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Houston Wire & Cable Company Reports Results for the Quarter Ended December 31, 2016
Selected quarterly results were:
- Sales of
$69.3 million down 1.5% but up 1% metals adjusted, from Q4 2015 - Net loss of
$(1.8) million - Adjusted net loss (non-GAAP) of
$(1.2) million , excluding Vertex acquisition expenses - Diluted EPS of
$(0.11) - Adjusted diluted EPS (non-GAAP) of
$(0.08) , excluding acquisition expenses - Cash flow of
$1.3 million
Selected annual results were:
- Sales of
$261.6 million down 15.1% or down 8% metals adjusted, from 2015 - Net loss of
$(6.0) million - Adjusted net loss (non-GAAP) of
$(3.3) million , excluding impairment charges and acquisition expenses - Diluted EPS of
$(0.37) -
Adjusted diluted EPS (non-GAAP) of
$(0.21) , excluding impairment charges and acquisition expenses - Cash flow of
$17.2 million - Completed the acquisition of Vertex in
October 2016
Fourth Quarter Summary
Gross margin at 21.8% increased 30 basis points from the fourth quarter of 2015, primarily due to the incrementally higher margins generated by Vertex following the acquisition. Sequentially, excluding Vertex, gross margin increased approximately 150 basis points. We experienced higher freight and shrinkage costs, offset by higher vendor rebates, due to Q4 activity and rising copper prices. Operating expenses at
Interest expense of
The results of operations produced a net loss of
Twelve month summary
Sales for the twelve month period were down 15.1% versus the prior year period and down approximately 8% on a metals adjusted basis. Excluding the
Gross margin at 20.2% was down 120 basis points from the 2015 period. "The higher margins generated by Vertex helped the overall margin, but legacy market conditions remained extremely competitive and pricing and margin pressure continued," said
Operating expenses at
Interest expense of
The full year effective tax rate of 18.8% included the 7.5% effect of the non-deductible portion of the impairment charge and the 9.9% impact of forfeited equity awards.
The results of operations generated a net loss of
Conference Call
The Company will host a conference call to discuss fourth quarter results today,
A live audio web cast of the call will be available on the Investor Relations section of the Company's website www.houwire.com.
Approximately two hours after the completion of the live call, a telephone replay will be available until
Replay, Toll-Free #: 855-859-2056
Replay, Toll #: 404-537-3406
Conference ID # 77191821
About the Company
With over 40 years' experience in the industry,
Standard stock items available for immediate delivery include continuous and interlocked armor cable; instrumentation cable; medium voltage cable; high temperature wire; portable cord; power cable; primary and secondary aluminum distribution cable; private branded products, including LifeGuard™, a low-smoke, zero-halogen cable; mechanical wire and cable and related hardware, including wire rope, lifting products and synthetic rope and slings; corrosion resistant fasteners, hose clamps, and rivets.
Comprehensive value-added services include same-day shipping, knowledgeable sales staff, inventory management programs, just-in-time delivery, logistics support, customized online ordering capabilities and 24/7/365 service.
Forward-Looking Statements
This release contains comments concerning management's view of the Company's future expectations, plans and prospects that constitute forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Investors are cautioned that forward-looking statements are inherently uncertain and projections about future events may, and often do, vary materially from actual results.
Other risk factors that may cause actual results to differ materially from statements made in this press release can be found in the Company's Annual Report on
Form 10-K and other documents filed with the SEC. These documents are available under the Investor Relations section of the Company's website at www.houwire.com.
Any forward-looking statements speak only as of the date of this press release and the Company undertakes no obligation to publicly update such statements.
Non-GAAP Financial Disclosures and Reconciliations
While the Company reports financial results in accordance with
Reconciliation of Non-GAAP Measures (Unaudited) (In thousands, except per share data) | |||||||||
Adjusted net income (loss) and adjusted diluted EPS | Three Months Ended | ||||||||
Net Income (Loss) | Diluted EPS | ||||||||
Net income (loss), as reported under GAAP | $ | (1,826 | ) | $ | (0.11 | ) | |||
Acquisition expenses | 748 | 0.04 | |||||||
Tax effect of acquisition expenses | (106 | ) | (0.01 | ) | |||||
Adjusted net income (loss) | $ | (1,184 | ) | $ | (0.08 | ) | |||
Adjusted net income (loss) and adjusted diluted EPS |
Year Ended | ||||||||
Net Income (Loss) | Diluted EPS | ||||||||
Net income (loss), as reported under GAAP | $ | (6,006 | ) | $ | (0.37 | ) | |||
Acquisition expenses | 861 | 0.05 | |||||||
Impairment charge | 2,384 | 0.15 | |||||||
Tax effect of acquisition expenses and impairment charge | (547 | ) | (0.04 | ) | |||||
Adjusted net income (loss) | $ | (3,346 | ) | $ | (0.21 | ) |
Houston Wire & Consolidated Balance Sheets (In thousands, except share data) | |||||||||
2016 | 2015 | ||||||||
(unaudited) | |||||||||
Assets | |||||||||
Current assets: | |||||||||
Accounts receivable, net | $ | 44,677 | $ | 46,250 | |||||
Inventories, net | 79,783 | 75,777 | |||||||
Income taxes | 1,948 | 932 | |||||||
Prepaids | 456 | 648 | |||||||
Total current assets | 126,864 | 123,607 | |||||||
Property and equipment, net | 11,261 | 10,899 | |||||||
Intangible assets, net | 13,378 | 5,984 | |||||||
22,770 | 14,866 | ||||||||
Deferred income taxes | 892 | 3,338 | |||||||
Other assets | 591 | 419 | |||||||
Total assets | $ | 175,756 | $ | 159,113 | |||||
Liabilities and stockholders' equity | |||||||||
Current liabilities: | |||||||||
Book overdraft | $ | 3,181 | $ | 3,701 | |||||
Trade accounts payable | 8,406 | 6,380 | |||||||
Accrued and other current liabilities | 13,134 | 9,568 | |||||||
Total current liabilities | 24,721 | 19,649 | |||||||
Debt | 60,388 | 39,188 | |||||||
Other long-term obligations | 516 | 275 | |||||||
Total liabilities | 85,739 | 59,112 | |||||||
Stockholders' equity: | |||||||||
Preferred stock, | — | — | |||||||
Common stock, | 21 | 21 | |||||||
Additional paid-in capital | 53,824 | 54,621 | |||||||
Retained earnings | 97,550 | 106,048 | |||||||
(61,264 | ) | (60,689 | ) | ||||||
Total stockholders' equity | 90,131 | 100,001 | |||||||
Total liabilities and stockholders' equity | $ | 175,756 | $ | 159,113 |
Houston Wire & Consolidated Statements of Operations (In thousands except, share and per share data) | ||||||||||||||||||
Three Months Ended | Year Ended | |||||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||
(unaudited) | (unaudited) | |||||||||||||||||
Sales | $ | 69,257 | $ | 70,314 | $ | 261,644 | $ | 308,133 | ||||||||||
Cost of sales | 54,181 | 55,194 | 208,694 | 242,223 | ||||||||||||||
Gross profit | 15,076 | 15,120 | 52,950 | 65,910 | ||||||||||||||
Operating expenses: | ||||||||||||||||||
Salaries and commissions | 8,474 | 6,820 | 29,369 | 28,537 | ||||||||||||||
Other operating expenses | 7,412 | 6,394 | 24,714 | 25,023 | ||||||||||||||
Depreciation and amortization | 820 | 740 | 3,018 | 2,915 | ||||||||||||||
Impairment charge | — | 423 | 2,384 | 3,417 | ||||||||||||||
Total operating expenses | 16,706 | 14,377 | 59,485 | 59,892 | ||||||||||||||
Operating income (loss) | (1,630 | ) | 743 | (6,535 | ) | 6,018 | ||||||||||||
Interest expense | 392 | 182 | 845 | 901 | ||||||||||||||
Income before income taxes (loss) | (2,022 | ) | 561 | (7,380 | ) | 5,117 | ||||||||||||
Income taxes | (196 | ) | 760 | (1,374 | ) | 3,073 | ||||||||||||
Net income (loss) | $ | (1,826 | ) | $ | (199 | ) | $ | (6,006 | ) | $ | 2,044 | |||||||
Earnings per share (loss): | ||||||||||||||||||
Basic | $ | (0.11 | ) | $ | (0.01 | ) | $ | (0.37 | ) | $ | 0.12 | |||||||
Diluted | $ | (0.11 | ) | $ | (0.01 | ) | $ | (0.37 | ) | $ | 0.12 | |||||||
Weighted average common shares outstanding: | ||||||||||||||||||
Basic | 16,216,978 | 16,641,129 | 16,345,679 | 17,012,560 | ||||||||||||||
Diluted | 16,216,978 | 16,641,129 | 16,345,679 | 17,067,593 | ||||||||||||||
Dividend declared per share | $ | — | $ | 0.06 | $ | 0.15 | $ | 0.42 |
Houston Wire & Consolidated Statements of Cash Flows (In thousands) | ||||||||||
Year Ended December 31, | ||||||||||
2016 | 2015 | |||||||||
(unaudited) | ||||||||||
Operating activities | ||||||||||
Net income (loss) | $ | (6,006 | ) | $ | 2,044 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||
Impairment charge | 2,384 | 3,417 | ||||||||
Depreciation and amortization | 3,018 | 2,915 | ||||||||
Amortization of unearned stock compensation | 856 | 886 | ||||||||
Provision for doubtful accounts | 285 | 97 | ||||||||
Provision for inventory obsolescence | 93 | 397 | ||||||||
Deferred income taxes | 6 | (485 | ) | |||||||
Other non-cash items | (116 | ) | (59 | ) | ||||||
Changes in operating assets and liabilities: | ||||||||||
Accounts receivable | 4,019 | 15,352 | ||||||||
Inventories | 10,483 | 12,784 | ||||||||
Book overdraft | (517 | ) | 588 | |||||||
Trade accounts payable | 896 | (1,613 | ) | |||||||
Accrued and other current liabilities | 2,473 | (3,557 | ) | |||||||
Income taxes | (1,016 | ) | (713 | ) | ||||||
Other operating activities | 385 | (224 | ) | |||||||
Net cash provided by operating activities | 17,243 | 31,829 | ||||||||
Investing activities | ||||||||||
Expenditures for property and equipment | (1,319 | ) | (3,123 | ) | ||||||
Proceeds from disposals of property and equipment | 5 | 8 | ||||||||
Cash paid for acquisition | (32,370 | ) | — | |||||||
Net cash used in investing activities | (33,684 | ) | (3,115 | ) | ||||||
Financing activities | ||||||||||
Borrowings on revolver | 302,898 | 310,366 | ||||||||
Payments on revolver | (281,698 | ) | (325,025 | ) | ||||||
Proceeds from exercise of stock options | — | 11 | ||||||||
Payment of dividends | (2,495 | ) | (7,172 | ) | ||||||
Excess tax benefit for options | — | — | ||||||||
Purchase of treasury stock | (2,264 | ) | (6,894 | ) | ||||||
Net cash used in financing activities | 16,441 | (28,714 | ) | |||||||
Net change in cash | — | — | ||||||||
Cash at beginning of year | — | — | ||||||||
Cash at end of year | $ | — | $ | — | ||||||
Supplemental disclosures | ||||||||||
Cash paid during the year for interest | $ | 728 | $ | 900 | ||||||
Cash paid during the year for income taxes | $ | 233 | $ | 4,278 |
CONTACT:Source:Nicol G. Graham Chief Financial Officer Direct: 713.609.2125 Fax: 713.609.2168 ngraham@houwire.com
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