Houston Wire & Cable Company (NASDAQ: HWCC) (the “Company”)
announced operating results for the third quarter ended September
30, 2018.
Third Quarter 2018 Highlights
- Net income of $2.5 million, or $0.15 per diluted share
- Reduced debt by $6.7 million
- Sales of $90.1 million increased 10.9% over 2017
- Gross margin of 23.8% up 90 basis points compared with
2017
Third Quarter Summary Houston Wire & Cable
Company reported net income of $2.5 million, or $0.15 per diluted
share, for the quarter ended September 30, 2018, compared to a net
loss of $1.7 million, or a loss of $0.11 per diluted share, for the
same quarter in 2017. Operating income in the third quarter
2018 was $3.0 million compared to $2.0 million during the third
quarter of 2017.
Jim Pokluda, President and Chief Executive Officer, commented,
“We were pleased to post our fifth consecutive quarter of
year-over-year revenue growth, as customer demand and end market
strength remained much improved over the prior year. We estimate
sales for our project business, which targets end markets for
Utility Power Generation, Environmental Compliance, Engineering
& Construction, Industrials, and Mechanical Wire Rope,
increased 13%, while Maintenance, Repair, and Operations (MRO)
sales were up 10%, as compared to the third quarter of 2017.”
Gross margin at 23.8% increased 90 basis points from the third
quarter of 2017, primarily due to higher product margins driven by
ongoing pricing discipline and product mix as metals prices
remained relatively consistent year over year. Operating expenses
at $18.3 million were up $1.8 million from Q3 2017 and $0.4 million
sequentially. During the quarter, these expenses were
elevated by approximately $0.4 million as the Company completed two
warehouse moves and one warehouse reorganization. Operating
expenses as a percentage of revenue remained relatively flat to
2017 at 20.4%.
Debt for the quarter decreased by $6.7 million to $73.4 million,
primarily from increased earnings and improved working capital
efficiency, while the effective interest rate increased from 3.7%
in the second quarter to 3.8% in the third quarter of 2018.
The effective tax rate for the quarter was a benefit of 6.4%,
which included the impact of a release of the Company’s $1.0
million valuation allowance established in 2017 and the impact of
lower corporate tax rates under the 2017 Tax Cuts and Jobs Act.
Mr. Pokluda further commented, “Our improved year-over-year
results are being driven by on-going recovery of end-market
activity, customer demand, and excellent execution of our strategic
plan. We are encouraged by these results, and remain laser
focused on driving above market performance in the period
ahead.”
Conference CallThe Company will host a
conference call to discuss fourth quarter results today, Friday,
November 9th, 2018, at 10:00 a.m., C.S.T. Hosting the call
will be James Pokluda, President and Chief Executive Officer, and
Christopher Micklas, 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 at
www.houwire.com.
Live call dial-in numbers are as follow:Toll-Free:
(800)-936-7954International: (720)-545-0048Conference ID #
2295115
Approximately two hours after the completion of the live call, a
telephone replay will be available until November 16th, 2018.
Replay, Toll-Free #: (855)-859-2056 Replay, Toll #:
(404)-537-3406 Conference ID # 2295115
About the Company With 43 years of
experience in the industry, Houston Wire & Cable Company, an
industrial distributor, is a large provider of products in the U.S
market. Headquartered in Houston, Texas, the Company has sales and
distribution facilities strategically located throughout the United
States.
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 StatementsThis 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
COMPANYConsolidated Balance Sheets(In
thousands, except share data)
|
|
September
30, |
|
|
December
31, |
|
|
|
2018 |
|
|
2017 |
|
|
|
(unaudited) |
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Accounts receivable, net |
|
|
|
|
|
|
|
|
Trade |
|
$ |
60,022 |
|
|
$ |
51,031 |
|
Other |
|
|
4,981 |
|
|
|
6,365 |
|
Inventories, net |
|
|
86,469 |
|
|
|
88,115 |
|
Income taxes |
|
|
550 |
|
|
|
449 |
|
Prepaids |
|
|
1,622 |
|
|
|
1,938 |
|
Total current assets |
|
|
153,644 |
|
|
|
147,898 |
|
|
|
|
|
|
|
|
|
|
Property and equipment, net |
|
|
11,522 |
|
|
|
11,355 |
|
Intangible assets, net |
|
|
11,433 |
|
|
|
12,015 |
|
Goodwill |
|
|
22,353 |
|
|
|
22,353 |
|
Deferred income taxes |
|
|
1,123 |
|
|
|
— |
|
Other assets |
|
|
578 |
|
|
|
418 |
|
Total assets |
|
$ |
200,653 |
|
|
$ |
194,039 |
|
|
|
|
|
|
|
|
|
|
Liabilities and stockholders' equity |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Book overdraft |
|
$ |
1,728 |
|
|
$ |
3,028 |
|
Trade accounts payable |
|
|
9,350 |
|
|
|
8,449 |
|
Accrued and other current liabilities |
|
|
16,517 |
|
|
|
16,823 |
|
Total current liabilities |
|
|
27,595 |
|
|
|
28,300 |
|
|
|
|
|
|
|
|
|
|
Debt |
|
|
73,403 |
|
|
|
73,555 |
|
Deferred income taxes |
|
|
— |
|
|
|
414 |
|
Other long term obligations |
|
|
784 |
|
|
|
1,026 |
|
Total liabilities |
|
|
101,782 |
|
|
|
103,295 |
|
|
|
|
|
|
|
|
|
|
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: 16,523,439 and 16,491,181
outstanding at September 30, 2018 and December 31, 2017,
respectively |
|
|
21 |
|
|
|
21 |
|
Additional paid-in-capital |
|
|
54,571 |
|
|
|
54,006 |
|
Retained earnings |
|
|
104,344 |
|
|
|
97,336 |
|
Treasury stock |
|
|
(60,065 |
) |
|
|
(60,619 |
) |
Total stockholders' equity |
|
|
98,871 |
|
|
|
90,744 |
|
Total liabilities and stockholders' equity |
|
$ |
200,653 |
|
|
$ |
194,039 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HOUSTON WIRE & CABLE
COMPANYConsolidated Statements of
Operations(Unaudited)(In thousands, except share and per
share data)
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales |
|
$ |
90,074 |
|
|
$ |
81,196 |
|
|
$ |
268,952 |
|
|
$ |
235,551 |
|
Cost of sales |
|
|
68,681 |
|
|
|
62,626 |
|
|
|
204,723 |
|
|
|
183,732 |
|
Gross profit |
|
|
21,393 |
|
|
|
18,570 |
|
|
|
64,229 |
|
|
|
51,819 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and commissions |
|
|
9,778 |
|
|
|
8,975 |
|
|
|
28,878 |
|
|
|
26,647 |
|
Other operating expenses |
|
|
8,028 |
|
|
|
6,999 |
|
|
|
23,016 |
|
|
|
21,303 |
|
Depreciation and amortization |
|
|
541 |
|
|
|
549 |
|
|
|
1,627 |
|
|
|
2,234 |
|
Total operating expenses |
|
|
18,347 |
|
|
|
16,523 |
|
|
|
53,521 |
|
|
|
50,184 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
|
3,046 |
|
|
|
2,047 |
|
|
|
10,708 |
|
|
|
1,635 |
|
Interest expense |
|
|
739 |
|
|
|
543 |
|
|
|
2,156 |
|
|
|
1,492 |
|
Income before income taxes |
|
|
2,307 |
|
|
|
1,504 |
|
|
|
8,552 |
|
|
|
143 |
|
Income tax (benefit) expense |
|
|
(148 |
) |
|
|
3,215 |
|
|
|
1,544 |
|
|
|
2,361 |
|
Net income (loss) |
|
$ |
2,455 |
|
|
$ |
(1,711 |
) |
|
$ |
7,008 |
|
|
$ |
(2,218 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.15 |
|
|
$ |
(0.11 |
) |
|
$ |
0.43 |
|
|
$ |
(0.14 |
) |
Diluted |
|
$ |
0.15 |
|
|
$ |
(0.11 |
) |
|
$ |
0.42 |
|
|
$ |
(0.14 |
) |
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
16,404,805 |
|
|
|
16,274,663 |
|
|
|
16,380,807 |
|
|
|
16,260,862 |
|
Diluted |
|
|
16,563,245 |
|
|
|
16,274,663 |
|
|
|
16,492,217 |
|
|
|
16,260,862 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HOUSTON WIRE & CABLE
COMPANYConsolidated Statements of Cash
Flows(Unaudited)(In thousands)
|
|
Nine Months
Ended September 30, |
|
|
|
2018 |
|
|
2017 |
|
|
|
|
|
|
|
|
Operating activities |
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
7,008 |
|
|
$ |
(2,218 |
) |
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
1,627 |
|
|
|
2,234 |
|
Stock-based compensation |
|
|
1,085 |
|
|
|
770 |
|
Provision for inventory obsolescence |
|
|
813 |
|
|
|
78 |
|
Deferred income taxes |
|
|
(1,537 |
) |
|
|
3,163 |
|
Other non-cash items |
|
|
93 |
|
|
|
195 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(7,668 |
) |
|
|
(12,619 |
) |
Inventories |
|
|
833 |
|
|
|
(2,082 |
) |
Prepaids |
|
|
316 |
|
|
|
(639 |
) |
Income taxes |
|
|
(101 |
) |
|
|
(742 |
) |
Book overdraft |
|
|
(1,300 |
) |
|
|
(1,293 |
) |
Trade accounts payable |
|
|
901 |
|
|
|
(1,790 |
) |
Accrued and other current liabilities |
|
|
(267 |
) |
|
|
4,031 |
|
Other operating activities |
|
|
(264 |
) |
|
|
18 |
|
Net cash provided by (used in) operating activities |
|
|
1,539 |
|
|
|
(10,894 |
) |
|
|
|
|
|
|
|
|
|
Investing activities |
|
|
|
|
|
|
|
|
Expenditures for property and equipment |
|
|
(1,210 |
) |
|
|
(1,307 |
) |
Cash received for acquisition |
|
|
— |
|
|
|
193 |
|
Net cash used in investing activities |
|
|
(1,210 |
) |
|
|
(1,114 |
) |
|
|
|
|
|
|
|
|
|
Financing activities |
|
|
|
|
|
|
|
|
Borrowings on revolver |
|
|
270,609 |
|
|
|
243,651 |
|
Payments on revolver |
|
|
(270,761 |
) |
|
|
(231,509 |
) |
Payment of dividends |
|
|
(39 |
) |
|
|
(60 |
) |
Purchase of treasury stock/stock surrendered on
vested awards |
|
|
(138 |
) |
|
|
(74 |
) |
Net cash (used in) provided by financing activities |
|
|
(329 |
) |
|
|
12,008 |
|
|
|
|
|
|
|
|
|
|
Net change in cash |
|
|
— |
|
|
|
— |
|
Cash at beginning of period |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
Cash at end of period |
|
$ |
— |
|
|
$ |
— |
|
CONTACT:
Christopher M. Micklas
Chief Financial Officer
Direct: 713.609.2114
Fax: 713.609.2168
cmicklas@houwire.com
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