General Cable Corporation (NYSE: BGC) (the "Company") today
announced it is implementing a restructuring program designed to improve
profitability and return on invested capital in each of its three
reportable segments. The restructuring program, which builds on the
Company's existing productivity and asset optimization plans, is
expected to result in ongoing annual savings of approximately $75
million, beginning in 2014 with full realization starting in early 2016.
The restructuring program is focused on the closure of certain
underperforming assets as well as the consolidation and realignment of
other facilities. The Company is also implementing reductions in
selling, general and administrative (SG&A) expenses globally.
Gregory B. Kenny, President and Chief Executive Officer, said, "While we
strongly believe our business is well positioned for the long-term, we
are continuing to face ongoing challenges in certain end markets and
persistently uneven global demand and pricing. We have therefore decided
to expand our productivity and asset optimization plans that were
communicated earlier this year by implementing a broad restructuring
program focused on improving profitability and return on invested
capital in all of our segments. While these are difficult decisions that
affect the lives of our employees, we believe these actions are
essential to improving both the near-term performance as well as
assuring the long-term success of the Company. We appreciate the
contributions of all of our employees, and will support those impacted
during this time of transition. As we move forward, we remain confident
in our strategy, competitiveness and ability to create shareholder
value. Over a business cycle, our operating model continues to support
substantial incremental earnings as we further strengthen the alignment
of our portfolio with the long-term fundamental growth prospects for
energy, infrastructure and construction investments in our key end
markets around the world."
Improving Profitability in All Three Reportable
SegmentsCollectively, the restructuring program is
expected to generate $10 million of savings in 2014, increasing to
ongoing annual savings of $75 million beginning in 2016.
As a result of the restructuring, the Company expects to record pre-tax
charges of approximately $200 million, which includes approximately $80
million of cash costs. The Company anticipates a majority of the total
charges will be incurred in 2014.
These actions are anticipated to result in the elimination of
approximately 1,000 positions globally, representing nearly 7% of the
Progress on the restructuring will be communicated periodically
throughout the implementation of the program which is expected to be
completed over the next 12 months.
The timing and costs of the restructuring program may vary from the
Company's current estimates based on certain factors, including the
finalization of timetables for the transition of production,
consultations with employees and other statutory severance requirements
of particular legal jurisdictions as well as any other actions that may
result from the Company's ongoing evaluation of its portfolio.
Update on Full Year 2014 OutlookAside
from typical seasonality, global demand and pricing remains uneven as
the tepid pace of the recovery continues to hamper growth in key end
markets. As a result, management is tempering its expectations for the
second half of the year principally due to the lack of consistent
momentum in utility and construction spending in North America and Latin
America as well as ongoing headwinds expected in Spain and Thailand. The
Company also anticipates that certain assets are unlikel to meet key
performance improvement milestones in the second half of the year.
Partially offsetting these anticipated trends in the second half of the
year are the initial benefits of the Company's restructuring program and
recently rising copper prices. Overall, the Company is expecting
adjusted operating income for the full year of 2014 to be in the range
of $200 to $230 million, down from its previously communicated estimate
of around $230 million. The Company's expectation for 2014 adjusted
operating income excludes any impact from Venezuela. The Company's
outlook assumes copper (COMEX) and aluminum (LME) prices of $3.25 and
Adjusted operating income for the second quarter is expected to be
within management's guidance range principally due to the seasonal
improvement experienced across the portfolio including the strong
execution of the Company's submarine turnkey project business. The
Company's share repurchase authorization remains at $75 million under
its current program as the Company did not repurchase any shares during
the second quarter. The Company may utilize this authorization in the
context of economic conditions as well as the then prevailing market
price of the common stock of the Company, regulatory requirements,
financial covenants and alternative deployments of capital.
Management will provide additional details on its second quarter results
and full year 2014 outlook in its earnings release on July 30 and
conference call on July 31.
Restructuring Program Conference CallThe
Company will host a conference call tomorrow morning (July 10, 2014) at
8:30 a.m. ET. Investors may access the live audio webcast at www.generalcable.com.
The webcast will also be available for replay. Also available on the
website is a copy of the presentation that will be referenced throughout
the conference call.
Second Quarter Earnings Release and Conference
CallThe Company will webcast a discussion of its second
quarter 2014 earnings on Thursday, July 31, 2014 at 8:30 a.m. ET. Chief
Executive Officer Gregory B. Kenny and Chief Financial Officer Brian J.
Robinson will discuss the second quarter results. The news release
detailing the results will be issued after the market closes on
Wednesday, July 30, 2014. Investors may access the live audio webcast at www.generalcable.com
beginning at 8:30 a.m. ET on Thursday, July 31, 2014. The webcast will
also be available for replay.
General Cable (NYSE:BGC), a Fortune 500 Company, is a global leader in
the development, design, manufacture, marketing and distribution of
copper, aluminum and fiber optic wire and cable products for the energy,
industrial, construction, specialty and communications markets. For more
information about General Cable, visit our website at www.generalcable.com.
operating income (defined as operating income before extraordinary,
nonrecurring or unusual charges and other certain items) is a "non-GAAP
financial measure" as defined under the rules of the Securities and
Exchange Commission. Management believes that this non-GAAP financial
measure is useful in analyzing the underlying operating performance of
the business. A reconciliation of adjusted operating income to reported
operating income for the first quarter of 2014 is provided in the
investor presentation available on the Company's website. With respect
to the Company's expected full year 2014 adjusted operating income, the
Company is not able to provide a reconciliation of the non-GAAP
financial measures to GAAP because it does not provide specific guidance
for the various extraordinary, nonrecurring or unusual charges and other
items. These items have not yet occurred, are out of the Company's
control and/or cannot be reasonably predicted. As a result,
reconciliation of the non-GAAP guidance measure to GAAP is not available
without unreasonable effort and the Company is unable to address the
probable significance of the unavailable information.
Cautionary Statement Regarding Forward-Looking
StatementsCertain statements in this press release are
forward-looking statements that involve risks and uncertainties, predict
or describe future events or trends and that do not relate solely to
historical matters. All statements that address expectations or
projections about the future, including statements regarding the timing
and costs of the Company's restructuring program, expected savings and
benefits as a result of the Company's restructuring program and the
Company's expected 2014 outlook, are forward-looking statements.
Forward- looking statements can generally be identified by use of
forward-looking terminology such as: "believe," "expect," "may," "will,"
"anticipate," "intend," "estimate," "project," "plan," "assume," "seek
to" or other similar expressions, although not all forward-looking
statements contain these identifying words. Actual results may differ
materially from those discussed in forward-looking statements as a
result of factors, risks and uncertainties over many of which we have no
control. These factors include, but are not limited to: the economic
strength and competitive nature of the geographic markets that the
Company serves; our ability to increase manufacturing capacity and
productivity; our ability to increase our selling prices during periods
of increasing raw material costs; our ability to service, and meet all
requirements under, our debt, and to maintain adequate domestic and
international credit facilities and credit lines; our ability to
establish and maintain internal controls; the impact of unexpected
future judgments or settlements of claims and litigation; impact of
foreign currency and exchange rate fluctuations; impact of future
impairment charges; compliance with U.S. and foreign laws, including the
Foreign Corrupt Practices Act; our ability to implement and make
appropriate, timely and beneficial decisions as to when, how and if to
purchase shares under the repurchase program, our ability to achieve the
anticipated cost savings, efficiencies and other benefits related to the
restructuring program and the other risks detailed from time to time in
the Company's filings with the Securities and Exchange Commission
("SEC"), including but not limited to, its annual report on Form 10-K
filed with the SEC on March 3, 2014, and subsequent SEC filings. You are
cautioned not to place undue reliance on these forward-looking
statements. General Cable does not undertake, and hereby disclaims, any
obligation, unless required to do so by applicable securities laws, to
update any forward-looking statements as a result of new information,
future events or other factors.
[ Back To NFVZone's Homepage ]