Webco Industries, Inc. Reports Fiscal 2012 Fourth Quarter and Year End Results

Webco Industries, Inc. Reports Fiscal 2012 Fourth Quarter and Year End Results

SAND SPRINGS, Okla.--(BUSINESS WIRE)-- Webco Industries, Inc. (OTC: WEBC) today reported results for its fiscal 2012 fourth quarter and year ended July 31, 2012.

For its fiscal 2012 fourth quarter, the Company reported net income of $3.2 million, or $4.09 per diluted share, compared to net income of $5.6 million, or $7.23 per diluted share, for the same quarter in fiscal 2011. Net sales for the fourth quarter of fiscal 2012 were $135.5 million, a 4.3 percent increase over the $130.0 million of sales in last year's fourth quarter. Results for the fourth quarter of fiscal year 2012 include $1.6 million in non-cash pre-tax losses related to the interest swap contract, whereas the fourth quarter of the prior year included a $2.7 million non-cash pre-tax loss on interest swap contracts.

For fiscal year 2012, the Company generated net income of $14.6 million, or $18.67 per diluted share, compared to net income of $24.8 million, or $31.98 per diluted share, for fiscal year 2011. Net sales for fiscal year 2012 amounted to $526.8 million, a 13.1 percent increase over the $465.6 million in sales last year. Results for fiscal year 2012 include a $5.4 million non-cash pre-tax loss related to the interest swap contract, whereas the prior year included a $1.3 million non-cash pre-tax loss on interest swap contracts.

Gross profit for the fourth quarter of fiscal 2012 was $13.3 million, or 9.8 percent of net sales, compared to $19.7 million, or 15.1 percent of net sales, for the fourth quarter of fiscal 2011. Gross profit for fiscal year 2012 was $55.1 million, or 10.5 percent of net sales, compared to $70.5 million, or 15.1 percent of net sales, in 2011. A weaker spot pricing market and less favorable product mix contributed to lower margins between the compared periods, as did facility start-up and product development costs.

Dana S. Weber, Chief Executive Officer, commented, "Our prior year, fiscal 2011, was a strong year from a number of vantage points, and comparisons to any other periods will make that clear. Nonetheless, 2012 was a solid year when considering the facility start-up and product development costs incurred. Fiscal year 2012 ended with a weaker spot pricing market and less optimal product mix than we have recently experienced. Notwithstanding how our commercial markets ended the year, over the last 18 months we have deployed $55 million in capital related to our new facility in Sand Springs. When combined with our product development spending, a platform for long-term organic growth opportunity consistent with our niche strategy has been built."

Selling, general and administrative expenses in the fourth quarter of fiscal 2012 were $6.0 million, compared to $6.8 million in the fourth quarter of the prior year. SG&A costs for fiscal year 2012 decreased to $23.1 million, from the $27.8 million reported for fiscal year 2011. The decrease in SG&A costs resulted from a $1.0 million bad debt charge that affected the prior full year periods and all periods reflected reductions in company-wide incentive compensation as a result of lower profitability.

Interest expense was $0.7 million in the current year fourth quarter and $1.1 million in the prior year fourth quarter. Interest expense totaled $3.6 million in fiscal year 2012 and $4.3 million in fiscal 2011. The Company is party to an arrangement that swaps the variable interest rate for $75 million of the Company's debt to a fixed rate from January 2013 through December 2017. Monthly swap settlements are included in interest expense. The Company records the interest swap contract at fair value and non-cash changes in value are reported in Gains or Losses on Interest Contracts. The reduction in interest expense in the current quarter is because the swap arrangement that existed in the comparable quarter in 2011 was modified in January 2012 to allow for a variable interest rate until January 2013.

Capital expenditures incurred amounted to $7.0 million for the fourth quarter of fiscal 2012 and $37.4 million for the entire fiscal year 2012. The Company's new manufacturing facility in Oklahoma that broadens technical capabilities, enhances quality and increases capacity for carbon steel tubing, commenced production in the fourth quarter of fiscal 2012. Capital spending in fiscal 2013 is expected to be in the range of $10 to $14 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 seven 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 any global economic downturn or 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

Fiscal Year Ended

July 31,

July 31,

2012

2011

2012

2011

Net sales

$

135,534

$

129,995

$

526,751

$

465,648

Cost of sales

122,238

110,303

471,664

395,151

Gross profit

13,296

19,692

55,087

70,497

Selling, general & administrative

5,991

6,847

23,086

27,824

Income from operations

7,305

12,846

32,001

42,673

Interest expense

712

1,085

3,588

4,270

(Gain) loss on interest contracts

1,618

2,694

5,412

1,304

Income before income taxes

4,975

9,067

23,001

37,099

Income tax expense

1,773

3,449

8,439

12,337

Net income

$

3,203

$

5,617

$

14,562

$

24,762

Net income per common share:

Basic

$

4.17

$

7.34

$

18.98

$

32.30

Diluted

$

4.09

$

7.23

$

18.67

$

31.98

Weighted average common shares outstanding:

Basic

768,000

765,000

767,000

767,000

Diluted

782,000

777,000

780,000

774,000

Note: Amounts may not sum due to rounding.

WEBCO INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET HIGHLIGHTS

(Dollars in thousands)

(Unaudited)

July 31,

July 31,

2012

2011

Accounts receivable, net

$

61,916

$

73,411

Inventories, net

157,601

147,925

Other current assets

17,740

15,484

Total current assets

237,404

236,820

Net property, plant and equipment

109,109

81,710

Other long-term assets

2,128

5,074

Total assets

$

348,642

$

323,604

Other current liabilities

$

72,870

$

57,020

Current portion of long-term debt

87,538

96,521

Total current liabilities

160,408

153,541

Long-term debt

15,125

18,643

Deferred income tax liability

21,288

14,593

Total equity

151,821

136,827

Total liabilities and equity

$

348,642

$

323,604

CASH FLOW DATA

(Dollars in thousands)

(Unaudited)

Three Months Ended

Fiscal Year Ended

July 31,

July 31,

2012

2011

2012

2011

Net cash provided by (used in)

operating activities

$

6,650

$

(23,119

)

$

45,418

$

(13,705

)

Depreciation and amortization

$

3,160

$

2,364

$

11,025

$

8,885

Cash paid for capital expenditures

$

9,739

$

8,365

$

40,068

$

23,162

Note: Amounts may not sum due to rounding.



WEBCO INDUSTRIES, INC.
Mike Howard, 918-241-1094
Chief Financial Officer
mhoward@webcoindustries.com

KEYWORDS: United States North America Oklahoma

INDUSTRY KEYWORDS: