U.S. Markets open in 7 hrs 3 mins

Edited Transcript of HWCC earnings conference call or presentation 16-Mar-17 3:00pm GMT

Thomson Reuters StreetEvents

Q4 2016 Houston Wire & Cable Co Earnings Call

HOUSTON Mar 16, 2017 (Thomson StreetEvents) -- Edited Transcript of Houston Wire & Cable Co earnings conference call or presentation Thursday, March 16, 2017 at 3:00:00pm GMT

TEXT version of Transcript

================================================================================

Corporate Participants

================================================================================

* Jim Pokluda

Houston Wire & Cable Company - President, CEO, Director

* Nic Graham

Houston Wire & Cable Company - CFO, Treasurer, Secretary

================================================================================

Conference Call Participants

================================================================================

* Sam Darkatsh

Raymond James & Associates, Inc. - Analyst

* David Nierenberg

Nierenberg Investment Management - Analyst

================================================================================

Presentation

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

Ladies and gentlemen, thank you for standing by. Welcome to Houston Wire & Cable Company's fourth-quarter 2016 earnings conference call. My name is Michelle and I will be your operator for today. Joining us on the call our Jim Pokluda, President and Chief Executive Officer, and Nic Graham, Vice President and Chief Financial Officer.

Today's call is being recorded for replay purposes and all participants are in a listen-only mode. At the end of the financial discussion, we will conduct a question-and-answer session and instructions will be given at that time.

Comments during today's call may include forward-looking statements. Any such statements are based on assumptions that the Company believes are reasonable but subject to risk factors that are summarized in the press released and the SEC filings. Forward-looking statements are not guarantees and actual results could differ materially from what is indicated in such statements. Any forward-looking statements speak only as of the date of the call and the Company undertakes no obligation to publicly update such statements.

If you did not receive a copy of the earnings press release that was distributed earlier this morning, a copy can be found under the Investor Relations page at the Company's website at www.houwire.com.

At this time, I would like to turn the conference over to Mr. Jim Pokluda, President and Chief Executive Officer. You may begin when you are ready, sir.

--------------------------------------------------------------------------------

Jim Pokluda, Houston Wire & Cable Company - President, CEO, Director [2]

--------------------------------------------------------------------------------

Thank you Michelle. Good morning, everyone, and thank you for joining us on our call today. I'll begin today's call with an update on the Vertex acquisition, followed by an overview of our fourth-quarter 2016 results and commentary involving present market conditions and our outlook for the first quarter of 2017. I'll then turn the call over to Nic, who will discuss our financial performance in additional detail.

We are happy to report that the Vertex revenue results for the fourth quarter met expectations and our progress with integration of the company has continued at a brisk pace. Not unexpectedly, we incurred a fair amount of integration expenses during the quarter, which, in the near term, negatively affected the Company's profitability. As we progress with the integration these nonrecurring expenses will diminish and overall profitability will improve. For the period, we estimate integration expenses were approximately $700,000.

To date, we have completed the consolidation of four Vertex facilities -- Dallas, Atlanta, Charlotte and Los Angeles. After initial moving and integration expenses, we estimate the savings from the above facility consolidations will be approximately $400,000 per year. Consolidations to be completed in Q2 of 2017 will be Houston, Tampa and Chicago. Additional integration accomplishments include inventory rebalancing, completion of the computer system conversion, exit from the majority of the transition services agreement with the seller, DXP, and retention of all key employees. Morale is high, strategic investment in inventory and digital resources continues, and we remain laser focused on delivering a superior customer experience.

Now I'll move on to comments involving our consolidated results for the fourth quarter of 2016 and provide a little color on some of the emerging optimism we are seeing in the market today. Including the acquisition of Vertex, and adjusted for metals fluctuation, sales increased 1% over 2015 and 6.2% sequentially. Industrial market conditions, including the oil and gas industry during the fourth quarter remained inconsistent. Encouragingly, however, the choppy results we experienced lead us to believe that the market is showing signs of recovery. Because of our product mix we tend to be a bit later cycled than our distributor partners during a broad market recovery and we believe this is the case today as several of our channel partners are reporting that their businesses began to moderately improve during the fourth quarter. Although still very early in the year, we've also begun to experience improving market conditions through January, February and early March of 2017. Sales, invoice counts and overall gross margins have started to recover from the levels experienced in the fourth quarter 2016, which we believe marked the bottom for our end markets that underperformed, primarily due to the reduction in the price of oil and gas. Our success in the expansion of our commercial product lines continued and was a contributor to sales and operating margins in the fourth quarter, and the acquisition of Vertex in early 2016 was the most recent example of our efforts to broaden our product offering into the industrial market. I was also pleased that we again achieved success in reducing our working capital investment and generating operating cash flow.

Gross margin of 21.8% increased 30 basis points from the fourth quarter of 2015 and 330 basis points sequentially in the fourth quarter of 2016 versus the third quarter of 2016, primarily due to incrementally higher margins generated by Vertex. Excluding Vertex, sequential gross margin increased approximately 150 basis points, in line with expectations I communicated in our last earnings release call.

The balance of my year-over-year comments will exclude contributions from Vertex.

Q4 transactional volume per day, which we measure as invoice count, increased slightly over 3% versus Q4 2015. Additionally, in line with some of the recent market improvements we are experiencing, year-over-year January and February transactional volume per day is up 4% and 9% respectively. Bookings per day also improved in January 2017 versus December 2016, increased again in February versus January, and have increased year-over-year in the early March period as well. The book-to-bill period in the January and February period of 2017 was 104%.

We estimate that the sales results in our core business, which services maintenance, repair and operations demand, increased approximately 9% from the prior-year quarter when adjusted for metals, and represented 83% of our total revenue. Growth continued in new products that target residential and nonresidential construction and regions with exposure to oil and gas and general manufacturing began to show varying degrees of recovery.

On the last call, I mentioned that the level of US land-based drilling can impact our financial performance in our largest end market, which is oil and gas. At that time, the closing October rotary rig count in the US what was 535, which was up 135 from the 400 level at the end of Q2. At present, the rig count is approximately 748, which is up 213 from the October level. This is good news for our business as we perform well when oil and gas markets are performing well.

As I've mentioned in the past, we are a later cycle participants in oil and gas MRO revenue streams, so should the present level of drilling activity continue to improve, so too should our results in this area. The offshore rig count at 20 is down slightly versus the prior quarter and as such, we do not expect any material improvement in demand for our products used in this end market.

Project sales for the fourth quarter decreased 49% from 2015 when adjusted for metals, and represented approximately 17% of our revenue. Our three primary end markets were projects that include utility power generation and environmental compliance, industrials and infrastructure. Project sales in the utility power generation and environmental compliance market were down approximately 42% year-over-year. Very similar to the prior quarter, sales were down due to a reduction in new construction of fossil fuel power plants, alternative fuel power plants, and environmental compliance devices, offset slightly by an increase in substation construction.

Project sales in the industrials end market declined approximately 54% year-over-year. Reduced oil and gas activity drove the majority of this decline, followed by metals and minerals. Although there are several large projects active along the Gulf Coast, we tend to be a second-level participant in these mega-projects as the initial buys for electrical wiring cable are often purchased without the aid of master distributors, and instead purchased direct from cable manufacturers. As these mega-projects mature, however, our opportunities and levels of participation increase due to the requirements for our just-in-time value proposition and specialized portfolio of products and services.

Q4 project sales in the infrastructure end market declined approximately 47% year-over-year. The entirety of the decline resulted from the ongoing reduction and spend from a large telecommunications project. We are disappointed that our sales involving this telecommunication project have diminished. However, we are encouraged by recent pronouncements for the potential of significantly increased US infrastructure spend. Should the forecasted infrastructure investments materialize, we believe this area of our business could experience nice tailwinds and growth for several years.

As we move further into 2017, our near-term outlook for the market has improved. Always mindful that the recent positive trends could again turn negative, which would drive a return to industrial activity reduction, reduced oil and gas exploration, transportation, and production and metals deflation, which would negatively impact our financial performance results, recent positive macro trends in these areas lead us to believe that several of our target markets have found bottom. Although we are disappointed with the fourth-quarter results, the good news is that the present macro drivers that assist us in our business are improving. Copper is at a 19-month high. The price of oil has appreciated significantly from the lows set in February of last year and at 748, the US rotary rig count is the highest it has been in the last 17 months. Year-over-year MRO sales have grown for two consecutive quarters and our sales funnel indicates that we are beginning to see build in project quoting activity. We are encouraged by these trends. However, as we move forward, we will continue to exercise extreme discipline with expense and working capital management as we realize that the macro drivers filling our sails today are still in their early stages and a lean cost structure is a necessary insurance policy in the market that we believe is showing signs of recovery.

I'll now turn the call over to Nic Graham, our Vice President and CFO, for a detailed analysis of our financial results. Nic?

--------------------------------------------------------------------------------

Nic Graham, Houston Wire & Cable Company - CFO, Treasurer, Secretary [3]

--------------------------------------------------------------------------------

Thanks Jim, and good morning, ladies and gentlemen. It was a disappointing quarter of financial results due to the level of industrial demand but, as Jim mentioned, there are some signs of recovery.

I am pleased with the Vertex acquisition. As you can tell from Jim's comments, we've all been working very hard on this integration into HWC.

Despite the disappointing operating results, we did attain success in several other financial areas. For the quarter, we reduced operating expenses, which, excluding the impact of Vertex and the related acquisition expenses, fell by 3.7% from 2015. On a sequential basis, operating expenses were near flat, but we picked up more than 100 basis points on OpEx as a ratio of these sales. We believe, with the addition of Vertex, that we will obtain further improvement in this ratio.

I also want to remind everyone that our model has a fairly high fixed cost component, so as we push more sales volume through the system, we gain operating leverage. For the year, excluding Vertex expenses, the acquisition expenses and the impairments from both the current year and the prior year, we reduced operating expenses by $2.4 million, or 4.2%. Our focus on expense reduction will continue.

Excluding Vertex's receivables, we were pleased to have improved our days sales outstanding by more than 1.5 days, which, considering the trend of customers to hold their cash in the current economic environment, was a good achievement. Our customer agents were in line with our expectations, but we continue to watch credit lines very closely.

Our bad debt experienced during the year was a little higher than we would've liked principally due to certain customers who were directly tied to the oil and gas market. But write-off of $200,000 were still less than 0.1% of sales. The aging of Vertex Accounts Receivable looks good and there are no obvious signs of distressed customer accounts.

Cash flow, despite the lackluster activity levels, was still positive in Q4 of $1.3 million and $17.3 million for the year.

I want to give you a little more color on the administrative side of the Vertex acquisition. It was a subsidiary of a large company, and it had minimal traditional back-office administrative or accounting support, nearly all of this being provided by its former parent, for which they were charged. We got Vertex onto our computer platform in May 2017, and all of its back-office functions, accounting, Accounts Payable, credit and collections, payroll and HR, have been consolidated in Houston, Texas. All of Vertex's bank functions have also been consolidated in Houston. We have added a few more people to our staff in Houston, but we currently estimate the net savings of this change to be approximately $200,000 per year.

We funded the $32.4 million acquisition of Vertex from our existing credit facility, which was amended to accommodate the assets of Vertex to be included in the asset-based facility. The facility still stands at $100 million with a $50 million accordion feature. At year-end, available borrowings under the facility were $25.6 million, more than adequate to fund our operations. We remain in full compliance with availability covenants of the facility.

Some comments on debt to equity and capital allocation. After funding the Vertex acquisition, our debt equity ratio increased and stands at 67% at year-end. This compares with a ratio of 40% at the end of 2015. The 2015 ratio was lower than the 49% level at the end of 2014, as we reduced debt by $14.6 million in 2015. Prior to the Vertex acquisition, we had reduced debt by $10.6 million in the first nine months of 2016. Historically, HWC has operated with much higher debt ratios, and I believe our ability to generate cash flow from our operations, including Vertex, provides us with the capacity to both manage the current debt load and reduce it going forward.

As we discussed at the last earnings call, the board suspended the dividend and has currently curtailed the stock buyback program. In light of our recent operating performance and current debt levels, we believe that this action is a fiscally responsible course of action to take.

Looking ahead at some of the current initiatives for 2017 -- consolidate additional Vertex sales and distribution centers into existing HWC facilities, work in those areas of Vertex operations where additional operating efficiencies can be obtained, including freight and inventory profiles, continue the overall imagery re-profiling initiative with the goal of reducing the working capital investment, and continue with the review of our current operating spend spend to ensure that all expenses provide a maximum return.

One SEC filing matter I need to comment on -- we could not complete our annual report on Form 10-K for the 2016 year, including the financial statements, on a timely basis, due to unanticipated delays arising in connection with the preparation and inclusion of certain information related to the recent acquisition. We anticipate that we will file the annual report on Form 10-K no later than the 15th calendar day following the prescribed filing date, which is today.

That concludes the prepared remarks. At this time, I'll turn the call back over to the operator. Michelle?

================================================================================

Questions and Answers

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

(Operator Instructions). Sam Darkatsh, Raymond James.

--------------------------------------------------------------------------------

Sam Darkatsh, Raymond James & Associates, Inc. - Analyst [2]

--------------------------------------------------------------------------------

Good morning Jim. Good morning Nic. How are you? Three questions if I could. First off, based on what you see, Jim, on the order book, when do you think the project business begins to grow on a year-on-year basis, and how should we look at that here in the first quarter with virtually all of it having been completed already?

--------------------------------------------------------------------------------

Jim Pokluda, Houston Wire & Cable Company - President, CEO, Director [3]

--------------------------------------------------------------------------------

When markets recover, in my experience, the MRO component comes back first, almost always. Of course, there are exceptions, and because we are kind of a small company, if you get a large project for a quarter, it can skew the data. But in the long run, in recovering markets, MRO customers, MRO spend, is the first to return. And that's certainly been the case here. And as you see in our data, it started to come back a couple of quarters ago. So we are encouraged by that.

Admittedly, the project business has been slow to form. We are seeing some build in Q1' there is certainly no doubt about that. I wouldn't describe it, though, as anything to get excited about yet. I'd like to tell you otherwise, but that wouldn't be fair.

We are seeing a build in the right areas. We are seeing more quoting activity. We are seeing less concern in the marketplace with the large end-users worried about spend. Because there's more optimism with what's going on with oil and gas, people don't seem to be quite as nervous. So there's no doubt that the buzz in the space has shifted from negative to emerging optimism, and we are happy about that.

We are generally -- and as I've also said in my prepared remarks, we are usually two or three quarters behind broad market moves, so I wouldn't look to any sort of meaningful project recovery until the middle or latter part of this year.

Another tailwind, of course, would be what's going on with infrastructure. A lot of talk in the market about significantly increased infrastructure spend, $1 trillion plus, that will bode well for our business, and that will emerge over time as well.

--------------------------------------------------------------------------------

Sam Darkatsh, Raymond James & Associates, Inc. - Analyst [4]

--------------------------------------------------------------------------------

Thank you for that complete answer. My next couple of questions might be more so for Nic. You mentioned the high fixed cost component to OpEx. I think you were talking specifically about OpEx, excluding salaries and commissions, although you perhaps could have been including both of them. I'm just trying to get a sense of what the organic incremental margins might look like in 2017, knowing that you'll probably get some sort of a variable or incentive comp reset with the new year having turned. Just trying to get a sense of what the leverage might look like.

--------------------------------------------------------------------------------

Nic Graham, Houston Wire & Cable Company - CFO, Treasurer, Secretary [5]

--------------------------------------------------------------------------------

Yes, Sam, I was back obviously -- you've got to ignore 2016. It wasn't very great in 2015. It was less than 2%, 6.5% in 2014, and about 4.5% in 2013. So I feel reasonably comfortable certainly looking at the average of 2013 and 2014 in that 5% range. I think that's doable. We are still working our way through the detail on the Vertex side, but I think 5% is probably a reasonable target.

--------------------------------------------------------------------------------

Sam Darkatsh, Raymond James & Associates, Inc. - Analyst [6]

--------------------------------------------------------------------------------

5% on an incremental EBITDA for organic growth, is that what you're referring to?

--------------------------------------------------------------------------------

Nic Graham, Houston Wire & Cable Company - CFO, Treasurer, Secretary [7]

--------------------------------------------------------------------------------

I'm talking about 5% overall. I think that's reasonable, assuming we get the sales momentum that we seemingly have seen on the new orders. But we have to get that sales momentum. Again, we have a fixed cost structure. We can take more capacity through the system. If our sales increased 10% or 15%. On the support side, you talk about salaries, we might obviously have to put some or spend on the warehouse side to cope with additional throughput, but the administrative support, the sales support, it probably won't fluctuate that much.

--------------------------------------------------------------------------------

Sam Darkatsh, Raymond James & Associates, Inc. - Analyst [8]

--------------------------------------------------------------------------------

Just so I'm clear, so you're thinking that operating expenses will grow about 5% in 2017. I just want to make sure we are talking about the same numbers.

--------------------------------------------------------------------------------

Nic Graham, Houston Wire & Cable Company - CFO, Treasurer, Secretary [9]

--------------------------------------------------------------------------------

I'm saying the ratio of operating income to sales will be about 5% if everything pans out.

--------------------------------------------------------------------------------

Sam Darkatsh, Raymond James & Associates, Inc. - Analyst [10]

--------------------------------------------------------------------------------

Okay. And then my last question, and I may need to be re-educated on this, so I apologize, Nic, if this has been asked and answered in prior calls. But the $26 million in available liquidity, how does that work? At some point, you're going to need to reinvest in inventory. I think your working capital to sales is, call it, maybe 35% or so on the way back up, which means that, if you have $26 million of available liquidity, you might be able to reinvest alone at maybe $75 million worth of sales volumes. So how does the liquidity work when business conditions improve, and you need to reinvest in inventory?

--------------------------------------------------------------------------------

Nic Graham, Houston Wire & Cable Company - CFO, Treasurer, Secretary [11]

--------------------------------------------------------------------------------

I think there's still some opportunity to take some costs out of our current inventory investment. So part of that is going to be a kind of swap out one for one. Obviously, if we introduce more new products or broaden any existing product lines, we would have to take that into account. So I can't really give you a hard and fast answer, but I think there's a lot of -- if we can free up some of the items we would like to free up, we could reinvest that. I don't see that $26 million moving a whole lot. Obviously, we've got to finance the receivables and collect that cash, so it will be a little bit of delay there. But I don't see it getting pressured very much.

--------------------------------------------------------------------------------

Sam Darkatsh, Raymond James & Associates, Inc. - Analyst [12]

--------------------------------------------------------------------------------

Okay. Thank you both, gentlemen. I appreciate it.

--------------------------------------------------------------------------------

Operator [13]

--------------------------------------------------------------------------------

(Operator Instructions). David Nierenberg, Nierenberg Investment.

--------------------------------------------------------------------------------

David Nierenberg, Nierenberg Investment Management - Analyst [14]

--------------------------------------------------------------------------------

It's been -- I'm thinking about how long it's been (technical difficulty) total corporate sales have risen on a metals adjusted basis. I realize we've had some improvement in MRO, but when I look at the entire Company, has it been 10 quarters, maybe 12 quarters? Because this time, total sales were up 1% (technical difficulty) it's probably been a long time.

--------------------------------------------------------------------------------

Jim Pokluda, Houston Wire & Cable Company - President, CEO, Director [15]

--------------------------------------------------------------------------------

Yes, it has, agreed.

--------------------------------------------------------------------------------

David Nierenberg, Nierenberg Investment Management - Analyst [16]

--------------------------------------------------------------------------------

So even though it's 1%, it's a milestone because it's black rather than red.

--------------------------------------------------------------------------------

Jim Pokluda, Houston Wire & Cable Company - President, CEO, Director [17]

--------------------------------------------------------------------------------

We are encouraged by that too, David. It's been a long 2.5 years. And I guess I'm going to have to maybe bore the audience with a little bit of a repetitive story. If you go back to the 2014 period before the oil industry cratered, we were moving right along -- Q1, Q2, most of Q3, really good records in Q1 and Q2 and almost a record in Q3. And we felt good about that. We had a lot of wind in our sail. Copper had started to pull down a little bit at that point, but it didn't fall off to the $2.00 level that we saw earlier this year. And that gives me a lot of peace of mind. It gives all of the management team a lot of peace of mind because, when the markets are behaving as they traditionally have for years, and I've been here 29 years, this business does quite well. We have a lot of operating leverage. We spin off cash, make good money, good EBITDA. EPS is good. We've produced $1.00 a share in markets that were fulsome. But then the market shifted, as you know, and that's where I said that's been a slow slug here for the past couple of years.

We are delighted to see the commodities inflation. Steel is up, copper is up quite a bit year-over-year. And that really helps us. It helps us with our inventory pricing. It helps us with bigger sales. So these broad market moves, metals inflation, the return in strength of oil and gas, increased activity upstream with the rig count, really, really glad to see that. And thank you for acknowledging that we've finally had a little bit of growth here.

Now, listen, we are not out of the woods, and we need to keep that in mind. Things are improving, though. The recent market trends in Q1, great, great improvements over Q4 of last year. After upstream settled in, downstream follows. So, you sort of start to see the dendrites that add to the backbone pipeline because a lot of these wells that are drilling are in new places. So you have to have oil and gas infrastructure to bring that product to market. You have the backbone pipeline, but you have to build these little tentacles on the side to bring it to that backbone. And that's where the pumping stations, compressor stations, metering stations, tank farms, substations, that's where that work comes in. And that's good news too.

So, finally, finally, we have some wind filling our sails, and we are ready for it. We have the inventory. We prepared our business over the past couple of quarters to do even better when the market recovers. We've invested in people. We've invested in new products. We haven't cut inventory. We've improved our digital platform. We've added engineering services in heavy lift. We've acquired our company. We've paid down debt. We've returned capital to shareholders. We've worked really, really hard over these past couple of years to do what we felt was the right thing to do, given the present operating environment. And now finally, we are starting to see some light at the tunnel. So I'm going to repeat myself here. We are glad to see that light. We are not saying that mission is accomplished, absolutely not. But we think we found bottom, and we're going to work very hard to do everything we can to continue to grow this business as we move forward throughout this year, given the recovery in the end markets.

--------------------------------------------------------------------------------

David Nierenberg, Nierenberg Investment Management - Analyst [18]

--------------------------------------------------------------------------------

The trend is your friend as we say. And this (technical difficulty) recovery to positive is good. Also, I remember asking you after the third quarter because, in the third quarter, there were a whole bunch of small nonrecurring hits to the gross margin. And I remember our asking you what you thought that the combined set of Vertex's higher gross margins and the normalization of your own gross margins would bring Q4 gross margins to. You estimated 21.9% when we forced you to come up with a number, and you actually did 21.8%. So, a huge improvement in gross margins as well. And then combining the comments that you made at the time of the Vertex acquisition with your comments today about the consolidation of warehouses as well as the administrative cost reduction, my recollection was you said you expect that Vertex to be 10% to 12%, -- $0.10 to $0.12 incremental of EPS on an annualized basis. And in addition to that, now you guys are talking about $600,000 of cost savings (technical difficulty) bump to $0.10 to $0.12, perhaps a few pennies higher. So there's a number of things that give us some optimism, Jim, that while we cannot predict when this company will return to profitability, exactly which quarter that will happen, the nose of the plane from a revenue point of view seems to be slightly up now. You're still paring away at costs. Gross margins have risen where to you expected. So there's reason to hope that this will be a year 2017 when you will have rising organic revenue and sometime during the year return to normalized profitability.

--------------------------------------------------------------------------------

Jim Pokluda, Houston Wire & Cable Company - President, CEO, Director [19]

--------------------------------------------------------------------------------

I think that was well articulated, David. It's funny. I was going to use an airplane metaphor earlier. We are gathering some air under our wings, and that's the first thing you have to do when you are pulling out. So whether the metaphor is wind in our sails or air under our wings, we are feeling better. This is a good craft. We've got good infrastructure, a solid frame, a strong keel, good mast, and we have some wind filling our sails. Now, what we have to do is do it for two or three quarters, and we are going to work exceedingly hard to do that. There is certainly no question about that. Happy to see what we've seen so far, not happy with our performance in Q4, but it is improving today, as I said, and we are not taking anything for granted. We are hunkered down, laser focused with expense management, gross margin optimization, integration of Vertex, key employee development, key employee retention, just laser, laser focused on the bare fundamentals of the business, the blocking and tackling of the business, that we believe will allow us to prevail as we emerge from this lousy market.

--------------------------------------------------------------------------------

David Nierenberg, Nierenberg Investment Management - Analyst [20]

--------------------------------------------------------------------------------

You and Nic and your team are solid operators. So as Nike says, just do it.

--------------------------------------------------------------------------------

Jim Pokluda, Houston Wire & Cable Company - President, CEO, Director [21]

--------------------------------------------------------------------------------

Thank you for those questions.

--------------------------------------------------------------------------------

Operator [22]

--------------------------------------------------------------------------------

I'm showing no further questions at this time. I would like to turn the conference back over Mr. Jim Pokluda for any closing remarks.

--------------------------------------------------------------------------------

Jim Pokluda, Houston Wire & Cable Company - President, CEO, Director [23]

--------------------------------------------------------------------------------

Thank you Michelle. And thanks to our valued team members for their continued hard work and dedication to the Company. To our shareholders, we appreciate your joining us on the call today, and look forward to success in the period ahead. Good day everyone.

--------------------------------------------------------------------------------

Operator [24]

--------------------------------------------------------------------------------

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program, and you may all disconnect. Everyone have a great day.