Electrical Companies Report 3Q Earnings

Nov. 21, 2008
It’s earnings season and many reports have come in. Here is a synopsis of third-quarter reports from several electrical industry players.

It’s earnings season and many reports have come in. Here is a synopsis of third-quarter reports from several electrical industry players.

Houston Wire & Cable Co., Houston, said its sales for the third quarter of 2008 matched 2007’s record level of $98.9 million despite the impact of two hurricanes on the company’s Gulf Coast operations, overall declining economic conditions and market disruptions.

However, net income for the third quarter was lower than the prior period by 20.7 percent. Third quarter performance was affected by lower gross margins. In spite of higher sales in the first nine months, the company experienced lower gross margins and higher levels of operating expenses.

President and CEO Charles Sorrentino said, “In light of current economic conditions and the disastrous hurricane activity, I am pleased that we managed to maintain our 2007 sales levels in the third quarter. Sales were negatively impacted by Hurricanes Gustav and Ike and Tropical Storm Edward, all of which hit the Gulf Coast in the third quarter of 2008. As a result, our Baton Rouge and Houston branches were closed for several days. Although our facilities suffered minimal physical damage, our customers and staff faced widespread power outages and mandatory evacuations. Those in the expanded geography of the strike zones were severely affected and electric power was disrupted or absent for approximately two weeks after each hurricane.

“While the company faces headwinds from the overall economy and declining copper prices, our five growth initiatives, supported by a strong balance sheet, continue to drive sales in areas which we believe to be more resilient to current economic conditions. Continued additions to our sales force, enhanced sales training and product line expansions are also solidifying our sales platform.”

Sorrentino said that traditionally the fourth quarter is a slower time of year for the business. He said this, coupled with the continued economic slow down, hurricane impact and declining commodity prices, caused Houston Wire and Cable to revise its 2008 earnings estimate to the range of $1.30 to $1.40 per share.

Coleman Cable Inc., Waukegan, Ill., reported third-quarter revenue of $270.7 million, up 7 percent over the same quarter last year. For the quarter, the company generated adjusted EBITDA of $21.5 million, an increase of $2.7 million or 14 percent over the second quarter of 2008.

Gary Yetman, president and CEO, said, “Our financial results for the quarter were at the upper end of our expectations despite the continuation of very challenging market conditions and a difficult economy.”

Yetman said that while he was pleased with the company’s third-quarter results, “we remain concerned about the state of the economy and the accompanying lower sales demand in our industry, as our customers manage their inventory levels in response to current conditions. Our Original Equipment Manufacturer (OEM) segment remains a significant challenge, and in the third quarter, continued to perform below our expectations.” He said the company is taking the necessary steps to address these issues, but does not expect to realize the full benefit of such actions, in terms of an overall improved return for the segment, until 2009.

“Also, in an effort to right size our production capacity and control costs, in October 2008 we announced internally a series of planned workforce reductions affecting a number of our manufacturing facilities, as well as our corporate office in Waukegan. These actions include the planned elimination of approximately 160 positions over the remainder of 2008 and into 2009.”

Yetman said that taking into consideration the current economic climate for the fourth quarter of 2008, the company expects revenues will be in a range of $190 million to $215 million.

WESCO International Inc., Pittsburgh, earned $65.9 million in the three-month period ended Sept. 30. That was down from earnings of $71.8 million for the same period in 2007.

Sales in the quarter rose 5.3 percent to nearly $1.63 billion, up from $1.55 billion in the same period last year. Sales were positively impacted by higher commodity prices, hurricane restoration activity, favorable exchange rates and the acquisitions completed in the second half of 2007.

Graybar Electric Co., St. Louis, reported net sales of $1.45 billion during the third quarter of 2008, an increase of 6.2 percent over the third quarter of 2007. Net sales for the first three quarters of 2008 rose 5.7 percent over the same period last year to $4.15 billion.

The company reported $66.9 million in net income for the first nine months of 2008. Profits increased by 1.1 percent compared to the same time period in 2007. Profit growth was negatively impacted by a market-wide decline in copper-based wire products.

“While economic conditions are uncertain, our organic growth strategy continues to produce solid business results,” said Robert A. Reynolds Jr., chairman, president and chief executive officer of Graybar. “Our low debt levels and strong financial position should allow Graybar to weather an economic slowdown and emerge with greater market share. It’s during challenging times that our investments in people and technology will provide clear advantages for our customers and the company.”

W.W. Grainger Inc., Lake Forest, Ill., reported net sales of $1.84 million for the third quarter of 2008, up 10.9 percent compared with sales for the comparable 2007 quarter. Gross profit of $742.3 million for the third quarter of 2008 increased 12.5 percent.

The U.S. branch-based business has added approximately 60,000 new products in 2008 that will be featured in the February 2009 catalog. The 2008 catalog includes a total of 183,000 products.