WAUKEGAN, Ill., Nov. 13, 2007 (PRIME NEWSWIRE) -- Coleman Cable, Inc. (Nasdaq:CCIX) (Coleman), a leading manufacturer and innovator of electrical and electronic wire and cable products, issued third-quarter and nine-month 2007 financial and operational results.
Third Quarter Highlights
* Record revenue of $253.5 million - up 120.5% from last year * Adjusted EBITDA of $22.4 million - near the top end of guidance and up 36.6% from last year * Adjusted EPS of $0.41 - an increase of 13.9% from last year
Management Comments
Gary Yetman, president and CEO, said, "In the third quarter, we again produced record revenues and increased adjusted EBITDA and adjusted EPS in challenging market conditions.
"Copperfield operations are transitioning well. Our board approved the planned Copperfield integration strategy of streamlining manufacturing operations and reducing costs. This plan involves the closure and consolidation of Copperfield manufacturing and distribution facilities located in Avilla, Ind., Nogales, Ariz., and El Paso, Texas, into one modern facility in El Paso, Texas. The integration strategy also includes the realignment of existing Copperfield facilities.
"As the company previously announced last week," continued Yetman, "the pending acquisition of Woods U.S. and Woods Canada is an exceptional opportunity to expand our U.S. and Canadian presence, making Coleman, we believe, a preeminent supplier of assembled wire and cable products in North America.
"We believe the planned integration of Coleman, Copperfield and Woods into one company provides significant opportunities to add value for our shareholders.
"We typically experience softness in the fourth quarter as many of end markets reduce their inventory stocking levels in conjunction with the year-end holidays. Not withstanding, we started the fourth quarter with strong results in October. While we continue to experience inflationary cost pressures from higher material and fuel costs, we have been successful in offsetting some of these pressures by the implementation of our cost reduction initiatives. However, the recent, significant downturn in copper prices and fluctuating market demands could potentially have a negative impact on our fourth quarter revenues and profitability. With these factors in mind, we are projecting fourth-quarter revenues between $220 million and $240 million and adjusted EBITDA in a range of $17 million to $21 million."
Yetman also added, "Coleman Cable is pleased to announce that on November 9, 2007, Coleman elected two additional independent directors to their board. Harmon S. Spolan and Isaac M. Neuberger will become directors of Coleman effective as of the close of business on November 16, 2007.
"Mr. Neuberger is a founding principal of the law firm of Neuberger, Quinn, Gielen, Rubin & Gibber, P.A. located in Baltimore, Maryland. He also serves as a member of the Board of Directors of AmTrust Financial Services, Inc. (Nasdaq:AFSI).
"Mr. Spolan is of Counsel to the law firm of Cozen O'Connor P.C. located in Philadelphia, Pennsylvania. Prior to joining Cozen in 1999, he served as president of Jefferson Bank for 22 years. Mr. Spolan is also a member of the Board of Directors of Atlas America Inc. (Nasdaq:ATLS) and TRM Corp. (Nasdaq:TRMM)."
GAAP Third Quarter Results
Coleman reported revenues for the 2007 third quarter of $253.5 million compared to revenues of $114.9 million in the same period of last year, which represents an increase of 120.5 percent, primarily due to the addition of Copperfield. Volume (total pounds shipped) increased 118.5 percent in the third quarter of 2007 compared to the prior-year third quarter, also primarily due to the acquisition of Copperfield.
Gross profit margin for the third quarter of 2007 was 11.5 percent compared to 21.1 percent for the same period of 2006 due primarily to the Copperfield acquisition. Copperfield prices its products to earn a fixed dollar margin per pound of goods sold, which causes Copperfield's margins to compress in higher copper price environments. Gross profit margin was also negatively impacted by pricing pressures caused by contracting market conditions in a number of Coleman's segments and factory variances.
Selling, engineering, general and administrative expense for the 2007 third quarter was $11.8 million compared to $9.2 million for the 2006 third quarter, with the increase resulting primarily from the Copperfield acquisition and an increase in stock compensation expense of $1.1 million.
Intangible amortization expense for the 2007 third quarter was $2.5 million due to the Copperfield acquisition in the second quarter.
Restructuring charges for the third quarter of 2007 were $0.1 million as the result of the planned closure of the Company's Siler City, N. C., facility. Restructuring charges for the third quarter of 2006 were $0.9 million as the result of the planned closure of the Company's Miami Lakes, Fla., facility.
Interest expense, net, for the third quarter of 2007 was $8.2 million compared to $4.2 million for the same period of 2006, due primarily to additional expense related to the 2007 Notes and increased borrowings under the Company's revolving line of credit, both due to the Copperfield acquisition.
Income tax expense was $2.6 million in the 2007 third quarter compared to $0.2 million for 2006 third quarter. The increase is due to the Company's change from an S corporation to a C corporation.
Net income applicable to common shareholders for the third quarter of 2007 was $4.0 million, compared to $9.8 million in the third quarter of 2006. Earnings per share for the third quarter were $0.24 in the 2007 period compared to $0.77 in the 2006 period. A number of items that were new in 2007 have impacted these results and are discussed in more detail below.
The Company continues to work to strengthen its balance sheet. Working capital, defined as accounts receivable plus inventory less accounts payable, was approximately 20.1 percent of annualized net sales for the quarter, more than 2.5 percentage points less than last year's level mainly due to the acquisition of Copperfield. Capital expenditures were approximately $1.9 million in the quarter, less than half of the third quarter's depreciation expense. The Company anticipates capital expenditures for the full year of 2007 to be in the range of $6 million to $8 million.
GAAP Nine-Month Results
Net sales for the nine months of 2007 were $609.9 million compared to $320.1 million for the same period of 2006, an increase of 90.5 percent. The increase in net sales was primarily due to the acquisition of Copperfield. Volume increased 74.1 percent in the 2007 period compared to the 2006 period due to the acquisition of Copperfield, which accounted for essentially all of the increase. With the exception of Copperfield products, product mix in units for the 2007 period was relatively consistent with the prior year.
Gross profit margin for the nine months ended September 30, 2007, was 12.1 percent compared to 20.4 percent for the same period of 2006. The decrease in the gross profit margin was primarily due to the Copperfield acquisition for the reasons listed above. Other factors contributing to the decrease in the gross profit margin were the rapid drop in copper prices during the end of 2006 and the beginning of 2007, which resulted in compressed margins across most business segments.
Selling, engineering, general and administrative expense for 2007 nine-month period was $31.2 million compared to $23.0 million for the 2006 nine-month period due primarily to the reasons listed above.
Intangible amortization expense for the nine months of 2007 was $5.1 million due to the Copperfield acquisition in the second quarter.
Restructuring charges for the nine months of 2007 were $0.6 million as a result of the planned closure of the Company's Siler City, N.C., facility. Restructuring charges for the first nine months of 2006 were $1.2 million as a result of the planned closure of the Company's Miami Lakes, Fla., facility.
Interest expense, net, for the 2007 nine-month period was $19.4 million compared to $12.5 million for the same period of 2006 due primarily from the reasons listed above.
Income tax expense was $6.8 million for the nine months of 2007, compared to $1.0 million for the nine months of 2006 due to the reasons listed above.
Net income applicable to common shareholders for the nine months of 2007 was $10.9 million, compared to $27.7 million for the nine months of 2006. Earnings per share for the nine months were $0.65 in the 2007 period compared to $2.17 in the 2006 period. A number of items that were new in 2007 have impacted these results and are discussed in more detail below.
Non-GAAP Third Quarter Results
The acquisition of Copperfield, the equity offering in 2006, and the conversion of Coleman from an S-Corporation to a C-Corporation in 2006 have made comparing quarterly and period results year over year complex. In an effort to better assist investors in understanding its financial results, the Company has provided in this release Adjusted Net Income, Adjusted Earnings Per Share (EPS), EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) and Adjusted EBITDA, which are all measures not defined under accounting principles generally accepted in the United States (GAAP). Management believes these numbers are useful to investors in understanding the results of operations because they illustrate the impact that interest, taxes, depreciation, amortization, and other non-recurring and/or non-cash charges had on results.
Webcast
Coleman Cable has also scheduled its conference call for Wednesday, November 14, 2007, at 10:00 a.m. central time. Hosting the call will be Gary Yetman, president and CEO, and Richard Burger, executive vice president and CFO. A live broadcast of Coleman Cable's conference call, along with accompanying visuals, will be available on-line through the Company's website at http://investors.colemancable.com/events.cfm. The webcast will be archived for 90 days.
About Coleman Cable Inc.
Coleman Cable, Inc. is a leading manufacturer and innovator of electrical and electronic wire and cable products for the security, sound, telecommunications, electrical, commercial, industrial, and automotive industries. With extensive design and production capabilities and a long-standing dedication to customer service, Coleman Cable, Inc. is the preferred choice of cable and wire users throughout the United States.
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 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 or 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 Annual Report on Form 10-K for the fiscal year ended December 31, 2006 (available at www.sec.gov), may cause its 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; * increased competition from other wire and cable manufacturers, including foreign manufacturers; * pricing pressures causing margins to decrease; * general economic conditions and changes in the demand for Coleman Cable's products by key customers; * the consummation of acquisitions, including Woods; * failure to identify, finance or integrate acquisitions; * failure to accomplish integration activities on a timely basis; * failure to achieve expected efficiencies in Coleman Cable's manufacturing and integration consolidations; * changes in the cost of labor or raw materials, including PVC and fuel costs; * inaccuracies in purchase agreements relating to acquisitions; * failure of customers to make expected purchases, including customers of acquired companies; * unforeseen developments or expenses with respect to Coleman Cable's acquisition, integration and consolidation efforts; and * other risks and uncertainties, including those described under "Item 1A. Risk Factors" in Coleman Cable's Annual Report on Form 10-K for the fiscal year ended December 31, 2006.
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
COLEMAN CABLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Thousands, except share data)
(unaudited)
Three months ended Nine months ended
September 30, September 30,
------------------- ------------------
2006 2007 2006 2007
-------- -------- -------- --------
NET SALES $114,925 $253,453 $320,137 $609,867
COST OF GOODS SOLD 90,697 224,287 254,712 535,837
-------- -------- -------- --------
GROSS PROFIT 24,228 29,166 65,425 74,030
SELLING, ENGINEERING,
GENERAL AND ADMINISTRATIVE
EXPENSES 9,158 11,753 23,049 31,238
INTANGIBLE AMORTIZATION
EXPENSE -- 2,522 -- 5,085
RESTRUCTURING CHARGES 891 53 1,210 580
-------- -------- -------- --------
OPERATING INCOME 14,179 14,838 41,166 37,127
INTEREST EXPENSE, NET 4,185 8,187 12,506 19,411
OTHER (INCOME) LOSS, NET -- 2 (11) 29
-------- -------- -------- --------
INCOME BEFORE INCOME TAXES 9,994 6,649 28,671 17,687
INCOME TAX EXPENSE 235 2,606 1,009 6,752
-------- -------- -------- --------
NET INCOME $ 9,759 $ 4,043 $ 27,662 $ 10,935
======== ======== ======== ========
EARNINGS PER COMMON SHARE DATA
NET INCOME PER SHARE
Basic $ 0.77 $ 0.24 $ 2.17 $ 0.65
Diluted 0.77 0.24 2.17 0.65
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING
Basic 12,753 16,787 12,751 16,787
Diluted 12,753 16,796 12,751 16,789
UNAUDITED PRO FORMA DATA
PRO FORMA NET INCOME
Income before
income taxes $ 9,994 $ 28,671
Pro forma income
tax expense 4,024 11,483
-------- --------
Pro forma net income 5,970 17,188
======== ========
PRO FORMA NET INCOME PER SHARE
Basic $ 0.47 $ 1.35
Diluted 0.47 1.35
COLEMAN CABLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Thousands, except share data)
(unaudited)
Dec. 31, Sept. 30, Sept. 30,
2006 2006 2007
--------- --------- ---------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 14,734 $ 52 $ 5,920
Accounts receivable,
less allowance for
uncollectible accounts of
$2,092, $2,262 and $3,711,
respectively 62,318 73,672 149,860
Inventories 66,765 80,377 128,546
Deferred income taxes 2,136 104 2,313
Assets held for sale -- -- 661
Prepaid expenses and
other current assets 2,739 4,133 5,237
--------- --------- ---------
Total current assets 148,692 158,338 292,537
--------- --------- ---------
PROPERTY, PLANT AND EQUIPMENT:
Land 579 579 2,809
Buildings and leasehold
improvements 7,636 7,535 15,112
Machinery, fixtures and equipment 45,125 44,684 98,946
--------- --------- ---------
53,340 52,798 116,867
Less accumulated depreciation
and amortization (31,762) (30,634) (39,137)
Construction in progress 244 693 3,184
--------- --------- ---------
Property, plant and
equipment, net 21,822 22,857 80,914
GOODWILL 60,628 60,642 103,398
INTANGIBLE ASSETS, NET 10 -- 59,326
OTHER ASSETS, NET 4,593 4,826 9,857
--------- --------- ---------
TOTAL ASSETS $235,745 $246,663 $546,032
========= ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 936 $ 44,973 $ 901
Accounts payable 13,091 36,589 53,952
Accrued liabilities 19,582 19,458 32,687
--------- --------- ---------
Total current liabilities 33,609 101,020 87,540
--------- --------- ---------
LONG-TERM DEBT 121,571 121,721 343,846
LONG-TERM LIABILITIES, NET -- -- 39
DEFERRED INCOME TAXES 2,724 160 23,161
SHAREHOLDERS' EQUITY:
Common stock, par value $0.001;
31,260 authorized; and 12,787
issued and outstanding on
September 30, 2006 and 16,787 on
December 31, 2006 and
September 30, 2007 17 13 17
Additional paid-in capital 80,421 26,077 83,091
Retained earnings
(accumulated deficit) (2,597) (2,328) 8,338
--------- --------- ---------
Total shareholders' equity 77,841 23,762 91,446
--------- --------- ---------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $235,745 $246,663 $546,032
========= ========= =========
COLEMAN CABLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands)
(unaudited)
Nine months ended
September 30,
2006 2007
-------- --------
CASH FLOW FROM OPERATING ACTIVITIES:
Net income $27,662 $10,935
Adjustments to reconcile net income to net
cash flow from operating activities:
Depreciation and amortization 4,799 14,811
Stock-based compensation 531 3,121
Deferred tax provision (credit) 147 (3,924)
(Gain) Loss on disposal of fixed assets 313 (12)
Gain on sale of investment (11) --
Changes in operating assets and liabilities:
Accounts receivable (14,832) (25,950)
Inventories (12,488) (20,180)
Prepaid expenses and other assets (1,251) (1,706)
Accounts payable 14,583 7,891
Accrued liabilities 2,682 9,654
-------- --------
Net cash flow from operating activities 22,135 (5,360)
-------- --------
CASH FLOW FROM INVESTING ACTIVITIES:
Capital expenditures (2,157) (4,929)
Acquisition of business,
net of cash acquired -- (214,810)
Proceeds from sale of fixed assets 42 18
Proceeds from sale of investment 82 59
-------- --------
Net cash flow from investing activities (2,033) (219,662)
-------- --------
CASH FLOW FROM FINANCING ACTIVITIES:
Net borrowings under
revolving loan facilities,
net of issuance costs (1,950) 98,196
Issuance of senior notes,
net of issuance costs -- 119,380
Common stock issuance costs -- (451)
Repayment of long-term debt (656) (917)
Dividends paid to shareholders (17,502) --
-------- --------
Net cash flow from financing activities (20,108) 216,208
-------- --------
DECREASE IN CASH AND CASH EQUIVALENTS (6) (8,814)
CASH AND CASH EQUIVALENTS - Beginning of period 58 14,734
-------- --------
CASH AND CASH EQUIVALENTS - End of period $ 52 $ 5,920
======== ========
NONCASH ACTIVITY
Unpaid capital expenditures 46 210
Capital lease obligation 16
SUPPLEMENTAL CASH FLOW INFORMATION
Income taxes paid 387 12,244
Cash interest paid 8,865 9,557
EBITDA and Adjusted EBITDA
Coleman Cable, Inc.
EBITDA and Adjusted EBITDA
$ in thousands Q3 2006 Q3 2007
-------- --------
EBITDA
Net income (loss) $ 9,759 $ 4,043
Interest expense--net 4,185 8,187
Income tax expense 235 2,606
Depreciation and
amortization expense 1,264 6,422
-------- --------
EBITDA 15,443 21,258
Adjustments to EBITDA
Restructuring charges 891 53
Stock based compensation -- 1,099
Tax Matters Agreement -- 4
-------- --------
Adjusted EBITDA $ 16,334 $ 22,414
-------- --------
Adjusted Net Income and Adjusted EPS
Comparative
Coleman Cable, Inc. Analysis
-------------------
$ in thousands (except EPS) Q3 2006 Q3 2007
-------- --------
as Reported
-------------------
Net sales $114,925 $253,453
Income before income taxes 9,994 6,649
Income tax expense 235 2,606
-------- --------
Net income $ 9,759 $ 4,043
======== ========
Earning per share data
Net income per share
Basic $ 0.77 $ 0.24
Diluted $ 0.77 $ 0.24
Weighted average common shares outstanding
Basic 12,753 16,787
Diluted 12,753 16,796
Adjusted for
comparative purposes
-------------------
Income before income taxes $ 9,994 $ 6,649
Stock based compensation -- 1,099(c)
Intangible asset amortization -- 2,537(d)
Incremental depreciation expense -- 902(d)
-------- --------
Adjusted income before income taxes 9,994 11,187
Pro forma income tax expense 4,024(a) 4,385
-------- --------
Net income $ 5,970 $ 6,802
======== ========
Earning per share data
Net income per share
Basic $ 0.36 $ 0.41
Diluted $ 0.36 $ 0.41
Weighted average common shares outstanding
Basic 16,787(b) 16,787
Diluted 16,796(b) 16,796
(a) Pro forma income tax expense computed for comparative purposes,
as Coleman was a S-Corporation and converted to an C-Corporation
(b) Used Q3 2007 basic and diluted shares used for comparative
purposes, as the equity offering occurred in October 2006
(c) Non-cash stock compensation expense incurred post the equity
offering in October 2006 and the adoption of a non-qualified
stock option plan
(d) Non-cash expenses directly associated with the allocation
purchase price of Copperfield, approximated 41% of which are tax
deductible.