SAND SPRINGS, Okla. — Webco Industries, Inc. (OTC: WEBC) on Monday reported results for its fiscal 2014 fourth quarter and fiscal year ended July 31.
For its fiscal 2014 fourth quarter, the Company reported net income of $0.8 million, or $0.99 per diluted share, compared to net income of $1.7 million, or $2.15 per diluted share, for the fourth quarter in fiscal 2013. Net sales for the fourth quarter of fiscal 2014 were $107.0 million, a 6.6 percent increase over the $100.4 million of sales in last year’s fourth quarter. The current quarter includes a $0.3 million non-cash gain related to the Company’s interest swap contract, whereas the prior year fourth quarter includes a $2.0 million non-cash gain related to the interest swap contract. In addition, other non-cash charges increased $0.3 million to $0.6 million from the fourth quarter of fiscal 2013 to the fourth quarter of fiscal 2014.
For fiscal year 2014, the company generated a net income of $0.4 million, or $0.52 per diluted share, compared to net income of $5.8 million, or $7.28 per diluted share, for fiscal year 2013. Net sales for fiscal year 2014 amounted to $409.5 million, a 1.0 percent decrease from last fiscal year’s sales of $413.7 million. Results for fiscal year 2014 include a $0.3 million non-cash gain related to the interest swap contract, whereas the prior fiscal year contained a $1.6 million non-cash gain on the contract. There were impairment charges on manufacturing equipment of $2.0 million and $1.7 million included in the results for fiscal years 2014 and 2013, respectively. Other non-cash charges increased from $0.9 million in fiscal year 2013 to $1.7 million in fiscal year 2014.
In the fourth quarter of fiscal year 2014, the Company generated income from operations of $2.0 million, including depreciation of $3.1 million. Income from operations in the fourth fiscal quarter of the prior year was $1.7 million, with depreciation amounting to $3.5 million. Gross profit for the fourth quarter of fiscal 2014 was $8.2 million, or 7.7 percent of net sales, compared to $6.9 million, or 6.9 percent of net sales, for the fourth quarter of fiscal 2013.
Income from operations for fiscal year 2014 was $4.2 million, after depreciation expense of $12.8 million, while income from operations for fiscal year 2013 was $11.2 million, after depreciation expense of $13.6 million. Gross profit for fiscal year 2014 was $27.7 million, or 6.8 percent of net sales, compared to $33.3 million, or 8.1 percent of net sales in fiscal year 2013. The previously mentioned non-cash impairment charges of $2.0 million and $1.7 million, respectively, are reflected in gross profit for fiscal year 2014 and 2013, respectively, and all previously mentioned non-cash charges are reflected in the operating income of the respective fiscal years.
Dana S. Weber, Chief Executive Officer, commented, “We continue to make progress in an environment that is burdened with lower demand, less favorable product mix and weak spot market pricing. We are having success adding incremental business, but the industrial economy in general is challenging, exacerbated by the accelerating cost and complexity of regulations and legislation. Because of the magnitude of our depreciation we are generating cash flow well in excess of debt service, enabling us to continue investing in efficiencies and long-term organic growth.”
Selling, general and administrative expenses in the fourth quarter of fiscal 2014 were $6.2 million, increasing from $5.2 million in the fourth quarter of fiscal 2013. Selling, general and administrative charges were $23.5 million in fiscal year 2014, increasing from $22.1 million for fiscal year 2013.
Interest expense was $0.9 million and $1.0 million in the fiscal 2014 and fiscal 2013 fourth quarter, respectively. Interest expense amounted to $3.8 million for fiscal year 2014 and $3.9 million for fiscal year 2013. The Company is party to an arrangement that swaps the variable interest rate for $75 million of the Company’s debt to a fixed rate through December 2017. The Company records the interest swap contract at fair value and non-cash changes in value are reported in Gains or Losses on Interest Contracts. Monthly swap settlements are included in interest expense.
Capital expenditures incurred amounted to $1.0 million in the fourth fiscal quarter ended July 31, 2014 and amounted to $7.3 million for fiscal year 2014.
Webco is a manufacturer and value-added distributor of high-quality carbon steel, stainless steel and other metal tubular products designed to industry and customer specifications. Webco's tubing products consist primarily of pressure tubing and specialty tubing for use in durable and capital goods. Webco has seven production facilities in Oklahoma and Pennsylvania and five value-added distribution facilities in Oklahoma, Texas, Illinois, and Michigan, serving more than 1,500 customers globally.