Feb 14, 2008 - Superior Essex Inc. Reports Fourth Quarter 2007 Results

Superior Essex Inc. Reports Fourth Quarter 2007 Results

ATLANTA, GA, February 14, 2008 — Superior Essex Inc. (NASDAQ: SPSX), one of the largest wire and cable manufacturers in the world, today reported its fourth quarter 2007 financial results.  For the quarter, Superior Essex reported revenues of $744 million and earnings of $0.69 per diluted share.  These results compare to revenues of $672 million and earnings of $0.33 per diluted share in the fourth quarter of 2006. 

Adjusted earnings per diluted share* totaled $0.70 for the fourth quarter of 2007, an increase of 119% over the prior year fourth quarter adjusted earnings per diluted share of $0.32. 

Core Business copper-adjusted revenues* in the fourth quarter of 2007 improved 22% vs. the prior year quarter.  This growth was primarily due to incremental revenues from the Canadian, Italian and Chinese Magnet Wire acquisitions completed in 2007.  Excluding acquisitions, copper-adjusted Core Business revenues increased 2% compared to the fourth quarter of 2006.

Adjusted EBITDA in the fourth quarter of 2007 totaled $40.2 million, including $3.8 million in net LIFO inventory benefits.  In the prior year fourth quarter, adjusted EBITDA was $26.1 million, including $0.8 million from transitional copper benefits and $4.6 million from net LIFO inventory benefits.

For full year 2007, Superior Essex reported revenues of $2.99 billion and earnings of $3.09 per diluted share.  These results compare to revenues of $2.94 billion and earnings per diluted share of $3.01 for full year 2006.  Adjusted earnings per diluted share totaled $2.87 for full year 2007, as compared to full year 2006 adjusted earnings per diluted share of $2.88.  Full year results for 2006 included a $0.71 per diluted share impact from transitional copper benefits.

“We were very pleased with profitability levels and overall performance for the fourth quarter of 2007, which is our slowest seasonal period,” said Stephen M. Carter, chief executive officer of Superior Essex.  “The positive operating results were attributable not only to acquisition and synergy benefits, but also to continued cost-efficiency gains and product mix enhancements in all of our business segments.”

View the complete 4Q'07 earnings release and financial tables 

About Superior Essex

Superior Essex Inc., a FORTUNE 1,000 company, is one of the largest wire and cable manufacturers in the world.  The Company manufactures a broad portfolio of wire and cable products with primary applications in the communications, magnet wire and related distribution markets.  It is a leading manufacturer and supplier of copper and fiber optic communications wire and cable products to telephone companies, distributors and system integrators; a leading manufacturer and supplier of magnet wire and fabricated insulation products to major original equipment manufacturers (OEMs) for use in motors, transformers, generators and electrical controls; and a distributor of magnet wire, insulation, and related products to smaller OEMs and motor repair facilities.  Additional information on the Company can be found on its Web site at www.superioressex.com.

Forward Looking Statements and Risk Factors

The matters discussed in this news release, including expected results, contain forward-looking statements that involve a number of risks and uncertainties. Actual results may vary significantly based on a number of factors, including, but not limited to, general economic, business and industry trends and conditions; fluctuations in the availability and cost of copper and other principal raw materials (including the working capital impact of such fluctuations and our ability to recover such costs) as well as natural gas and freight; changes in spending patterns by the telephone industry; changes in the rate of decline in access lines to homes and businesses; the migration of magnet wire demand to China; intense competition from other manufacturers and from alternative technologies such as fiber optics, wireless and VoIP; losses or gains in sales as customer contracts expire or are renewed or rebid; volume and timing of customer orders; rapid product and technology development; market acceptance of new products and continuing product demand for existing products; significant changes in the amount of our indebtedness; our ability to operate within the framework of our revolving credit facility and senior notes; our ability to achieve anticipated benefits of manufacturing network restructurings, integrate acquired acquisition operations and achieve anticipated benefits; our ability to identify, finance and integrate other acquisitions; our ability to successfully operate and expand our magnet wire business in China; changes in short-term interest rates and foreign exchange rates; any deterioration in our labor relations; and other risk factors detailed in Superior Essex's filings with the Securities and Exchange Commission, including the Annual Report on Form 10-K for the year ended December 31, 2006, and Quarterly Reports on Form 10-Q, all of which we incorporate by reference herein.  Forward-looking statements are only as of the date they are made, and we do not undertake to update these statements to reflect subsequent changes except as required by federal securities law.

Financial Measures and Key Operating Metrics

General

We use certain operating and financial measures that are not calculated in accordance with accounting principles generally accepted in the United States of America, or GAAP.  A non-GAAP financial measure is defined as a numerical measure of a company's financial performance, financial position or cash flows that (i) excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in the statement of income, balance sheet or statement of cash flows; or (ii) includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the comparable measure so calculated and presented.  These non-GAAP operating and financial measures are described below.

Copper-Adjusted Revenues

Due to the impact of differing copper values on revenues in the reported periods, the Company is providing supplemental, non-GAAP sales comparisons at a constant value of copper ("copper adjusted revenues”) to aid in analyzing period-to-period net sales.  Presentation of net sales herein for 2007 and 2006 are adjusted to a $3.00/lb COMEX value for our North American operations (or the equivalent SHME per kilogram value for our Chinese operations) and €5.290 per kilogram for our European operations.  In prior year presentations, copper adjusted revenues were previously reflected at $2.00/lb COMEX value.  “Copper adjusted increase” in revenues or net sales is calculated after adjusting net sales in both periods to a constant copper value.  Sales adjusted for a constant value of copper as used by us may not be comparable to similarly titled measures of other companies.

Core Business Revenues

Core Businesses consist of the Company’s Communications Cable business segment, its Magnet Wire and Distribution North America business segment, its Magnet Wire and Distribution Europe business segment, and its Magnet Wire Asia Pacific business segment.

EBITDA

Earnings before interest, taxes, depreciation and amortization, or "EBITDA", is a performance metric which we use and which is used by other companies. "EBITDA" as used by the Company (defined as earnings before interest, taxes, depreciation, amortization, minority interest and certain other non-operating items) may not be comparable to a similarly titled measure of another company.

Adjusted EBITDA and Adjusted EPS

The Company uses the terms “Adjusted EBITDA” and “Adjusted earnings per diluted share” (or “Adjusted EPS”).  Adjusted EBITDA is defined as EBITDA excluding the impact of special items (before tax).  Adjusted EPS is defined as earnings per diluted share excluding the after-tax, after minority interest impact of special items.  These items may not be comparable to a similarly titled measure of another company.  Special items are detailed in the financial tables accompanying this release.

Net Debt

The Company uses the term “Net Debt,” which is a non-GAAP financial measure.  Net debt is defined as total debt outstanding less cash and cash equivalents.  Net debt as used by the Company may not be comparable to a similarly titled measure of another company.

Comparisons to GAAP

Management believes that EBITDA, Adjusted EBITDA, Adjusted EPS and Copper-Adjusted Revenues are useful adjuncts to net income (loss), earnings per share, revenues and other measurements under GAAP.  The Company believes these measures are useful in analyzing the underlying operating performance of the Company’s business without regard to financing methods, capital structure, cost basis of assets or other non-routine events which we do not expect to occur regularly in the future.  These measures are also used in our internal budgeting process, managing, comparing and reporting on operating performance internally and to evaluate performance for certain executive compensation programs.  The following non-GAAP financial measurements are reconciled to the most directly comparable GAAP financial measures – EBITDA to net income; Adjusted EBITDA to net income; Adjusted EPS (or Adjusted earnings per diluted share) to earnings per diluted share; and Copper-Adjusted Revenues to revenues.

EBITDA, Adjusted EBITDA and Adjusted EPS are supplements to GAAP financial information and should not be considered an alternative to, or more meaningful than, net income or operating income as determined in accordance with GAAP.  EBITDA and Adjusted EBITDA have distinct limitations as compared to GAAP information such as net income or operating income.  These measures do not reflect all costs and benefits associated with the operation of our business that impact net income or earnings per share calculated on a GAAP basis.  Management compensates for these limitations by reconciling the non-GAAP financial measurements to the most directly comparable GAAP measure and by presenting the GAAP results in conjunction with these other measures.

Copper-adjusted revenues has distinct limitations as compared to GAAP revenues.  By copper-adjusting revenues, in a declining copper cost environment, it may not be apparent that net sales may be declining on an actual basis.  Management compensates for these limitations by reconciling the non-GAAP financial measurements to the most directly comparable GAAP measure and by presenting the GAAP results in conjunction with copper-adjusted revenues.

Core Business revenues has distinct limitations as compared to GAAP revenues.  By limiting net sales to “Core Businesses,” the revenues of the omitted segment, copper rod, may not be apparent. Management compensates for these limitations by reconciling the non-GAAP financial measurements to the most directly comparable GAAP measure and by presenting the GAAP results in conjunction with Core Business revenues.

* Adjusted earnings per diluted share, adjusted EBITDA, Core Business revenues and copper-adjusted Core Business revenues are non-GAAP financial measures.  Please see Financial Measures and Key Operating Metrics for detailed explanations of these terms and the attached tables for reconciliations to the appropriate GAAP measures.

Company Contact: 
Peggy Tharp
Director of Investor Relations
(770) 657-6246