Houston Wire & Cable Company
Nov 6, 2014

Houston Wire & Cable Company Reports Results for the Third Quarter of 2014

Houston Wire & Cable Company Reports Results for the Third Quarter of 2014

Solid Third Quarter; Inconsistent Market Demand

HOUSTON, TX -- Nov 6, 2014 -- Houston Wire & Cable Company (NASDAQ: HWCC) (the "Company") announced operating results for the third quarter ended September 30, 2014.

Selected highlights were:

Third Quarter Summary

Jim Pokluda, President and Chief Executive Officer, commented, "We were pleased to post our third consecutive quarter of year-over-year revenue growth despite uneven product demand in our Maintenance, Repair and Operations (MRO) business. Total revenue increased 1.6% over the comparable period and 3% when adjusted for fluctuations in the price of metals. Market conditions remain very competitive and day to day activity is unpredictable and continues to vary by region. While the project pipeline still indicates heavy future investment in a variety of capital projects, commencement dates on a high percentage of the work are being pushed back into 2015 and later years."

"We estimate MRO sales decreased 4%, or approximately 3% on a metals adjusted basis, while project business increased 12%, or approximately 14% on a metals adjusted basis over the prior year quarter. Ongoing activity in upstream oil and gas and general manufacturing markets were the primary drivers of our project growth. We also remain pleased that sales of our new product initiatives, including specialty oil and gas cables and aluminum cables, continued to increase."

Gross margin at 21.8% decreased 20 basis points from the third quarter of 2013 primarily due to higher freight costs and customer incentives. Excluding the $7.6 million goodwill impairment charge from the 2013 amount, operating expenses were up $0.2 million or 1.2% from the prior year period, principally due to higher property taxes and costs incurred at the new distribution locations, but down 10 basis points as a percentage of sales to 15.6%. Pokluda commented, "Disciplined expense management remains a top priority at the Company and on a sequential basis expenses fell by $0.5 million or 2.9%."

Interest expense of $0.3 million was slightly higher than the prior year period, as average debt at $52.1 million increased from $45.6 million at September 30, 2013. The average effective interest rate remained flat at 2.1%. The effective tax rate for the period of 38.4% was lower than the 38.9% rate in the prior year period, due to slightly lower state tax rates in 2014.

Again excluding the impairment charge from 2013 results, net income of $3.5 million was flat with the third quarter of 2013. Diluted earnings per share of $0.20 were consistent with the prior year period. Pokluda further commented, "As previously announced, I am pleased that our financial performance and healthy operating cash flow and balance sheet again allowed us to return funds to our shareholders through the $0.12 per share dividend and the repurchase of approximately 118,000 shares of stock."

Nine month summary

Sales for the nine month period were up 4% versus the prior year period and increased approximately 5% on a metals adjusted basis. We estimate that MRO sales increased 1%, while project sales increased 13%, on a metals adjusted basis.

Gross margin at 21.7% was down 50 basis points from the 2013 period. "Market competitiveness continues to pressure product pricing, however we have been successful in maintaining margins at consistent levels over the first nine months of the year," said Mr. Pokluda. Gross profit dollars increased $1.2 million or 1.9%, primarily due to the increase in sales.

Excluding the $7.6 million impairment from the 2013 amounts, operating expenses increased by 2.8% or $1.2 million in the current year period principally due to the investment in new distribution facilities, partially offset by expense reductions executed earlier in the year.

Interest expense of $0.9 million was higher than the prior year's $0.8 million as average debt levels increased from $48.3 million in 2013 to $56.1 million in 2014, while interest rates increased 10 basis points to 2%. The effective tax rate for the period of 38.4% was higher than the 38.2% rate in the prior year period, as the prior year included a state tax credit.

Excluding the impairment from 2013 results, net income for the period of $11.3 million fell 1.2% from the $11.4 million level in the prior year period. However, diluted earnings per share of $0.64 were consistent with the prior year period.

Conference Call

The Company will host a conference call to discuss second quarter results today, Thursday, November 6, 2014, at 10:00 a.m. C.S.T. Hosting the call will be James Pokluda, President and Chief Executive Officer and Nicol Graham, Vice President and Chief Financial Officer.

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 November 13, 2014.

Replay, Toll-Free #: 855-859-2056
Replay, Toll #: 404-537-3406
Conference ID # 24177300

About the Company

With over 39 years experience in the industry, Houston Wire & Cable Company is one of the largest providers of wire and cable in the U.S. market. Headquartered in Houston, Texas, the Company has sales and distribution facilities strategically located throughout the nation.

Standard stock items available for immediate delivery include continuous and interlocked armor, instrumentation, medium voltage, high temperature, portable cord, power cables, primary and secondary aluminum distribution cables, 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.

Comprehensive value-added services include same-day shipping, knowledgeable sales staff, inventory management programs, just-in-time delivery, logistics support, customized internet-based 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.

 
 
HOUSTON WIRE & CABLE COMPANY
Consolidated Balance Sheets
(In thousands, except share data)
             
    September 30,     December 31,  
    2014     2013  
    (unaudited)        
Assets                
Current assets:                
  Accounts receivable, net   $ 65,488     $ 60,408  
  Inventories, net     86,097       96,107  
  Deferred income taxes     3,258       2,591  
  Income taxes     299       420  
  Prepaids     1,102       762  
Total current assets     156,244       160,288  
                 
Property and equipment, net     8,842       7,974  
Intangible assets, net     8,934       10,234  
Goodwill     17,520       17,520  
Other assets     133       159  
Total assets   $ 191,673     $ 196,175  
                 
Liabilities and stockholders' equity                
Current liabilities:                
  Book overdraft   $ 3,728     $ 4,594  
  Trade accounts payable     13,462       13,637  
  Accrued and other current liabilities     12,536       18,772  
Total current liabilities     29,726       37,003  
                 
Debt     50,508       47,952  
Other long term obligations     96       97  
Deferred income taxes     227       429  
Total liabilities     80,557       85,481  
                 
Stockholders' equity:                
  Preferred stock, $0.001 par value; 5,000,000 shares authorized, none issued and outstanding     --       --  
  Common stock, $0.001 par value; 100,000,000 shares authorized: 20,988,952 shares issued: 17,568,540 and 17,954,032 outstanding at September 30, 2014, and December 31, 2013, respectively     21       21  
  Additional paid-in-capital     55,689       55,642  
  Retained earnings     109,674       104,607  
  Treasury stock     (54,268 )     (49,576 )
Total stockholders' equity     111,116       110,694  
                 
Total liabilities and stockholders' equity   $ 191,673     $ 196,175  
                 
 
 
HOUSTON WIRE & CABLE COMPANY
Consolidated Statements of Income
(Unaudited)
(In thousands, except share and per share data)
           
    Three Months Ended     Nine Months Ended
    September 30,     September 30,
    2014   2013     2014   2013
                   
Sales   $ 96,721   $ 95,214     $ 300,481   $ 288,850
Cost of sales     75,644     74,292       235,261     224,824
Gross profit     21,077     20,922       65,220     64,026
                           
Operating expenses:                          
  Salaries and commissions     7,656     7,636       23,840     23,388
  Other operating expenses     6,702     6,539       19,922     19,135
  Depreciation and amortization     739     741       2,242     2,244
  Impairment of goodwill     --     7,562       --     7,562
Total operating expenses     15,097     22,478       46,004     52,329
                           
Operating income (loss)     5,980     (1,556 )     19,216     11,697
Interest expense     253     228       866     753
Income (loss) before income taxes     5,727     (1,784 )     18,350     10,944
Income taxes     2,199     1,378       7,046     6,191
Net income (loss)   $ 3,528   $ (3,162 )   $ 11,304   $ 4,753
                           
Earnings (loss) per share:                          
  Basic   $ 0.20   $ (0.18 )   $ 0.64   $ 0.27
  Diluted   $ 0.20   $ (0.18 )   $ 0.64   $ 0.27
Weighted average common shares outstanding:                          
  Basic     17,520,810     17,830,813       17,672,010     17,794,803
  Diluted     17,608,402     17,830,813       17,749,708     17,891,942
                           
Dividend declared per share   $ 0.12   $ 0.11     $ 0.35   $ 0.31
                           
 
 
HOUSTON WIRE & CABLE COMPANY
Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
 
    Nine Months
Ended September 30,
 
    2014     2013  
                 
Operating activities                
Net income   $ 11,304     $ 4,753  
Adjustments to reconcile net income to net cash provided by operating activities:                
  Impairment of goodwill     --       7,562  
  Depreciation and amortization     2,242       2,244  
  Amortization of unearned stock compensation     633       669  
  Provision for inventory obsolescence     905       397  
  Deferred income taxes     (906 )     (1,416 )
  Other non-cash items     (28 )     (15 )
  Changes in operating assets and liabilities:                
    Accounts receivable     (5,038 )     (1,059 )
    Inventories     9,105       4,029  
    Book overdraft     (866 )     4,039  
    Trade accounts payable     (175 )     1,669  
    Accrued and other current liabilities     (6,371 )     (2,615 )
    Income taxes     105       (557 )
    Other operating activities     (329 )     (129 )
Net cash provided by operating activities     10,581       19,571  
                 
Investing activities                
  Expenditures for property and equipment     (1,810 )     (782 )
Net cash used in investing activities     (1,810 )     (782 )
                 
Financing activities                
  Borrowings on revolver     303,870       287,223  
  Payments on revolver     (301,314 )     (301,286 )
  Payment of dividends     (6,173 )     (5,509 )
  Purchase of treasury stock     (5,333 )     (6 )
  Other financing activities     179       515  
Net cash used in financing activities     (8,771 )     (19,063 )
                 
Net change in cash     --       (274 )
Cash at beginning of period     --       274  
                 
Cash at end of period   $ --     $ --  
                 

CONTACT:
Nicol G. Graham
Chief Financial Officer
Direct: 713.609.2125
Fax: 713.609.2168
ngraham@houwire.com

Source: Houston Wire & Cable Company

 

 

News Provided by Acquire Media