x-2018 First Qtr Results – Webco Industries, Inc.

Friday, November 17, 2017

SAND SPRINGS, Oklahoma, November 17, 2017 – Webco Industries, Inc. (OTC: WEBC) today reported results for our first quarter of fiscal year 2018, ended October 31, 2017.

Download PDF/Tables »

For our first quarter of fiscal year 2018, we generated net income of $3.0 million, or $3.31 per diluted share, compared to a net income of $0.7 million, or $0.86 per diluted share, for the first quarter in fiscal 2017. Net sales for the first quarter of fiscal 2018 were $114.3 million, a 29.4 percent increase from the $88.3 million of sales in last year’s first quarter. The current quarter includes a $0.2 million non-cash gain related to our interest swap contract, whereas the prior year first quarter includes a $0.5 million non-cash gain related to the interest swap contract.

In the first quarter of fiscal year 2018, we generated income from operations of $5.7 million, after depreciation of $3.0 million. The first fiscal quarter of the prior year generated income from operations of $1.5 million, after depreciation amounting to $2.8 million. Gross profit for the first quarter of fiscal 2018 was $13.9 million, or 12.2 percent of net sales, compared to $7.9 million, or 9.0 percent of net sales, for the first quarter of fiscal 2017.

Dana S. Weber, Chief Executive Officer, commented, “Results have improved over the prior year’s quarter, in large part, due to the hard work and dedication of our engaged workforce. We have experienced pricing and volume improvement resulting from the trade case filed in April 2017 against certain steel tubular products being imported from six named countries. We have been investing in our core strengths, including quality, efficiency, yield improvement and capabilities.”

Selling, general and administrative expenses were $8.1 million in the first quarter of fiscal 2018 and $6.4 million in the first quarter of fiscal 2017. The increase in SG&A reflects increased costs associated with increased business levels, such as company-wide incentive compensation and variable pay programs.

Interest expense was $0.8 million and $0.7 million, respectively, in each of the first quarters of fiscal years 2018 and 2017.

We are party to an arrangement that swaps the variable interest rate for $50 million of our debt to a fixed rate through December 2019. We record the interest swap contract at fair value on our balance sheet and non-cash changes in value are reported as unrealized gains or losses on interest contracts. The non-cash income and charges from adjusting the interest swap contract value to market value create volatility in our income statement; however, they have no bearing on cash flow for the quarter because the actual monthly cash swap payments are reflected in interest expense, and therefore earnings.

At October 31, 2017, we had $6.3 million in cash, in addition to $29.1 million of available borrowing under our senior revolving credit facility, which had $67.5 million drawn. The amended revolver continues to have a $120 million cap with availability primarily subject to advance rates on eligible accounts receivable and inventories.

Capital expenditures incurred amounted to $1.9 million in the first fiscal quarter. Our first quarter fiscal 2018 capital investments were largely focused on improving our efficiencies, yields, quality and capabilities.

Webco’s mission is to create a vibrant company for the ages. We leverage on core values of trust and teamwork, continuously building strength, agility and innovation. We focus on practices that are in support of our brand, such that we are 100% engaged every day to build a forever kind of company for our teammates, customers, business partners and community. We manufacture and distribute high-quality carbon steel, stainless steel and other metal tubular products designed to industry and customer specifications. We have five tube production facilities in Oklahoma and Pennsylvania and six value-added facilities in Oklahoma, Texas, Illinois and Michigan, serving 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,” “available,” “believes,” “can,” “considering,” “expects,” “hopes,” “intended,” “plans,” “projects,” “pursue,” “should,” “would,” or similar words constitute “forward-looking statements.” Such forwardlooking 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, reduced oil prices, competition from foreign imports, including any impacts associated with dumping or the strength of the U.S. dollar, changes in manufacturing technology, banking environment, including availability of adequate financing, monetary policy, changes in tax rates and regulation, raw material costs and availability, appraised values of inventories which can impact available borrowing under the Company’s credit facility, industry capacity, domestic competition, loss of or reductions in purchases by significant customers and customer work stoppages, the costs associated with providing healthcare benefits to employees, customer claims, technical and data processing capabilities, and insurance costs and availability. The Company assumes no obligation to update publicly such forward-looking statements.