UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark one)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended January 31, 1998
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15D OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________________ to ____________________.
Commission File Number: 0-23242
WEBCO INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Oklahoma 73-1097133
(State or other jurisdiction of (I.R.S. Employer Identification No)
incorporation or organization)
9101 West 21st Street SAND SPRINGS, OKLAHOMA 74063
(Address of principal executive offices) (Zip Code)
(918) 241-1000
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months ( or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. [X] Yes [ ] No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to distribution of securities under a plan
confirmed by a court.
NOT APPLICABLE [ ] Yes [ ] No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practical date: 6,339,000 shares of Common
Stock, $0.01 par value, as of February 1, 1998.
<PAGE>
WEBCO INDUSTRIES, INC.
TABLE OF CONTENTS
Page
Number
PART I FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited):
Balance Sheets 3
Statements of Income 4
Statements of Cash Flows 5
Notes to Unaudited Financial Statements 6-7
Report of Review by Independent
Accountants 8
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations 9-12
PART II OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 2. Changes in Securities 13
Item 3. Defaults Upon Senior Securities 13
Item 4. Submission of Matters to a Vote of
Security Holders 13
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURES 15
<PAGE>
<TABLE>
WEBCO INDUSTRIES, INC.
BALANCE SHEETS
(Dollars in thousands, except share amounts and par value)
(Unaudited)
<CAPTION>
January 31, July 31,
ASSETS 1998 1997
<S> <C> <C>
Current assets:
Cash $ 635 $ 466
Accounts receivable, net 20,385 17,159
Inventories 24,906 26,982
Prepaid expenses 374 268
Deferred income tax asset 1,604 1,460
Total current assets 47,904 46,335
Property, plant and equipment:
Land 1,436 1,436
Buildings and improvements 11,477 11,448
Machinery and equipment 53,750 53,305
Furniture and fixtures 2,842 2,628
Construction in progress 8,695 4,896
Less accumulated depreciation and amortization (26,566) (24,972)
Net property, plant and equipment 51,634 48,741
Notes receivable from related parties 1,620 1,582
Other assets, net 1,549 1,526
Total assets $ 102,707 $ 98,184
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 9,818 $ 11,264
Accrued liabilities 4,872 3,800
Current portion of long-term debt 109 121
Total current liabilities 14,799 15,185
Long-term debt 36,374 34,108
Deferred income tax liability 7,860 6,764
Contingencies (Note 3) - -
Stockholders' equity:
Common stock, $.01 par value, 12,000,000 shares
authorized, 6,339,000 shares issued and outstanding 63 63
Additional paid-in capital 35,944 35,944
Retained earnings 7,667 6,120
43,674 42,127
Total liabilities and stockholders' equity $ 102,707 $ 98,184
<FN>
See accompanying notes to unaudited financial statements.
</TABLE>
<PAGE>
<TABLE>
WEBCO INDUSTRIES, INC.
STATEMENTS OF INCOME
(Dollars and shares in thousands, except per share amounts)
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
January 31, January 31,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Net sales $ 35,049 $ 28,678 $ 66,592 $ 57,122
Cost of sales 29,186 24,671 56,346 49,339
Gross profit 5,863 4,007 10,246 7,783
Selling, general and
administrative expenses 3,602 2,496 6,513 4,804
Special Item: Write-off of Mill 3
Cut-off equipment - 884 - 884
Income from operations 2,261 627 3,733 2,095
Interest expense 614 465 1,234 970
Income before income taxes 1,647 162 2,499 1,125
Provision for deferred
income tax expense 628 62 952 428
Net income $ 1,019 $ 100 $ 1,547 $ 697
Net income per common share: (Note 4)
Basic $ .16 $ .02 $ .24 $ .11
Diluted $ .16 $ .02 $ .24 $ .11
Weighted average common shares outstanding:
Basic 6,339,000 6,339,000 6,339,000 6,339,000
Diluted 6,379,000 6,339,000 6,387,000 6,339,000
<FN>
See accompanying notes to unaudited financial statements.
</TABLE>
<PAGE>
<TABLE>
WEBCO INDUSTRIES, INC.
STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
<CAPTION>
Six Months Ended
January 31,
1998 1997
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,547 $ 697
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,721 1,454
Loss on write-off and disposition of
property, plant and equipment 10 899
Deferred tax expense 952 428
(Increase) decrease in:
Accounts receivable (3,226) (3,376)
Inventories 2,076 (3,467)
Prepaid expenses (106) (147)
Increase (decrease) in:
Accounts payable 103 3,998
Accrued liabilities 1,072 (83)
Net cash provided by operating activities 4,149 403
Cash flows from investing activities:
Capital expenditures (4,588) (3,035)
Proceeds from sale of property, plant and equipment - 10
Advances to stockholder (38) (1,226)
Repayments of stockholder advances - 26
Other (118) (47)
Net cash used in investing activities (4,744) (4,272)
Cash flows from financing activities:
Proceeds from long-term debt 66,165 58,405
Principal payments on long-term debt (63,911) (55,137)
Increase (decrease) in book overdrafts (1,490) 914
Net cash provided by financing activities 764 4,182
Net change in cash 169 313
Cash, beginning of period 466 508
Cash, end of period $ 635 $ 821
<FN>
See accompanying notes to unaudited financial statements.
</TABLE>
<PAGE>
WEBCO INDUSTRIES, INC.
Notes to Unaudited Financial Statements
Note 1 - General
The accompanying unaudited condensed financial statements of Webco
Industries, Inc. (the "Company") include, in the opinion of management, all
adjustments (which are of a normal recurring nature) necessary for a fair
presentation of financial position at January 31, 1998 and results of
operations for the three months and six months ended January 31, 1998 and
January 31, 1997, and cash flows for the six months ended January 31, 1998 and
January 31, 1997. Results for the three months and six months ended January
31, 1998 are not necessarily indicative of results which will be realized for
the full fiscal year. The year-end balance sheet was derived from the audited
financial statements but does not include all disclosures required by generally
accepted accounting principles. The unaudited condensed financial statements
should be read in conjunction with the audited financial statements and related
notes thereto for the year ended July 31, 1997, included in the Company's Form
10-K for the year ended July 31, 1997.
Note 2 - Inventory
In fiscal 1997, the Company changed its method of accounting for inventory
from the Last-In First-Out ("LIFO") method to the weighted average cost method.
Accordingly, the prior year financial statements have been retroactively
restated for this accounting change. The reader should refer to the Company's
1997 Form 10-K for additional information regarding this matter.
At January 31, 1998 and July 31, 1997, the components of inventory were as
follows:
January 31, 1998 July 31, 1997
Raw materials $15,209,000 $18,666,000
Work-in-process 1,350,000 2,159,000
Finished goods 7,082,000 4,947,000
Maintenance parts
and supplies 1,265,000 1,210,000
Total inventories $24,906,000 $26,982,000
Note 3 - Contingencies
The Company has been identified as a potentially responsible party in the
cleanup of two EPA Superfund cleanup sites. At January 31, 1998 the Company
estimates its remaining potential liability for remediation of the waste
disposal sites and legal costs, related to the Superfund's oversight body, to
be approximately $267,000 which has been recorded as an accrued liability.
In addition, the Company is a party to various other lawsuits and claims
arising in the ordinary course of business. Management, after review and
consultation with legal counsel, considers that any liability resulting from
these matters would not materially affect the results of operations or the
financial position of the Company.
The reader should refer to the Company's 1997 Form 10-K: Part I, Item 3
"Legal Proceedings" for additional information regarding these matters.
<PAGE>
Note 4 - Common Stock and Common Stock Equivalents
In the second quarter of fiscal 1998 the Company adopted Statement of
Financial Accounting Standards No. 128 ("FAS 128"). FAS 128 requires the
restatement of prior periods earnings per share to conform to the new standard.
The effect adopting FAS 128 is to replace the captions "primary" and "fully
diluted" with "basic" and "diluted", and to simplify the calculation of
weighted average shares outstanding primarily by removing common stock
equivalents from the calculation of "basic" earnings per share. Presented
below is a reconciliation of the differences between actual weighted average
shares outstanding, which are used in computing basic earnings per share and
diluted weighted average shares, which are used in computing diluted earnings
per share.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
January 31, January 31,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Basic EPS:
Weighted average shares outstanding 6,339,000 6,339,000 6,339,000 6,339,000
Effect of dilutive securities: Options 40,000 - 48,000 -
Diluted EPS:
Diluted weighted average
shares outstanding 6,379,000 6,339,000 6,387,000 6,339,000
Anti-dilutive options outstanding:
Diluted weighted average
shares outstanding 182,000 333,300 9,500 333,300
Weighted average exercise price $ 7.42 $ 5.25 $ 10.46 $ 5.25
</TABLE>
<PAGE>
<AUDIT-REPORT>
INDEPENDENT ACCOUNTANT'S REPORT
To the Board of Directors and Stockholders
Webco Industries, Inc.
We have reviewed the accompanying condensed balance sheet of Webco
Industries, Inc. as of January 31, 1998, and the related condensed statements
of income for the three-month and six month periods ended January 31, 1998 and
1997 and cash flows for the six-month periods ended January 31, 1998 and 1997.
These financial statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying financial statements for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the balance sheet as of July 31, 1997, and the related statements of
operations, stockholders' equity and cash flows for the year then ended (not
presented herein); and in our report dated September 18, 1997, we expressed an
unqualified opinion on those financial statements. In our opinion, the
information set forth in the accompanying condensed balance sheet as of July
31, 1997 is fairly stated in all material respects in relation to the balance
sheet from which it has been derived.
COOPERS & LYBRAND L.L.P.
Tulsa, Oklahoma
February 20, 1998
</AUDIT-REPORT>
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
General
Webco Industries, Inc. ("Webco" or the "Company"), an Oklahoma corporation
founded in 1969 by F. William Weber, chairman of the board and chief executive
officer, is a specialty manufacturer of high-quality carbon steel tubing and
stainless steel tubing and pipe designed to industry and customer
specifications. Based on the Company's knowledge of the specialty tube
industry, management believes that Webco is the domestic market leader in the
manufacture of welded carbon heat exchanger tubing and welded carbon boiler
tubing, and the leading supplier of stainless tubing for the high efficiency
residential furnace market. Commencing in fiscal 1996, the Company
manufactures and markets, through its QuikWater division, a patented direct
contact water heater with unique environmental and energy saving advantages for
a wide variety of end use markets. The Company's tubing products are delivered
from its three production facilities in Oklahoma and Pennsylvania and from two
distribution facilities in Oklahoma and Texas to more than 800 customers
located primarily in the continental United States, southern Canada, and
northern Mexico.
Results of Operations for the Three Months Ended January 31, 1998 Compared to
the Three Months Ended January 31, 1997
Net sales for the quarter ended January 31, 1998 were $35,049,000, an
increase of 22.2% over the $28,678,000 for the same quarter last year. The
$6,371,000 increase in net sales is the result of both higher volumes in the
tonnage of tubing sold and a higher average net sales price per ton. The 16.6%
increase in the tonnage of tubing sold is a reflection of improved market
penetration primarily in the mechanical and boiler tube markets. In addition,
there was a 4.5% increase in the average net sales price per ton of tubing sold
due to a more favorable tubing product sales mix and higher pricing for most
carbon tubing products. This was partially offset by an industry-wide decline
in the sales price per ton of stainless pipe and tube.
Gross profit increased 46.3% to $5,863,000 for the current period as
compared to $4,007,000 for the same quarter of fiscal 1997. Expressed as a
percentage of net sales, gross profit increased to 16.7% for the second quarter
of fiscal 1998 from 14.0% for the same period last year. The increase in gross
profit percentage is attributable to the higher average net sales price per ton
noted above.
Selling, general and administrative expenses were $3,602,000 for the
second quarter of fiscal 1998 compared to $2,496,000 for the same quarter of
fiscal 1997. The increase in fiscal 1998 is primarily the result of
approximately $517,000 of profit sharing and bonuses to employees and a
$150,000 increase in sales commission based upon a higher level of sales.
During the second quarter of fiscal 1997 the Company recorded a special
charge of $884,000 ($548,000 or $0.09 per share after tax) relating to the
write-off of cutoff equipment on the Company's largest weld mill.
<PAGE>
Income from operations for the current quarter increased to $2,261,000
(6.5% of net sales) as compared to $627,000 (2.2% of net sales) for the same
quarter last year. Excluding the special charge, income from operations for
the second quarter of fiscal 1997 was $1,511,000, which is 5.3% of net sales.
The increase in operating income for the second quarter of fiscal 1998 is
primarily attributable to the increase in the tonnage of tubing sold, coupled
with the increase in the average net sales price per ton.
Interest expense for the current period was $614,000 ($730,000 prior to
interest capitalization) as compared to interest expense of $465,000 ($546,000
prior to interest capitalization) for the same quarter last year. The increase
in interest prior to interest capitalization is the result of the average level
of debt under the bank Loan and Security Agreement for the three months ended
January 31, 1998 being $35.1 million as compared to $22.7 million for the same
period last year. The average interest rate decreased to 7.67% in the second
quarter of fiscal 1998 from 8.89% in the second quarter of fiscal 1997.
The recorded income tax expense for the quarter ended January 31, 1998 is
based upon the estimated annual effective federal and state income tax rates.
The after-tax loss attributable to QuikWater in the second quarter of
fiscal 1998 was $246,000 compared with $278,000 for fiscal 1997, or $0.04 and
$0.04 per share, respectively.
Results of Operations for the Six Months Ended January 31, 1998 Compared to the
Six Months Ended January 31, 1997
Net sales for the six months ended January 31, 1998 increased to
$66,592,000, a 16.6% increase from the $57,122,000 for the same period last
year. This is primarily the result of a 14.2% increase in the tonnage of tubing
sold during the current period, which is a reflection of improved market
penetration in the mechanical and stainless markets. In addition, the net
average sales price per ton increased by 1.9%, a reflection of higher pricing
for most carbon products.
Gross profit increased 31.6% to $10,246,000 for the first six months of
fiscal 1998 as compared to $7,783,000 for the same period last fiscal year.
Gross profit expressed as a percentage of net sales increased to 15.4% for
year-to-date fiscal 1998 compared to 13.6% for year-to-date fiscal 1997. An
increase in the net average sales price per ton of 1.9% coupled with a slight
decrease of less than 1% in the average manufacturing cost per ton resulted in
the increase in gross profit.
Selling, general and administrative expenses were $6,513,000 for the first
six months of fiscal 1998 as compared to $4,804,000 for the same period of the
prior fiscal year. Factors contributing to the additional $1,709,000 of expense
include an increase of approximately $620,000 of profit sharing and bonuses
paid to employees and a $236,000 increase in sales commission based upon a
higher level of sales. In addition, during the first quarter of fiscal 1997,
selling, general and administrative expenses were partially offset by a
$225,000 insurance recovery on an EPA related claim.
During the second quarter of fiscal 1997 the Company recorded a special
charge of $884,000 ($548,000 or $0.09 per share after tax) relating to the
replacement and write-off of cutoff equipment.
<PAGE>
Income from operations for the six months ended January 31, 1998 was
$3,733,000 as compared to $2,095,000 for the same period last year. Operating
income expressed as a percentage of net sales was 5.6% for year-to-date fiscal
1998 compared to 3.7% for year-to-date fiscal 1997. Excluding the special
charge noted above, income from operations for the previous six-month period
was $2,979,000 or 5.2% of net sales.
Interest was $1,234,000 ($1,436,000 prior to interest capitalization) for
the current six-month period as compared to $970,000 ($1,123,000 prior to
interest capitalization) for the same period in fiscal 1997. The increase in
interest prior to interest capitalization is the result of the average level of
debt under the bank Loan and Security Agreement for the six month period ended
January 31, 1998 being $34.5 million as compared to $31.4 million for the same
period last year. The average interest rate related to this debt for the
comparable six-month periods decreased to 7.72% in fiscal 1998 from 8.89% in
fiscal 1997.
The recorded income tax expense for the six months ended January 31, 1998
is based upon the estimated annual effective federal and state tax rates.
Net income for the six-month period ended January 31, 1998 increased to
$1,547,000, or $0.24 per common share. Excluding the special charge in the
second quarter of fiscal 1997, after-tax income was $1,246,000 or $0.20 per
common share. Net income was $697,000 or $0.11 per common share for the same
six-month period in the prior fiscal year.
The after-tax loss attributable to QuikWater in the first six months of
fiscal 1998 was $526,000 compared with $423,000 for fiscal 1997, or $0.08 and
$0.07 per share, respectively.
Liquidity and Capital Resources
Net cash provided by operations was $4,149,000 for the six months ended
January 31, 1998 versus $403,000 for the six-month period ended January 31,
1997. While receivables increased by $3,226,000 and $3,376,000 during fiscal
1998 and 1997 respectively, inventories decreased $2,076,000 during the current
period and increased by $3,467,000 for the same period last year. In addition,
accrued liabilities increased by $1,072,000 during fiscal 1998 while having a
decrease of $83,000 during the same period in fiscal 1997. These factors were
partially offset by an increase in accounts payable of $103,000 during fiscal
1998 as compared to an increase of $3,998,000 during the same period in fiscal
1997.
Net cash used in investing activities for the six months ended January 31,
1998 was $4,744,000, which was $472,000 greater than the $4,272,000 used in
investing activities during the same period in fiscal 1997. Capital
expenditures made during the current six month period related to continued
progress with the expansion of the stainless facility, expansion of the
shipping bay at the Sand Springs facility, initial expenditures for the
purchase and installation of new computer software, completion of the building
renovation of the Company's corporate headquarters, as well as other projects
which are expected to increase capacity and improve productivity.
As of January 31, 1998, the Company had $8.8 million available under its
$20 million line of credit and a long-term debt-to-equity ratio of 83%. Net
borrowings under the line of credit of $2.3 million for the six months ended
January 31, 1998 were used primarily for capital projects and to support
increased levels of accounts receivable.
<PAGE>
Over the next two years, the Company will be acquiring, developing and
installing significant financial and operational computer systems. These new
systems are currently expected to replace substantially all of the Company's
existing systems and are designed to be year 2000 compliant.
Management believes that credit line availability and cash flow from
operations will provide the Company with adequate capital to fund its currently
anticipated operations and future growth, including capital expenditures for at
least the year. The Company expects to continue to vigorously pursue growth
opportunities and that long-term needs will be satisfied primarily through
borrowings from commercial lenders.
Forward Looking Statements
Certain statements in this Form 10-Q constitute "forward looking"
statements within the Company's interpretation of the Private Securities
Litigation Reform Act of 1995. Such forward-looking 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, among others: general economic and business conditions,
interest rate fluctuations, the Company's ability to access capital markets,
industry capacity, industry trends, competition, raw material costs and
availability, the loss of any significant customers, the successful
implementation of business strategies, availability of qualified personnel, and
changes in, or the failure or inability to comply with government regulations.
<PAGE>
PART II OTHER INFORMATION
Item 1. Legal Proceedings
The Company has been identified as a potentially responsible party in the
cleanup of two EPA Superfund cleanup sites. At January 31, 1998 the Company
estimates its remaining potential liability for remediation of the waste
disposal sites and legal costs to be approximately $267,000, which has been
recorded as an accrued liability.
In August 1997, the Company filed an action, Webco Industries, Inc. vs.
Thermatool Corporation and Alpha Industries, Inc., relating to certain cut-off
equipment sold to the Company and installed on Mill 3, which did not perform to
manufacturer specifications. The case, filed in the United States District
Court for the Northern District of Oklahoma (Case No. 97-CV-708H (W)), seeks
recoveries including, but not limited to, the cost of the equipment, lost
profits, lost market share and other damages suffered by the Company. There
can be no assurance that the Company will prevail in all or in part of its
action, or that if successful, any recoveries will be commensurate with the
damages suffered by the Company.
In addition, the Company is a party to various other lawsuits and claims
arising in the ordinary course of business. Management, after review and
consultation with legal counsel, considers that any liability resulting from
these matters would not materially affect the results of operations or the
financial position of the Company.
The reader should refer to the Company's 1997 10-K: Part I, Item 3: "Legal
Proceedings" for additional information regarding these matters.
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
On December 2, 1997 the Company held its annual stockholders meeting.
During that meeting the following director was elected to a three-year term:
For Withheld
Neven C. Hulsey 5,303,452 6,360
The following director's terms will continue: F. William Weber, Dana S.
Weber, Frederick C. Ermel and Dr. Kenneth E. Case.
The appointment of Coopers & Lybrand LLP as auditors for 1998 was ratified
by the following vote:
For Against Abstain
5,303,562 1,000 5,250
<PAGE>
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
A. Exhibits
Exhibit 15: Letter Regarding Unaudited Interim Financial Information
B. Reports on Form 8-K
None
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WEBCO INDUSTRIES, INC.
March 12, 1998 /s/F. William Weber
F. William Weber
Chairman
Chief Executive Officer
Director
March 12, 1998 /s/Dana S Weber
Dana S. Weber
President
Chief Operating Officer
Director
March 12, 1998 /s/Michael P. Howard
Michael P. Howard
Treasurer
Chief Financial Officer
Vice President of Finance and Administration
<PAGE>
EXHIBIT 15
WEBCO INDUSTRIES, INC.
LETTER REGARDING UNAUDITED INTERIM FINANCIAL INFORMATION
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Webco Industries, Inc.
Registration on Form S-3
We are aware that our report dated February 20, 1998 on our review of the
interim financial information of Webco Industries, Inc. for the periods ended
January 31, 1998 and 1997, and included in this Form 10-Q is incorporated by
reference in the Company's registration statement on Form S-3 (File no.
333-22779). Pursuant to Rule 436(c) under the Securities Act of 1933, this
report should not be considered a part of the registration statement prepared
or certified by us within the meaning of Sections 7 and 11 of that Act.
Coopers & Lybrand L.L.P.
Tulsa, Oklahoma
February 20, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-END> JAN-31-1998
<CASH> 635
<SECURITIES> 0
<RECEIVABLES> 20385
<ALLOWANCES> 0
<INVENTORY> 24906
<CURRENT-ASSETS> 47904
<PP&E> 78200
<DEPRECIATION> 26566
<TOTAL-ASSETS> 102707
<CURRENT-LIABILITIES> 14799
<BONDS> 36374
0
0
<COMMON> 63
<OTHER-SE> 43611
<TOTAL-LIABILITY-AND-EQUITY> 102707
<SALES> 66592
<TOTAL-REVENUES> 66592
<CGS> 56346
<TOTAL-COSTS> 56346
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1234
<INCOME-PRETAX> 2499
<INCOME-TAX> 952
<INCOME-CONTINUING> 1547
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1547
<EPS-PRIMARY> .24
<EPS-DILUTED> .24
</TABLE>
