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8-K - 8-K - Coleman Cable, Inc.d624526d8k.htm

Exhibit 99.1

 

LOGO

Coleman Cable, Inc. Announces Record Third-Quarter 2013 Results,

Including Adjusted EPS of $0.40 and Adjusted EBITDA of $24.0 Million

WAUKEGAN, Ill., November 7, 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 third-quarter 2013 financial results.

Highlights

 

    Third-quarter 2013 Adjusted Earnings Per Share (EPS) of $0.40, a third-quarter record for the Company.

 

    Third-quarter 2013 Adjusted EBITDA of $24.0 million, a third-quarter record for the Company.

 

    Third-quarter and first nine-month 2013 Adjusted EPS growth of 8.1 percent and 16.8 percent, respectively, versus the same periods last year.

Outlook and Dividend

 

    For the fourth quarter of 2013, the Company estimates sales between $225.0 million and $250.0 million and Adjusted EPS between $0.36 and $0.49.

 

    Declared quarterly cash dividend of $0.05 per share payable on November 29, 2013, to stockholders of record as of the close of business on November 15, 2013.

Third-Quarter 2013 Results

Net sales for the third quarter of 2013 were $229.0 million, consistent with $229.3 of million net sales for the third quarter of 2012. Sales volume (measured in total pounds shipped, on a comparable basis) increased 4.2 percent for the third quarter of 2013 compared to the same period last year, while copper prices declined 8.5 percent on a year-over-year basis. Compared to last year, the Company’s sales results in the 2013 third quarter mainly reflect higher sales within the Company’s Engineered Solutions and Distribution segments, offset by lower sales in its OEM segment.

President and CEO Gary Yetman stated, “For the third quarter of 2013, both our Adjusted EBITDA and Adjusted EPS were third-quarter records for the Company, while our Adjusted EBITDA results marked the fourth consecutive quarter of record results dating back to last year. Further, our results include total volume growth of 4.2 percent driven by increased demand across a variety of products, particularly within industrial and construction-related categories. Our strong third-quarter performance continues to reflect the diversity of our business and the strength of our operating platform, which have allowed us to achieve strong results notwithstanding copper price volatility and the negative impact of the sequestration on TRC’s military business in our Engineered Solutions segment.”

Mr. Yetman concluded, “We have been encouraged by double-digit demand growth from our construction-related products during the third quarter. This growth, along with the introduction of our newer industrial products, has us well-positioned to finish what has already been a strong year of financial results.”


On a GAAP basis, the Company recorded earnings of $0.8 million, or $0.04 per diluted share, for the third quarter of 2013 compared to $5.5 million, or $0.31 per diluted share, for the third quarter last year. For the third quarter of 2013, the Company’s GAAP results include a pre-tax, non-cash goodwill impairment charge of $6.6 million, or $0.36 per diluted share, recorded as the result of an interim goodwill impairment test performed during the 2013 third quarter on TRC’s military business. As a result of this test, a non-cash impairment charge was required to reduce the carrying value of the goodwill associated with TRC’s military business. Since the conclusion of 2012, the Company has operated this business amidst a general uncertainty involving the timing and amount of U.S. military spending. This charge has no impact on the Company’s operating cash flow, liquidity, or debt covenant compliance. GAAP results for the 2013 period also include restructuring charges and share-based compensation expense. 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 November 5, 2013, Coleman’s board of directors declared a quarterly cash dividend of $0.05 per share payable on November 29, 2013, to stockholders of record as of the close of business on November 15, 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, November 8, 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 EPS, 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. For the periods presented in this report, the specifically identified items include asset impairment, 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 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 wide variety 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 Dividend” 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
September 30,
     Nine Months Ended
September 30,
 
     2013      2012      2013     2012  

NET SALES

   $ 229,039       $ 229,301       $ 685,350      $ 681,023   

COST OF GOODS SOLD

     194,911         194,948         581,285        580,018   
  

 

 

    

 

 

    

 

 

   

 

 

 

GROSS PROFIT

     34,128         34,353         104,065        101,005   

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

     13,538         15,880         46,399        47,354   

INTANGIBLE ASSET AMORTIZATION

     1,976         2,189         6,137        5,755   

ASSET IMPAIRMENT

     6,584                 6,584          

RESTRUCTURING CHARGES

     122         959         491        1,314   
  

 

 

    

 

 

    

 

 

   

 

 

 

OPERATING INCOME

     11,908         15,325         44,454        46,582   

INTEREST EXPENSE

     6,915         6,919         20,727        20,963   

OTHER LOSS (INCOME)

     103         227         (129     230   
  

 

 

    

 

 

    

 

 

   

 

 

 

INCOME BEFORE INCOME TAXES

     4,890         8,179         23,856        25,389   

INCOME TAX EXPENSE

     4,106         2,725         10,481        8,579   
  

 

 

    

 

 

    

 

 

   

 

 

 

NET INCOME

   $ 784       $ 5,454       $ 13,375      $ 16,810   
  

 

 

    

 

 

    

 

 

   

 

 

 

EARNINGS PER COMMON SHARE DATA

          

NET INCOME PER SHARE:

          

Basic

   $ 0.04       $ 0.32       $ 0.75      $ 0.98   

Diluted

     0.04         0.31         0.75        0.96   

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING

          

Basic

     18,293         17,071         17,617        17,077   

Diluted

     18,478         17,301         17,780        17,311   

CASH DIVIDENDS DECLARED PER COMMON SHARE

   $ 0.04       $ 0.02       $ 0.10      $ 0.04   


COLEMAN CABLE, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Thousands, except per share data)

(Unaudited)

 

     September 30,
2013
    December 31,
2012
 

ASSETS

    

CURRENT ASSETS:

    

Cash and cash equivalents

   $ 9,745      $ 9,562   

Accounts receivable, net of allowances of $2,913 and $3,046, respectively

     128,449        125,982   

Inventories

     123,572        112,590   

Deferred income taxes

     5,206        4,271   

Assets held for sale

     1,072        1,074   

Prepaid expenses and other current assets

     5,527        4,071   
  

 

 

   

 

 

 

Total current assets

     273,571        257,550   
  

 

 

   

 

 

 

PROPERTY, PLANT AND EQUIPMENT, NET

     77,442        78,914   

GOODWILL

     59,896        66,535   

INTANGIBLE ASSETS, NET

     31,278        37,417   

DEFERRED INCOME TAXES

     591        329   

OTHER ASSETS

     9,315        8,595   
  

 

 

   

 

 

 

TOTAL ASSETS

   $ 452,093      $ 449,340   
  

 

 

   

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

    

CURRENT LIABILITIES:

    

Current portion of long-term debt

   $ 28,177      $ 35,566   

Accounts payable

     28,177        25,748   

Accrued liabilities

     32,954        38,208   
  

 

 

   

 

 

 

Total current liabilities

     89,308        99,522   
  

 

 

   

 

 

 

LONG-TERM DEBT

     273,451        288,273   

OTHER LONG-TERM LIABILITIES

     4,231        3,693   

DEFERRED INCOME TAXES

     10,197        6,687   

COMMITMENTS AND CONTINGENCIES

    

SHAREHOLDERS’ EQUITY:

    

Common stock, par value $0.001; 75,000 authorized; 18,314 and 16,998 issued and outstanding on September 30, 2013 and December 31, 2012, respectively

     18        17   

Treasury stock, at cost: 485 and 443 shares, respectively

     (4,690     (3,918

Additional paid-in capital

     107,735        94,470   

Accumulated deficit

     (27,838     (39,371

Accumulated other comprehensive loss

     (319     (33
  

 

 

   

 

 

 

Total shareholders’ equity

     74,906        51,165   
  

 

 

   

 

 

 

TOTAL LIABILITIES AND EQUITY

   $ 452,093      $ 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
September 30,
     Nine Months Ended
September 30,
 
     2013      2012      2013      2012  
Diluted earnings per share, as determined in accordance with GAAP, to Adjusted EPS    (unaudited)  

Earnings per share

   $ 0.04       $ 0.31       $ 0.75       $ 0.96   

Asset impairment

     0.36                 0.37           

Restructuring charges

             0.04        0.02         0.05   

Share-based compensation expense

             0.02        0.11         0.04   

Acquisition-related costs

                           0.02   
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted diluted earnings per share

   $ 0.40       $ 0.37       $ 1.25       $ 1.07   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

     Three Months Ended
September 30,
     Nine Months Ended
September 30,
 
     2013      2012      2013      2012  
Net income, as determined in accordance with GAAP, to EBITDA and Adjusted EBITDA   

(unaudited)

(Thousands)

 

Net income

   $ 784       $ 5,454       $ 13,375       $ 16,810   

Interest expense

     6,915         6,919         20,727         20,963   

Income tax expense

     4,106         2,725         10,481         8,579   

Depreciation and amortization expense (a)

     5,373         5,577         16,474         15,987   
  

 

 

    

 

 

    

 

 

    

 

 

 

EBITDA

   $ 17,178       $ 20,675       $ 61,057       $ 62,339   
  

 

 

    

 

 

    

 

 

    

 

 

 

Asset impairment

     6,584                 6,584           

Restructuring charges

     122         959         491         1,314   

Share-based compensation expense

     134         457         3,013         1,169   

Acquisition-related costs

             77                 443   
  

 

 

    

 

 

    

 

 

    

 

 

 

ADJUSTED EBITDA

   $ 24,018       $ 22,168       $ 71,145       $ 65,265   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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 Fourth-Quarter 2013 Earnings Guidance to GAAP

For the fourth quarter of 2013, the Company is currently estimating diluted Adjusted EPS to be in the range of $0.36 to $0.49 per share. On a GAAP basis, the Company is currently estimating diluted EPS to be in the range of $0.35 to $0.48 per share.

* Rounding differences may occur for various calculated amounts.