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8-K - FORM 8-K - Coleman Cable, Inc.d582456d8k.htm

Exhibit 99.1

 

LOGO

Coleman Cable, Inc. Announces Record Second-Quarter 2013

Results, Including Adjusted EPS of $0.47 and Adjusted EBITDA of $25.1 Million

WAUKEGAN, Ill., August 8, 2013 — Coleman Cable, Inc. (NASDAQ: CCIX) (the “Company,” “Coleman,” “we,” “us,” or “our”), a leading manufacturer and innovator of electrical and electronic wire and cable products, announced second-quarter 2013 financial results.

Highlights

 

   

Second-quarter 2013 Adjusted Earnings per Share (EPS) of $0.47 per diluted share, a record for the Company since becoming public in 2007.

 

   

Second-quarter 2013 Adjusted EBITDA of $25.1 million, a record for the Company.

 

   

First six-month 2013 Adjusted EPS growth of 18.3 percent versus the same period last year.

Outlook and Dividend

 

   

For the third quarter of 2013, the Company estimates sales between $230.0 million and $250.0 million and Adjusted EPS between $0.37 and $0.52.

 

   

Declared quarterly cash dividend of $0.04 per share payable on August 30, 2013, to stockholders of record as of the close of business on August 16, 2013.

Second-Quarter 2013 Results

Net sales for the second quarter of 2013 were $233.8 million compared to $231.2 million, an increase of $2.6 million, from the second quarter of 2012. Sales volume (measured in total pounds shipped, on a comparable basis) increased 3.8 percent for the second quarter of 2013 compared to the same period last year and increased 7.5 percent compared to the first quarter of 2013. The increase in net sales mainly reflects higher OEM segment sales, a greater contribution from the Company’s Engineered Solutions segment, which includes two additional months of results for Watteredge, partially offset by lower Distribution segment sales due primarily to lower copper prices, which declined 8.5 percent for the second quarter on a year-over-year basis. Second-quarter 2013 Adjusted EPS and Adjusted EBITDA were $0.47 per diluted share and $25.1 million, respectively, compared to $0.46 per diluted share and $24.1 million, respectively, for the second quarter of 2012.

President and CEO Gary Yetman stated, “Our second quarter 2013 results mark the third consecutive quarter of record Adjusted EBITDA for the respective calendar quarter, with our second quarter 2013 Adjusted EBITDA of $25.1 million representing an all-time quarterly high for Coleman. Additionally, our second quarter total volume was our highest quarterly mark since 2008 and included all-time highs within several areas of our business.


Mr. Yetman concluded, “Our recent results reflect the diversity of our business and the strength of our operating platform which have allowed us to deliver solid results despite copper price volatility and the negative impact of sequestration on our Engineered Solutions segment. Looking toward the second half of 2013, we anticipate continued modest demand growth. We also continue to closely monitor housing and commercial construction activities and believe we are well positioned to derive additional benefit from a sustained rebound in these areas. Visibility with respect to the timing and magnitude of such growth, however, remains limited and, as such, the benefits from such factors may not significantly impact our results in the second half of 2013.”

On a GAAP basis, the Company recorded earnings of $0.41 per diluted share for the second quarter of 2013 compared to $0.44 per diluted share for the second quarter last year. GAAP results for the 2013 period included restructuring charges and share-based compensation expense, while results for the 2012 period included restructuring charges, share-based compensation expense and acquisition-related costs. These items are excluded from the Company’s Adjusted EBITDA and Adjusted EPS results. Please see the discussion of Non-GAAP results below and the attached schedules for a full reconciliation of GAAP results to non-GAAP results.

Quarterly Cash Dividend

On August 6, 2013, Coleman’s board of directors declared a quarterly cash dividend of $0.04 per share payable on August 30, 2013, to stockholders of record as of the close of business on August 16, 2013. Future declarations of quarterly dividends are subject to approval of the board of directors and may be adjusted as business needs or market conditions change.

Webcast

Coleman Cable has scheduled its conference call for Friday, August 9, 2013, at 10:00 a.m. Central time. Hosting the call will be Gary Yetman, President and CEO, and Alan Bergschneider, Executive Vice President and CFO. A live broadcast of the Company’s conference call, along with accompanying visuals, will be available on-line through the Company’s Web site at http://investors.colemancable.com/events.cfm. The webcast will be archived for 90 days.

Non-GAAP Results

In addition to net income determined in accordance with GAAP, we use certain non-GAAP measures in assessing our operating performance. These non-GAAP measures used by management include: (1) EBITDA, which we define as net income before net interest, income taxes, depreciation and amortization expense (“EBITDA”), (2) Adjusted EBITDA, which is our measure of EBITDA adjusted to exclude the impact of certain specifically identified items (“Adjusted EBITDA”), and (3) Adjusted earnings per share, which we calculate as diluted earnings per share adjusted to exclude the estimated per share impact of the same specifically identified items used to calculate Adjusted EBITDA (“Adjusted EPS”). For the periods presented in this report, the specifically identified items include restructuring charges, share-based compensation expense, and acquisition-related costs.

We believe both EBITDA and Adjusted EBITDA, when presented in conjunction with comparable GAAP measures, are useful for investors because we use that information in evaluating the performance of our business. We use these measures in the preparation of our annual operating budgets and serve as an indicator of business performance and management’s effectiveness with specific references to these indicators. We believe both EBITDA and Adjusted EBITDA allow us to


readily view operating trends, perform analytical comparisons and identify strategies to improve operating performance. The usefulness of EBITDA and Adjusted EBITDA as performance measures is limited by the fact that they both exclude the impact of interest expense, depreciation and amortization expense, and taxes. Due to these limitations, we do not, and you should not, use either EBITDA or Adjusted EBITDA as the only measures of our performance. We also use, and recommend that you consider, net income in accordance with GAAP as a measure of our performance. Finally, other companies may define EBITDA and Adjusted EBITDA differently and, as a result, our measure of EBITDA and Adjusted EBITDA may not be directly comparable to EBITDA and Adjusted EBITDA measures of other companies.

Similarly, we believe our use of Adjusted EPS provides an appropriate measure to use in assessing our performance across periods given that this measure provides an adjustment for certain significant items, the magnitude of which may vary significantly from period to period. However, we do not, and do not recommend that you solely use Adjusted EPS to assess our financial and earnings performance. We also use, and recommend that you use, diluted earnings per share in addition to Adjusted EPS in assessing our earnings performance. Finally, other companies may define Adjusted EPS differently and, as a result, our measure of Adjusted EPS may not be directly comparable to Adjusted EPS measures of other companies.

About Coleman Cable, Inc.

Coleman Cable, Inc. is a a leading manufacturer and innovator of electrical and electronic wire and cable products for residential and commercial construction, industrial, OEM, and consumer applications, with operations in the United States, Honduras, and Canada. The Company’s broad product offering enables it to provide its customers a single source for many of their wire and cable requirements. It manufactures the majority of its products in nine domestic production facilities and sells products to more than 8,000 active customers in a myriad of end markets. It operates three segments: Distribution, OEM, and Engineered Solutions. For more information, visit www.colemancable.com.

Various statements included in this release, including those that express a belief, expectation or intention, as well as those that are not statements of historical fact constitute forward-looking statements. These statements include those made under “Outlook and Dividends” and also may be identified by the use of forward-looking terminology such as “believes,” “plans,” “anticipates,” “expects,” “estimates,” “continues,” “could,” “may,” “might,” “potential,” “predict,” “should,” or the negative thereof or other variations thereon or comparable terminology. In particular, statements about Coleman Cable’s expectations, beliefs, plans, objectives, assumptions or future events, financial results, earnings guidance or financial performance contained in this release are forward-looking statements. Coleman Cable has based these forward-looking statements on its current expectations, assumptions, estimates and projections. While Coleman Cable believes these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond our control. These and other important factors, including those discussed in Coleman Cable’s most recent Annual Report on Form 10-K (available at www.sec.gov), may cause our actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. Some of the key factors that could cause actual results to differ from Coleman Cable’s expectations include:


   

fluctuations in the supply or price of copper and other raw materials, including PVC and fuel;

 

   

increased competition from other wire and cable manufacturers, including foreign manufacturers;

 

   

pricing pressures causing margins to decrease;

 

   

our dependence on indebtedness and our ability to satisfy our debt obligations;

 

   

failure to identify, finance or integrate acquisitions;

 

   

product liability claims and litigation resulting from the design or manufacture of our products;

 

   

advancements in wireless technology;

 

   

impairment charges related to our goodwill and long-lived assets;

 

   

restructuring charges;

 

   

changes in the cost of labor;

 

   

disruption in the importation of raw materials and products from foreign-based suppliers;

 

   

our ability to maintain substantial levels of inventory;

 

   

increase in exposure to political and economic development, crises, instability, terrorism, civil strife, expropriation, and other risks of doing business in foreign markets;

 

   

changes in tax legislation relating to our Honduras subsidiary; and

 

   

other risks and uncertainties, including those described under “Item 1A. Risk Factors,” in Coleman Cable’s most recent Annual Report on Form 10-K.

In addition, any forward-looking statements represent Coleman’s views only as of today and should not be relied upon as representing its views as of any subsequent date. While Coleman may elect to update forward-looking statements at some point in the future, it specifically disclaims any obligation to do so, even if its estimates change and, therefore, you should not rely on these forward-looking statements as representing Coleman’s views as of any date subsequent to today.

CCIX-G

Investor Contacts:

Philip Kranz, Dresner Corporate Services, 312-780-7240, pkranz@dresnerco.com

Financial Tables Follow


COLEMAN CABLE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF INCOME

(Thousands, except per share data)

(Unaudited)

 

     Three Months Ended
June 30,
    Six Months Ended
June 30,
 
     2013     2012     2013     2012  

NET SALES

   $ 233,798      $ 231,232      $ 456,311      $ 451,723   

COST OF GOODS SOLD

     198,159        195,249        386,374        385,070   
  

 

 

   

 

 

   

 

 

   

 

 

 

GROSS PROFIT

     35,639        35,983        69,937        66,653   

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

     15,365        15,744        32,861        31,474   

INTANGIBLE ASSET AMORTIZATION

     1,976        1,742        4,161        3,566   

RESTRUCTURING CHARGES

     151        23        369        356   
  

 

 

   

 

 

   

 

 

   

 

 

 

OPERATING INCOME

     18,147        18,474        32,546        31,257   

INTEREST EXPENSE

     6,887        7,023        13,812        14,045   

OTHER (INCOME) LOSS

     (125     (71     (233     3   
  

 

 

   

 

 

   

 

 

   

 

 

 

INCOME BEFORE INCOME TAXES

     11,385        11,522        18,967        17,209   

INCOME TAX EXPENSE

     4,045        3,893        6,375        5,853   
  

 

 

   

 

 

   

 

 

   

 

 

 

NET INCOME

   $ 7,340      $ 7,629      $ 12,592      $ 11,356   
  

 

 

   

 

 

   

 

 

   

 

 

 

EARNINGS PER COMMON SHARE DATA

        

NET INCOME PER SHARE:

        

Basic

   $ 0.42      $ 0.44      $ 0.72      $ 0.66   

Diluted

     0.41        0.44        0.72        0.65   

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING

        

Basic

     17,445        17,086        17,269        17,072   

Diluted

     17,675        17,309        17,433        17,308   

CASH DIVIDENDS DECLARED PER COMMON SHARE

   $ 0.04      $ 0.02     $ 0.06      $ 0.02  


COLEMAN CABLE, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Thousands, except per share data)

(Unaudited)

 

     June 30,
2013
    December 31,
2012
 

ASSETS

    

CURRENT ASSETS:

    

Cash and cash equivalents

   $ 6,408      $ 9,562   

Accounts receivable, net of allowances of $3,013 and $3,046, respectively

     134,455        125,982   

Inventories

     117,309        112,590   

Deferred income taxes

     4,789        4,271   

Assets held for sale

     1,072        1,074   

Prepaid expenses and other current assets

     10,864        4,071   
  

 

 

   

 

 

 

Total current assets

     274,897        257,550   
  

 

 

   

 

 

 

PROPERTY, PLANT AND EQUIPMENT, NET

     77,526        78,914   

GOODWILL

     66,450        66,535   

INTANGIBLE ASSETS, NET

     33,252        37,417   

DEFERRED INCOME TAXES

     563        329   

OTHER ASSETS

     8,639        8,595   
  

 

 

   

 

 

 

TOTAL ASSETS

   $ 461,327      $ 449,340   
  

 

 

   

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

    

CURRENT LIABILITIES:

    

Current portion of long-term debt

   $ 18,603      $ 35,566   

Accounts payable

     27,805        25,748   

Accrued liabilities

     33,833        38,208   
  

 

 

   

 

 

 

Total current liabilities

     80,241        99,522   
  

 

 

   

 

 

 

LONG-TERM DEBT

     293,804        288,273   

OTHER LONG-TERM LIABILITIES

     4,286        3,693   

DEFERRED INCOME TAXES

     9,670        6,687   

COMMITMENTS AND CONTINGENCIES

    

SHAREHOLDERS’ EQUITY:

    

Common stock, par value $0.001; 75,000 authorized; 18,196 and 16,998 issued and outstanding on June 30, 2013 and December 31, 2012, respectively

     18        17   

Treasury stock, at cost: 484 and 443 shares, respectively

     (4,690     (3,918

Additional paid-in capital

     106,496        94,470   

Accumulated deficit

     (27,910     (39,371

Accumulated other comprehensive loss

     (588     (33
  

 

 

   

 

 

 

Total shareholders’ equity

     73,326        51,165   
  

 

 

   

 

 

 

TOTAL LIABILITIES AND EQUITY

   $ 461,327      $ 449,340   
  

 

 

   

 

 

 


COLEMAN CABLE, INC. AND SUBSIDIARIES

Non-GAAP Results

(Thousands, except per share data)

(unaudited)

Reconciliation of Non-GAAP Financial Measures

 

     Three Months Ended
June 30,
     Six Months Ended
June 30,
 
     2013      2012      2013      2012  

Diluted earnings per share, as determined in accordance with GAAP, to Adjusted EPS

           

Earnings per share

   $ 0.41       $ 0.44       $ 0.72       $ 0.65   

Restructuring charges

     0.01         —          0.01         0.01   

Share-based compensation expense

     0.05         —          0.11         0.03   

Acquisition-related costs

     —           0.02         —           0.02   
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted diluted earnings per share

   $ 0.47       $ 0.46       $ 0.84       $ 0.71   
  

 

 

    

 

 

    

 

 

    

 

 

 
     Three Months Ended
June 30,
     Six Months Ended
June 30,
 
     2013      2012      2013      2012  

Net income, as determined in accordance with GAAP, to EBITDA and Adjusted EBITDA

           

Net income

   $ 7,340       $ 7,629       $ 12,592       $ 11,356   

Interest expense

     6,887         7,023         13,812         14,045   

Income tax expense

     4,045         3,893         6,375         5,853   

Depreciation and amortization expense (a)

     5,362         5,083         11,102         10,414   
  

 

 

    

 

 

    

 

 

    

 

 

 

EBITDA

   $ 23,634       $ 23,628       $ 43,881       $ 41,668   
  

 

 

    

 

 

    

 

 

    

 

 

 

Restructuring charges

     151         23         369         356   

Share-based compensation expense

     1,273         114         2,879         712   

Acquisition-related costs

     —           364         —           366   
  

 

 

    

 

 

    

 

 

    

 

 

 

ADJUSTED EBITDA

   $ 25,058       $ 24,129       $ 47,129       $ 43,102   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

a) Depreciation and amortization expense shown in the above schedule excludes amortization of debt issuance costs, which are included as a component of interest expense.

For additional information regarding our non-GAAP financial measures, see “Non-GAAP Results.”

Reconciliation of Third-Quarter 2013 Earnings Guidance to GAAP

For the third quarter of 2013, the Company is currently estimating diluted Adjusted EPS to be in the range of $0.37 to $0.52 per share. On a GAAP basis, the Company is currently estimating diluted EPS to be in the range of $0.35 to $0.51 per share.

 

* Rounding differences may occur for various calculated amounts.