Excluding a net after-tax gain of $2.7 million from unusual items, principally related to the sale of the Pyrotenax business and a financially favorable restructuring of the company’s interest costs, the first quarter result was $8.8 million of net income or $0.27 per share, up 22% and 29% respectively, from the comparable first quarter 2000 pro forma results.
The pro forma comparison excludes from the 2000 results the losses incurred in the businesses divested in the third quarter of 2000 to Pirelli Cavi e Sistemi, S.p.A. The all-in comparison is net income of $11.5 million and EPS of $0.35 in the first quarter of 2001 versus a loss of $(9.0) million or $(0.26) per share in the first quarter of 2000.
Gross margins improved by approximately 100 basis points versus the year-ago quarter as the result of two significant contributions: an increasing proportion of sales of high margin Communications products as a percentage of total sales (28% this quarter versus 26% in the year-ago quarter) and continuing productivity improvement.
Earnings before interest, taxes, depreciation and amortization for the quarter were $49.8 million versus pro forma EBITDA of $34.7 million recorded in the 2000 first quarter. Excluding unusual items, EBITDA for the first quarter of 2001 was $41.1 million, up 18.4%. Pro forma cash flow (net income excluding unusual items plus depreciation and amortization) per share for the quarter was up 18% to $0.58 per share versus the 2000 first quarter of $0.49 per share for the ongoing business.
The Company’s Board of Directors also declared its fifteenth consecutive quarterly cash dividend of $0.05 per common share payable on May 16, 2001 to shareholders of record on April 30, 2001.
Our Communication segment continues to perform exceptionally well, said Stephen Rabinowitz, Chairman and Chief Executive Officer of General Cable. Despite well publicized concerns regarding the investment spending outlook in some segments of the Telecommunications industry, we achieved revenue growth of 7% and operating margin improvement of 130 basis points versus the first quarter of 2000.
The improvement was widespread, with total sales of high bandwidth data communications products up 12% and operating margin on these products improved by 60 basis points, sales of outside plant telecommunications cables (the last mile) up 5% on flat margins, and Communications cables sales in our international operations up more than 70%.
I am particularly pleased to note that sales of our flagship enhanced data communications cables increased by 350% over last year’s first quarter, well above the industry growth rate, and now comprise 62% of total category cables sales, up from 17% in the first quarter of 2000 and 57% in the fourth quarter of 2000. Sales of optical fiber cables increased 52% over the year-ago quarter. We see these positive trends continuing through the second quarter and expect Communications sales to be up more than 10% and margin expanded by 70-100 basis points versus the year-ago second quarter.
The Energy segment also continues to perform well in an uncertain economy, continued Rabinowitz. With strong productivity improvement and a mix that continues to shift to higher value-added products, operating profits increased 2% and operating margin expanded 30 basis points on sales that were actually down about 3% versus the year-ago first quarter. Looking forward, these trends should continue and recently announced contract awards will bring us incremental sales in the second quarter and beyond that should substantially offset a general weakness in the overall Energy cables market related to lingering concerns over the eventual resolution of the California energy crisis and substantially higher power costs for many transmission and distribution companies leading, in some cases, to a reduction in capital spending.
Finally, our Electrical segment, where the impact of the near-recession U.S. market for industrial and construction cables is felt most immediately and directly, still achieved a $2.5 million improvement in operating earnings over the prior year first quarter, and an operating margin expansion of 100 basis points despite a sales decline of more than 4% and price erosion in building wire, continued Rabinowitz. Excluding building wire performance, sales in the Electrical segment were off 1.5%, but the operating margin improved 160 basis points. In order to optimize the return in building wire in this continuing difficult environment, we have deliberately acted to exert better pricing discipline in the market. As a result of this discipline, and despite the worst building wire price environment this management team has ever encountered, we held our operating performance to the same level as the first quarter of 2000 by managing down our building wire sales by approximately 8%, and by rigorously reducing all aspects of cost and capital employed in this business unit.
Net sales for the first quarter of 2001 decreased 0.8% to $562.0 million, from $566.4 million recorded in the 2000 first quarter for the ongoing businesses (the average monthly COMEX price per pound of copper was $0.82 in both quarters). First quarter 2001 net sales included the previously mentioned 7% increase in sales of Communications cables. The 3% decrease in Energy segment net sales is distorted by sales related to an unusually large and non-recurring project in the first quarter of 2000. Excluding the effect of this project on sales, the Energy segment’s net sales increased by 2% versus the prior year period. This increased sales volume in the Energy segment was principally attributable to revenue growth in energy cable sales in Europe. Electrical cable sales decreased 4% as the Company managed down its building wire sales by 8% to optimize building wire operating results. Building wire performance remained flat for the quarter versus the prior year despite price deterioration of $0.02 per pound. The 4% decrease in Electrical segment sales includes the negative impact of the divestiture of the Pyrotenax business, which was sold in early March 2001.
Net income as reported was $11.5 million in the first quarter of 2001 compared to $7.2 million in the first quarter of 2000. Fully diluted earnings per share were $0.35 in the first quarter of 2001 compared to $0.21 in the first quarter of 2000. Contributing to the improvement in earnings per share were a 23% increase in operating earnings (excluding unusual items), a 4% reduction in the number of fully diluted weighted average common shares outstanding in the first quarter of 2001 and a net of $4.3 million of unusual pre-tax income and expense items, partially offset by a $3.3 million increase in interest expense.
