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EXHIBIT 99.1
WOLVERINE TUBE REPORTS RESULTS FOR THE THIRD QUARTER OF 2000
Earnings Per Share Increased 21 Percent
HUNTSVILLE, ALABAMA, OCTOBER 26, 2000--Wolverine Tube, Inc. (NYSE: WLV) today
reported net income for the third quarter of 2000 of $5.0 million, or $0.40 per
diluted share, a 21 percent increase over last year on a per share basis, which
exceeds the street's consensus estimate of $0.39 per share at quarter end. For
the third quarter of 1999, net income before restructuring and other charges was
$4.3 million, or $0.33 per diluted share.
Net sales for the third quarter of 2000 were $171.1 million, versus $164.8
million in the comparable year-ago quarter. The increase in net sales for the
quarter was favorably impacted by increased volumes in technical tube,
industrial tube, fabricated products, and rod, bar and strip. Offsetting this
increase were lower volumes and prices of wholesale products. However, the
increase in net sales was principally due to higher average copper prices. The
average price of copper in the 2000 third quarter was $0.87 per pound, up from
$0.78 per pound in the same period of 1999. It is important to note that the
Company's cost of copper is a "pass through" to a majority of its customers.
Total pounds of product shipped was 97.1 million pounds, compared to 99.3
million pounds in the year-ago quarter. Gross profit for the third quarter was
$19.1 million, a seven percent increase over the year-ago quarter (before
restructuring and other charges) and represented the fourth consecutive quarter
that the Company experienced improvement in gross profit. Income from
operations, before restructuring charges, improved nine percent over 1999 levels
to $10.7 million.
"Our financial results continue to improve and momentum remains strong as we
approach the end of the year," said Dennis Horowitz, President and Chief
Executive Officer. "During the quarter, demand grew most notably for our
commercial products segment. Demand for industrial tube, used in residential air
conditioners, has been seasonally strong. While a cool summer in the northeast
impacted some segments of the industry, as a whole our broad customer base with
its geographic dispersion mitigated the impact on our business."
"Technical tube, used in commercial chillers, was a bit stronger than expected
this quarter and continues to show positive momentum. We remain focused on
maintaining our domestic business and expanding our market share overseas. In
fact, we recently added a third shift at our
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Shanghai facility to meet the growing demands for the Company's products and we
continue to enjoy market penetration in Europe," added Horowitz. "Similarly,
demand for fabricated products is up versus last year and we are continuing to
see additional domestic and global growth opportunities for this product group."
Horowitz added, "We also completed our acquisition of the joining technologies
business from Engelhard this quarter. The new Wolverine Joining Technologies is
operating smoothly and we anticipate the acquisition will be accretive by
approximately $0.12 - $0.15 per share in 2001. This was an important transaction
for Wolverine - it leverages our existing customer base and expands our reach
with an enhanced product line and new technologies."
NINE-MONTH RESULTS
For the first nine months of 2000, Wolverine shipped a record 299.4 million
pounds of product and achieved net sales of $528.4 million. Gross profit for the
first nine months was $67.1 million, a five percent increase over the comparable
period last year (before restructuring and other charges). Net income for the
first nine months was $19.9 million, or $1.59 per diluted share.
THIRD QUARTER RESULTS BY SEGMENT
Shipments of commercial products totaled 57.9 million pounds, a five percent
increase over last year's third quarter of 55.1 million pounds. Net sales were
$116.8 million, up 9 percent over last year's third quarter of $107.2 million.
Gross profit was $16.6 million, a 15 percent improvement over last year's third
quarter of $14.4 million. These results reflect the continued strong demand for
industrial tube, a healthier demand for technical tube, and increased volumes of
fabricated products. The Company's cost containment programs further impacted
the improvements in gross profit.
Shipments of wholesale products totaled 17.7 million pounds, a 31 percent
decrease over last year's third quarter of 25.5 million pounds. Net sales were
$24.8 million, down 29 percent from last year's third quarter of $35.1 million.
Gross profit was $2.0 million, down 30 percent from last year's third quarter.
Management believes that on a year-over-year basis wholesale products have been
negatively impacted by rising copper prices and interest rates, which have in
turn caused a slowdown in the residential construction markets in both the U.S.
and Canada. This has adversely affected both demand and pricing for wholesale
products. Compounding this macro-economic issue, shipments in Canada have also
been impacted by offshore competition entering the marketplace. To a large
extent, management has been able to stem this inflow with an enhanced customer
incentive sales program. In addition, with the strong demand in its commercial
products segment, production capacity was shifted away from the wholesale
segment to the Company's higher value-added commercial products.
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Shipments of rod, bar and strip totaled 21.6 million pounds, a 15 percent
increase over last year's third quarter of 18.7 million pounds. Net sales were
$29.5 million, up 31 percent over last year's third quarter of $22.5 million.
These results primarily reflect the positive impact of higher shipments of strip
from the Wolverine Ratcliffs Inc. (WRI) joint venture. To a lesser extent,
higher shipments of rod and bar products from the Company's Montreal faciltiy
also contributed to this increase. Gross profit was $0.6 million, down $87,000
from last year's third quarter as a result of integration costs associated with
WRI and some unexpected maintenance expenses at the joint venture during the
quarter.
EARNINGS OUTLOOK
"Given the current overall demand for our products and the positive outlook of
the majority of our customers, we remain comfortable with the 2000 fourth
quarter range of analyst estimates," stated Horowitz. First Call reports the
2000 fourth quarter estimates ranging from $0.28 - $0.32 per share with a
consensus estimate of $0.30 per share."
"Looking towards next year, we are encouraged by the growing domestic and
international demand for our products. Our core businesses are strong and lead
us to expect double-digit earnings per share growth in 2001; at the same time,
we, like most companies, are facing abnormally high fuel and energy costs, as
well as accelerating medical costs. As a result, we expect 2001 earnings per
share to be in the $2.02 - $2.12 range as we overcome these challenges. As we
leave 2001, existing productivity and profitability improvement programs, i.e.
Project 21, will continue to impact operating efficiencies, and ongoing benefits
from Wolverine Joining Technologies will drive solid, double-digit bottom line
growth," said Horowitz.
THIRD QUARTER CONFERENCE CALL
The Company will hold a conference call at 9:30 a.m. Central (10:30 a.m. EST)
this morning to discuss the contents of this release with members of the
investment community. Please visit Wolverine's website at www.wlv.com to access
the call. A replay of the call will be available through November 2, 2000 at
Wolverine's website or by calling (256) 800-5309 (access code 40179, pass code
40179). Should you have any problems accessing the call or the replay, please
contact the Company at (256) 890-0460.
ABOUT WOLVERINE TUBE, INC.
Wolverine Tube, Inc. is a world-class quality partner, providing its customers
with copper and copper alloy tube, fabricated products, brazing alloys, fluxes
and lead-free solder, as well as copper and copper alloy rod, bar and strip
products. Internet addresses: www.wlv.com and www.silvaloy.com.
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Forward-looking statements in this press release are made pursuant to the "Safe
Harbor" provisions of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements use such words as "may", "will", "expect",
"believe", "plan" and other similar terminologies. This press release contains
forward-looking statements regarding the anticipated accretive effects of the
acquisition of the joining products business of Engelhard Corporation and
expectations of future sales and earnings of the Company. These forward-looking
statements are subject to various risks and uncertainties that could cause
actual results to differ materially from those stated or implied by such
forward-looking statements. The Company undertakes no obligation to publicly
release any revision of any forward-looking statements contained herein to
reflect events or circumstances occurring after the date hereof or to reflect
the occurrence of unanticipated events. Specifically, with respect to the effect
of the acquisition of the joining products business, factors that could affect
actual results include assumptions made as to customer retention, costs
associated with attracting new customers, costs of integration and future
operating costs of Wolverine Joining Technologies. With respect to expectations
of future earnings and the effect of the acquisition of the joining products
business, broader-based factors that could affect actual results include,
without limitation, global and local economic and political environments,
weather conditions, regulatory pressures, labor costs, raw material costs, fuel
and energy costs, the mix of geographic and product revenues, the effect of
currency fluctuations, and competitive products and pricing. A discussion of
such risks and uncertainties, which could cause actual results to differ from
those contained in the forward-looking statements, can be found in the Company's
Annual Report on Form 10-K for the most recently ended fiscal year and reports
filed from time to time with the Securities and Exchange Commission.
--TABLES TO FOLLOW--
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Consolidated Statements of Income (Unaudited)
<TABLE>
<CAPTION>
Three-month period ended Nine-month period ended
10/1/2000 10/2/1999 10/1/2000 10/2/1999
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<S> <C> <C> <C> <C>
In thousands, except per share data
Pounds shipped 97,147 99,331 299,397 296,563
======================================================================================================================
Net sales $171,078 $164,766 $528,430 $489,928
Cost of goods sold 151,974 146,864 461,362 425,795
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Gross profit 19,104 17,902 67,068 64,133
Selling, general and administrative expenses 8,383 8,082 25,640 22,536
Restructuring and other non-recurring charges (Note 1) -- 34,352 -- 34,352
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Income (loss) from operations 10,721 (24,532) 41,428 7,245
Interest expense, net 2,978 3,319 9,341 9,617
Amortization and other, net (51) 4 486 912
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Income (loss) before income taxes and
cumulative effect of accounting change 7,794 (27,855) 31,601 (3,284)
Income tax provision (benefit) 2,800 (10,751) 11,751 (1,991)
Cumulative effect of accounting change, net
of tax benefit of $2,211 (Note 2) -- -- -- (5,754)
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Net income (loss) $4,994 ($17,104) $19,850 ($7,047)
======================================================================================================================
Net income before restructuring charge,
non-recurring charge and cumulative effect of
accounting change $4,994 $4,313 $19,850 $20,124
======================================================================================================================
Basic earnings (loss) per share $0.41 ($1.32) $1.61 ($0.55)
Diluted earnings (loss) per share 0.40 (1.32) 1.59 (0.55)
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Diluted earnings per share before restructuring
charge, non-recurring charge and cumulative
effect of accounting change $0.40 $0.33 $1.59 $1.50
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Basic shares 12,051 13,003 12,192 13,247
Diluted shares 12,307 13,003 12,388 13,247
======================================================================================================================
</TABLE>
Note 1: In the third quarter of 1999, the Company recorded restructuring and
other charges of $34.4 million ($21.4 million net of tax). These
charges related to the reduction of the Company's indirect
(non-manufacturing) workforce, the closing of the Company's Roxboro,
North Carolina facility, a LIFO inventory adjustment and other costs
associated with the realignment of the Company's manufacturing
operations and product rationalization.
Note 2: In the first quarter of 1999, the Company adopted the American
Institute of Certified Public Accounting Statement of Position 98-5,
Reporting on the Costs of Start-Up Activities. In accordance with this
Statement of Position, the Company recognized a cumulative effect of a
change in accounting principle of $8 million pre-tax ($5.8 million
after-tax). The Statement of Position provides specific guidance on the
financial reporting of start-up costs and organizational costs, and
requires these costs to be expensed as incurred.
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Segment Information (Unaudited)
<TABLE>
<CAPTION>
Three-month period ended Nine-month period ended
10/1/2000 10/2/1999 10/1/2000 10/2/1999
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
In thousands
Pounds:
Commercial 57,859 55,098 183,787 172,971
Wholesale 17,704 25,526 51,176 69,628
Rod, bar and strip 21,584 18,707 64,434 53,964
-----------------------------------------------------------------------------------------------------
Total pounds 97,147 99,331 299,397 296,563
=====================================================================================================
Net sales:
Commercial $116,804 $107,171 $367,930 $333,998
Wholesale 24,779 35,056 74,064 92,559
Rod, bar and strip 29,495 22,539 86,436 63,371
-----------------------------------------------------------------------------------------------------
Total net sales $171,078 $164,766 $528,430 $489,928
=====================================================================================================
Gross profit:
Commercial $ 16,551 $ 14,432 $ 52,804 $ 47,391
Wholesale 1,963 2,793 9,173 13,233
Rod, bar and strip 590 677 5,091 3,509
-----------------------------------------------------------------------------------------------------
Total gross profit $ 19,104 $ 17,902 $ 67,068 $ 64,133
=====================================================================================================
</TABLE>
Condensed Consolidated Balance Sheets (Unaudited)
<TABLE>
<CAPTION>
10/1/2000 12/31/1999
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<S> <C> <C>
In thousands
Assets
Cash and cash equivalents $ 18,538 $ 26,894
Accounts receivable 110,106 84,440
Inventory 105,891 95,368
Other current assets 7,685 10,926
Property, plant and equipment, net 209,508 190,774
Other assets 123,561 98,287
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Total assets $575,289 $506,689
====================================================================================================================
Liabilities and Stockholders' Equity
Accounts payable and other accrued expenses $ 65,640 $ 54,012
Short-term borrowings 10,615 13,469
Deferred income taxes 20,403 20,931
Long-term debt 228,304 176,421
Other liabilities 14,399 14,525
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Total liabilities 339,361 279,358
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Minority interest 2,511 2,381
Redeemable cumulative preferred stock 2,000 2,000
Stockholders' equity 231,417 222,950
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Total liabilities, minority interest, redeemable cumulative preferred
stock and stockholders' equity $575,289 $506,689
====================================================================================================================
</TABLE>
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