WEBCO INDUSTRIES, INC. REPORTS FISCAL 2024 THIRD QUARTER RESULTS

Rhea-AI Summary

Webco Industries (OTC: WEBC) reported its fiscal Q3 2024 results ending April 30, 2024. Net income was $6.4 million, or $7.49 per diluted share, identical to Q3 2023's net income but down from $7.91 per diluted share. Net sales fell 9.1% to $153.2 million from $168.6 million in Q3 2023. For the first nine months, net income was $11.8 million, or $14.30 per diluted share, down from $18.3 million or $22.89 per diluted share in the same period of the previous year. Net sales for this period dropped 13.8% to $457 million from $530.5 million. Despite a challenging market impacted by foreign imports, CEO Dana S. Weber emphasized maintaining a strong balance sheet, with $87.5 million in cash, short-term investments, and available credit. Gross profit and operating income also saw declines. The company continues investing in infrastructure, including its new Tech Center and corporate headquarters. Webco's stock repurchase program remains active, with 3,600 shares repurchased in Q3 2024.

Positive

• Net income for Q3 2024 remained stable at $6.4 million compared to Q3 2023.
• Total cash, short-term investments, and available credit stood at $87.5 million at April 30, 2024.
• Interest expense decreased to $0.7 million in Q3 2024 from $1.6 million in Q3 2023.
• Capital expenditures for the first nine months of FY 2024 were $28.4 million, indicating ongoing investment in business infrastructure.
• The company’s stock repurchase program is active, having bought 3,600 shares in Q3 2024.
• Webco’s stock repurchase program was refreshed with a $40 million limit and extended until July 31, 2026.

Negative

• Net sales declined by 9.1% in Q3 2024 compared to Q3 2023.
• Net income per diluted share decreased to $7.49 in Q3 2024 from $7.91 in Q3 2023.
• For the first nine months of fiscal 2024, net income decreased to $11.8 million from $18.3 million for the same period in 2023.
• Sales for the first nine months of fiscal 2024 were down 13.8% compared to the same period in the previous year.
• Gross profit margin for Q3 2024 decreased to 12.9% from 14.0% in Q3 2023.
• Operating income fell to $7.1 million in Q3 2024 from $11.4 million in Q3 2023.
• SG&A expenses increased to $12.6 million in Q3 2024 from $12.2 million in Q3 2023.

SAND SPRINGS, Okla., May 22, 2024 /PRNewswire/ -- Webco Industries, Inc. (OTC: WEBC) today reported results for our third quarter of fiscal year 2024, which ended April 30, 2024.

For our third quarter of fiscal year 2024, we had a net income of $6.4 million, or $7.49 per diluted share, while in our third quarter of fiscal year 2023, we had net income of $6.4 million, or $7.91 per diluted share.  Net sales for the third quarter of fiscal 2024 were $153.2 million, a 9.1 percent decrease from the $168.6 million of sales in the third quarter of fiscal year 2023. 

For the first nine months of fiscal year 2024, we generated a net income of $11.8 million, or $14.30 per diluted share, compared to a net income of $18.3 million, or $22.89 per diluted share, for the same period in fiscal year 2023.  Net sales for the first nine months of the current year amounted to $457.0 million, a 13.8 percent decrease from the $530.5 million in sales for the same nine-month period of last year.

Dana S. Weber, Chief Executive Officer and Board Chair, stated, "The current quarter, while improved from the second quarter of fiscal year 2024, was slower than we have experienced in the past several years, which is consistent with our view of the overall domestic manufacturing economy. Further, we have certain markets that are being adversely impacted by foreign imports. We continue to focus on positioning Webco for various economic environments and opportunities 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 $87.5 million at April 30, 2024, which we believe to be a competitive advantage."

In the third quarter of fiscal year 2024, we had income from operations of $7.1 million after depreciation of $3.8 million.  The third fiscal quarter of the prior year generated income from operations of $11.4 million after depreciation of $3.3 million.  Gross profit for the third quarter of fiscal 2024 was $19.7 million, or 12.9 percent of net sales, compared to $23.6 million, or 14.0 percent of net sales, for the third quarter of fiscal year 2023.   

Our income from operations for the first nine months of fiscal year 2024 was $16.6 million, after depreciation expense of $11.2 million.  Income from operations in the first nine-month period of fiscal year 2023 was $28.4 million, after depreciation expense of $9.8 million.   Gross profit for the first nine months of fiscal 2024 was $54.3 million, or 11.9 percent of net sales, compared to $64.9 million, or 12.2 percent of net sales for the same period in fiscal year 2023.

Selling, general and administrative expenses were $12.6 million in the third quarter of fiscal 2024 and $12.2 million in the third quarter of fiscal 2023. SG&A expenses were $37.7 million in the first nine months of fiscal year 2024 and $36.5 million for the first nine-month period of fiscal year 2023. 

Interest expense was $0.7 million in the third quarter of fiscal year 2024 and $1.6 million in the same quarter of fiscal year 2023.  Interest expense was $3.0 million and $4.8 million in the first nine-month periods of the current and prior fiscal years, respectively.   Construction-based investments increased and, as a result, capitalized interest between the third quarter and nine-month periods being compared increased $0.4 million and $1.1 million, respectively.   Capitalized interest decreases net interest expense. Notwithstanding capitalized interest, the impact of increased interest rates was more than offset by lower average debt balances.

Capital expenditures incurred amounted to $7.0 million in the third quarter of fiscal year 2024 and $28.4 million for the first nine months of fiscal year 2024.  Included in our capital spending is ongoing construction of our F. William Weber Leadership Campus, which will house our Tech Center and corporate headquarters.  The Tech Center will be the tip of the spear leading Webco's trusted and technical brand throughout our industry.

As of April 30, 2024, we had $19.8 million in cash and short-term investments, in addition to $67.6 million of available borrowing under our $220 million senior revolving credit facility.  Availability on the revolver, which had $46.9 million drawn at April 30, 2024, was subject to advance rates on eligible accounts receivable and inventories.  Our term loan and revolver mature in September 2027.  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.  In September 2023, the Company's Board of Directors refreshed the repurchase program with a new limit of up to $40 million and extended the program's expiration until July 31, 2026.  We purchased 3,600 shares of our stock during the third quarter of fiscal year 2024.  The number of shares repurchased in the prior fiscal year totaled approximately 4,000 shares.  Webco purchased over 144,000 shares over the course of the four 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.

Risk Factors and Forward-looking statements: Certain statements in this release, including, but not limited to, those preceded by or predicated upon the words "anticipates," "appears," "believes," "estimates," "expects," "forever," "hopes," "intends," "plans," "projects," "pursue," "should," "will," "wishes," 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.  No assurance is provided that current results are indicative of those that will be realized in the future.

FOR:	WEBCO INDUSTRIES, INC.
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 April 30,				Nine Months Ended April 30,
	2024		2023		2024		2023
Net sales	$   153,221		$   168,576		$   457,043		$   530,477
Cost of sales	133,530		144,989		402,770		465,597
Gross profit	19,692		23,588		54,274		64,880
Selling, general & administrative expenses	12,590		12,199		37,672		36,480
Income (loss) from operations	7,102		11,389		16,601		28,420
Interest expense	698		1,564		3,046		4,788
Pretax income (loss)	6,404		9,825		13,556		23,632
Provision for (benefit from) income taxes	44		3,472		1,771		5,336
Net income (loss)	$      6,360		$      6,353		$      11,784		$    18,296
Net income (loss) per share:
Basic	$        7.90		$        8.16		$       14.82		$      23.84
Diluted	$        7.49		$        7.91		$       14.30		$      22.89
Weighted average common shares outstanding:
Basic	805,000		779,000		795,000		767,000
Diluted	850,000		803,000		824,000		799,000

 

CONSOLIDATED CASH FLOW DATA (Dollars in thousands – Unaudited)
	Three Months Ended April 30,				Nine Months Ended April 30,
	2024		2023		2024		2023
Net cash provided by (used in)      operating activities	$     28,378		$     39,961		$     56,102		$     59,850
Depreciation and amortization	$       3,885		$       3,337		$     11,317		$       9,959
Cash paid for capital expenditures	$       6,859		$       6,551		$     31,241		$     24,077
Notes: Amounts may not sum due to rounding.

 

	WEBCO INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in thousands - Unaudited)
		April 30,		July 31,
		2024		2023
Current assets:
	Cash	$      4,423		$      6,208
	Certificates of deposit	-		1,000
	U.S. Treasury Bonds	15,387		14,858
	Accounts receivable	70,095		68,478
	Inventories, net	174,883		207,976
	Prepaid expenses	4,857		2,628
	Total current assets	269,644		301,148
Property, plant and equipment, net		162,210		144,717
Right of use, finance leases, net		1,111		1,196
Right of use, operating leases, net		20,644		23,210
Other long-term assets		16,704		13,405
Total assets		$   470,312		$   483,676
Current liabilities:
	Accounts payable	$     33,548		$     33,463
	Accrued liabilities	33,052		34,846
	Current portion of long-term debt	46,666		68,554
	Current portion of finance lease liabilities	431		407
	Current portion of operating lease liabilities	4,826		4,785
	Total current liabilities	129,156		142,055
Long-term debt, net of current portion		20,000		20,000
Finance lease liabilities, net of current portion		719		814
Operating lease liabilities, net of current portion		15,686		18,330
Stockholders' equity:
	Common stock	8		8
	Additional paid-in capital	54,156		52,559
	Retained earnings	255,251		249,910
	Total stockholders' equity	315,385		302,478
Total liabilities and stockholders' equity		$   470,312		$   483,676
Notes: Amounts may not sum due to rounding.

 

 

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SOURCE Webco Industries, Inc.

FAQ

What were Webco Industries' net sales for Q3 2024?

Webco Industries reported net sales of $153.2 million for Q3 2024.

How much was Webco Industries' net income for Q3 2024?

Webco Industries' net income for Q3 2024 was $6.4 million.

What was Webco Industries' EPS for Q3 2024?

The earnings per share (EPS) for Webco Industries in Q3 2024 was $7.49 per diluted share.

How did Webco Industries' Q3 2024 net sales compare to Q3 2023?

Net sales for Q3 2024 were $153.2 million, a 9.1% decrease from Q3 2023.

What was Webco Industries' gross profit margin for Q3 2024?

Webco Industries' gross profit margin for Q3 2024 was 12.9%.

How much did Webco Industries spend on capital expenditures in the first nine months of fiscal 2024?

Webco Industries incurred $28.4 million in capital expenditures in the first nine months of fiscal 2024.

What was the total cash, short-term investments, and available credit for Webco Industries as of April 30, 2024?

As of April 30, 2024, Webco Industries had $87.5 million in total cash, short-term investments, and available credit.

How many shares did Webco Industries repurchase in Q3 2024?

Webco Industries repurchased 3,600 shares during Q3 2024.