,
net 192,992 202,806 198,542 Other assets 97,508 101,034 101,015
Total assets $573,156 $547,971 $553,258 Liabilities and
Stockholders' Equity Accounts payable and other accrued expenses
$88,327 $65,776 $77,290 Short-term borrowings 659 1,574 1,502
Deferred income taxes 0 6,687 359 Pension liabilities 24,968 18,776
22,316 Long-term debt 235,970 255,451 254,284 Other liabilities
18,678 17,633 18,156 Total liabilities 368,602 365,897 373,907
Stockholders' equity 204,554 182,074 179,351 Total liabilities and
stockholders' equity $573,156 $547,971 $553,258 Reconciliation of
Income from Continuing Operations to Earnings Before Interest,
Taxes, Depreciation and Amortizations (1) (Unaudited) 10/3/04
9/28/03 10/3/04 9/28/03 In thousands Income/(loss) from continuing
operations ($2,512) ($31,722) $2,156 ($30,985) Interest expense,
net 4,922 5,269 15,752 15,739 Income tax (benefit) (2,492) (5,245)
(1,062) (5,966) Depreciation and amortization 4,122 4,743 13,155
14,117 Goodwill impairment 0 23,153 0 23,153 Earnings (loss) before
interest, taxes, depreciation and amortization $4,040 ($3,802)
$30,001 $16,058 (1) This statement reconciles income from
continuing operations to earnings before interest, taxes,
depreciation and amortization (EBITDA), which is a non-GAAP
financial measure. Management believes EBITDA is a meaningful
measure of financial performance and the Company's ability to
service debt. Contact: James E. Deason, Executive Vice President,
Chief Financial Officer (256) 580-3500 DATASOURCE: Wolverine Tube,
Inc. CONTACT: James E. Deason, Executive Vice President, Chief
Financial Officer of Wolverine Tube, Inc., +1-256-580-3500 Web
site: http://www.wlv.com/ http://www.silvaloy.com/
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