General Cable (BGC) Michael T. McDonnell on Q4 2015 Results - Earnings Call Transcript

| About: General Cable (BGC)

General Cable Corp. (NYSE:BGC)

Q4 2015 Earnings Call

February 11, 2016 8:30 am ET

Executives

Leonard R. Texter - Vice President, Finance, Investor Relations

Michael T. McDonnell - President & Chief Executive Officer

Brian J. Robinson - Chief Financial Officer & Executive Vice President

Analysts

Gausia Chowdhury - Longbow Research LLC

Noelle Dilts - Stifel, Nicolaus & Co., Inc.

Brent Edward Thielman - D. A. Davidson & Co.

Operator

Good morning. My name is Heidi, and I will be your conference facilitator. I would like to welcome everyone to General Cable Corporation's Fourth Quarter 2015 Conference Call. This conference is being recorded at the request of General Cable. Should you have any objections, you may disconnect at this time.

All participants have been placed on mute to prevent any background noise. There will be a question-and-answer session after the speakers' remarks. Thank you.

General Cable, you may begin your conference.

Leonard R. Texter - Vice President, Finance, Investor Relations

Good morning, everyone, and welcome to General Cable's fourth quarter 2015 earnings conference call. I'm Len Texter, Senior Vice President of Finance, Investor Relations. Joining me this morning are Mike McDonnell, our President and Chief Executive Officer; and Brian Robinson, our Chief Financial Officer.

Today's call will be accompanied by a slide presentation, which is available on our website at generalcable.com. If you've not downloaded a copy, we recommend that you do so as we will refer to the presentation throughout our prepared remarks today.

On today's call, Mike will provide an update on our strategic roadmap and an overview of our fourth quarter results and first quarter outlook. Brian will then provide some additional details on our fourth quarter results and financial position, as well an update on the company's FCPA investigation.

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 number two, as we will be making forward-looking statements and referring to adjusted results in today call.

To begin, please turn to slide five. I will now turn the call over to Mike McDonnell.

Michael T. McDonnell - President & Chief Executive Officer

Thanks, Len. Good morning, everyone, and thank you for joining us today.

During the fourth quarter we made some very good progress on executing a number of key initiatives, and today we'd like to provide you with an update on that progress. Brian and I will take you through the fourth quarter results in a few minutes, but first let me say a few words about our strategic roadmap where I'm very pleased to report that we have moved from the planning analysis stage to beginning execution.

As you will recall on our last call, we identified certain key areas of focus. Leveraging our scale and leadership positions, our focus will be on the markets where we have leading positions and strong businesses in utility, communications, and industrial markets. Second, optimizing our cost structure. Third, aligning our organizational structure and enhancing certain capabilities. And fourth, creating a spirited culture that enhances the performance of our talented and dedicated workforce.

Our goals are to achieve long-term sustainable growth, clear competitive advantage, a leading competitive cost position, and operating margin improvement. Our strategic roadmap anticipates industry-leading EBIT margins of 7% in the markets we serve. To achieve this, we have identified and developed detailed execution plans for multiple major initiatives across a number of categories.

We plan to have an Investor Day in March to talk through this plan, targets, timelines, and metrics in detail, but I'd like to give you some color now on the progress we've made during the fourth quarter on two components of that roadmap: simplifying and optimizing the portfolio, and developing a leading cost and efficiency position.

As I've said before, we believe wire and cable is fundamentally a good industry. Most end markets have solid and attractive long-term fundamentals. Growth drivers, including increased power demand, grid reliability, renewable energy sources, efficiency and replacement of aging infrastructure, industrial production, and nonresidential construction. And in communications, the increased demand for bandwidth and connectivity.

There is also substantial opportunity for innovation in this manufacturing industry. Product innovation can leverage advances in surface and material sciences, including polymer science and metallurgy, particularly from other industries as we've already done in certain cases. Service innovation can be developed through our partner relationships with our customers. And operational innovation capitalizes on improvements in machine productivity, material flows, and supply chain efficiency opportunities. There is much potential in all of these areas in this industry.

Now, we've been in a process of carefully evaluating all of our businesses against a set of strategic and financial criteria, including market position, scale and cost position, alignment with attractive market drivers, opportunities for innovation and value creation, and ability to meet certain metrics including growth, sustainable margins, and return on invested capital. We've now substantially completed our analysis across the entire portfolio and have started to execute against that strategic plan in the fourth quarter. We've also finalized the financial framework to allocate resources to drive the targeted results.

So, let me be clear. General Cable has very many strengths. We have leading positions in utility, communications, and industrial markets. We serve these markets with a broad product portfolio with strong innovation potential. And importantly, we have a large number of very talented, dedicated, and hardworking people. We're going to focus on these businesses to develop their growth potential, scale, and efficiency. However, there's clearly room for continued improvement in the overall business and product portfolio. As the company grew over the past, some of our businesses were sub-scale, and introduced substantial complexity into the company. We've already identified and taken action in Asia-Pacific and Africa regions, where it doesn't make sense for us to continue to operate.

At this time, we've also identified businesses currently representing about 20% of our portfolio that may not be able to achieve our criteria. We're now looking at plans to either sell these businesses or to determine if they can be improved in the near-term with the addition of modest resources. We've also completed an analysis of product profitability, and identified opportunities for further complexity reduction by rationalizing low volume and low margin products.

Now, I'll turn to driving a leading cost position. Our goal is to achieve a leading service, cost, and efficiency position, and that is critical to the success of General Cable going forward. We'll do this by restructuring and optimizing our manufacturing footprint and our supply chain to drive cost savings, improve scale and efficiency, and become a more nimble, streamlined company. We've identified a number of areas where our current manufacturing footprint lacks proper scale to be competitive long-term.

Additionally, we're initiating a multifaceted supply chain optimization project to reduce our costs of raw materials and logistics. Now, in the fourth quarter, we already took several actions in regards to our footprint and cost structure. In North America, we announced the closure of the Malvern, Arkansas plant, one of our electric utility facilities, which will be consolidated into existing facilities.

To be clear, Malvern wasn't performing poorly. In fact, the plant has performed well and we have good people there. However, this difficult decision moves us in the direction of a more competitive scale and cost position. We are very committed to the North American utility market and we have leading market position. We'll continue to produce our utility products at our other plants, but we'll be doing it more efficiently in the future.

We also took incremental actions to enhance scale and drive further efficiencies of our Lawrenceburg communication facility, which involved relocating assets from Brazil and from Franklin, Massachusetts. In Latin America, we announced further consolidation in Central America with the planned shutdown of operations in Honduras, as the facility lacks the scale necessary to obtain a leading cost position. This action builds on the previously announced consolidation actions in both Brazil and Colombia.

And in Europe, we announced workforce and other cost reductions in Germany and workforce reductions and further rationalization of low-value products in France. Clearly, we'll only comment on actions that have already been communicated within the company. Our end goal is to achieve scale, a leading cost and efficiency position, and a more nimble, streamlined company. These actions are the first steps in the new roadmap. We look forward to discussing these initiatives further at our Investor Day in March.

A few thoughts on our performance culture initiatives. It's very important to increase the motivation, engagement and alignment of our associates and foster a spirited culture performance centered on the highest ethical and compliance standards. At General Cable, our people are the foundation of all that we do. We're focused on cultivating a culture where our people feel a strong sense of purpose, ownership and accountability. We're also working to ensure objectives and incentives are fully aligned and can really make a difference. In the end, in any business it all comes down to people working together to get the right things done. We're going about this in a unique way and we look forward to sharing this with you in March.

At our Investor Day in March we'll provide you with a clear and transparent set of metrics and targets that will help you understand the timing and magnitude of the improvement we are targeting with the roadmap and the progress we're making. We've already talked about our target operating margin goal of 7% and we'll provide additional metrics and targets next month.

As I spend more time here with the company and our people, I get more and more enthusiastic and confident about the opportunity we have. We've experienced a very difficult set of challenges over the past few years. We're battle-hardened. We're getting things done, cleaning up past issues, and now starting to execute on a plan that will transform the company and its performance level. I appreciate the commitment and hard work of the people here at General Cable and I am making it a priority to earn their trust and loyalty.

Turning to a brief summary of Q4. You know we've been putting a lot of energy into completing our strategic roadmap and accelerating these early actions from that roadmap. We're also very focused on the quarter and on executing properly in what has continued to be a very challenging environment.

As you can see from today's results, our results are once again in line with our guidance. We delivered $10 million of restructuring savings in the quarter, which offset the majority of widespread volume weakness experienced in the quarter versus prior year. And we also experienced an unfavorable $8 million impact from the decline of metal prices during the quarter as well. Recall that metals, by the way, are typically a pass-through cost but we're affected in approximately half our business by changes in metal price between the time we buy the metal and the time we sell the cable made with the metal, which can typically average around three months. Certainly, we're not satisfied with our performance in the quarter, but given the challenging macroeconomic environment in which we operate, and continued weakness in demand in our end markets, we believe that the strategy we have in place is the right one and we're executing against it well.

With respect to the first quarter, we expect sequentially stable to improved volumes and further benefits from restructuring and business improvement initiatives, partially offset by unfavorable metal price impact and significantly easing performance now of our submarine turnkey business. Visibility is low, but we're encouraged by the resilience in our utility, nonresidential construction, and communications end markets, even while industrial and oil and gas end markets may soften a bit further.

It's a challenging environment, but I'm excited that we now have a strategic roadmap for our path forward and we're relentlessly focused on execution. Overall, we believe we're heading in the right direction, and clearly there's a lot more to be done. However, I'm confident we can do it and in doing so, deliver value to our shareholders.

I'll now turn the call over to Brian to review our fourth quarter results in more detail. Brian?

Brian J. Robinson - Chief Financial Officer & Executive Vice President

Thank you, Mike. On slide eight, unit volume was down 21% year-over-year, which is principally due to lower end market demand across the North American portfolio including industrial and specialty cables, continued pressure on end market demand throughout Latin America, and the exit from certain low value-add markets in Europe. Sequentially, unit volume was down 8% as seasonal demand and weak industrial, specialty, and electric utility cable shipments were partially offset by stability in Europe and Latin America, which benefited from stronger aerial transmission product shipments in Brazil.

Adjusted operating income of $28 million reflects restructuring savings of $10 million, unfavorable metal costs impact of approximately $8 million, the impact of lower unit volume in North America, and lower project activity in the subsea power business in Europe, as the company has substantially completed its multi-year Baltic 2 project.

On slide nine, in North America, adjusted operating income for the fourth quarter of $22 million declined 33% sequentially and 31% year-over-year, principally due to the impact of selling higher average cost inventory into a lower metal cost environment and the impact of lower demand for industrial and specialty cables particularly for products tied to oil and gas applications and electric utility cables. Despite the sluggish finish to the year, our communication and electric utility businesses, which benefit from stronger demand throughout the first nine months of the year delivered year-over-year adjusted operating income improvement for 2015 of 38% and 34% respectively.

Overall demand for 2015 was down 2% versus 2014, primarily due to demand for industrial and specialty cables particularly those tied to oil and gas applications. Demand for communications and electric utility cables was stable year-over-year. Our communications businesses continue to drive sales for higher value-add products included Cat 6 and Cat 6A, as well as specialty and premise fiber. In our electric utility business, our ability to capture transmission and distribution projects for grid expansion and reinforcement through the first nine months of the year offset the sluggish finish to the year as utility order rates declined. We are monitoring order patterns very closely and we are encouraged with the solid pace of shipments and bookings through the first month of the year.

On slide 10 in Europe, adjusted operating income for the fourth quarter of $6 million decreased $10 million sequentially and was flat year-over-year, which principally reflects lower activity in the company's subsea power cable business as the Baltic 2 project winds down. For 2015, we generated $48 million of adjusted operating income in Europe, which is four times the adjusted operating income generated in 2014. This improvement reflects the strong production, contract service, and installation activity in the submarine turnkey project business as well as the benefit of restructuring actions.

Our project backlog including both subsea and land was $190 million U.S. dollars at the end of the fourth quarter. End market demand in Western Europe for electric utility cables including land and subsea projects was stable during the fourth quarter, which helped to offset lower demand for industrial and construction related products. Reported revenue for 2015 includes the impact of $219 million of unfavorable foreign currency movements due to the stronger U.S. dollar.

On slide 11, despite the challenging macro environment in Latin America marked by volatile currencies and low commodity prices, weak construction spending and slowing growth rates, we're continuing to implement our restructuring actions to drive savings and improve our operational execution. Our team in Brazil continues to capture meaningful aerial transmission projects, driving unit volume growth in the transmission business up 9% year-over-year. In Colombia, we have generated a notable improvement year-over-year due to our restructuring initiatives, which have been focused on the factory floor.

As we have summarized in slide 13, we remain focused on executing our plan to simplify our portfolio, reduce operational complexity, and deliver improved returns in North America, Latin American, and Europe. We are pleased with the execution and the continued positive momentum we've achieved since announcing the divestiture program. In total, we have generated $176 million of cash proceeds and continue to target cash proceeds in the range of $250 million to $300 million.

We're pleased with the continued momentum as we've just signed a definitive purchase agreement to sell our interest in our operations in Zambia, which is expected to close later this year. We are managing an active process and pressing forward with the divestitures of our remaining operations in Africa, including Algeria, Egypt, and Angola, and Asia-Pacific, including China, New Zealand, Australia, and India.

Next, on our Restructuring program, we are substantially complete with our July 2014 program. In the fourth quarter, we generated $10 million of savings, and achieved our 2015 target, generating $36 million of savings for the full year of 2015. We continue to target $80 million to $100 million of annual savings, and are on track to realize the needed $40 million to $50 million of incremental savings in 2016 to achieve our target.

As Mike discussed earlier, we are executing and accelerating our actions, moving forward under the company's new strategic road map. As a result, we've announced additional restructuring actions in the fourth quarter, and incurred approximately $9 million of related costs in the quarter. These announced actions are focused on cost reduction and efficiency within our core end markets in North America, Europe, and Latin America. Together, these actions, are expected to generate annual savings of $10 million to $15 million, at a total cost of approximately $30 million.

We have provided some detail in our presentation on these actions, but I wanted to briefly comment on the initiatives in North America. This is an important step in our strategic plans. We focus on driving improvement in two of our largest businesses in North America, where we have scale and important market positions. We announced the consolidation of another one of our electric utility plants, and enhancement of our capabilities at one of our flagship facilities in our communications business. These actions in North America are expected to deliver about half the target savings for these incremental initiatives under our new strategic road map.

On slide 15, we provide a summary of our debt maturity profile position as of the fourth quarter. Net debt of $999 million was down $220 million from the end of 2014 and $15 million from the third quarter due to the continued tight management of working capital and cash proceeds generated from divestures. We currently have $347 million of availability under our North American and European-based credit facility. In addition, we have approximately $88 million of availability on working capital lines and cash in our Latin American businesses. We are well positioned to fund the business including working capital requirements, restructuring activities and quarterly dividends.

Finally, I'm pleased to report that we have now substantially completed our internal investigations related to our previously disclosed FCPA matters. Based on the findings of our internal review, we've increased our existing accrual of $24 million by an incremental $4 million. This accrual represents our estimate of the profit derived from certain transactions identified during our investigation that we believe is probable to be disgorged in connection with any future resolution with the government.

In the course of our investigation, we also identified certain other transactions that may raise concerns under the FCPA, for which it is at least reasonably possible we may be required to disgorge certain profits. The range of additional possible profit disgorgement is from zero to $33 million. These amounts do not include any possible fines, civil or criminal penalties.

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

Your first question comes from the line of Gausia Chowdhury. Go ahead. Your line is open.

Gausia Chowdhury - Longbow Research LLC

Hi, good morning. This is Gausia calling on behalf of Shawn Harrison. I was just wondering if you can give some color on volume expectations per region for the quarter and potentially for the year as well? Specifically, the utility business was pretty good for 2015. You saw some weakness in North America on the fourth quarter. So given some comments about utility spending for 2016, is the strength tied to certain region as well? If you could provide some color, that'd be helpful.

Michael T. McDonnell - President & Chief Executive Officer

Yeah, let me just run through the regions very briefly beginning with North America, maybe start there and then the utility business. We had a relatively strong 2015, for the first nine months. The last three months we saw some pullback related, I think to end-of-year. I think a lot of fourth quarter was related to end-of-year tightening of the supply chain, reduction of inventories, and so forth but we're pretty encouraged by what we're seeing right now in utility sort of bouncing back a bit and getting back into line with where it had been in the last year maybe even a bit more in North America. I think we're also encouraged by the Communication business in North America and the continued growth there. So I think those two are very solid. I think also with respect to the businesses that are tied to non-residential construction, I think those are solid and we have a lot of optimism about that.

On the other side of course, industrial has slowed in the second half of last year and particularly in the fourth quarter and that may soften a bit further, particularly in the projects side of industrial. And of course oil, gas and mining have been declining throughout 2015. We think that they're probably near the bottom there but there might be a little bit of softness there.

So overall in North America a mixed bag but we're pretty encouraged with what we're seeing right now. We think that the fourth quarter a lot of that softness was created by people being concerned, a lack of visibility. But I think first quarter is – we're encouraged by what we're seeing and we think the first quarter will be in line with our guidance. And beyond that, it's really hard to tell so I don't think anybody can, but that at least give you a sense that I'm a lot happier right now than I was in the fourth quarter.

Moving over to Europe briefly. There we're also seeing some sequential improvement from the fourth quarter in Europe. Europe has been steady for the last few quarters. And if I just break into two particular countries, in Spain, Iberia, we're seeing probably some 2% to 3% growth coming into the first quarter. We think that's likely to continue through the rest of the year. And France is a bit sideways, but we have some things in France that were connected to high voltage and also the fiber business there that we think will give us a little bit of lift there in Europe as well. So Europe's stable and net-net, increasing a bit as we move forward.

Latin America, actually improved a little bit in the fourth quarter sequentially and we think that there's a lot of uncertainty around where that's going to go. It might be a little bit stronger, it might be a little bit softer. But we've done a lot of work in our Latin American businesses over the last year and we're poised – I would say, my hope is that we can beat the market by a little bit in terms of volume growth in Latin America as we move in through Q1 and then the rest of the year. So that gives you a bit of a summary of how we're seeing things at this point in time.

Gausia Chowdhury - Longbow Research LLC

Perfect. Very helpful. Thank you. And then with regards to the restructuring, can you clarify that $10 million to $15 million, that's incremental or in addition to the $80 million to $100 million, right? So just, if you can give us the total new estimate versus the old estimate, just so we're clear on that?

Brian J. Robinson - Chief Financial Officer & Executive Vice President

Yes, that's right. So, the original, let's call it the original program, the July 2014 program, has a range of $80 million to $100 million range. And that's right, this $10 million to $15 million is incremental to that $80 million to $100 million program. That's exactly right. And we haven't, and as we said in the comments, that's as much as we're prepared to say about the actions we're taking now, and in the Investor Day next month, our intention is to provide a much broader perspective around our future actions.

Gausia Chowdhury - Longbow Research LLC

Okay, great. I'll hop back into queue. Thank you.

Michael T. McDonnell - President & Chief Executive Officer

You're welcome.

Brian J. Robinson - Chief Financial Officer & Executive Vice President

You're welcome.

Operator

Your next question comes from the line of Noelle Dilts from Stifel. Go ahead. Your line is open.

Noelle Dilts - Stifel, Nicolaus & Co., Inc.

Thanks. Good morning.

Michael T. McDonnell - President & Chief Executive Officer

Good morning, Noelle.

Noelle Dilts - Stifel, Nicolaus & Co., Inc.

First, just wanted to get a sense of, in your first quarter guidance, how are you thinking about the potential headwind from metals as we move into the quarter?

Michael T. McDonnell - President & Chief Executive Officer

So, we actually put a number out there of $8 million unfavorable in the first quarter.

Noelle Dilts - Stifel, Nicolaus & Co., Inc.

Okay. Okay. Perfect. Sorry. Thanks. I'm on the road.

Michael T. McDonnell - President & Chief Executive Officer

And one of the things we're trying to do is, in these calls, is become even more transparent around how metals are affecting our business, and how the underlying business is actually performing...

Noelle Dilts - Stifel, Nicolaus & Co., Inc.

Great.

Michael T. McDonnell - President & Chief Executive Officer

...besides he metals impact. Just to give you a little bit more insight into what's happening here at General Cable.

Noelle Dilts - Stifel, Nicolaus & Co., Inc.

Perfect. Secondly, could you talk – just circling back around North American Utility – can you just talk about a little bit what you're expecting in terms of lower voltage distribution versus the timing of some of that transmission work this year?

Michael T. McDonnell - President & Chief Executive Officer

I think our – well, I think from a market standpoint, we're looking at transmission as solid this year and steady. Distribution, we have more optimism on, in terms of some low-single to mid-single digit growth there. But the timing of these things is always hard to predict. So I'm giving you, sort of, a view as we move into the New Year but it's really hard to parse that out.

I think overall, it's a solid business for us, and I think, flat to up low-single digits is how we're looking at it this year. And a big part of that for us, not a big part, but an important part, is the renewable side. Wind is strong, solar is solid. So that's all part of that, too. And with the renewals now on the tax credits and so forth, I think we're going to have a solid year here.

Noelle Dilts - Stifel, Nicolaus & Co., Inc.

Okay, perfect. And then, lastly, could you give us some thoughts, just at this point on the dividend? It's obviously, a pretty high percentage of, at least, what folks are forecasting for the year in terms of your earnings. So can you just talk a little bit about how you're thinking about that?

Brian J. Robinson - Chief Financial Officer & Executive Vice President

Yeah. Hi, Noelle. It's Brian. Yeah, I mean, the dividend is something we always consider relative to other capital allocations. And we think about how we want to grow, certain important strategic elements of our business. So, at this point we're supporting the dividend and as we've been saying at the Investor Conference next week we'll have a capital allocation strategy that will line up with our overall strategy.

Noelle Dilts - Stifel, Nicolaus & Co., Inc.

Okay, perfect. Thank you. Appreciate it.

Brian J. Robinson - Chief Financial Officer & Executive Vice President

You're welcome.

Michael T. McDonnell - President & Chief Executive Officer

You're welcome.

Operator

Your next question comes from the line of Brent Thielman from D.A. Davidson. Go ahead. Your line is open.

Brent Edward Thielman - D. A. Davidson & Co.

Hi, good morning.

Michael T. McDonnell - President & Chief Executive Officer

Hi, Brent.

Brian J. Robinson - Chief Financial Officer & Executive Vice President

Hi, Brent.

Brent Edward Thielman - D. A. Davidson & Co.

Mike or Brian, with the additional accruals for the investigations, are your internal investigations still ongoing or does this substantially wrap up your end of things and now it's kind of up to the DOJ to complete theirs? I know you can't comment on timing but just try and understand kind of what's next here.

Brian J. Robinson - Chief Financial Officer & Executive Vice President

Yeah, it's more of the latter, Brent. We're pleased to be able to report that consistent with what we've been saying, we've completed, substantially completed our work and as we've also been saying that we're cooperating very closely with the government, so now we're into that phase.

Brent Edward Thielman - D. A. Davidson & Co.

Okay, great. And Mike, now that you've been here a little while, I guess I'm curious kind of what you see now within the company that you feel like the company hasn't been fully leveraging whether that's particular product lines or business units or kind of go-to-market strategies. Any thoughts there?

Michael T. McDonnell - President & Chief Executive Officer

Yeah, well, as we've been talking about on our travels to see our investors and on these calls and so forth, we've taken a significant strategy shift in the company and with that, opens always new opportunities, and our shift has been as you've seen toward focusing on where we're strong now. And the core businesses, the core markets and so forth, and I mentioned communications, industrial, utility, and whenever you do that you see new opportunities that maybe weren't visible before because you were focused on other things, geographic expansion for example.

And so every time you look at something differently, and with my fresh eyes that's helped a bit but the team was already on a lot of this stuff and way ahead of anyone else in terms of seeing these opportunities. So I think that if you look at how we're focusing on our strengths now, how we're getting very, very clear about operational excellence and taking the next steps in that, developing our culture, really inspiring our people, et cetera, towards a new strategy, I think you'll see good things from that.

And in particular I'm most excited about this strategic roadmap. Six months ago coming in, we started working on this but it was still a bit aspirational. Our 7% target was aspirational, I mean we felt in our gut we could do it, now we have a plan that shows we can do it and that plan that we're excited to lay out in March when you come and hear us and interact with us in March, you'll get a much better sense about where we see opportunity now, and what we're driving hard for. But there's a lot of opportunity here. I think you've heard me say that consistently, a lot of opportunity.

Brent Edward Thielman - D. A. Davidson & Co.

Okay. Thank you.

Michael T. McDonnell - President & Chief Executive Officer

Welcome.

Operator

Your next question comes from the line of Gausia Chowdhury. Go ahead. From Longbow Research. Go ahead. Your line is open.

Gausia Chowdhury - Longbow Research LLC

Thank you. Can you give us what the operating cash flow and CapEx was for the fourth quarter? And then, just how we should think about CapEx for 2016, please?

Michael T. McDonnell - President & Chief Executive Officer

The operating cash flow, we had disclosed at around $96 million from our core operations, and then the CapEx for the quarter was right around $13 million for Q4.

Brian J. Robinson - Chief Financial Officer & Executive Vice President

As we look forward to 2016, we estimate the CapEx in the range of $75 million, which includes, obviously, meaningful element of maintenance, but also some selected investments around some of our, as we said, strategically important future initiatives.

Gausia Chowdhury - Longbow Research LLC

Perfect. And the last one for me is, just how should we think about tax for the year, as well? I think 40% is what we had before.

Brian J. Robinson - Chief Financial Officer & Executive Vice President

Yeah. It's 40% for 2015. For 2016, on an ETR basis, we're using 50%, which is higher than we had anticipated, for a number of reasons, but one of the bigger reasons is we anticipated, I'd say, a broader diversity of earnings as we move forward, which would have allowed us to use some loss carry-forwards. But the short answer is 50%, and on a cash basis, we're closer to about 20%. So a meaningful difference there between the ETR and the cash rate.

Gausia Chowdhury - Longbow Research LLC

Okay. And would you be able to disclose that Zambia asset in terms of how big it was in terms of sales? Do you have that?

Brian J. Robinson - Chief Financial Officer & Executive Vice President

Yeah. What I would tell you is that the proceeds are – we expect the proceeds to be approximately $20 million.

Gausia Chowdhury - Longbow Research LLC

Okay. That's helpful. Thank you very much. I appreciate it.

Brian J. Robinson - Chief Financial Officer & Executive Vice President

You're welcome.

Operator

There are no further questions at this time. I turn the call back over to the presenters.

Leonard R. Texter - Vice President, Finance, Investor Relations

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

Operator

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

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