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Houston Wire & Cable Company Reports Results for the Quarter Ended June 30, 2019

HOUSTON, Aug. 08, 2019 (GLOBE NEWSWIRE) -- Houston Wire & Cable Company (HWCC) (the “Company”) announced operating results for the second quarter ended June 30, 2019.

Selected quarterly results versus the second quarter of 2018 were:

  • Sales of $85.3 million, down 9.1%
  • Gross margin of 24.1%, up 30 basis points
  • Operating expense improved $448 thousand
  • Quarter end debt decreased $7.0 million and average debt down $8.2 million
  • Net income of $1.6 million, down 37%
  • Fully diluted EPS of $0.10, down $0.06

Second Quarter Summary
Jim Pokluda, President and Chief Executive Officer commented, “Industrial market demand weakened versus the prior year period, and revenue declines in oil and gas, fastener, and offshore drilling end markets negatively impacted our results.  We estimate that sales decreased approximately 7.0% from the prior year quarter when adjusted for aggregate changes in metals prices.  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 2%, while Maintenance, Repair, and Operations (MRO) sales were down 11%, as compared to the second quarter of 2018. 

Despite recent market headwinds, we continued to make good progress with gross profit improvement and reduction of expenses.  Gross margin at 24.1% increased 30 basis points from the prior period, primarily due to improved pricing discipline and product mix.  Operating expenses at $17.5 million were down $0.4 million from prior period.”

Debt at the end of the second quarter of 2019 was $73.1 million, a reduction of $7.0 million and $5.8 million from the second quarter of 2018 and the first quarter of 2019, respectively.   This reduction in debt is consistent with our seasonal business patterns. Average debt in the second quarter of 2019 was $74.3 million, which was $8.2 million lower than the average in the second quarter of 2018.  The average effective interest rate was 3.9%, which was flat with the first quarter of 2019 and a 20 basis point increase over the second quarter 2018.   The result is that interest expense for the second quarter of 2019 was flat sequentially and decreased 4.5% or $35 thousand to $738 thousand versus the prior year.

Net income was $1.6 million, as compared to $2.6 million in the same period of the prior year.

Mr. Pokluda further commented “as we move into the second half of the year, despite seeing lessened activity in certain industrial end markets, we continue to manage what is within our control, and are performing well in many areas of our business that will help offset some of the market pressures.  Our operational excellence is at peak levels, customer satisfaction is very high, and expense management, working capital management, and prudent allocation of capital remain as our top priorities.” 

Conference Call
The Company will host a conference call to discuss fourth quarter results tomorrow, [Friday], August 9th, 2019, at 10:00 a.m., C.D.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 www.houwire.com.  

Live call dial-in numbers are as follows:
Toll-Free: (800)-936-7954
International: (720)-545-0048
Conference ID # 7158919

Approximately two hours after the completion of the live call, a telephone replay will be available until August 16, 2019.

Replay, Toll-Free #: (855)-859-2056
Replay, Toll #: (404)-537-3406
Conference ID # 7158919

About the Company 
With 44 years’ 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 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)

    June 30,     December 31,  
    2019     2018  
    (unaudited)        
Assets                
Current assets:                
Cash   $     $ 1,393  
Accounts receivable, net:                
Trade     55,877       52,946  
Other     3,313       6,847  
Inventories, net     106,273       94,325  
Income taxes     577       435  
Prepaids     2,108       737  
Other current assets     490        
Total current assets     168,638       156,683  
                 
Property and equipment, net     12,033       11,456  
Intangible assets, net     10,790       11,179  
Goodwill     22,353       22,353  
Operating lease right-of-use assets, net     11,176        
Deferred income taxes     571       930  
Other assets     490       456  
Total assets   $ 226,051     $ 203,057  
                 
Liabilities and stockholders’ equity                
Current liabilities:                
Book overdraft   $ 330     $  
Trade accounts payable     13,359       11,253  
Accrued and other current liabilities     21,612       19,232  
Operating lease liabilities     2,961        
Total current liabilities     38,262       30,485  
                 
Debt     73,107       71,316  
Operating lease long term liabilities     8,628        
Other long term liabilities     706       578  
Total liabilities     120,703       102,379  
                 
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: 16,645,182 and 16,611,651 outstanding at June 30, 2019 and December 31, 2018, respectively     21       21  
Additional paid-in-capital     53,620       53,514  
Retained earnings     110,003       105,975  
Treasury stock     (58,296 )     (58,832 )
Total stockholders’ equity     105,348       100,678  
Total liabilities and stockholders’ equity   $ 226,051     $ 203,057  
                 



HOUSTON WIRE & CABLE COMPANY
Consolidated Statements of Operations
(Unaudited)
(In thousands, except share and per share data)

    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2019     2018     2019     2018  
                         
Sales   $ 85,326     $ 93,852     $ 170,596     $ 178,878  
Cost of sales     64,789       71,505       128,800       136,042  
Gross profit     20,537       22,347       41,796       42,836  
                                 
Operating expenses:                                
Salaries and commissions     9,244       9,906       18,424       19,100  
Other operating expenses     7,729       7,508       15,392       14,988  
Depreciation and amortization     534       541       1,087       1,086  
Total operating expenses     17,507       17,955       34,903       35,174  
                                 
Operating income     3,030       4,392       6,893       7,662  
Interest expense     738       773       1,479       1,417  
Income before income taxes     2,292       3,619       5,414       6,245  
Income tax expense     649       1,013       1,487       1,692  
Net income   $ 1,643     $ 2,606     $ 3,927     $ 4,553  
                                 
Earnings per share:                                
Basic   $ 0.10     $ 0.16     $ 0.24     $ 0.28  
Diluted   $ 0.10     $ 0.16     $ 0.24     $ 0.28  
Weighted average common shares outstanding:                                
Basic     16,504,471       16,387,112       16,491,236       16,368,610  
Diluted     16,597,496       16,489,671       16,571,113       16,459,736  
                                 

  

HOUSTON WIRE & CABLE COMPANY
Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)

    Six Months
Ended June 30,
 
    2019     2018  
             
Operating activities                
Net income   $ 3,927     $ 4,553  
Adjustments to reconcile net income to net cash used in operating activities:                
Depreciation and amortization     1,087       1,086  
Amortization of unearned stock compensation     707       703  
Non-cash lease expense     1,968        
Provision for refund liability     471       108  
Provision for inventory obsolescence     459       191  
Deferred income taxes     460       (82 )
Other non-cash items     83       21  
Changes in operating assets and liabilities:                
Accounts receivable     75       (5,403 )
Inventories     (12,407 )     105  
Prepaids     (1,371 )     196  
Other assets     (550 )     (12 )
Lease payments     (1,963 )      
Book overdraft     330       (1,716 )
Trade accounts payable     2,106       (439
Accrued and other current liabilities     2,235       (4,483 )
Income taxes     (142     (399 )
Other operating activities     359       (104
Net cash used in operating activities     (2,166 )     (5,675 )
                 
Investing activities                
Expenditures for property and equipment     (875 )     (741 )
Net cash used in investing activities     (875 )     (741 )
                 
Financing activities                
Borrowings on revolver     175,417       179,994  
Payments on revolver     (173,626 )     (173,401 )
Payment of dividends     (30 )     (39 )
Purchase of treasury stock/stock surrendered on vested awards     (65 )     (138 )
Lease payments     (48 )      
Net cash provided by financing activities     1,648       6,416  
                 
Net change in cash     (1,393      
Cash at beginning of period     1,393        
                 
Cash at end of period   $     $  
                 


 

CONTACT:

      Christopher M. Micklas
      Chief Financial Officer
      Direct:  713.609.2114
      Fax:  713.609.2168
      cmicklas@houwire.com