Le Lézard
Classified in: Mining industry, Business
Subject: ERN

WEBCO INDUSTRIES, INC. REPORTS FISCAL 2024 FIRST QUARTER RESULTS


SAND SPRINGS, Okla.,  Nov. 28, 2023 /PRNewswire/ -- Webco Industries, Inc. (OTC: WEBC) today reported results for our first quarter of fiscal year 2024, which ended October 31, 2023.

For our first quarter of fiscal year 2024, we had a net income of $5.1 million, or $6.25 per diluted share, while in our first quarter of fiscal year 2023, we had net income of $8.4 million, or $10.54 per diluted share.  Net sales for the first quarter of fiscal 2024 were $157.8 million, a 16.3 percent decrease from the $188.5 million of sales in the first quarter of fiscal year 2023. 

Dana S. Weber, Chief Executive Officer and Board Chair, stated, "There are so many factors affecting the global and industrial economies today that it is hard to know how they will affect any given market, let alone the broader go-forward economy.  There is little consensus on what we should expect in the near term.   As such, we continue to focus on positioning Webco for various economic environments and opportunities by maintaining a strong balance sheet and good liquidity and making compelling investments in our business.  Our total cash, short-term investments and available credit on our revolver were $102.7 million at October 31, 2023, which we believe to be a competitive advantage."

In the first quarter of fiscal year 2024, we had income from operations of $8.0 million after depreciation of $3.7 million.  The first fiscal quarter of the prior year generated income from operations of $12.4 million after depreciation of $3.2 million.  Gross profit for the first quarter of fiscal 2024 was $21.6 million, or 13.7 percent of net sales, compared to $26.0 million, or 13.8 percent of net sales, for the first quarter of fiscal year 2023.   

Selling, general and administrative expenses were $13.6 million in the first quarter of fiscal 2024 and $13.6 million in the first quarter of fiscal 2023.  SG&A expenses reflect a decrease in costs associated with lower profitability, such as company-wide incentive compensation and variable pay programs, offset by inflation we have experienced in wages and other expenses. 

Interest expense was $1.3 million in the first quarter of fiscal year 2024 and $1.5 million in the same quarter of fiscal year 2023.  The impact of increases in the variable rate component on our senior credit facility resulting from Fed funds rate increases by the Federal Reserve have been offset by a significant reduction in average debt balances.    

Capital expenditures incurred amounted to $10.1 million in the first quarter of fiscal year 2024.  Included in our capital spending is ongoing construction of our F. William Weber Leadership Campus, which will house our Tech Center, Webco University and corporate headquarters.  The Tech Center will be the tip of the spear leading Webco's trusted and technical brand throughout our industry and Webco University is the mechanism through which we educate and engage our trusted teammates.

As of October 31, 2023, we had $21.8 million in cash and short-term investments, in addition to $80.9 million of available borrowing under our $220 million senior revolving credit facility.  Availability on the revolver, which had $63.2 million drawn at October 31, 2023, was subject to advance rates on eligible accounts receivable and inventories.  Our term loan and revolver mature in September 2027.  Accounting rules require asset-based debt agreements like our revolver to be classified as a current liability, despite its fiscal year 2028 maturity.

Webco's stock repurchase program authorizes the purchase of our outstanding common stock in private or open market transactions.  In September 2023, the Company's Board of Directors refreshed the repurchase program with a new limit of up to $40 million and extended the program's expiration until July 31, 2026.  We did not purchase any of our stock during the first quarter of fiscal year 2024.  The number of shares repurchased in the prior fiscal year totaled approximately 4,000 shares.  Webco purchased over 144,000 shares over the course of the four prior fiscal years.   The repurchase plan may be extended, suspended or discontinued at any time, without notice, at the Board's discretion. 

Webco's mission is to continuously build on our strengths as we create a vibrant company for the ages.  We leverage our core values of trust and teamwork, continuously building strength, agility and innovation.  We focus on practices that support our brand such that we are 100% engaged every day to build a forever kind of company for our Trusted Teammates, customers, business partners, investors and community.  We provide high-quality carbon steel, stainless steel and other metal specialty tubing products designed to industry and customer specifications.  We have five tube production facilities in Oklahoma and Pennsylvania and eight value-added facilities in Oklahoma, Illinois, Michigan, Pennsylvania and Texas, serving customers globally.

Risk Factors and Forward-looking statements: Certain statements in this release, including, but not limited to, those preceded by or predicated upon the words "anticipates," "appears," "believes," "estimates," "expects," "forever," "hopes," "intends," "plans," "projects," "pursue," "should," "will," "wishes," or similar words may constitute "forward-looking statements."  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 the factors discussed above and, among others: general economic and business conditions, including any global economic downturn; government policy or low hydrocarbon prices that stifle domestic investment in energy; competition from foreign imports, including any impacts associated with dumping or the strength of the U.S. dollar; political or social environments that are unfriendly to industrial or energy-related businesses; changes in manufacturing technology; banking environment, including availability of adequate financing; worldwide and domestic monetary policy; changes in tax rates and regulation; regulatory and permitting requirements, including, but not limited to, environmental, workforce, healthcare, safety and national security; availability and cost of adequate qualified and competent personnel; changes in import / export tariff or restrictions; volatility in raw material cost and availability for the Company, its customers and vendors; the cost and availability, including time for delivery, of parts and services necessary to maintain equipment essential to the Company's manufacturing activities; the cost and availability of manufacturing supplies, including process gases; volatility in oil, natural gas and power cost and availability;  world-wide or national transition from hydrocarbon sources of energy that adversely impact demand for our products; problems associated with product development efforts; appraised values of inventories that can impact available borrowing under the Company's credit facility; declaration of material adverse change by a lender; industry capacity; domestic competition; loss of, or reductions in, purchases by significant customers and customer work stoppages; work stoppages by critical suppliers; labor unrest; conditions, including acts of God, that require more costly transportation of raw materials; accidents, equipment failures and insured or uninsured casualties; third-party product liability claims; flood, tornado, winter storms and other natural disasters;  customer or supplier bankruptcy; customer or supplier declarations of force majeure; customer or supplier breach of contract; insurance cost and availability; lack of insurance coverage for floods; the cost associated with providing healthcare benefits to employees; customer claims; supplier quality or delivery problems; technical and data processing capabilities; cyberattack on our information technology infrastructure; world, domestic or regional health crises; vaccine mandates or related governmental policy that would cause significant portions of our workforce, or that of our customers or vendors, to leave their current employment; global or regional wars and conflicts; our inability or unwillingness to comply with rules required to maintain the quotation of our shares on any market place; and our ability to repurchase the Company's stock. The Company assumes no obligation to publicly update any such forward-looking statements.  No assurance is provided that current results are indicative of those that will be realized in the future.

-   TABLES FOLLOW   -


WEBCO INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands, except per share data - Unaudited)







Three Months Ended

October 31,



2023

2022






Net sales

$     157,837

$     188,524


Cost of sales

136,231

162,533






Gross profit

21,606

25,992


Selling, general & administrative expenses

13,629

13,598






Income (loss) from operations

7,977

12,393


Interest expense

1,293

1,483






Pretax income (loss)

6,684

10,911


Provision for (benefit from) income taxes

1,600

2,503






Net income (loss)

$       5,084

$         8,407






Net income (loss) per share:   




     Basic

$         6.43

$         11.04


     Diluted

$         6.25

$         10.54






Weighted average common shares outstanding:




      Basic

790,000

762,000


      Diluted

814,000

798,000


 

CASH FLOW DATA

(Dollars in thousands - Unaudited)






Three Months Ended

October 31,



2023

2022






Net cash provided by 

   (used in) operating activities

$      18,050

$           (99)


Depreciation and amortization

$        3,696

$        3,307


Cash paid for capital expenditures

$      12,588

$        7,899






Notes: Amounts may not sum due to rounding.

 


WEBCO INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands - Unaudited)








October 31,


July 31,



2023


2023






Current assets:





Cash

$      6,973


$      6,208


Certificates of deposit

500


1,000


U.S. Treasury Bonds

14,312


14,858


Accounts receivable

73,614


68,478


Inventories, net

193,426


207,976


Prepaid expenses

4,055


2,628


Total current assets

292,880


301,148






Property, plant and equipment, net

151,234


144,717

Right of use, finance leases, net

1,235


1,196

Right of use, operating leases, net

23,323


23,210

Other long-term assets

13,524


13,405






Total assets

$   482,197


$   483,676






Current liabilities:





Accounts payable

$     29,438


$     33,463


Accrued liabilities

37,610


34,846


Current portion of long-term debt

62,932


68,554


Current portion of finance lease liabilities

424


407


Current portion of operating lease liabilities

5,069


4,785


Total current liabilities

135,473


142,055






Long-term debt, net of current portion

20,000


20,000

Finance lease liabilities, net of current portion

840


814

Operating lease liabilities, net of current portion

18,142


18,330






Stockholders' equity:





Common stock

8


8


Additional paid-in capital

52,739


52,559


Retained earnings

254,994


249,910


Total stockholders' equity

307,741


302,478






Total liabilities and stockholders' equity

$   482,197


$   483,676





Notes: Amounts may not sum due to rounding.

 

CONTACT:    
Mike Howard
Chief Financial Officer
(918) 241-1094
[email protected]

SOURCE Webco Industries, Inc.


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