General Cable Management Discusses Q1 2014 Results - Earnings Call Transcript

May. 1.14 | About: General Cable (BGC)

General Cable (NYSE:BGC)

Q1 2014 Earnings Call

May 01, 2014 8:30 am ET

Executives

Len Texter - Vice President of Investor Relations

Brian J. Robinson - Chief Financial Officer, Principal Accounting Officer and Executive Vice President

Gregory B. Kenny - Chief Executive Officer, President and Director

Gregory J. Lampert - Executive Vice President, Member of Global Operating Committee, Chief Executive Officer of General Cable Americas and President of General Cable Americas

Analysts

Shawn M. Harrison - Longbow Research LLC

Noelle C. Dilts - Stifel, Nicolaus & Company, Incorporated, Research Division

Matthew Schon McCall - BB&T Capital Markets, Research Division

Operator

Good morning. My name is Denise, and I will be your conference facilitator. I would like to welcome everyone to the General Cable Corporation's First Quarter 2014 Earnings Conference Call. This conference call is being recorded at the request of General Cable. Should you have any obligation -- objections, you may disconnect at this time. [Operator Instructions] Thank you. General Cable, you may begin your conference.

Len Texter

Good morning, everyone, and welcome to General Cable's First Quarter 2014 Earnings Conference Call. I'm Len Texter, Vice President, Investor Relations at General Cable. Joining me this morning are Greg Kenny, our President and Chief Executive Officer; Brian Robinson, our Chief Financial Officer; Greg Lampert, our President and Chief Executive Officer of the Americas; and Bob Siverd, our General Counsel.

Many of you have already seen a copy of our press release issued last night. For those of you who have not, it is available on our website at generalcable.com. Today's call will be accompanied by a slide presentation, also available on our website. If you have not downloaded a copy, we recommend that you do so, as we will refer to the presentation throughout our prepared remarks today.

The format of today's call will first be an overview by Brian Robinson of our first quarter results, including an update on our second quarter and full year outlook. Secondly, Greg Kenny will provide comments on key themes and initiatives for 2014, followed by a question-and-answer period.

Before we get started, I wanted to call your attention to our Safe Harbor provision regarding forward-looking statements and company-defined non-GAAP financial measures as defined on Slide #2, as we will refer to adjusted operating income in today's call.

To begin, please turn to Slide #5, where we have summarized the financial results for the first quarter. With that, I'll turn the call over to Brian Robinson. Brian?

Brian J. Robinson

Thank you, Len. Good morning. Overall, we managed through a number of challenges in the first quarter, reporting adjusted operating income at the upper end of our revised range. The first quarter is seasonally our slowest period of the year, which was impacted by events in Venezuela, extreme winter weather in North America and lower copper prices in the latter portion of the quarter. Importantly, we experienced sharp sequential improvement in March unit volume and have seen a similar trend in April. We're focused on the construction season including utility maintenance activities and production and installation of submarine and land turnkey products in Europe, which we expect when combined with the improvement of our greenfields, will result in a stronger second quarter and second half of the year. We will discuss the full year outlook in few slides, but first I want to take you through the first quarter in more detail on Slides 5 and 6.

On Slide #5, year-over-year the 3% decline in unit volume and metal adjusted net sales was principally due to the impact of the extreme winter weather in North America, as well as stronger electric utility product shipments in Europe and Med during the first quarter of 2013. Partially offsetting these trends were metal pounds sold in Latin America, which reflect the shipment of metal-intensive products such as aerial transmission cable in Brazil and copper rodding in Chile.

Adjusted operating income for the first quarter versus the prior year reflect the negative impact of the social unrest in Venezuela and Thailand and the impact of the extreme winter in North America, as well as the strong contribution of Alcan Cable reported in the first quarter of 2013. Partially offsetting these trends were the improved results reported in Europe due the continued execution of our submarine turnkey project business, again, on a seasonally-adjusted basis. Other expense principally reflects the impact of the remeasurement of the Venezuelan balance sheet at the exchange rate of VEF 10.8 to each U.S. dollar.

Next on Slide 6, sequential unit volume was down 9%, which is slightly greater than typical seasonal declines due to the extreme winter in North America, as well as the near-record-high shipments of aerial transmission cables in the fourth quarter of 2013. Europe was about as expected seasonally in terms of volume, as was ROW, excluding Venezuela. Sequentially, adjusted operating income principally reflects the impact of the social unrest and pricing controls in Venezuela, seasonally slower production and installation activity in the company's submarine turnkey project business and the impact of seasonally lower global unit volume.

On Slide 7 and 8, we have provided our second quarter and full year outlook, which does not include any contribution from Venezuela, given the ongoing challenges in the local market. On Slide 7, net sales in global unit volume are expected to increase in the second quarter due to seasonal demand patterns. However, given the recent decline in copper prices, the company now expects adjusted operating income to be in the range of $45 million to $60 million at current metals as of April 29. The company estimates the impact of the lower copper price environment on operating results in the second quarter to be in the range of $15 million to $20 million.

On Slide 8 (sic) [9], for the full year 2014, we expect adjusted operating income at around the low end of the range of $230 million, which represents an improvement of 15% versus 2013; global unit volume, which is expected to be up in the low single-digit range year-over-year. Adjusted operating income for 2014 is expected to improve year-over-year as productivity gains and the performance of greenfields, including the submarine turnkey project business, gather momentum as we move into the second half of the year. The company also expects the impact of the social unrest in Thailand to subside in the second half of the year.

Operating cash flow is expected to be strong in 2014, in the range of $259 at the midpoint. This is down slightly from our previous outlook due to lower anticipated cash earnings.

Moving to Slide 11 (sic) [10]. Net debt was $1.152 million (sic) [$1,152 million] at the end of the first quarter, an increase of $184 million from the end of the year. The increase in net debt is principally the result of higher working capital requirements due to the normal seasonal trends, as the company invested in inventory in North America and ROW during the first quarter. The impact of the change in the Venezuelan currency exchange rate also contributed to the increase in net debt, as the value of the company's cash held in bolivars and Venezuela was reduced by $81 million in the first quarter of 2014.

The company continues to maintain adequate liquidity to fund operations, internal growth opportunities, including product and geographic expansion, as well as shareholder capital deployment.

With those comments, I'll turn the call over to Greg. Greg?

Gregory B. Kenny

Thank you, Brian, and good morning, everyone. Our focus for 2014 is on the enhancement of returns through productivity improvement and asset optimization. This focus includes both developed and emerging markets and encompasses all aspects of our portfolio. For 2014, we expect the benefit of productivity gains in North America, continuing submarine turnkey project execution in Europe and progress on the turnaround of greenfields in ROW to more than offset the near-term copper headwinds expected in the second quarter, as we continue to generate momentum into the latter half of the year.

We are moving quickly on the permanent closure of 2 electric utility plants in North America announced in February, which we estimate will result in $3 million to $5 million in annual savings, part of which we expect to realize in the latter part of 2014. We're also making progress on our greenfield turnaround plans, which are tracking in line with our expectations.

Overall, our view of the immediate and long-term demand growth drivers in the company's key end markets is unchanged. We are well positioned in each of our end markets to capitalize in a late cyclical recovery in energy infrastructure and other infrastructure-related investments as well as construction activity throughout the world.

The management transition in Europe is going smoothly, and we have a number of strong candidates to replace our retiring general counsel. We are committed to our balanced capital deployment program and remain focused on improving daily execution, working capital management and returns in 2014. In the first quarter, we repurchased $31 million or 2% of our common shares, and have returned approximately $95 million to shareholders over the last 15 months.

That concludes our prepared remarks. I'll now turn the call back over to the operator who will assist us in taking your questions. Operator?

Question-and-Answer Session

Operator

[Operator Instructions] Your first question comes from Shawn Harrison with Longbow Research.

Shawn M. Harrison - Longbow Research LLC

With Venezuela now out of the guidance, what incremental risk does Venezuela present to business going forward, either in terms of write-downs, other factors that maybe I'm not thinking of?

Brian J. Robinson

Yes, Shawn, it's Brian. Partly, as you can see in the way I'm talking about the business, how we've carved Venezuela out to the side, given the volatility on the ground there, and obviously, the knock -- the carry-on effect to our results. As we said, we recorded a devaluation charge in the quarter, which is in the $83 million kind of area. If you -- what's left in terms of being denominated to local currency, for example, we wrote the thing [ph] All way down to 0, would be about $100 million. But there's a number of different inputs and factors that -- clearly, there's a lot happening with respect to the exchange rate mechanisms and the like. So we'll see or will continue to separately discuss Venezuela.

Gregory B. Kenny

Yes, Shawn, there's a obviously high inflation there. There's workers that are eager for -- to keep up with inflation. We import copper; they don't have any. And then they authorize that and then need the dollars, obviously, to pay that. So we'll go ahead and buy copper from places like Chile and then import it, and then they release dollars, but we have to watch closely their release rates and do they have the dollars to support that. And then, of course, that business is about 80% copper dependent, which is imported; and 20% or 30% aluminum, which is negative to the country in terms of supply. The other thing we have, as you know, is also, which is being looked -- taken apart now, is the price control environment, which was there in part historically, but now it's there comprehensively.

Shawn M. Harrison - Longbow Research LLC

Okay. I guess, the other topic I just want to look -- touch on is, you need some pretty strong, I guess -- or some good volume growth into the back half of the year, kind of -- if you could update us just in terms of -- particularly in North America, just kind of what you're seeing in terms of the drivers, particularly construction? Any green shoots beyond the seasonal uptick right now?

Gregory B. Kenny

Well, I've got Greg Lampert with me who, as you know, is responsible for the Americas and he's just come back from meeting a lot of our channel partners. I'll turn it over to Greg.

Gregory J. Lampert

Sure, Shawn. And I would say that we had a weaker first quarter in transmission cables certainly, and that's kind of a project backlog business. So we have some upside in transmission cables. We move forward, certainly, January, February were very difficult months due to the weather conditions in most of the U.S. So we're already seeing improved volume as the quarter wore on into March and April. So we still feel good about the year, again kind of a mid-single digit kind of growth rate depending on the some of the project activity on the transmission side.

Gregory B. Kenny

Shawn, overall, it's spotty, so stuff tied to coal generation is down; wind is pretty good; utility transmission, we think will be off about 10% for the year, but it's still at a very high level. The construction is really -- we see us up low-single digits in the distribution low-voltage area. So that's to the utilities, which is somewhat maintenance reinforcement and also new construction related, so it's up. It would be up about 4% is our thinking now. But it's fairly choppy, but we're cautiously optimistic, Shawn. But the first quarter cost us both production days, as well as customer demand was quite weak; the rally, late in March.

Shawn M. Harrison - Longbow Research LLC

And just last will be very brief. Do you expect to be active with the buyback during the quarter?

Brian J. Robinson

Shawn, we will comment specifically on what we'll do. We have $75 million left for the full year and we'll consider that in light of our results or cash flow performance and financial covenants so -- or that's called baskets. So I can't -- I won't comment specifically on the quarter.

Operator

Your next question comes from Noelle Dilts with Stifel.

Noelle C. Dilts - Stifel, Nicolaus & Company, Incorporated, Research Division

For my first question, can you talk about how March and April orders were up?

Brian J. Robinson

On a run rate basis, I would say, Noelle, it's probably low-single digits, maybe it's 5%. But obviously, we had a tough January and February, particularly in North America with the weather. So the positive is, clearly, that the trend is in the right direction after a very difficult couple of months.

Noelle C. Dilts - Stifel, Nicolaus & Company, Incorporated, Research Division

Okay. I was hoping you could go back to your earnings tower that you laid out at your Investor Day of $500 million to $600 million over the next 5-ish years. I think that included some contribution from Venezuela. How are you thinking about that at this point, kind of pulling Venezuela out of the equation?

Brian J. Robinson

Yes, we had Venezuela in there really sideways when we roll it out over that 4, 5 year period. And also, I would say, it's in many ways, it's -- it was in there for, say $30 to -- in that $30 million to $45 million range. So I would say, that -- the earnings power really -- and you see in that slide and you think about the boxes, not much of that -- or any of that growth is really around Venezuela. So I think there's enough room there that, given the inherent earnings potential both in the North American business and really all the businesses, that, that model is still appropriate.

Noelle C. Dilts - Stifel, Nicolaus & Company, Incorporated, Research Division

Okay, and then I -- just kind of stick in there, I think you get to that target that you laid out. You were talking about a mid-single-digit sort of compound annual growth rate over that 5-year period. Maybe you could talk a little bit about just how you see the pace or the rate of that growth kind of emerging? Do you think '15 could be a bit higher than that, just how you are thinking about that at this point?

Gregory B. Kenny

We haven't really gone and done our planning around '15 yet. No, I see the North America, we'll watch, obviously, the wind legislation, which has been a driver of the business; solar; the strength of the construction recovery in Europe. No, we're seeing some pretty decent work on the transmission grid interconnects. Our French unit is picking up. We're motoring through some of those complex projects that will -- should be completing at NSW that are a couple of years now in the works. So we've got to make sure that we're continuing to build our submarine and energy wind businesses. But Philippines remains strong, and I think Thailand is recovering, though it's still unstable. We're seeing a pickup in strengthening in Mexico and Central America, which is, again, some good work with the combined teams. But I'm not calling a big breakout in terms of demand. It would be nice to see one, but I don't -- I think we have to continue to help ourselves, Noelle, so we're planning on modest demand recovery. And then we got to keep working on cost. And by cost, not just the continuous improvement on the factory floor, but also looking at work streams, in the selling, general and administrative costs, and applying the same Lean principles there and driving the SG&A as well.

Noelle C. Dilts - Stifel, Nicolaus & Company, Incorporated, Research Division

Okay, and one last question, can you just help me understand given -- I was actually pleasantly surprised by the margin in North America in light of the weather headwinds in the quarter. Was there anything unusual in the margin or in the profit that benefited the first quarter?

Brian J. Robinson

No, Noelle, I wouldn't say there was anything unusual. I think it's continued focus on the productivity and the cost containment. But nothing unusual in North American, no.

Operator

Your next question comes from Matt McCall with BB&T Capital Market.

Matthew Schon McCall - BB&T Capital Markets, Research Division

So actually, I'll follow up on that last question. If you look at the pre-released EBIT guidance range, looks like you came in right at the upper end of that range. Can you talk about anything that -- any of the items that might have surprised to the upside pre-release date to end the quarter?

Brian J. Robinson

Yes, Matt, it's Brian. I -- not going to call anything out particularly. Clearly it was, given the volatility in the metals, and then the challenges we had in the business, particularly in North America in February, the visibility was clearly challenged. But I mean, clearly, the positive is, we ended up at the high end of our expectations, and we'll continue to build off of that. But I don't know that I'd call anything out as being massively or singularly surprising to the upside.

Matthew Schon McCall - BB&T Capital Markets, Research Division

Okay. And also following up on Greg's SG&A comments, can you give us some kind of idea about where that level should be on a dollar basis going forward? And then, Greg, you talked to us. I think you kind of alluded to focusing on maybe some SG&A adjustments or some savings or some efficiencies. I don't know how you want put it. But can you quantify any targeted savings that you might have on that line?

Gregory B. Kenny

No, we're doing that work now. We have tens of million we're targeting internally, principally in the manufacturing. In the SG&A is also commissions we use, both direct sales as well as agent commissions. So there's -- some of that is -- varies with volume on the agent side. So it would be premature to say that -- to give you a target. We're doing that right now. Brian and Sonya Reed, who run HR -- Brian, obviously on the phone now, along with the regional operating people are going through this bottoms up. And that work is underway now to probe that and see where there's waste in the system, either process waste or other steps we can take. And that's everything from simple things as travel, to discretionary, to headcount and so on. So we're doing all that, and as we have done that, we scrubbed it bottom up. We may talk directionally, but in the end, this was a big simultaneous equation. We need to be pushing on the shop floor and on the SG&A. Our business changes a bit in -- and the reason -- in China we use a heavy direct selling. So the SG&A is naturally higher. We actually get a return on that effort. So I don’t want to be simplistic on simple ratios, because the business mix has different things. But we're going to take it apart dollar by dollar, and we do that annually. But the old term, I guess, is zero-based budgets.

Brian J. Robinson

Sorry, from a numbers perspective, I would say, before these actions, that there's $480 million to $500 million kind of run rate on the SG&A for the year. And obviously, every point we can get out of this is broadly $5 million, or $0.08 of earnings or something along those lines. So clearly the focus, I think we run -- as we've always do -- as we said, we kind of run the company very hard, but clearly, we will do the work, as Greg just mentioned, to push it even further.

Matthew Schon McCall - BB&T Capital Markets, Research Division

Okay, right. Well, the $485 million to $500 million definitely looks like it's a little higher than my numbers, so maybe the next question will help fill in that blank. The greenfield improvements you talked about, I think, Greg, you said you're on track there. Can you remind us of the savings? And then, as expected in '14, and then as we move out beyond '14, are there items that will help '15 as well? Or is there going to be further improvement in '15?

Gregory B. Kenny

I would say, we continue -- without getting specific on this phone call, we continue to measure our rate of improvement on these assets. And then of course, we have to constantly look at, is that -- are we satisfied with where we'll be, and are we on track for that recovery? The other thing we're doing is, continuing to look at, is more with less, which says, we announced 2 facilities. We keep looking at envelopes and then demand projections, and obviously, we want to make sure that we have enough surge capacity to meet demand. But I would say that's an ongoing effort as well and if we take any further decisions, that would impact 2015 surely. But we don’t -- this is complicated work and you also want to make sure that you're getting a return on it and you can maintain your positions in the market. So that's -- this is a -- we're very, very focused, as we've said, on this and sweating the assets, as well as being superb on the delivery to our customers, and obviously, with quality and perfect service being prerequisites. But Matt, we'll -- as we get into our planning cycle over the summer, we'll -- we're continuing to do the work now. We don’t do planning, neither strategic nor business, at one set point; it's sort of continuous. But we're going to drive hard in the SG&A, and we're going to continue to do the analysis, which is not formula [ph]and is complicated in terms of envelopes, served markets and ability to serve those markets with the envelopes we have or with less envelopes. So that's ongoing work, and I would say that's continuous, but it's clearly top of mind.

Operator

Your next question comes from Scott Levine [ph] from Meridian [ph].

Unknown Attendee

I was wondering, as an investor in the company, when we could expect to cease to hear the word disappointing in the sell-side performance? You've reported the last 12 quarters, and on 75% of those quarters, the equity price has declined. In addition, a second question would be, can we expect this quarter to be the bottom? There's been 2 reset guidance, and we're looking at another reset of guidance in the second quarter, and copper is now being embedded at $3.07. So I guess, all in all, I mean, are we finally looking at the bottom here? I'm sure you guys are watching your equity price.

Gregory B. Kenny

Yes. Well, Scott [ph], obviously, you nor I know what demand is going to look like in August. But the -- and we don't know whether copper is going to be $2.75 or $3.25. It affects us, especially with this lackluster recovery globally where we're running at sort of 70% capacity utilization. So it's really sloppy. So I'm a big shareholder in the company. And I would love this to be a bottom, and we're pulling on every throttle we can, Scott [ph]. But if you have any specific ideas, we're open to it.

But yes, I'm not happy with the facts set as they are. And I would rather hinge you back to the build of this company from very little and the kind of run rate we had in the last cycle, which may not be repeated, but it was an extraordinary one, and I think we optimized that. But yes, we got to go back and make sure we're delivering. And again, this is a big simultaneous equation in terms of market pricing and the input cost. So I wish we had 2% variability demand, and if we had known, 1-year contracts, but we don’t. That's not the nature of the business.

But I hope this is a bottoming, Scott [ph], and as a major shareholder, personally and for management, we're all over this. But we're disappointed with the recovery. We've gone through everything from a theft -- in perfect hindsight, we've done some things really well, a lot of things, and some things you'd say, "Well, if I know what I know now versus 5 years ago, would we -- do we get a -- do we bat a thousand?" Certainly not. But then, if I batted 1 for 1, I'm not sure you'd want to be a holder of this company. You'd be holding a exchange cable, which is fallen by 90%, and that's about it.

Unknown Attendee

Right, right. I understand the growth of the company and all, but do you feel that the process of at least managing where expectations have been over the last, let’s call it 12 quarters has fallen short? I mean, where do you lie that? Part of investing is managing the expectations and it just seems like it's been a continual chase down as far -- to put it all on the price of copper?

Gregory B. Kenny

Yes, and it's not, Scott [ph]. We -- obviously, we had worked through a theft in Brazil, a very complex North Sea environment. We're beginning to get that sorted out. If you attended investment day, you met the people who are running our turnkey business. I'm proud of where we come. North America, which obviously was on its knees 5 years ago, is holding the company through. I think Europe is bottoming. Developing world, you read it every day, it's choppy, because China does make a difference. But we call it as we see it. Obviously, we have to range it. But some time ago, we were accused of being too conservative, and we're happy when we can over-deliver as we did now, but we call it in a range that seems appropriate to what we know at that time. But yes, I'd love to go river and price it.

Unknown Attendee

I guess, just final question, I mean, do you guys feel -- are strategic alternatives being looked at? I mean, there's been transactions, I believe, in the market place around 8x EBITDA. I mean, the company seems to be not getting a fair valuation of the market regardless of the consistency of results.

Gregory B. Kenny

Well, Scott [ph], I think as a board, we've been very provocative with ourselves and thinking through the assets. Again, we built this company from very little. Then you go back and say, "What's worked? What things may be only a single, not a triple?" And we're diluting our time and resources. So we talk about that. We have always been open to -- we've been an acquirer. There's lots of assets for sale now. There are a few buyers. And arguably, some of these assets might maybe -- this maybe a time to buy some of them. But right now, we have been focused internally in sending cash as we have, and if somebody has a better idea for the company, then we have to listen, if it's a serious idea. So we've been -- we're open to any good ideas. Again, the business is complex, and in terms of where our cash is and the number of places that we operate in. So you got to -- it's not a simple equation of private-equity model as a following or whatever. You got to do the homework and think through it, as I'm sure an investor would.

But we are open, as we have to be, to serious ideas about how to unlock value in the company. There is nothing today that I wouldn't do as a public company that -- all options to improve the business are on the table, whether we're public or private. So we're not constrained in our behavior. What I have to do, is think about our long term -- you can get silly in these things, and just say, "Well, let’s close everything we don't like today." That's -- that would be probably value destructive for our shareholders and probably make money for someone else's shareholders. But we got to be balanced and thoughtful and provocative with ourselves.

So we got ahead and continue to challenge ourselves at the board level, internally. And I brought our Chairman, Jack Welsh, to the Investor Day in case anyone else had a better idea or wanted to engage him directly. But we are an open group of board members, and I think you understand that. So I don’t know what questions you may have directed to Jack, but he was there in New York and it remains open.

Operator

Your next question comes from Noelle Dilts with Stifel.

Noelle C. Dilts - Stifel, Nicolaus & Company, Incorporated, Research Division

I was -- just couple of follow-ups. First, just on the greenfield improvements, given that, that's a key area of focus, maybe you could just go into some of the progress that you've been making so far, talk about where you're having the most success, where you're seeing a more challenged environment? And obviously, anything you could give us in terms of quantification and year-over-year improvement would be helpful?

Gregory B. Kenny

Yes, Noelle, the -- we've seen a lot of good work on the production side, leveraging the engineers globally. I would say we're making progress. We have a small greenfield in sub-Saharan Africa. We are making progress. Sub-Saharan Africa is profitable and we're getting capital out of there; that is working capital. So Karl Zimmer has led that effort and I've been very pleased. We're seeing nice movement in Mexico and that is a blow on that economy. And we have a fine asset that there, so I'd say Greg Lampert and his team have made nice progress. We run Mexico and Central America together and we're a leader there. So I'm been very pleased there. The start-ups in Brazil, in terms of some of the specialty products, seem to be broadly on track. The -- India, which is really a -- we serve India from both Thailand as well as locally, is behind where I'd like it to be.

And the -- I would say, the NSW is really nicely stabilizing under Günther. And for those of people who met him at Investor Day, he's an impressive guy, and we're getting through those tough projects and, obviously, have to bring in more work and keep our ships busy. And that's one that our delivery is good, and I would say, he is -- he's brought it a long way in the last year.

Peru is behind where I would like it to be. But we're -- we had a distribution business there. We have a manufacturing asset that supports that now. So I would say, focused on India, Peru, and then -- in terms of ones that are behind from where I'd like it to be. The others, they have to keep pushing, because they're a long way from where they should be.

Noelle C. Dilts - Stifel, Nicolaus & Company, Incorporated, Research Division

And can you give us any sense of -- just even in the quarter how, if you look at that bucket of assets, the improvement that you've seen so far year-over-year?

Brian J. Robinson

I would say for the full year, I think about it collectively as, say something in the $10 million kind of area. And for the quarter, maybe it's 2 kind of number. Not -- we haven't -- we didn't see a big kick from the greenfield in the first quarter, but Greg has outlined the way we're thinking about it.

Noelle C. Dilts - Stifel, Nicolaus & Company, Incorporated, Research Division

Okay, and then just on the transmission markets, given that you had a pretty strong quarter in Brazil, how -- can you give us any help there on the timing of shipments this year and the seasonality of that business? I'm curious if it's -- kind of a slowdown is going to impact the second quarter?

Gregory B. Kenny

In Brazil or in the U.S.?

Noelle C. Dilts - Stifel, Nicolaus & Company, Incorporated, Research Division

Well, I'd actually like to know about both.

Gregory B. Kenny

Yes, I guess, in the U.S., we see it as relatively -- it's lumpy, but we see it as relatively flat and down from prior year. So the peak in our transmission business would have been somewhere around 2012 or something like that. But it's still quite high. And in Brazil, Greg, you want to comment on either Brazil or the U.S.?

Gregory J. Lampert

The demand in Brazil was strong. We have a good backlog projects. There's a lot of project business in Brazil. So unfortunately, it's really difficult to predict whether it falls over the finish line of quarter second into the third place at the backlog. And Brazil was solid and not the lumpiness at this point without any project, the light kind of lumpiness that we've seen maybe in the last 2 years in Brazil.

Gregory B. Kenny

The U.S. is fairly flat, Noelle, in terms of our thinking by quarter. But again, a project can move in and out of quarter, but right now our thinking is it's fairly linear, with the second quarter being the weakest of the 3.

Noelle C. Dilts - Stifel, Nicolaus & Company, Incorporated, Research Division

Okay. And then, just one last housekeeping question. Sorry if I missed this, but did you call out any impact from copper in the -- or metals in the first quarter on operating income?

Brian J. Robinson

We didn't call it out, Noelle. But it's also probably a couple of million dollars, so maybe about $3 million plus or minus in the first quarter.

Noelle C. Dilts - Stifel, Nicolaus & Company, Incorporated, Research Division

Okay. And I'm just going to keep going. On pricing, can you talk a little bit about, is there any markets where you're seeing some improvement in pricing? Or conversely, where you're seeing deterioration?

Gregory B. Kenny

Half of our business is priced short cycle, and then you have sort of purchase agreements. But I would say, clearly, pricing in many markets is at the cash cost of the least efficient producers. So I would say the worse pricing is probably in Europe, but we're not seeing, until we get utilization levels up, we're not seeing a lot of pricing power. There's some -- there's a few narrow niches maybe in the U.S. where we're seeing a bit, but it's -- and we're constantly pushing price because we need to get a fair return on capital. But again, it's a sloppy process right now. It's exacerbated by metals falling as it did through the first quarter. Distributers, as you've known, some of them -- many of them have a tendency to draw down their inventories, wait for it to bottom and then demand might restart. So we not only have the issue of what's our -- what's in our cost of goods sold versus what the spot metals price is in that week or in that day, but also when copper is falling or not disciplined distributors wait. So right now, he's sort of bottomed in that $3.00, $3.05 range, and we expect -- and we'll see some stabilization of distributer demand as they've drawn down, and copper hasn't moved down further.

Operator

Your next question comes from Shawn Harrison with Longbow Research.

Shawn M. Harrison - Longbow Research LLC

Two follow-ups. Just what is the volume expectation in Europe for 2014? And then also, what level of profitability improvement you expect on a dollar basis relative to 2013?

Brian J. Robinson

On a dollar basis -- Shawn, it's Brian. I would say, yes, clearly, we're very pleased with the improvement in NSW, in the submarine cable business, but also very carefully watching the business in Iberia. But I would say that the improvement in Europe is a net $5 million to $15 million range, and I appreciate that's bit of a wide range from a EBIT perspective. From a volume perspective...

Gregory B. Kenny

It's actually flat. It’s down, right now. It depends on where we are, but France is roughly flat. The -- we're seeing some weakness or roughly flat in Iberia. And the NSW business is lumpy by the percentage of completion accounting, whether you're shipping cable or services, but generally it's -- we're not expecting demand to pick up in Europe or North Africa. It's actually flat to slightly down.

Shawn M. Harrison - Longbow Research LLC

Okay. I'm sorry if I missed this in the press release or the presentation, but we have the volume contribution from Venezuela in the first quarter. What was the revenue contribution? And then, just for easy help here, what was the total volume contributions from Venezuela in 2013?

Brian J. Robinson

Shawn, let us get that for you. We...

Shawn M. Harrison - Longbow Research LLC

Yes, sorry. I thought I had that in hand. But yes, if could e-mail me, that would be great.

Len Texter

Yes, we'll send you a note, Shawn.

Gregory B. Kenny

I think, Shawn, that Europe, my sense is, it's getting slightly better. Again, in Europe is North Africa and the percentage of completion accounting around the NSW business. So -- but broadly, we expect France to be stable and I think Iberia is -- which exports is somewhere around flat to down slightly. But it's -- that's sort of the mix. We've got to help ourselves in Europe in a market that is sloppy and there is a fair amount of announced restructuring and other things that are going on in Europe.

Shawn M. Harrison - Longbow Research LLC

But the pricing environment sounds like, maybe it's flattening out there, finally?

Gregory B. Kenny

Say again?

Shawn M. Harrison - Longbow Research LLC

The pricing environment in Europe's flattening out at least?

Gregory B. Kenny

Well, it can hardly be any worse. Yes, obviously you get paid for some of the specialty work you do, and it's often unique designs, but that's not enough to -- it's important. It's what we're known for. But the real -- what's happened is, obviously, with Western Europe, weak; with Eastern Europe, weak; and North Africa and Middle East, relatively weak around the Mediterranean, all competitors are either thinking through their asset base or selling to absorb fixed. Obviously it's expensive to close factories in Western Europe. So you sort of have that stew, but I think we're at the exhaustion point for a lot of folks. So it's a marginal contribution pricing generally, which is unsustainable, fundamentally.

Brian J. Robinson

Shawn, the Venezuela numbers. Len...

Len Texter

Yes, Shawn, the revenue for Venezuela in the first quarter was roughly $40 million, and that's all in about GBP 4 million.

Shawn M. Harrison - Longbow Research LLC

Okay, do we have the pounds number for 2013?

Len Texter

First quarter 2013 was about little over GBP 4 million.

Shawn M. Harrison - Longbow Research LLC

I was thinking for the full year, do have?

Len Texter

Yes, one sec here. Full year 2013, would be roughly GBP 21 million, GBP 22 million.

Operator

There are no further questions queued up at this time. I'll turn the call back over to General Cable.

Len Texter

Thank you for joining us this morning. That concludes our conference call. A replay of this call will be available later today on our website. We appreciate your continued interest in General Cable. Thank you.

Operator

This concludes today's conference call. You may now disconnect.

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