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WEBCO INDUSTRIES, INC. REPORTS FISCAL 2023 FOURTH QUARTER AND YEAR END RESULTS

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Webco Industries reports Q4 and FY2023 results with decrease in net sales
Positive
  • Webco Industries reported a net income of $8.3 million, or $10.25 per diluted share, for Q4 FY2023, compared to $8.2 million, or $10.28 per diluted share, in Q4 FY2022.
  • Net sales for Q4 FY2023 decreased by 9.3% to $156.4 million compared to $172.5 million in Q4 FY2022.
  • For FY2023, Webco Industries generated a net income of $26.6 million, or $33.19 per diluted share, compared to $48.4 million, or $59.61 per diluted share, in FY2022.
  • Net sales for FY2023 decreased by 2.4% to $686.9 million compared to $704.0 million in FY2022.
Negative
  • The decrease in net sales for Q4 and FY2023 may negatively affect the stock price.
  • The decrease in net income for FY2023 may also negatively impact the stock price.

SAND SPRINGS, Okla., Oct. 4, 2023 /PRNewswire/ -- Webco Industries, Inc. (OTC: WEBC) today reported results for our fourth fiscal quarter and year ended July 31, 2023.

For our fourth quarter of fiscal year 2023, we had a net income of $8.3 million, or $10.25 per diluted share, while in our fourth quarter of fiscal year 2022, we had net income of $8.2 million, or $10.28 per diluted share.  Net sales for the fourth quarter of fiscal 2023 were $156.4 million, a 9.3 percent decrease from the $172.5 million of sales in the fourth quarter of fiscal year 2022. 

For fiscal year 2023, we generated a net income of $26.6 million, or $33.19 per diluted share, compared to a net income of $48.4 million, or $59.61 per diluted share, for the same period in fiscal year 2022.  Net sales for the current fiscal year amounted to $686.9 million, a 2.4 percent decrease from the $704.0 million in sales for last year.

In the fourth quarter of fiscal year 2023, we had income from operations of $10.5 million after depreciation of $3.7 million.  The fourth fiscal quarter of the prior year generated income from operations of $11.1 million after depreciation of $3.4 million.  Gross profit for the fourth quarter of fiscal 2023 was $24.5 million, or 15.8 percent of net sales, compared to $21.1 million, or 12.2 percent of net sales, for the fourth quarter of fiscal year 2022.   

Our income from operations for fiscal year 2023 was $38.9 million, after depreciation expense of $13.5 million.  Income from operations in fiscal year 2022 was $64.8 million, after depreciation expense of $14.0 million.   Gross profit for fiscal year 2023 was $89.4 million, or 13.0 percent of net sales, compared to $118.1 million, or 16.8 percent of net sales for fiscal year 2022.

Dana S. Weber, Chief Executive Officer and Board Chair, stated, "There are many different ways the go-forward economy could turn and little consensus on which direction is the most likely.  As such, we continue to focus on positioning Webco for various economic environments 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 $89.4 million at July 31, 2023, which we believe to be a competitive advantage."

Selling, general and administrative expenses were $14.0 million in the fourth quarter of fiscal 2023 and $10.0 million in the fourth quarter of fiscal 2022.  SG&A expenses were $50.5 million in fiscal year 2023 and $53.3 million for fiscal year 2022.  SG&A expenses in fiscal year 2023 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 fourth quarter of fiscal year 2023 and $1.2 million in the same quarter of fiscal year 2022.  Interest expense was $6.1 million and $3.3 million in the current and prior fiscal years, respectively.  Fed funds rate increases by the Federal Reserve have increased the variable rate component on our senior credit facility, causing most of the increase in interest expense.    

Capital expenditures incurred amounted to $10.8 million in the fourth quarter of fiscal year 2023 and $34.7 million for fiscal year 2023.  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 July 31, 2023, we had $72.0 million of available borrowing capacity under our senior revolving credit facility.  Availability on the revolver, which had $68.9 million drawn at July 31, 2023, was subject to advance rates on eligible accounts receivable and inventories.  Borrowing decreased primarily due to reduced working capital levels.  In September 2022, we refinanced our senior credit facility, increasing our revolving credit facility from $160 million to $220 million and our senior term loan to $20 million from $12 million.  The increased capacity of our senior credit facility will help us navigate volatility in raw material cost.  Our new term loan and revolver mature in September 2027.  Most provisions of the senior credit facility are similar to our prior agreement.  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.  The Company's Board of Directors recently 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 fourth quarter of fiscal year 2023.  The number of shares repurchased in the current fiscal year totaled almost 4,100 shares.  Webco purchased over 140,000 shares over the course of the three 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.

Forward-looking statements: Certain statements in this release, including, but not limited to, those preceded by or predicated upon the words "anticipates," "appears," "available," "believe," "can," "consider," "expects," "forever," "hopes," "intends," "plans," "projects," "pursue," "should," "wishes," "would," 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.

CONTACT:   

Mike Howard                                               


Chief Financial Officer                                 


(918) 241-1094


mhoward@webcotube.com

- TABLES FOLLOW -

 

WEBCO INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS

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










Three Months Ended

July 31,


Year Ended

July 31,


2023


2022


2023


2022









Net sales

$   156,439


$   172,534


$   686,916


$ 704,048

Cost of sales

131,947


151,438


597,544


585,904









Gross profit

24,492


21,096


89,372


118,144

Selling, general & administrative expenses

14,005


9,963


50,465


53,341









Income (loss) from operations

10,487


11,133


38,907


64,803

Interest expense

1,302


1,193


6,089


3,267









Pretax income (loss)

9,186


9,941


32,818


61,535

Provision for (benefit from) income taxes

1,838


1,711


6,174


13,184









Net income (loss)

$      8,348


$     8,230


$    26,644


$    48,351









Net income (loss) per share:








     Basic

$        10.56


$       10.77


$      34.46


$      62.87

     Diluted

$        10.25


$       10.28


$      33.19


$      59.61









Weighted average common shares outstanding:








     Basic

790,000


764,000


773,000


769,000

     Diluted

814,000


800,000


803,000


811,000

 

CONSOLIDATED CASH FLOW DATA

(Dollars in thousands – Unaudited)










Three Months Ended

July 31,


Year Ended

July 31,


2023


2022


2023


2022









Net cash provided by (used in)

     operating activities

 

$     23,026


 

$       9,432


 

$     82,876


 

$  (15,734)

Depreciation and amortization

$       3,743


$       4,071


$     13,702


$     14,576

Cash paid for capital expenditures

$       7,658


$       6,455


$     31,735


$     21,642


                                              Notes: Amounts may not sum due to rounding.

 


WEBCO INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands - Unaudited)

 








July 31,

2023


July 31,

2022






Current assets:





Cash

$      6,208


$     12,739


Certificates of deposit

1,000


-


U.S. Treasury Bonds

14,858


-


Accounts receivable

68,478


83,657


Inventories, net

207,976


244,311


Prepaid expenses

2,628


11,847


Total current assets

301,148


352,553






Property, plant and equipment, net

144,717


123,136

Right of use, finance leases, net

1,196


1,181

Right of use, operating leases, net

23,210


21,592

Other long-term assets

13,405


9,686






Total assets

$   483,676


$   508,148






Current liabilities:





Accounts payable

$     33,463


$     53,255


Accrued liabilities

34,846


33,614


Current portion of long-term debt

68,554


114,210


Current portion of finance lease liabilities

407


611


Current portion of operating lease liabilities

4,785


4,484


Total current liabilities

142,055


206,175






Long-term debt, net of current portion

20,000


12,000

Finance lease liabilities, net of current portion

814


613

Operating lease liabilities, net of current portion

18,330


17,083

Deferred tax liability

-


-






Stockholders' equity:





Common stock

8


8


Additional paid-in capital

52,559


48,424


Retained earnings

249,910


223,846


Total stockholders' equity

302,477


272,277






Total liabilities and stockholders' equity

$   483,676


$   508,148


                  Notes: Amounts may not sum due to rounding.                                              .

 

Cision View original content:https://www.prnewswire.com/news-releases/webco-industries-inc-reports-fiscal-2023-fourth-quarter-and-year-end-results-301947766.html

SOURCE Webco Industries, Inc.

FAQ

What were Webco Industries' net income and net sales for Q4 FY2023?

Webco Industries reported a net income of $8.3 million and net sales of $156.4 million for Q4 FY2023.

How did Webco Industries' net income and net sales for FY2023 compare to FY2022?

Webco Industries generated a net income of $26.6 million and net sales of $686.9 million in FY2023, compared to a net income of $48.4 million and net sales of $704.0 million in FY2022.

Did Webco Industries' stock price increase or decrease?

The decrease in net sales for Q4 and FY2023 may negatively affect the stock price.

WEBCO INDUSTRIES INC

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150.72M
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Steel
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United States of America
Sand Springs