Houston Wire & Cable Company
May 5, 2016

Houston Wire & Cable Company Reports Results for the Quarter Ended March 31, 2016

HOUSTON, TX -- (Marketwired) -- 05/05/16 -- Houston Wire & Cable Company (NASDAQ: HWCC) (the "Company") announced operating results for the first quarter ended March 31, 2016.

Selected quarterly results were:

First Quarter Summary
Jim Pokluda, President and Chief Executive Officer commented, "Market conditions did not improve during the first quarter as demand levels were extremely inconsistent. A very slow start to the period was then tempered by higher levels of customer activity, which gave us some hope that customer demand was improving. Unfortunately, this improvement was not sustained and the trend reverted back to inconsistency over the balance of the quarter. We continue to experience weak industrial activity and the impact of a depressed oil and gas market. Sales decreased 20.7% or approximately 11% on a metals adjusted basis from the first quarter of 2015. We estimate that Maintenance, Repair and Operations (MRO) sales decreased 18% or approximately 9% on a metals adjusted basis, while project sales decreased 27% or approximately 18% on a metals adjusted basis. Total transactional activity, as measured by invoice count, decreased by 4%."

Gross margin at 20.7% decreased 100 basis points from the first quarter of 2015, as extremely competitive market conditions and lower demand compressed pricing and as we continued to aggressively reduce our inventory investment. Operating expenses at $13.4 million fell 4.0% or $0.6 million from Q1 2015 and by $0.5 million on a sequential basis, excluding the Q4 2015 impairment, as prudent expense management continues to be a key focus point, especially in light of the depressed market conditions.

Interest expense of $0.2 million was down 34% from $0.3 million in the prior year period. Average debt levels decreased by 25.1% from $49.1 million in 2015 to $36.7 million in 2016, while the effective interest rate decreased from 2.0% in 2015 to 1.7% in 2016.

The income tax benefit of $0.1 million was impacted by write-offs of deferred tax assets related to share based compensation forfeitures, as the APIC pool was previously fully exhausted. The results of operations produced a net loss of $0.2 million, compared to net income of $2.2 million in the prior year period.

Mr. Pokluda further commented, "We continue to experience a loss of leverage from the reduced sales levels, and the resulting impact on our operating results is significant. New business initiatives through product line expansion, including those geared towards the commercial market, continue to gain traction. However, the temporary loss of industrial capacity expansion, and reduced industrial MRO activity, large project activity and oil and gas demand, are difficult to overcome. In this depressed industrial market environment, we continue to focus on exceptional customer service, improving the efficiency of our working capital investment and re-aligning our operating expense structure with current activity levels."

Pokluda continued, "Despite the disappointing financial performance results, our healthy operating cash flow allowed us to again reduce debt and strengthen our balance sheet, including the buy-back of an additional 124,000 shares of stock. The Company considers its performance, stock price, dividend yield and financial position in deciding the best way to reward our shareholders. Accordingly, the upcoming dividend will be paid at the rate of $0.06 per share."

Conference Call
The Company will host a conference call to discuss first quarter results on Thursday, May 5, 2016 at 10:00 a.m., C.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 May 12, 2016.

Replay, Toll-Free #: 855-859-2056
Replay, Toll #: 404-537-3406
Conference ID # 1653519

About the Company
With over 40 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 cable; instrumentation cable; medium voltage cable; high temperature wire; 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 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

Consolidated Balance Sheets
(In thousands, except share data)
March 31, December 31,
2016 2015
Current assets:
Accounts receivable, net $ 43,078 $ 46,250
Inventories, net 70,436 75,777
Deferred income taxes 3,532 3,074
Income taxes 746 932
Prepaids 1,199 648
Total current assets 118,991 126,681
Property and equipment, net 10,917 10,899
Intangible assets, net 5,612 5,984
Goodwill 14,866 14,866
Deferred income taxes 11 264
Other assets 369 419
Total assets $ 150,766 $ 159,113
Liabilities and stockholders' equity
Current liabilities:
Book overdraft $ 1,586 $ 3,701
Trade accounts payable 7,837 6,380
Accrued and other current liabilities 8,846 9,568
Total current liabilities 18,269 19,649
Debt 33,647 39,188
Other long term obligations 538 275
Total liabilities 52,454 59,112
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: 16,583,399 and 16,712,626 outstanding at March 31, 2016 and December 31, 2015, respectively 21 21
Additional paid-in-capital 54,897 54,621
Retained earnings 104,864 106,048
Treasury stock (61,470 ) (60,689 )
Total stockholders' equity 98,312 100,001
Total liabilities and stockholders' equity $ 150,766 $ 159,113
Consolidated Statements of Operations
(In thousands, except share and per share data)
Three Months Ended
March 31,
2016 2015
Sales $ 64,711 $ 81,600
Cost of sales 51,312 63,876
Gross profit 13,399 17,724
Operating expenses:
Salaries and commissions 6,909 7,238
Other operating expenses 5,837 6,048
Depreciation and amortization 692 712
Total operating expenses 13,438 13,998
Operating income (loss) (39 ) 3,726
Interest expense 175 265
Income (loss) before income taxes (214 ) 3,461
Income tax expense (benefit) (30 ) 1,275
Net income (loss) $ (184 ) $ 2,186
Earnings (loss) per share:
Basic $ (0.01 ) $ 0.13
Diluted $ (0.01 ) $ 0.13
Weighted average common shares outstanding:
Basic 16,481,122 17,296,978
Diluted 16,481,122 17,376,928
Dividends declared per share $ 0.06 $ 0.12
Consolidated Statements of Cash Flows
(In thousands)
Three Months
Ended March 31,
2016 2015
Operating activities
Net income (loss) $ (184 ) $ 2,186
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization 692 712
Amortization of unearned stock compensation 209 217
Provision for inventory obsolescence 166 356
Deferred income taxes (205 ) (419 )
Other non-cash items 30 44
Changes in operating assets and liabilities:
Accounts receivable 3,153 6,402
Inventories 5,175 6,972
Book overdraft (2,115 ) (1,634 )
Trade accounts payable 1,457 (473 )
Accrued and other current liabilities (729 ) (5,331 )
Income taxes 186 1,697
Other operating activities (249 ) (440 )
Net cash provided by operating activities 7,586 10,289
Investing activities
Expenditures for property and equipment (337 ) (440 )
Net cash used in investing activities (337 ) (440 )
Financing activities
Borrowings on revolver 61,842 76,746
Payments on revolver (67,383 ) (82,874 )
Payment of dividends (989 ) (2,070 )
Purchase of treasury stock (719 ) (1,651 )
Net cash used in financing activities (7,249 ) (9,849 )
Net change in cash -- --
Cash at beginning of period -- --
Cash at end of period $ -- $ --

Source: Houston Wire & Cable Company

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