Market Overview

General Cable Reports First Quarter 2018 Results

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General Cable Corporation (NYSE:BGC) reported today results for
the first quarter ended March 30, 2018. For the quarter, reported loss
per share was $0.08 and reported operating income was $34 million.
Adjusted earnings per share and adjusted operating income were $0.20 and
$38 million, respectively, for the quarter. See page two of this press
release for the reconciliation of reported to adjusted results and
related disclosures.

Michael T. McDonnell, President and Chief Executive Officer, said, "Our
first quarter reflects continued performance improvement in Latin
America, stronger subsea and land turnkey project activity in Europe,
and demand stability in our North America businesses, particularly
electric utility, construction and automotive. Although commodity
pricing and business dynamics related to our review of strategic
alternatives and pending transaction with Prysmian S.p.A. affected
results, our 2018 outlook is positive, as seasonal demand trends,
turnkey project activity and restructuring savings are expected to drive
sequential and year over year improvement in the second quarter."
McDonnell continued, "Regarding the pending merger with Prysmian, we are
also pleased that the regulatory approval process is advancing, and we
continue to expect the merger to be completed by the third quarter of
2018, subject to receiving the remaining regulatory approvals and
satisfying other customary conditions."

Summary

  • Reported operating income of $34 million was up $10 million year
    over year primarily due the wind down of restructuring costs coupled
    with stronger subsea and land turnkey project activity in 2018
  • Adjusted operating income of $38 million decreased $7 million
    year over year as continued performance improvement in Latin America
    and stronger subsea and land turnkey project activity in Europe were
    more than offset by subsiding metal benefits and unfavorable product
    mix in North America
    • Impact of rising metal prices was a benefit of $2 million
      and $7 million for the first quarter of 2018 and 2017, respectively
  • Operating cash flow was a use of $86 million for the first
    quarter of 2018 driven by investments in working capital and rising
    metal prices
  • Maintained significant liquidity with $255 million of
    availability on the Company's $700 million asset-based revolving
    credit facility and $54 million of cash and cash equivalents

First Quarter Segment Demand

North America – Unit volume as measured in
metal pounds sold was up 4% versus prior year driven by stronger demand
for construction, automotive and aluminum rod products.

Europe – Unit volume as measured in metal
pounds sold was up 7% versus prior year driven by stronger demand for
electric utility products including subsea and land turnkey project
activity.

Latin America – Unit volume as measured in
metal pounds sold was down 10% versus prior year driven by uneven
spending on electric infrastructure and construction projects throughout
the region as well as the impact of the Company's go-to-market
initiatives focused on margin improvement. Aerial transmission cables in
Brazil as measured in metal pounds sold was down 8% year over year.

Net Debt

At the end of the first quarter 2018 and the end of the fourth quarter
2017, total debt was $1,169 million and $1,086 million, respectively,
and cash and cash equivalents were $54 million and $85 million,
respectively. The increase in net debt was driven by seasonal
investments in working capital and rising metal prices.

Non-GAAP Financial Measures

Adjusted operating income (defined as operating income before
extraordinary, nonrecurring or unusual charges and other certain items),
adjusted earnings per share (defined as diluted earnings per share
before extraordinary, nonrecurring or unusual charges and other certain
items) and net debt (defined as long-term debt plus current portion of
long-term debt less cash and cash equivalents) are "non-GAAP financial
measures" as defined under the rules of the Securities and Exchange
Commission ("SEC"). Metal-adjusted revenues and return on metal-adjusted
sales on a segment basis, both of which are non-GAAP financial measures,
are also provided herein. See "Segment Information."

These Company-defined non-GAAP financial measures exclude from reported
results those items that management believes are not indicative of our
ongoing performance and are being provided herein because management
believes they are useful in analyzing the operating performance of the
business and are consistent with how management reviews our operating
results and the underlying business trends. Use of these non-GAAP
measures may be inconsistent with similar measures presented by other
companies and should only be used in conjunction with the Company's
results reported according to GAAP. Historical segment adjusted
operating results are disclosed in the First Quarter 2018 Investor
Presentation available on the Company's website.

A reconciliation of GAAP operating income (loss) and diluted earnings
(loss) per share to adjusted operating income and earnings per share
follows:

 
First Quarter of 2018 versus First Quarter of 2017
   
First Quarter
2018   2017
Operating   Operating  
In millions, except per share amounts Income EPS Income* EPS
Reported $ 34.3 $ (0.08 ) $ 24.2 $ 0.24
Adjustments to reconcile operating Income/EPS
Non-cash convertible debt interest expense (1) - 0.01 - 0.01
Mark to market (gain) loss on derivative instruments (2) - 0.24 - (0.10 )
Restructuring and divestiture costs (3) 2.8 0.03 14.1 0.09
Legal and investigative costs (4) 0.5 0.01 0.3 -
(Gain) loss on sale of assets (5) - - 3.5 0.02
Asia Pacific and Africa (income)/loss (6)   0.6   (0.01 )   2.8   0.01  
Total adjustments   3.9   0.28     20.7   0.03  
Adjusted $ 38.2 $ 0.20   $ 44.9 $ 0.27  
 
NOTE:   The tables above reflect EPS adjustments based on the Company's full
year effective tax rate for 2018 and 2017 of 40%
* Historical results have been recast to reflect the Company's
adoption of ASU 2017-07, "Compensation – Retirement Benefits (Topic
715)"
(1) The Company's adjustment for the non-cash convertible debt interest
expense reflects the accretion of the equity component of the 2029
convertible notes, which is reflected in the income statement as
interest expense.
(2) Mark to market (gains) and losses on derivative instruments
represents the current period changes in the fair value of commodity
instruments designated as economic hedges. The Company adjusts for
the changes in fair values of these commodity instruments as the
earnings associated with the underlying contracts have not been
recorded in the same period.
(3) Restructuring and divestiture costs represent costs associated with
the Company's announced restructuring and divestiture programs as
well as costs associated with the review of strategic alternatives
that resulted in the previously announced definitive merger
agreement with Prysmian. Examples consist of, but are not limited
to, employee separation costs, asset write-downs, accelerated
depreciation, working capital write-downs, equipment relocation,
contract terminations, consulting fees and legal costs. The Company
adjusts for these charges as management believes these costs will
not continue at the conclusion of both the restructuring and
divestiture programs and closing of the merger.
(4) Legal and investigative costs represent costs incurred for external
legal counsel and forensic accounting firms in connection with the
restatement of our financial statements and the Foreign Corrupt
Practices Act investigation. The Company adjusts for these charges
as management believes these costs will not continue at the
conclusion of these investigations which are considered to be
outside the normal course of business.
(5)
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