HOUSTON, TX--(Marketwire - Mar 18, 2013) - Houston Wire & Cable Company (
Selected highlights for the fourth quarter of 2012 compared to the prior year period:
- Record fourth quarter sales of $104.4 million, a 19.3% increase
- Net income of $4.4 million increased 43.2% from $3.1 million
- Diluted EPS of $0.25 increased 47.1% from $0.17 per share
- Declared a dividend of $0.09 cents per share
- Operating cash flow of $8.6 million or 197% of net income
Selected highlights for 2012:
- Sales of $393 million decreased 1% from $396.4 million in 2011
- Diluted EPS of $0.96 versus $1.11 in 2011
- Declared dividend totaling $0.36 cents per share
- Debt to equity ratio of 53.7%
Fourth Quarter Summary
Jim Pokluda, President and Chief Executive Officer commented, "I was extremely pleased with our team's strong year-end sales performance. Activity was solid for the entire quarter. Our 19.3% year-over-year sales increase was the result of steady MRO demand and an increase in project business in both electrical and steel wire rope end markets. I was also pleased with the sequential sales increase of 8.6%.
"Similar to prior quarter experiences, we continued to benefit from resurgence in demand in several major markets. Nevertheless, there remained regions that performed below our expectations as we believe industrial activity has not fully returned to pre-recession levels in all areas of the United States. Despite inconsistent market conditions and customer activity, several strategic markets including Oil & Gas, Power Generation and Industrials performed well. We added 88 new customers during the quarter, and sales of recently introduced new products such as specialty oil and gas cables and aluminum cables exceeded our internal expectations."
Gross margin fell to 21.1% as a result of higher project sales. Operating expenses were flat compared to the prior year period and up 0.9% or $0.1 million on a sequential basis, primarily due to the increased headcount. Operating margins reached 7.1%, up 100 basis points from 2011.
Interest expense of $0.3 million was flat with the prior year period. While average debt levels increased 14.7% from the fourth quarter of 2011, the effective interest rate declined by 17.5%, from 2.5% in 2011 to 2.0% in 2012. The effective tax rate for the quarter of 38.6% remained in line with the 2011 annual rate and with the 38.7% level in the comparable 2011 quarter.
Net income of $4.4 million, increased by 43.2% or $1.3 million, from the fourth quarter of 2011. Diluted earnings per share of $0.25 were up 47.1% from the $0.17 level in the prior year quarter.
Twelve month summary
Sales for the year were $393 million and metal adjusted sales grew approximately 3% over 2011. Sales activity within the six long-term growth initiatives of Power Generation, Environmental Compliance, Engineering & Construction, Industrials, Mechanical Wire Rope and LifeGuard™, our proprietary private-label product, remained active and were largely driven by multiple small to medium sized projects. As expected, the mega-projects experienced in 2011 did not recur; however, the absence of these projects was largely offset by increased activity in oil and gas extraction and transportation, investments in new products and additional sales and marketing resources.
We closed the year with a positive book to bill ratio and throughout the year experienced growth in transactional activity and opportunity pipeline. Project business was up 2% and our MRO business was off roughly 3% owing to continued inconsistent post-recession demand and geographic market strength.
Gross margin was off slightly for the year finishing at 22.1%, down 30 basis points from 2011. "While we were able to hold margins in the face of very competitive market conditions, lower margin project business impacted the fourth quarter and caused a slight decrease over 2011," said Mr. Pokluda.
Operating expenses increased by 4.6% or $2.6 million in the current year. Excluding the impact of the $1.7 million expense reversal in 2011 resulting from a stock compensation adjustment, operating expenses increased 1.6% or $0.9 million, primarily due to the impact of the higher headcount and higher consulting and professional fees.
Interest expense of $1.3 million was lower than the prior year's $1.4 million as average debt levels fell by 1.0% from $58.5 million in 2011 to $58.0 million in 2012 and interest rates decreased 10.4% from 2.3% to 2.1%. The effective tax rate for the year of 38.4% was the same as in 2011.
Net income for the period of $17.0 million fell 13.4% from the $19.7 million level in the prior year, or 8.6% from the $18.6 million level (excluding the impact of the stock compensation reversal).
The Company will host a conference call to discuss fourth quarter results on Monday, March 18, 2013 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 March 25, 2013.
Replay, Toll-Free #: (855) 859-2056
Replay, Toll #: (404) 537-3406
Conference ID # 22051643
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, 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.
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 |
|Accounts receivable, net||65,892||59,731|
|Deferred income taxes||2,455||2,268|
|Total current assets||154,124||134,037|
|Property and equipment, net||5,824||6,029|
|Intangible assets, net||11,967||13,700|
|Liabilities and stockholders' equity|
|Trade accounts payable||12,330||10,099|
|Accrued and other current liabilities||15,379||19,101|
|Total current liabilities||27,714||31,470|
|Other long-term obligations||103||128|
|Deferred income taxes||1,670||2,250|
|Preferred stock, $0.001 par value; 5,000,000 shares authorized, none issued and outstanding||--||--|
|Common stock, $0.001 par value; 100,000,000 shares authorized: 20,988,952 shares issued: 17,899,499 and 17,811,806 shares outstanding at December 31, 2012 and 2011, respectively||21||21|
|Additional paid-in capital||55,291||55,760|
|Total stockholders' equity||109,080||97,338|
|Total liabilities and stockholders' equity||$||197,155||$||179,153|
|Houston Wire & Cable Company|
|Consolidated Statements of Income|
|Three Months Ended||Year Ended|
|December 31,||December 31,|
|(In thousands, except share and per share data)|
|Cost of sales||82,362||67,564||306,017||307,515|
|Salaries and commissions||7,611||7,511||30,013||28,053|
|Other operating expenses||6,221||6,399||25,139||24,513|
|Depreciation and amortization||747||701||2,941||2,952|
|Total operating expenses||14,579||14,611||58,093||55,518|
|Income before income taxes||7,115||4,981||27,674||31,953|
|Earnings per share:|
|Weighted average common shares outstanding:|
|Dividend declared per share||$||0.09||$||0.09||$||0.36||$||0.355|
|Houston Wire & Cable Company|
|Consolidated Statements of Cash Flows|
|Year Ended December 31,|
|Adjustments to reconcile net income to net cash (used in) provided by operating activities:|
|Depreciation and amortization||2,941||2,952|
|Amortization of capitalized loan costs||18||14|
|Amortization of unearned stock compensation||1,040||(707||)|
|Provision for doubtful accounts||(19||)||(9||)|
|Provision for returns and allowances||(61||)||66|
|Provision for inventory obsolescence||815||826|
|(Gain) loss on disposals of property and equipment||(7||)||(2||)|
|Deferred income taxes||(773||)||283|
|Changes in operating assets and liabilities:|
|Trade accounts payable||2,231||(9,888||)|
|Accrued and other current liabilities||(3,722||)||(337||)|
|Long term liabilities||(25||)||(13||)|
|Net cash (used in) provided by operating activities||(3,033||)||14,319|
|Expenditures for property and equipment||(1,005||)||(1,319||)|
|Proceeds from disposals of property and equipment||9||452|
|Cash paid for acquisition||--||(343||)|
|Net cash used in investing activities||(996||)||(1,210||)|
|Borrowings on revolver||402,231||405,741|
|Payments on revolver||(391,610||)||(412,599||)|
|Deferred loan cost||--||(100||)|
|Proceeds from exercise of stock options||137||114|
|Payment of dividends||(6,375||)||(6,276||)|
|Excess tax benefit for options||35||37|
|Purchase of treasury stock||(115||)||(26||)|
|Net cash provided by (used in) financing activities||4,303||(13,109||)|
|Net change in cash||274||--|
|Cash at beginning of year||--||--|
|Cash at end of year||$||274||$||--|
|Cash paid during the year for interest||$||1,231||$||1,445|
|Cash paid during the year for income taxes||$||9,762||$||14,732|