TULSA, Okla.--(BUSINESS WIRE)--March 8, 2005--Webco Industries, Inc. (OTC:WEBO) today reported results for its fiscal 2005 second quarter ended January 31, 2005.
For its fiscal 2005 second quarter, the Company reported net income of $4,437,000, or $0.59 per diluted share, compared to $349,000, or $0.05 per diluted share, for the same quarter in fiscal 2004. Net sales for the second quarter of fiscal 2005 were $73.2 million, a 58.6 percent increase over the $46.2 million in last year's second quarter.
Net income for the first six months of fiscal year 2005 was $11,051,000, or $1.51 per diluted share, compared to $763,000, or $0.11 per diluted share, for the same period in fiscal 2004. Net sales for the first six months of the current year amounted to $144.9 million, a 52.2 percent increase over the $95.2 million in the same six-month period of last year. Higher selling prices have followed the steep increases in raw material cost over the last nine months. Earnings were enhanced during that period since higher selling prices for our products were matched against lower average-cost inventories.
F. William Weber, Webco's Chairman and Chief Executive Officer, commented, "The dynamics in our business continue to be very positive. Today, the most significant issue affecting steel costs appears to be the steel producers' resolute pricing power brought on by industry consolidation and their determination to maintain steel prices at the highest levels possible. The few number of producers in the steel industry, along with continued weakness in the value of the dollar and strong foreign demand for steel and steelmaking components, make this situation possible."
Mr. Weber continued, "Because of this sustained environment, along with a recovery in the U.S. industrial economy, we have been able to maintain the sales prices for our tubing and a high level of profitability. The drop in profitability from the first quarter of fiscal 2005 was expected as the average-cost of our steel inventories increased closer to the market price of the steel, a trend which will continue at a slower pace. As indicated in prior releases, we could face the opposite challenge of selling from high average-cost inventories at reduced sales prices if steel costs drop from current levels."
Gross profit for the second quarter of fiscal 2005 was $13.4 million, or 18.3 percent of net sales, compared to $4.5 million, or 9.7 percent of net sales, for the second quarter of fiscal 2004. Gross profit for the first six months of fiscal 2005 was $30.2 million, or 20.9 percent of net sales, compared to $9.1 million, or 9.5 percent of sales, in the same six-month period in 2004.
Selling, general and administrative expenses in the second quarter of fiscal 2005 were $5.7 million, compared to $3.3 million in the second quarter of fiscal 2004. S,G&A costs increased primarily due to increased employee and executive profit sharing as a result of improved operating performance and additional reserves necessary for customer accounts. Selling, general and administrative costs in the first six-months of fiscal 2005 increased to $11.5 million, from the $6.6 million reported for the same six-month period in 2004, for the same reasons.
The effective tax rate for the current fiscal year periods is lower than historical levels because of one-time tax benefits related to changing the tax treatment of certain costs previously treated as non-deductible and tax credits being realized due to the level of the Company's profitability. The expected effective tax rate for the remainder of fiscal year 2005 is approximately 37 percent. In future years, the effective tax rate should return to a more historical level of approximately 39 percent.
Capital spending amounted to $1.3 million for the second quarter of fiscal 2005 and $3.2 million for the first six months of fiscal 2005. Capital spending for the total fiscal year 2005 is expected to be in the range of $5.0 million to $6.0 million.
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 including heat exchangers, boilers, automobiles and trucks and home appliances. Webco's long-term strategy involves the pursuit of niche markets within the metal tubing industry through the deployment of leading-edge manufacturing and information technology. Webco has three production facilities in Oklahoma and Pennsylvania and five value-added distribution facilities in Oklahoma, Texas, Illinois, and Michigan, serving more than 1,000 customers throughout North America.
Forward-looking statements: Certain statements in this release, including, but not limited to, those preceded by or predicated upon thewords "anticipates", "appears", "believes", "expects", "hopes", "plans", "should", "would", or similar words 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, among others: general economic and business conditions, competition from imports, changes in manufacturing technology, banking environment, monetary policy, raw material costs and availability, industry capacity, domestic competition, loss of significant customers and customer work stoppages, customer claims, technical and data processing capabilities, and insurance costs and availability. The Company assumes no obligation to update publicly such forward-looking statements, whether as a result of new information, future events or otherwise.
Summary financial information is available with the release posted on the Company's website at www.webcoindustries.com.
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Contact:
Webco Industries, Inc., Tulsa
Dana S. Weber, 918-241-1040
or
Mike Howard, 918-241-1094
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