HWCC
$4.01
Houston Wire Cable
($.04)
(.99%)
Earnings Details
Quarter September 2019
Thursday, November 07, 2019 5:12:00 PM
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Summary

Houston Wire Cable (HWCC) Reports Quarter Earnings

Houston Wire Cable (HWCC) reported Quarter September 2019 earnings of $0.07 per share on revenue of $85.4 million.. Revenue fell 5.2% compared to the same quarter a year ago.

Houston Wire & Cable Co provides specialty wires and cable and related services to the U.S. electrical distribution market.

Results
Reported Earnings
$0.07
Earnings Whisper
-
Consensus Estimate
Reported Revenue
$85.4 Mil
Revenue Estimate
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

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

HOUSTON, Nov. 07, 2019 (GLOBE NEWSWIRE) -- Houston Wire & Cable Company (NASDAQ: HWCC) (the “Company”) announced operating results for the third quarter ended September 30, 2019.

Third Quarter 2019 Summary

Revenues for the quarter totaled $85.4 million, decreasing $4.7 million, or 5.2%, compared to $90.1 million in the third quarter 2018. The net loss was $(0.7) million, compared to net income of $2.5 million in the prior-year period. The net loss included a $1.8 million after-tax charge related to the closure of the Vertex Attleboro, MA distribution center. EPS totaled $(0.04), with the Attleboro charge having a negative impact of $0.11 per share.

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 3% 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, decreased approximately 1% while Maintenance, Repair, and Operations (MRO) sales were down approximately 4%, as compared to the prior year and adjusted for metals prices.” 

Recent market headwinds have put pressure on pricing and, despite progress with pricing and product mix, gross margin at 22.8% decreased 100 basis points from the prior year.  Operating expenses at $19.5 million were up $1.2 million from the prior year, although excluding the Attleboro charge, operating expenses were down $1.1 million, or 5.8%, in line with the sales decline.

Debt at the end of the quarter was $77.9 million, an increase of $4.5 million over the prior year’s quarter.  This increase in debt is primarily due to payment for an opportunistic inventory purchase at the end of the second quarter.  The average debt of $78.0 million was $1.1 million higher than the average for the prior year quarter.  The average effective interest rate was 4.0% per annum, which was near flat with the second quarter of 2019 and a 20-basis point increase over the prior year quarter.  The result is that interest expense for the quarter was near flat sequentially and increased 9.9%, or $73 thousand, to $812 thousand versus the prior year.

Third Quarter Developments

On July 22, we reached an agreement with the landlord of the Vertex warehouse in Attleboro, MA which provides for the early termination of the lease during the fourth quarter 2019.  We agreed to pay $2.5 million, which includes $0.3 million for repairs, in consideration for the reduction in lease term.  In connection with the closure of the Attleboro warehouse, we are more than doubling Vertex’s Chicago warehouse capacity and will open a new distribution center in Edison, NJ by the end of 2019.  Going forward, it is anticipated that the net annual operating expense savings resulting from these warehouse activities will be approximately $1 million.

In September, we successfully implemented a new ERP system in the Electrical business unit.  The new ERP system will allow us to expand our digital activities which are focused on improved efficiencies in operations and enhanced customer service.

As previously announced, the Company reactivated its stock repurchase program in August, and the company repurchased 235 thousand shares for $1.1 million during the third quarter.

Mr. Pokluda further commented “as we move into the final quarter of the year, despite seeing lessened activity in certain industrial end markets, we continue to manage what is within our control, and as evidenced by our Vertex restructuring and ERP implementation, make strategic investments in people, processes, and technology that will deliver benefits.  Finally, our operational excellence remains at peak levels, customer satisfaction is very high, and expense management, working capital management, and prudent allocation of capital remain our top priorities.” 

Conference Call
The Company will host a conference call to discuss third quarter results tomorrow, Friday, November 8, 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 # 2843006

Approximately two hours after the completion of the live call, a telephone replay will be available until November 15, 2019.

Replay, Toll-Free #: (855) 859-2056
Replay, Toll #: (404) 537-3406
Conference ID # 2843006

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.

CONTACT:

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



HOUSTON WIRE & CABLE COMPANY
Consolidated Balance Sheets
(In thousands, except share data)

  September 30,  December 31, 
  2019  2018 
  (unaudited)    
Assets        
Current assets:        
Cash $6  $1,393 
Accounts receivable, net:        
Trade  55,681   52,946 
Other  4,847   6,847 
Inventories, net  105,867   94,325 
Income taxes  1,323   435 
Prepaids  1,508   737 
Other current assets  768    
Total current assets  170,000   156,683 
         
Property and equipment, net  13,890   11,456 
Intangible assets, net  10,596   11,179 
Goodwill  22,353   22,353 
Operating lease right-of-use assets, net  9,872    
Deferred income taxes  578   930 
Other assets  464   456 
Total assets $227,753  $203,057 
         
Liabilities and stockholders’ equity        
Current liabilities:        
Book overdraft $  $ 
Trade accounts payable  12,289   11,253 
Accrued and other current liabilities  19,547   19,232 
Operating lease liabilities  4,737    
Total current liabilities  36,573   30,485 
         
Debt  77,903   71,316 
Operating lease long term liabilities  7,671    
Other long term liabilities  1,658   578 
Total liabilities  123,805   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: 16,408,916 and 16,611,651 outstanding at September 30, 2019 and December 31, 2018, respectively  21   21 
Additional paid-in-capital  53,996   53,514 
Retained earnings  109,282   105,975 
Treasury stock  (59,351)  (58,832)
Total stockholders’ equity  103,948   100,678 
Total liabilities and stockholders’ equity $227,753  $203,057 
         



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

  Three Months Ended  Nine Months Ended 
  September 30,  September 30, 
  2019  2018  2019  2018 
             
Sales $85,403  $90,074  $255,999  $268,952 
Cost of sales  65,972   68,681   194,772   204,723 
Gross profit  19,431   21,393   61,227   64,229 
                 
Operating expenses:                
Salaries and commissions  9,249   9,778   27,673   28,878 
Other operating expenses  9,602   8,028   24,994   23,016 
Depreciation and amortization  667   541   1,754   1,627 
Total operating expenses  19,518   18,347   54,421   53,521 
                 
Operating income (loss)  (87  3,046   6,806   10,708 
Interest expense  812   739   2,291   2,156 
Income (loss) before income taxes  (899  2,307   4,515   8,552 
Income tax expense (benefit)  (178  (148)  1,309   1,544 
Net income (loss) $(721 $2,455  $3,206  $7,008 
                 
Earnings (loss) per share:                
Basic $(0.04 $0.15  $0.19  $0.43 
Diluted $(0.04 $0.15  $0.19  $0.42 
Weighted average common shares outstanding:                
Basic  16,443,446   16,404,805   16,475,131   16,380,807 
Diluted  16,443,446   16,563,245   16,558,068   16,492,217 
                 



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

  Nine Months
Ended September 30,
 
  2019  2018 
       
Operating activities        
Net income $3,206  $7,008 
Adjustments to reconcile net income to net cash (used in) provided by operating activities:        
Depreciation and amortization  1,754   1,627 
Amortization of unearned stock compensation  1,083   1,085 
Non-cash lease expense  5,143    
Provision for refund liability  751   40 
Provision for inventory obsolescence  426   813 
Deferred income taxes  453   (1,537)
Other non-cash items  101   53 
Changes in operating assets and liabilities:        
Accounts receivable  (1,546  (7,668)
Inventories  (11,968)  833 
Prepaids  (771)  316 
Other assets  (817)  (192)
Lease payments  (3,016)   
Book overdraft     (1,300)
Trade accounts payable  1,036   901 
Accrued and other current liabilities  (1,186)  (267)
Income taxes  (888  (101)
Other operating activities  1,311   (72
Net cash (used in) provided by operating activities  (4,928)  1,539 
         
Investing activities        
Expenditures for property and equipment  (1,742)  (1,210)
Net cash used in investing activities  (1,742)  (1,210)
         
Financing activities        
Borrowings on revolver  266,322   270,609 
Payments on revolver  (259,735)  (270,761)
Payment of dividends  (30)  (39)
Purchase of treasury stock/stock surrendered on vested awards  (1,120)  (138)
Lease payments  (154)   
Net cash provided by (used in) financing activities  5,283   (329
         
Net change in cash  (1,387   
Cash at beginning of period  1,393    
         
Cash at end of period $6  $ 

 

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Source: Houston Wire & Cable