Coleman Cable reports weak Q3 profits
Coleman Cable, Inc. (Nasdaq: CCIX) shares are dipping after the maker and supplier of electrical wire and cable reported its third-quarter profit declined despite a spike in revenue.
During the three months ended Sept. 30, pricing pressures caused the Waukegan, Ill.-based company’s gross profit margin to fall to 11.5%, from 21.1% a year earlier. The firm’s acquisition of copper wire maker Copperfield, LLC—completed in April for $213 million in cash—ate away Coleman’s quarterly income. Acquisition-related costs caused interest expense during the third quarter to rise 95% to $8.2 million, from $4.2 million last year. Also, selling, general and administrative expense increased 28% to $11.8 million, from $9.2 million during the same period of 2006.
Coleman’s third-quarter net sales soared 121% to $253.5 million, above Wall Street estimates of $250.1 million and from $114.9 million a year earlier. However, the firm’s quarterly profit declined to $4 million, or $0.24 per share, below analyst estimates of $0.29 per share and down 59% from $9.8 million, or $0.77 per share, during the same period of 2006.
“We typically experience softness in the fourth quarter as many of the end markets reduce their inventory stocking levels in conjunction with the year-end holidays. Not withstanding, we started the fourth quarter with strong results in October,” CEO Gary Yetman said in a statement. “While we continue to experience inflationary cost pressures from higher material and fuel costs, we have been successful in offsetting some of these pressures by the implementation of our cost reduction initiatives.”
The chief executive warned that the downturn in copper prices and fluctuating market demands could have “a negative impact on our fourth-quarter revenues and profitability.” Yetman said the firm expects fourth-quarter revenue in the range of $220 million to $240 million, below analyst estimates of $243.9 million.
In morning trading, CCIX shares are down 10.45%, or $1.40, at $12. Over the last 52 weeks, shares have ranged from $9.37 to $30.30.
