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By: Kirby Lee Davis The Journal Record March 1, 2010 0
Dana Weber, president of Webco Industries in Sand Springs, pauses for a photo at her desk. (Rip Stell)
But with signs of improvement in its client base, the Sand Springs manufacturer anticipates strong single-digit revenue and work force growth this year.
“We saw May 2009 as the nadir, the worst month,” said President Dana Weber, who oversees daily operations for the 800-employee company. “That was the month that seemed like everything was in the valley all at one time.”
As customers replenish their inventories, Weber anticipates gradually improving business conditions through 2010.
“It’s not going to be 2007 or even 2008,” she cautioned. “It’s going to be gradually improving but a bumpy ride. But we anticipate a decent year for us.”
Tulsa securities analyst M. “Jake” Dollarhide drew more surprise from the expected jobs than the financial turnaround.
“They haven’t had any good news come out of Webco for a while,” said Dollarhide, the chief executive of Tulsa’s Longbow Asset Management, marveling at the news. “If a company did not truly believe that recovery was right around the corner, the company would be more willing to make shortcuts, window-dressing. That seems like a very positive sign on what has been a horrible 18 to 24 months in their industry and areas in which their customers are represented.”
Weber pointed to the recovering automotive sector as one Webco support leg. With its rebound from 2009 lows, Webco should find growing demand for products used in drive trains of several vehicle types.
High-efficiency home heating appliances promise 2010 strength, said Weber. She attributed that to tax credit programs and other incentives.
With commodity prices shoring up, certain energy industry areas promise improved Webco sales, from small “oil country” niches to the offshore exploration segment and other specialized drilling areas.
But the heat exchanger sector remains weak, she said, as do other areas linked to the refining and petrochemical industries.
Weber attributed the company gains not only to settling economics, but good customer service and sales successes by her staff.
Webco also has worked through many of its high-inventory costs from steel reserves purchased before the 2008 price plunge.
“It will probably be a small drag over time,” said Weber, who has worked for the company since 1977. Her father, Chairman and Chief Executive F. William Weber, founded Webco in 1969.
The company will release its fiscal second-quarter earnings this month.
After reporting a $2.9 million loss for fiscal 2009 ended July 31, Webco recorded earnings of $502,000, or 66 cents per diluted share, for fiscal 2010’s first quarter ended Oct. 31. Sales fell 38.5 percent to $68 million.
Although a major expansion hinted at in 2008 remains on hold, Weber expects employment to rise 5 to 10 percent this year. Weber said “a good portion” of that will fall at the Kellyville facility, a 45-employee stainless steel tube plant opened last year.
Webco also anticipates $6 million to $8 million in equipment acquisitions this year, following normal reinvestment plans.
The company operates at about 80-percent-plus capacity across its five production facilities in Oklahoma and Pennsylvania, serving more than 1,000 customers throughout North America.
Although 85 percent represents maximum capacity for the carbon and stainless steel tube producer, Weber said this narrow range represents an opportunity to select customers able to pay higher prices, improving Webco’s margins. The company also has different options for expanding capacity.
“Some of those we’re anticipating now,” she said.
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