Webco Industries, Inc. Reports Fiscal 2013 Second Quarter Results

Webco Industries, Inc. Reports Fiscal 2013 Second Quarter Results

SAND SPRINGS, Okla.--(BUSINESS WIRE)-- Webco Industries, Inc. (OTC: WEBC) today reported results for its fiscal 2013 second quarter ended January 31, 2013.

For its fiscal 2013 second quarter, the Company reported net income of $1.3 million, or $1.62 per diluted share, compared to net income of $3.3 million, or $4.25 per diluted share, for the same quarter in fiscal 2012. Net sales for the second quarter of fiscal 2013 were $99.1 million, a 21.8 percent decrease from the $126.8 million of sales in last year's second quarter. The current quarter results include a $0.5 million non-cash gain, whereas the prior year same quarter includes a $1.8 million non-cash loss related to the interest swap contract. Further, the second quarter of fiscal year 2013 included approximately $1.1 million of incremental inventory related charges and $0.9 million of additional depreciation related to new facilities.


For the first six months of fiscal year 2013, the Company generated net income of $3.0 million, or $3.81 per diluted share, compared to net income of $6.1 million, or $7.89 per diluted share, for the same period in fiscal 2012. Net sales for the first six months of the current year amounted to $215.5 million, a 16.0 percent reduction from the $256.4 million in sales for the same six-month period of last year. Results for the first six months of the current year include a $0.3 million non-cash gain related to the interest swap contract, whereas the prior year same six-month period contained a $3.7 million non-cash loss on the contract. In addition, for the first six months of fiscal year 2013 incremental inventory-related charges increased approximately $1.3 million and depreciation, as a result of new facilities, increased $1.8 million. An impairment charge on manufacturing equipment of $1.1 million was also included in the results for the first six months of fiscal year 2013.

Gross profit for the second quarter of fiscal 2013 was $8.1 million, or 8.1 percent of net sales, compared to $14.2 million, or 11.2 percent of net sales, for the second quarter of fiscal 2012. Gross profit for the first six months of fiscal 2013 was $18.0 million, or 8.3 percent of net sales, compared to $27.2 million, or 10.6 percent of net sales, in the same six-month period in 2012. While gross profit for the second quarter of fiscal 2013 was negatively impacted by inventory related charges, increased depreciation and impairment charges, the greatest factors affecting both the quarterly and six-month comparisons were lower volume, a less favorable product mix and weak spot pricing.

Dana S. Weber, Chief Executive Officer, commented, "We hope for the return of more favorable volume and spot pricing conditions as fiscal year 2013 progresses, but continue to monitor domestic and international economic and political uncertainty. We have continued to invest in a platform for long-term organic growth strategies that are consistent with our niche strategy."

Selling, general and administrative expenses in the second quarter of fiscal 2013 decreased to $5.7 million from the $6.2 million in the second quarter of the prior year. SG&A costs in the first six months of fiscal 2013 were $11.7 million, up slightly from the $11.6 million reported for the same six-month period in 2012.

Interest expense was $1.0 million in each of the current year and prior year second quarters. For the first six months of fiscal 2013, interest expense amounted to $2.0 million, while interest expense for the first six months of the prior year amounted to $2.3 million. 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 through December 2017. 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. Monthly swap settlements, if any, are included in interest expense.

Capital expenditures incurred amounted to $2.1 million and $5.8 million, respectively, for the second quarter and first six-month period of fiscal 2013. Due to the plant expansion in Sand Springs, Oklahoma, capital spending incurred in fiscal 2012 amounted to $14.4 million and $20.1 million during the second quarter and first six months, respectively. Capital spending for the full fiscal year 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, tax rates and regulation, 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

January 31,

Six Months Ended

January 31,

2013

2012

2013

2012

Net sales

$

99,125

$

126,833

$

215,519

$

256,442

Cost of sales

91,066

112,624

197,567

229,235

Gross profit

8,059

14,210

17,952

27,208

Selling, general & administrative

5,663

6,154

11,709

11,572

Income from operations

2,396

8,056

6,244

15,635

Interest expense

978

999

1,956

2,251

Unrealized (gain) loss on interest contracts

(493

)

1,802

(339

)

3,707

Income before income taxes

1,911

5,255

4,627

9,677

Income tax expense

633

1,943

1,637

3,546

Net income

$

1,278

$

3,311

$

2,990

$

6,131

Net income per common share:

Basic

$

1.64

$

4.32

$

3.86

$

8.01

Diluted

$

1.62

$

4.25

$

3.81

$

7.89

Weighted average common shares outstanding:

Basic

778,400

766,500

774,300

765,700

Diluted

788,200

778,300

785,300

777,300

Note: Amounts may not sum due to rounding.

WEBCO INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET HIGHLIGHTS

(Dollars in thousands)

(Unaudited)

January 31,

2013

July 31,

2012

Accounts receivable, net

$

39,264

$

61,916

Inventories, net

143,544

157,601

Other current assets

12,529

17,887

Total current assets

195,338

237,404

Net property, plant and equipment

108,177

109,109

Other long-term assets

1,746

2,128

Total assets

$

305,261

$

348,642

Other current liabilities

$

43,487

$

72,870

Current portion of long-term debt

74,569

87,538

Total current liabilities

118,056

160,408

Long-term debt

12,000

15,125

Deferred income tax liability

20,548

21,288

Total equity

154,657

151,821

Total liabilities and equity

$

305,261

$

348,642

CASH FLOW DATA

(Dollars in thousands)

(Unaudited)

Three Months Ended

January 31,

Six Months Ended

January 31,

2013

2012

2013

2012

Net cash provided by (used in)

operating activities

$

26,115

$

10,602

$

30,542

$

30,796

Depreciation and amortization

$

3,651

$

2,674

$

7,052

$

5,123

Cash paid for capital expenditures

$

2,192

$

14,047

$

6,079

$

20,423

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:

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