WEBCO INDUSTRIES, INC. REPORTS FISCAL 2025 SECOND QUARTER RESULTS

Rhea-AI Summary

Webco Industries (OTC: WEBC) reported challenging Q2 fiscal 2025 results, with a net loss of $2.0 million (-$2.91 per share) compared to net income of $0.3 million ($0.42 per share) in Q2 2024. Net sales decreased 11.1% to $129.7 million from $146.0 million year-over-year.

The company's performance was impacted by extended recession in domestic manufacturing markets, seasonal factors, and unfair foreign product dumping. Gross profit margin declined to 7.6% from 8.9% in Q2 2024. The company maintains strong liquidity with $72.8 million in total cash, short-term investments, and available credit.

During Q2 2025, Webco purchased 145,000 shares under its stock repurchase program, with $8.3 million remaining in purchase authority through July 31, 2026. Capital expenditures were $5.7 million, primarily focused on stainless facilities expansion.

Positive

• Strong liquidity position of $72.8M in cash, investments, and available credit
• Ongoing stock repurchase program with $8.3M remaining authority
• Strategic capital investments in stainless facilities expansion

Negative

• Net loss of $2.0M in Q2 2025 vs $0.3M profit in Q2 2024
• 11.1% decrease in net sales to $129.7M
• Gross profit margin declined to 7.6% from 8.9%
• Operating loss of $1.8M vs $1.5M operating income in prior year
• Negative impact from foreign product dumping

SAND SPRINGS, Okla., Feb. 26, 2025 /PRNewswire/ -- Webco Industries, Inc. (OTC: WEBC) today reported results for our second quarter of fiscal year 2025, which ended January 31, 2025.

For our second quarter of fiscal year 2025, we had a net loss of $2.0 million, or a loss of $2.91 per diluted share, while in our second quarter of fiscal year 2024, we had net income of $0.3 million, or $0.42 per diluted share.  Net sales for the second quarter of fiscal 2025 were $129.7 million, an 11.1 percent decrease from the $146.0 million of sales in the second quarter of fiscal year 2024. 

For the first six months of fiscal year 2025, we generated a net loss of $2.1 million, or a loss of $2.87 per diluted share, compared to a net income of $5.4 million, or $6.69 per diluted share, for the same period in fiscal year 2024.  Net sales for the first six months of the current year amounted to $271.1 million, a 10.8 percent decrease from the $303.8 million in sales for the same six-month period of last year.

Dana S. Weber, Chief Executive Officer and Board Chair, stated, "Many of the markets we serve in the domestic manufacturing economy have been in a recession for an extended period; and our second fiscal quarter was further impacted by typical seasonality.  In addition, unfair dumping of products by foreign manufacturers into our markets made the suppressed manufacturing environment even more difficult.  We continue to focus on our strong balance sheet, good liquidity and making compelling investments in our business.  Our total cash, short-term investments and available credit on our revolver were $72.8 million at January 31, 2025, which we believe to be a competitive advantage."

In the second quarter of fiscal year 2025, we had a loss from operations of $1.8 million after depreciation of $4.6 million.  The second fiscal quarter of the prior year generated income from operations of $1.5 million after depreciation of $3.7 million.  Gross profit for the second quarter of fiscal 2025 was $9.9 million, or 7.6 percent of net sales, compared to $13.0 million, or 8.9 percent of net sales, for the second quarter of fiscal year 2024.   

Our loss from operations for the first six months of fiscal year 2025 was $0.7 million, after depreciation expense of $9.3 million.  Income from operations in the first six-month period of fiscal year 2024 was $9.5 million, after depreciation expense of $7.3 million.   Gross profit for the first half of fiscal 2025 was $23.6 million, or 8.7 percent of net sales, compared to $34.6 million, or 11.4 percent of net sales for the same period in fiscal year 2024.

Selling, general and administrative expenses were $11.7 million in the second quarter of fiscal 2025 and $11.5 million in the second quarter of fiscal 2024. SG&A expenses were $24.3 million in the first half of fiscal year 2025 and $25.1 million for the first six-month period of fiscal year 2024. SG&A expenses in fiscal year 2025 reflect a decrease in costs related to 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 $1.2 million in the second quarter of fiscal year 2025 and $1.1 million in the same quarter of fiscal year 2024.  Interest expense was $2.4 million and $2.3 million in the first six-month periods of the current and prior fiscal years, respectively.  Average construction-based investments decreased in fiscal year 2025 and, as a result, capitalized interest decreased $0.4 million and $0.7 when compared to the second quarter and first half of fiscal year 2024, respectively.   Capitalized interest decreases net interest expense in the consolidated statement of operations. Notwithstanding capitalized interest, interest rates and average debt balances were marginally lower in the current fiscal quarter and first six-month period than in the prior fiscal year.

Capital expenditures incurred amounted to $5.7 million in the second quarter of fiscal year 2025 and $10.8 for the first six months of fiscal year 2025.  Capital spending in fiscal year 2025 was dominated by construction and expansion at our stainless facilities.  Included in capital spending for the second quarter and first half of fiscal year 2024 was construction of our F. William Weber Leadership Campus, which houses our Tech Center and corporate headquarters.  The Tech Center, which is the tip of the spear that leads Webco's trusted and technical brand throughout our industry, was completed in the fourth quarter of fiscal year 2024. 

As of January 31, 2025, we had $17.2 million in cash and short-term investments, in addition to $55.6 million of available borrowing under our $220 million senior revolving credit facility.  Availability on the revolver, which had $77.6 million drawn at January 31, 2025, is 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 145,000 shares of our stock during the second quarter of fiscal year 2025, including the previously disclosed 143,000 shares acquired on December 31, 2024.  Including the current fiscal year, Webco has purchased approximately 300,000 shares over the course of the last five-year period.   At January 31, 2025, there was approximately $8.3 million of purchase authority left in the current stock repurchase program.  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.  Our F. William Weber Leadership Campus is in Sand Springs, Oklahoma and houses our corporate offices and our Webco TechCenter™, providing a state-of-the-art laboratory and R & D facility to lead and develop technical solutions for the metal tubing industry.

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; the 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; significant shifts in product demand away from internal combustion engine automobiles; 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 inability 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.

TABLES FOLLOW

 

WEBCO INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF OPERATIONS (Dollars in thousands, except per share data – Unaudited)
	Three Months Ended January 31,				Six Months Ended January 31,
	2025		2024		2025		2024
Net sales	$   129,710		$   145,984		$   271,096		$   303,822
Cost of sales	119,801		133,008		247,541		269,240
Gross profit	9,909		12,976		23,555		34,582
Selling, general & administrative expenses	11,703		11,454		24,267		25,083
Income (loss) from operations	(1,794)		1,522		(711)		9,499
Interest expense	1,246		1,054		2,397		2,347
Pretax income (loss)	(3,040)		468		(3,109)		7,152
Provision for (benefit from) income taxes	(999)		128		(962)		1,727
Net income (loss)	$     (2,040)		$         341		$    (2,147)		$      5,425
Net income (loss) per share:
Basic	$     (2.91)		$        0.43		$      (2.87)		$        6.86
Diluted	$     (2.91)		$        0.42		$      (2.87)		$        6.69
Weighted average common shares outstanding:
Basic	700,000		791,000		749,000		790,000
Diluted	700,000		811,000		749,000		811,000

 

CONSOLIDATED CASH FLOW DATA (Dollars in thousands – Unaudited)
	Three Months Ended January 31,				Six Months Ended January 31,
	2025		2024		2025		2024
Net cash provided by (used in)      operating activities	$         71		$       9,673		$     13,922		$     27,724
Depreciation and amortization	$     4,675		$       3,736		$       9,368		$       7,432
Cash paid for capital expenditures	$     6,085		$     11,795		$     11,636		$     24,382
Notes: Amounts may not sum due to rounding.

 

	WEBCO INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in thousands - Unaudited)
		January 31,		July 31,
		2025		2024
Current assets:
	Cash	$       4,929		$      1,171
	U.S. Treasury Bonds	12,237		15,903
	Accounts receivable	61,334		70,249
	Inventories, net	178,823		169,513
	Prepaid expenses	4,951		9,530
	Total current assets	262,275		266,366
Property, plant and equipment, net		169,727		168,186
Right of use, finance leases, net		1,041		1,043
Right of use, operating leases, net		21,233		21,879
Other long-term assets		15,160		15,611
Total assets		$   469,436		$   473,085
Current liabilities:
	Accounts payable	$     31,890		$     28,109
	Accrued liabilities	29,316		33,066
	Current portion of long-term debt, net	77,451		49,115
	Current portion of finance lease liabilities	470		429
	Current portion of operating lease liabilities	5,234		5,063
	Total current liabilities	144,361		115,782
Long-term debt, net of current portion		20,000		20,000
Finance lease liabilities, net of current portion		620		657
Operating lease liabilities, net of current portion		15,875		16,653
Deferred tax liability		-		886
Stockholders' equity:
	Common stock	7		9
	Additional paid-in capital	46,056		54,256
	Retained earnings	242,517		264,842
	Total stockholders' equity	288,580		319,107
Total liabilities and stockholders' equity		$   469,436		$   473,085
Notes: Amounts may not sum due to rounding.

 

CONTACT:	Mike Howard
	Chief Financial Officer
	(918) 241-1094
	mhoward@webcotube.com

View original content:https://www.prnewswire.com/news-releases/webco-industries-inc-reports-fiscal-2025-second-quarter-results-302386602.html

SOURCE Webco Industries, Inc.

FAQ

What caused Webco Industries (WEBC) Q2 2025 net loss?

WEBC reported a $2.0M net loss due to extended recession in domestic manufacturing markets, seasonal factors, and unfair foreign product dumping affecting sales and margins.

How much did Webco (WEBC) sales decline in Q2 2025?

WEBC's net sales decreased 11.1% to $129.7M in Q2 2025 from $146.0M in Q2 2024.

What is Webco's (WEBC) current stock buyback program status?

WEBC purchased 145,000 shares in Q2 2025, with $8.3M remaining in purchase authority through July 31, 2026.

How much liquidity does Webco (WEBC) have as of January 31, 2025?

WEBC has $72.8M in total liquidity, comprising cash, short-term investments, and available credit on their revolver.

What was Webco's (WEBC) gross profit margin in Q2 2025?

WEBC's gross profit margin declined to 7.6% in Q2 2025 from 8.9% in Q2 2024.