Houston Wire & Cable Company (NASDAQ: HWCC) (the "Company")
announced operating results for the first quarter ended March 31,
2012.
Selected highlights were:
- Sales of $94.5 million
- Gross margin reached 22.4%
- Operating margins reached 7.2%
- Net income of $4.0 million
- Diluted EPS of $0.23
- Declared dividends totaling $0.09 cents per share
Jim Pokluda, President and Chief Executive Officer, commented,
"I am pleased that our sales in the quarter rebounded from the
fourth quarter of 2011, increasing 8%, albeit falling short of the
prior year period by just over 5%. Comparisons for the first half
of 2012 are difficult, because the 2011 period experienced
significant project billings and strong MRO demand from formerly
delayed work during the recession. Typically, on a sequential
basis, sales performance in the first quarter is similar to that of
the fourth quarter in the prior year. Although both project and MRO
sales were down on a year-over-year basis, I believe our sequential
growth, to be a positive indicator of improving market
conditions.
"We have continued to invest in additional sales and marketing
resources and expanded our product line. The mechanical product is
now being housed in four additional distribution facilities and
electrical wire is now being carried in one more facility. All
business development initiatives drove continued market penetration
and resulted in 107 new customers being added during the
quarter."
First Quarter Summary
Overall market strength remained intact and project activity
within the five long-term growth initiatives of Utility Power
Generation, Environmental Compliance, Engineering &
Construction, Industrials and LifeGuard™, our proprietary
private-label product, remained a significant component of overall
revenue. New project opportunities and sales increased as a result
of several small to medium sized orders from plant expansions and
upgrades. However total project sales compared to the prior year
period, decreased approximately 5% for the quarter due to a
reduction in "mega" project billings.
Sales activity in the Repair and Replacement market, also
referred to as Maintenance, Repair and Operations (MRO), was down
approximately 5% versus the prior year period, which was primarily
due to the slow start in activity during the first two months of
the quarter. Management also estimates that copper fluctuations had
little or no impact on revenues during the quarter.
While gross margins fell slightly on a sequential basis, the
resulting 22.4% was still higher than the prior year period and
continued the recent upward trend.
Operating expenses increased 1.7% or $0.2 million from the prior
year period, primarily the result of costs associated with a higher
headcount and higher levels of consulting and professional fees.
The sequential increase in sales, coupled with our continuing focus
on expense control, moved operating margins up 110 basis points
sequentially to 7.2%. The resulting operating income at $6.8
million was up 28.2% sequentially.
Interest expense of $0.3 million was lower than the prior year
period, as average debt levels fell from $55.4 million in 2011 to
$47.6 million in the first quarter of 2012 and the effective
interest rate declined from 2.3% in 2011 to 2.1% in 2012. The
effective tax rate for the quarter of 38.6% remained in line with
the 2011 annual rate, but was up slightly from the 38.4% level in
2011, primarily due to the impact of higher state income taxes.
Net income increased sequentially by 31.6% to $4.0 million,
showing the leverage of our model. Diluted earnings per share were
$0.23, compared to the $0.17 on a sequential basis.
Conference Call
The Company will host a conference call to discuss first quarter
results on Thursday, May 10, 2012 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 17, 2012.
Replay Dial In: 855.859.2056 International Replay: 404.537.3406
Confirmation Code: 77394778
About the Company
With over 35 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, 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)
March 31, December 31,
2012 2011
------------- -------------
(unaudited)
Assets
Current assets:
Accounts receivable, net $ 64,964 $ 59,731
Inventories, net 81,650 69,517
Deferred income taxes 2,158 2,268
Income taxes -- 1,693
Prepaids 1,029 828
------------- -------------
Total current assets 149,801 134,037
Property and equipment, net 5,831 6,029
Intangible assets, net 13,266 13,700
Goodwill 25,082 25,082
Other assets 302 305
------------- -------------
Total assets $ 194,282 $ 179,153
============= =============
Liabilities and stockholders' equity
Current liabilities:
Book overdraft $ 5,586 $ 2,270
Trade accounts payable 14,807 10,099
Accrued and other current liabilities 16,160 19,101
Income taxes 874 --
------------- -------------
Total current liabilities 37,427 31,470
Debt 54,561 47,967
Other long term obligations 125 128
Deferred income taxes 2,038 2,250
------------- -------------
Total liabilities 94,151 81,815
------------- -------------
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: 17,830,851 and 17,811,806
outstanding at March 31, 2012 and December
31, 2011, respectively 21 21
Additional paid-in-capital 55,652 55,760
Retained earnings 96,011 93,588
Treasury stock (51,553) (52,031)
------------- -------------
Total stockholders' equity 100,131 97,338
------------- -------------
Total liabilities and stockholders' equity $ 194,282 $ 179,153
============= =============
The accompanying Notes are an integral part of these
Consolidated Financial Statements.
HOUSTON WIRE & CABLE COMPANY
Consolidated Statements of Income
(Unaudited)
(In thousands, except share and per share data)
Three Months Ended
March 31,
-----------------------
2012 2011
----------- -----------
Sales $ 94,462 $ 99,727
Cost of sales 73,324 77,475
----------- -----------
Gross profit 21,138 22,252
Operating expenses:
Salaries and commissions 7,229 7,304
Other operating expenses 6,374 6,063
Depreciation and amortization 733 727
----------- -----------
Total operating expenses 14,336 14,094
----------- -----------
Operating income 6,802 8,158
Interest expense 266 333
----------- -----------
Income before income taxes 6,536 7,825
Income taxes 2,520 3,007
----------- -----------
Net income $ 4,016 $ 4,818
=========== ===========
Earnings per share:
Basic $ 0.23 $ 0.27
=========== ===========
Diluted $ 0.23 $ 0.27
=========== ===========
Weighted average common shares outstanding:
Basic 17,698,600 17,664,890
=========== ===========
Diluted 17,814,902 17,775,598
=========== ===========
Dividend declared per share $ 0.09 $ 0.085
=========== ===========
The accompanying Notes are an integral part of these
Consolidated Financial Statements.
HOUSTON WIRE & CABLE COMPANY
Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
Three Months
Ended March 31,
------------------------
2012 2011
----------- -----------
Operating activities
Net income $ 4,016 $ 4,818
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization 733 727
Amortization of capitalized loan costs 5 14
Amortization of unearned stock compensation 268 554
Provision for doubtful accounts 9 34
Provision for returns and allowances (96) 69
Provision for inventory obsolescence 158 (148)
Deferred income taxes (108) (351)
Changes in operating assets and liabilities:
Accounts receivable (5,146) 3,177
Inventories (12,291) (6,166)
Prepaids (201) 129
Other assets (2) --
Book overdraft 3,316 (1,294)
Trade accounts payable 4,708 (1,663)
Accrued and other current liabilities (2,941) (4,751)
Income taxes payable 2,564 2,207
Other long term obligations (3) (4)
----------- -----------
Net cash used in operating activities (5,011) (2,648)
Investing activities
Expenditures for property and equipment (101) (207)
Cash paid for acquisition -- (343)
----------- -----------
Net cash used in investing activities (101) (550)
Financing activities
Borrowings on revolver 94,060 104,302
Payments on revolver (87,466) (99,724)
Proceeds from exercise of stock options 137 92
Excess tax benefit for stock options 28 29
Payment of dividends (1,593) (1,501)
Purchase of treasury stock (54) --
----------- -----------
Net cash provided by financing activities 5,112 3,198
----------- -----------
Net change in cash -- --
Cash at beginning of period -- --
----------- -----------
Cash at end of period $ -- $ --
=========== ===========
The accompanying Notes are an integral part of these
Consolidated Financial Statements.
CONTACT: Nicol G. Graham Chief Financial Officer Direct:
713.609.2125 Fax: 713.609.2168 ngraham@houwire.com
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