HIGHLAND HEIGHTS, Ky. — General Cable Corporation reported results for the fourth quarter ended December 31, 2017. For the quarter, reported earnings per share was $0.31 and reported operating income was $8 million. Adjusted earnings per share and adjusted operating income were $0.03 and $20 million, respectively, for the quarter.
Michael T. McDonnell, President and Chief Executive Officer, said, “Our fourth quarter reflects improved performance in Latin America and demand stability of key businesses in North America (electric utility, construction and automotive) and Europe (land turnkey). Although industry dynamics, especially in Europe, and business uncertainties resulting from our review of strategic alternatives did impact results, our 2018 outlook is positive based on trends we have seen since the beginning of this year.” McDonnell added, “We are also pleased to have now received our stockholders’ approval for the pending merger with Prysmian S.p.A., and we continue to expect the merger to be completed by the third quarter of 2018, subject to regulatory approvals and other customary conditions.”
- Announced at its special meeting of common stockholders on February 16, 2018, a majority of the votes cast, which also represented a majority of the outstanding shares of the Company’s common stock, voted to approve the adoption of the previously announced definitive merger agreement under which Prysmian will acquire General Cable for $30.00 per share in cash
- Reported operating income of $8 million primarily impacted by charges of $15 million related to the review of strategic alternatives that resulted in the previously announced definitive merger agreement with Prysmian
- Adjusted operating income of $20 million decreased $7 million year over year as restructuring savings and continued performance improvement in Latin America were offset by ongoing challenging industry dynamics particularly in Europe and unfavorable product mix in North America
- Operating cash flow was a use of $39 million for the full year of 2017 including payments totaling $82 million for the resolution of FCPA related matters
- Completed the divestiture program focused on the sale or liquidation of non-core operations in Asia Pacific and Africa generating total proceeds of approximately $260 million consistent with management’s expectations
- Maintained significant liquidity with $326 million of availability on the Company’s $700 million asset-based revolving credit facility and $85 million of cash and cash equivalents
- Impact of rising metal prices was a benefit of $4 million and $5 million for the fourth quarter of 2017 and 2016, respectively
Fourth Quarter Segment Demand
North America – Unit volume as measured in metal pounds sold was up 5% versus prior year driven by stronger demand for aerial transmission cables and construction products.
Europe – Unit volume as measured in metal pounds sold was up 6% versus prior year as stronger demand for electric utility products including land turnkey projects helped to more than offset lower subsea project activity and weakness in industrial and construction markets.
Latin America – Unit volume as measured in metal pounds sold was down 6% versus prior year driven by uneven spending on electric infrastructure and construction projects throughout the region as well as the impact of the Company’s go-to-market initiatives (focused on margin improvement). Shipments of aerial transmission cables in Brazil were up sharply year over year.
At the end of 2017 and 2016, total debt was $1,086 million and $939 million, respectively, and cash and cash equivalents were $85 million and $101 million, respectively. The increase in net debt was principally driven by payments totaling $82 million related to the resolution of FCPA matters as well as investments in working capital (partly due to higher metal prices) and funding of restructuring actions.
Other Matters – Income Taxes
The enactment of the Tax Cuts and Jobs Act (“Tax Reform Act”) provides for a one-time deemed taxable repatriation of the Company’s off-shore accumulated earnings. This deemed repatriation resulted in a preliminary estimate of $46 million of non-cash deferred tax expense in the fourth quarter of 2017 as the deemed repatriation income was offset by existing net operating losses. In addition, the Tax Reform Act provides for the reduction of the U.S. corporate income tax rate from 35% to 21%, effective for 2018. Accordingly, the Company’s deferred tax assets and liabilities were required to be remeasured in the fourth quarter of 2017 resulting in a preliminary estimated non-cash deferred tax benefit of approximately $62 million. Prospectively, the Company expects its reported earnings to be favorably impacted by the reduced U.S. tax rate.Tagged with financial, General Cable