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Houston Wire & Cable Company Reports Results for the Quarter Ended March 31, 2019

HOUSTON, May 09, 2019 (GLOBE NEWSWIRE) -- Houston Wire & Cable Company (HWCC) (the “Company”) announced operating results for the first quarter ended March 31, 2019.

Selected quarterly results were:

  • Net income of $2.3 million, up 17.3% from the first quarter of 2018
  • Fully diluted EPS of $0.14, up $0.02 over the first quarter of 2018
  • Sales of $85.3 million, up 0.3% from the same period in 2018
  • Gross margin of 24.9%, up 80 basis points from the first quarter of 2018
  • Sequential quarter operating expense declined $393 thousand
  • Operating income of $3.9 million, an 18.1% increase from the same period in 2018

First Quarter Summary
Jim Pokluda, President and Chief Executive Officer commented, “We were pleased with the profitability improvements realized in the first quarter as these results represented our eighth consecutive quarter of year-over-year operating profit growth.  Although reported revenue was only slightly positive, adjusting for one less business day and the headwinds experienced from metals, it is encouraging that end market activity remained stable, and that our team continued to make gains with key elements of our strategic plan including margin improvement. 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 5%, while Maintenance, Repair, and Operations (MRO) sales were down 1% as compared to the first quarter of 2018.”

Gross margin at 24.9% increased 80 basis points from the first quarter of 2018, primarily due to improved pricing discipline and product mix. Sequentially, gross margin increased 100 basis points. Operating expenses at $17.4 million were up $0.2 million from Q1 2018 and down $0.4 million sequentially.  

Average debt levels for the quarter increased 3.5% sequentially consistent with the historical first quarter trend but decreased 4.5% from $76.9 million in Q1 2018 to $73.5 in 2019, while the effective interest rate increased from 3.3% in 2018 to 3.9% in 2019.

The effective tax rate for the quarter was 26.8%, compared to the 25.9% level in 2018.

Net income was $2.3 million, as compared to $1.9 million in the same period of the prior year. Mr. Pokluda further commented, “As a result of the attainment of higher margin levels and sequential reduction in operating expenses, we are able to report the highest level of first quarter operating income since 2014.”

Conference Call
The Company will host a conference call to discuss first quarter results tomorrow, Friday, May 10, 2019, at 2:00 p.m., C.D.T. The call was originally scheduled for 10:00 a.m. C.D.T., however due to concerns with the weather in the Houston area, we have chosen to move the call. 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 # 3298124

Approximately two hours after the completion of the live call, a telephone replay will be available until May 17, 2019.

Replay, Toll-Free #: (855)-859-2056
Replay, Toll #: (404)-537-3406
Conference ID # 3298124

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)

  March 31,     December 31,  
  2019     2018  
  (unaudited)        
Assets              
Current assets:              
Cash $ 256     $ 1,393  
Accounts receivable, net:              
Trade   58,350       52,946  
Other   1,585       6,847  
Inventories, net   95,325       94,325  
Income taxes         435  
Prepaids   1,742       737  
Other current assets   490        
Total current assets   157,748       156,683  
               
Property and equipment, net   11,377       11,456  
Intangible assets, net   10,984       11,179  
Goodwill   22,353       22,353  
Operating lease right-of-use assets, net   11,954        
Deferred income taxes   747       930  
Other assets   503       456  
Total assets $ 215,666     $ 203,057  
               
Liabilities and stockholders’ equity              
Current liabilities:              
Trade accounts payable $ 7,829     $ 11,253  
Accrued and other current liabilities   12,583       19,232  
Operating lease liabilities   3,082        
Income taxes   99        
Total current liabilities   23,593       30,485  
               
Debt   78,940       71,316  
Operating lease long term liabilities   9,280        
Other long term liabilities   440       578  
Total liabilities   112,253       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: 16,612,396 and 16,611,651 outstanding at March 31, 2019 and December 31, 2018, respectively   21       21  
Additional paid-in-capital   53,856       53,514  
Retained earnings   108,360       105,975  
Treasury stock   (58,824 )     (58,832 )
Total stockholders’ equity   103,413       100,678  
Total liabilities and stockholders’ equity $ 215,666     $ 203,057  

  

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

  Three Months Ended  
  March 31,  
  2019     2018  
           
Sales $ 85,270     $ 85,026  
Cost of sales   64,011       64,537  
Gross profit   21,259       20,489  
               
Operating expenses:              
Salaries and commissions   9,180       9,194  
Other operating expenses   7,663       7,480  
Depreciation and amortization   553       545  
Total operating expenses   17,396       17,219  
               
Operating income   3,863       3,270  
Interest expense   741       644  
Income before income taxes   3,122       2,626  
Income tax expense   838       679  
Net income $ 2,284     $ 1,947  
               
Earnings per share:              
Basic $ 0.14     $ 0.12  
Diluted $ 0.14     $ 0.12  
Weighted average common shares outstanding:              
Basic   16,477,855       16,349,902  
Diluted   16,577,126       16,422,961  

  

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

  Three Months
Ended March 31,
 
  2019     2018  
           
Operating activities              
Net income $ 2,284     $ 1,947  
Adjustments to reconcile net income to net cash used in operating activities:              
Depreciation and amortization   553       545  
Amortization of unearned stock compensation   342       313  
Non-cash lease expense   986        
Provision for refund liability   559       50  
Provision for inventory obsolescence   170       224  
Deferred income taxes   284       (137 )
Other non-cash items   34       11  
Changes in operating assets and liabilities:              
Accounts receivable   (723 )     2,749  
Inventories   (1,170 )     (5,511 )
Prepaids   (1,005 )     (1,435 )
Other assets   (549 )      
Lease payments   (982 )      
Book overdraft         149  
Trade accounts payable   (3,424 )     297  
Accrued and other current liabilities   (6,460 )     (6,204 )
Income taxes   534       809  
Other operating activities   93       109  
Net cash used in operating activities   (8,474 )     (6,084 )
               
Investing activities              
Expenditures for property and equipment   (278 )     (452 )
Net cash used in investing activities   (278 )     (452 )
               
Financing activities              
Borrowings on revolver   94,333       91,514  
Payments on revolver   (86,709 )     (84,886 )
Payment of dividends         (29 )
Release (purchase) of treasury stock/stock surrendered on vested awards   8       (63 )
Lease payments   (17 )      
Net cash provided by financing activities   7,615       6,536  
               
Net change in cash   (1,137 )      
Cash at beginning of period   1,393        
               
Cash at end of period $ 256     $  
 

CONTACT:

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