Belden Reports First-Quarter Earnings
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ST. LOUIS, April 25 /PRNewswire-FirstCall/ -- Belden Inc. (NYSE: BWC), a market leader in specialty wire and cable, today announced results for the quarter ended March 31, 2002. Total revenue for the quarter was $207.1 million, compared with revenue of $259.5 million in the first quarter a year ago. Net income was $1.2 million, or $.05 per diluted share, compared with net income of $11.2 million or $.45 per diluted share in the first quarter of 2001.
Belden generated cash flow from operations of $33.8 million and reduced its debt by $15.9 million during the quarter, bringing the ratio of debt to total capital down to 41.0 percent.
Baker Cunningham, Chairman, President, and CEO, said, ``Historically, the first quarter is a seasonal low point for Belden. Compared with the fourth quarter, our sales were 2 percent lower, which was consistent with our expectations and signaled stabilization in our markets. Inventories throughout our channels are in line with the current market, so improvement in end-use demand, when it occurs, will pass through to our sales very quickly. Our earnings were slightly better than we had expected, primarily because of our aggressive cost reduction program.''
The quarter's results included an expense of $3.3 million (pretax), or about $.09 per share, related to reductions in personnel that were taken early in the first quarter, which the company had previously disclosed. Also included in the quarter's results was a benefit of $1.4 million (pretax) or $.04 per share in settlement of a class-action suit regarding the pricing of copper futures in the mid-1990s.
Revenues of 2002 and 2001 reflect a reclassification of shipping and handling costs, which are now classified as cost of sales rather than netted against revenue. In the first quarter of 2001, net income included a net gain on the sale of the Company's interest in a joint venture investment and the impact of adopting SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities. The two items together resulted in a net gain of approximately $.02 per diluted share in the year-ago quarter.
Electronics Segment
Revenues of the Electronics Segment were $137.0 million in the quarter, a decline of 19.1 percent from revenues of $169.5 million in the first quarter of 2001. Sequentially, segment revenue was down 5.6 percent from fourth quarter revenue of $145.1 million. Operating earnings were $6.8 million or 5.0 percent of sales in the quarter, after severance charges of $3.3 million. This compares with operating earnings of $18.6 million in the year-ago quarter. Although revenue in each of the major markets served by the Electronics Segment was down year-over-year, and revenue in most markets was flat or down sequentially from the fourth quarter of 2001, Belden noted that demand per day was improving in its North American markets, consistent with the Company's expectations.
Communications Segment
In the Communications Segment, revenue in the quarter ended March 31, 2002, was $70.1 million, down 22.1 percent from $90.0 million in the first quarter of 2001. A primary contributor to the year-over-year revenue decline was the loss of certain private-label business, which contributed $10.6 million in revenue for the quarter ended March 31, 2001. Revenue increased 5.4 percent sequentially, from $66.5 million in the fourth quarter, which was the net effect of slightly lower sales in the United Kingdom and higher sales in the United States. Operating earnings were $1.7 million or 2.4 percent of sales, compared with operating earnings of $5.1 million a year ago.
``When we acquired our operation in Phoenix, which formed the core of our Communications segment, we set out on an aggressive three-year cost reduction program,'' Mr. Cunningham said. ``Now, early in the third year of the program, we have exceeded our three-year goal. We have significantly reduced our material cost by cutting scrap in half, negotiating better prices for material, and reducing the amount of material used through more precise manufacturing controls. In addition, we reduced headcount in our Phoenix plant by one-third since 1999 and thus increased sales per employee by double- digit rates each year. We are pleased to have met our goal early, but we are by no means finished. Important capital projects implemented in 2001 are just beginning to provide further productivity gains, and we have additional projects planned for 2002. At the present rate of demand, we still have a challenge in raising the overall profitability of the business. But we are addressing our cost base aggressively and very successfully.''
Outlook
``We expect challenging market conditions to continue,'' said Mr. Cunningham. ``We are encouraged by signs of improvement in the daily order rate and by some of the more positive recent U.S. economic indicators. But clearly, our revenue and earnings for 2002 are largely dependent on investment activity in the technology and communications sectors. If we see gradual economic recovery, particularly in the U.S., we continue to expect to see our quarterly revenue and earnings improve sequentially throughout the year. So far, nothing has happened to cause us to alter our estimate for 2002 from that which we have previously provided. That is, based on a gradual economic recovery, we still expect 2002 revenues to be down about 5% from 2001, and for 2002 earnings per share to be between $1.35 and $1.45. This anticipated improvement of about 10% in earnings per share over 2001 reflects the benefit of our cost reduction programs throughout the company.
``For the second quarter, we expect revenues to be less than in the prior year but up from the first quarter due to typical seasonal improvement and the assumed gradual recovery. Likewise, we expect earnings in the quarter ending June 30, 2002, to be less than the $.39 per share reported for the same period a year ago but better than in the first quarter. More specifically, based on the anticipated sequential revenue improvement, the positive impact of continued cost reduction activity, and the absence of the $.09 charge for personnel reductions, we expect earnings for the second quarter to be up nicely from the first quarter of 2002, to an estimated range of $.18 to $.23 per share,'' Mr. Cunningham concluded. |
