WEBC Webco Industrial Inc (PK)

Webco Industries, Inc. (OTC: WEBC) today reported results for its fiscal 2013 fourth quarter and year ended July 31, 2013.

For its fiscal 2013 fourth quarter, the Company reported net income of $1.7 million, or $2.15 per diluted share, compared to net income of $3.2 million, or $4.09 per diluted share, for the fourth quarter in fiscal 2012. Net sales for the fourth quarter of fiscal 2013 were $100.4 million, a 25.9 percent decrease from the $135.5 million of sales in last year’s fourth quarter. The current quarter results include a $2.0 million non-cash gain related to the Company’s interest swap contract, whereas the prior year fourth quarter includes a $1.6 million non-cash loss related to the interest swap contract.

For fiscal year 2013, the Company generated net income of $5.8 million, or $7.28 per diluted share, compared to net income of $14.6 million, or $18.67 per diluted share, for fiscal year 2012. Net sales for the current fiscal year amounted to $413.7 million, a 21.4 percent reduction from the $526.8 million in sales for fiscal year 2012. Results for the current year include a $1.6 million non-cash gain related to the interest swap contract, whereas the prior fiscal year contained a $5.4 million non-cash loss on the contract.

Gross profit for the fourth quarter of fiscal 2013 was $6.9 million, or 6.9 percent of net sales, compared to $13.3 million, or 9.8 percent of net sales, for the fourth quarter of fiscal 2012. Gross profit for fiscal year 2013 was $33.3 million, or 8.1 percent of net sales, compared to $55.1 million, or 10.5 percent of net sales, in fiscal year 2012.

Dana S. Weber, Chief Executive Officer, commented, “The greatest factors affecting both the quarterly and year comparisons are lower volume, less favorable product mix and weak spot pricing. We are having success adding incremental business, but the industrial economy in general is challenging and competitive. We hope for the return of more favorable business conditions into calendar year 2014. We continue to invest in a platform for long-term organic growth that is consistent with our niche strategy.”

Selling, general and administrative expenses in the fourth quarter of fiscal 2013 decreased to $5.2 million from $6.0 million in the fourth quarter of the prior year. SG&A costs in fiscal year 2013 were $22.1 million, down slightly from $23.1 million reported for fiscal year 2012.

Interest expense was $1.0 million in fiscal 2013’s fourth quarter and $0.7 million in the fourth quarter of fiscal 2012. For fiscal year 2013 and 2012, respectively, interest expense amounted to $3.9 million and $3.6 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 $0.8 million and $8.0 million, respectively, for the fourth quarter and fiscal year ended July 31, 2013. Capital spending for fiscal year 2014 is expected to be in the range of $7 to $8 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

July 31,

    Fiscal Year Ended

July 31,

2013

   

2012

2013

   

2012

  Net sales $ 100,421 $ 135,534 $ 413,699 $ 526,751 Cost of sales   93,478     122,238   380,380     471,664   Gross profit 6,944 13,296 33,319 55,087 Selling, general & administrative   5,234     5,991   22,138     23,086   Income from operations 1,710 7,305 11,182 32,001 Interest expense 1,010 712 3,892 3,588 Unrealized (gain) loss on interest contracts   (1,985 )   1,618   (1,631 )   5,412  

Income before income taxes

2,685

4,975

8,921

23,001

Income tax expense   968     1,773   3,168     8,439   Net income $ 1,717   $ 3,203 $ 5,753   $ 14,562

 

Net income per common share: Basic $ 2.17   $ 4.17 $ 7.38   $ 18.98 Diluted $ 2.15   $ 4.09 $ 7.28   $ 18.67   Weighted average common shares outstanding: Basic   790,000     768,000   779,000     767,000 Diluted   800,000     782,000   790,000     780,000  

Note: Amounts may not sum due to rounding.

    WEBCO INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET HIGHLIGHTS

(Dollars in thousands)

(Unaudited)

             

July 31,

2013

July 31,

2012

  Cash $ 7,181 $ 5,530 Accounts receivable, net 38,297 61,916 Inventories, net 153,675 157,601 Other current assets   9,843   12,357 Total current assets 208,995 237,404   Net property, plant and equipment 103,006 109,109 Other long-term assets   1,719   2,128   Total assets $ 313,721 $ 348,642   Other current liabilities $ 45,227 $ 72,870 Current portion of long-term debt  

78,565

  87,538 Total current liabilities 123,792 160,408   Long-term debt 12,000 15,125 Deferred income tax liability 20,142 21,288   Total equity   157,786   151,821   Total liabilities and equity $ 313,721 $ 348,642    

CASH FLOW DATA

(Dollars in thousands)

(Unaudited)

                      Three Months Ended

July 31,

Fiscal Year Ended

July 31,

2013

     

2012

2013

2012

 

Net cash provided by (used in) operating activities

$ 1,303

$ 6,650

$ 30,533

$ 45,418

  Depreciation and amortization $ 3,682 $ 3,160 $ 14,245 $ 11,025   Cash paid for capital expenditures $ 753 $ 9,739 $ 8,041 $ 40,068  

Note: Amounts may not sum due to rounding.

Webco Industries, Inc.Mike Howard, 918-241-1094Chief Financial Officermhoward@webcoindustries.com