General Cable Reports Third Quarter 2016 Results

General Cable Corporation (NYSE: BGC) reported today results for the third quarter ended September 30, 2016. For the quarter, reported diluted loss per share was $0.29 and reported operating income was $5 million. The Company generated adjusted earnings per share for the quarter of $0.07 and adjusted operating income of $32 million. See page 3 and 4 of this press release for the reconciliation of reported to adjusted results and related disclosures.

Michael T. McDonnell, President and Chief Executive Officer, said, "Third quarter results were below our expectations largely due to a temporary lull in North American end market demand early in the quarter and continued pressure on construction and electrical infrastructure spending in Latin America. Third quarter results were also impacted by the further softening of demand for historically higher margin industrial and specialty products, particularly those tied to oil and gas markets. While disappointed by lower than expected third quarter results, unit volume grew late in the quarter and customer sentiment improved as we continue to navigate a choppy end market environment. For the fourth quarter, we expect year-over-year improvement as higher unit volume is anticipated to more than offset lower subsea turnkey project activity. Overall, I'm very pleased with the progress we are making on the elements within our control - most importantly, our ability to execute as we generated strong operating cash flow, reduced outstanding borrowings, and completed the sale of two businesses. In addition, the execution of our strategic roadmap to transform the Company into a more focused, efficient and innovative organization is advancing according to plan."

Third Quarter Summary
  • Reported operating income of $5 million and adjusted operating income of $32 million were down year over year $20 million and $15 million, respectively, primarily due to lower subsea turnkey project activity compared to last year, further weakening demand for industrial and specialty products tied to oil and gas end markets in North America and the continued pressure in Latin America
  • Generated operating cash flow of $50 million driven by the continued tight management of working capital
  • Maintained significant liquidity with $393 million of availability on the Company's asset based credit facility and applied cash proceeds from divestitures to reduce outstanding borrowings
  • Completed the sale of the Company's Zambia business bringing the total cash proceeds generated from the divestiture program to $203 million while also completing the sale of the company's Venezuela business
  • Impact of metal prices was neutral as compared to guidance and the second quarter of 2016. The third quarter of 2015 was negatively impacted by metal price movements of $10 million.

Segment Demand

North America - Unit volume was down 2% year over year as stronger demand for construction and electric utility distribution cables was more than offset by lower shipments of aerial transmission cables and further weakening of demand for industrial and specialty products tied to oil and gas end markets.

Europe - Unit volume was up 3% year over year driven by demand for electric utility products including land-based turnkey projects as well as energy cables.

Latin America - Unit volume was up 3% year over year driven by demand for aerial transmission products (excluding volume in Venezuela in Q3 2015).

Overall, through the first nine months of the year, demand in electric utility distribution and non-residential construction markets in North America was up mid-single digits year over year while demand for industrial and specialty products tied to oil and gas markets has continued to weaken throughout the year and was down year over year 5% and 50%, respectively. In Europe, setting aside the impact of restructuring activities, end market demand through the first nine months has been flat year over year. Unit volume in Latin America remains under pressure due to reduced spending on electric infrastructure and construction projects.

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