HOUSTON, May 12, 2008 (PRIME NEWSWIRE) -- Houston Wire & Cable Company (Nasdaq:HWCC) (the "Company") announced record sales and earnings per share for the first quarter of 2008.
Selected highlights for the first quarter of 2008 are:
* Sales increased 9.4% to a record $89.4 million from $81.8 million in 2007 * Organic growth accounted for the entire increase in sales * Basic and fully diluted earnings per share (EPS) set a new record high at $0.37 * Operating cash flow of $7.0 million * Paid quarterly dividend of $.085 per share * Repurchased 3.9% of its outstanding shares
Sales in the first quarter of 2008 reached a record level of $89.4 million. The Company achieved a 9.4% increase over last year's record first quarter, which experienced a growth rate of 23.1% over the prior year's first quarter. Internal growth accounted for the entire increase in sales. The Company estimates that sales from its five major growth initiatives, encompassing Emission Controls, Engineering & Construction, Selected Industrials, LifeGuard(tm) (and other private branded products) and Utility Power Generation, increased approximately 20-25% over the first quarter of 2007, while first quarter sales in its Repair and Replacement sector, also referred to as Maintenance Repair & Operation (MRO), were down moderately, as our Repair and Replacement sector faced a more challenging economy in the first quarter of 2008.
Gross margin of 25.3%, while lower than the comparative year quarter, mainly due to then current market conditions, was in line with prior historical trends.
Operating expenses increased over the prior year by 6.0%, primarily due to the increased investment in our sales force and stock option compensation expense. Operating expenses as a percent of sales were 12.5%, down from 12.9% in 2007 as a result of improved operating leverage.
Operating cash flow was $7.0 million in 2008, which was lower than the $7.8 million generated in 2007, but the third consecutive quarter in which the Company generated cash flow at or in excess of $7 million. Interest expense increased to $0.5 million in 2008 from $0.2 million in 2007. This was primarily due to borrowings used to fund the Company's stock repurchase program.
Net income for the first quarter was $6.7 million compared to $7.3 million last year, a decrease of 7.7%, as sales increases and improvements in operating leverage did not fully mitigate the decline in gross margin and the higher level of operating expenses.
Basic and diluted EPS for the first quarter of 2008 were $0.37 compared to $0.35 in 2007, as the reduction in the number of shares outstanding more than made up for the decrease in net income.
President and CEO, Charles Sorrentino commented, "We were pleased with our sales growth at 9.4% in light of the challenging economy and what appears to be flat to slightly positive industry sales growth. Our five growth initiatives continue to be the engine driving organic sales increases. These growth drivers have been largely responsible for the more than doubling of our annual revenues over the last four years."
"We are starting to benefit from the additional investments made in 2007 in our sales force, product line expansions and new product introductions. Strong operating cash flow at $7.0 million provided a basis for us to repurchase an additional 3.9% of our outstanding shares in the quarter. Since adopting our buyback program in August 2007, we have purchased a total of 15.0% of the outstanding shares, and at March 31, 2008, the remaining authorization to repurchase shares under the program was $23.9 million. As previously announced, the Company increased its quarterly dividend rate by 13.3% in the quarter. These actions represent our commitment to shareholders to make every effort to manage capital in the most efficient manner while still maintaining adequate resources to make acquisitions and fund future organic growth."
"We remain vigilant with respect to the current challenging economic environment and will continue to focus on increasing market share in our targeted end markets which, for the most part, we estimate are growing in spite of the near term economic uncertainty. Congratulations to all of our team members for a great start to 2008."
Conference Call
The Company will host a conference call to discuss first quarter results on Monday, May 12th at 10:00 am CT. Hosting the call will be Charles Sorrentino, President and Chief Executive Officer, and Nicol Graham, Vice President and Chief Financial Officer.
This call is being web cast by Thomson/CCBN and can be accessed at http://ir.houwire.com/phoenix.zhtml?c=197708&p=irol-IRHome. Institutional investors can access the call at (www.streetevents.com), a password-protected event management site hosted by Thomson Street Events.
Approximately two hours after the call has been completed, the web cast can be found under the Investor Relations section of the Company's website at www.houwire.com. The web cast will be available for 30 days and a replay of the telephone conference will be available until May 19, 2008. Interested parties should use the following replay phone numbers:
Primary Replay Number: (888) 286-8010 Secondary Replay Number: (617) 801-6888 Participant Password: 15264269
About the Company
With more than 30 years experience in the electrical industry, Houston Wire & Cable Company is one of the largest distributors of specialty wire and cable and related services in the U.S. electrical distribution market. Headquartered in Houston, Texas, HWCC has sales and distribution facilities in Atlanta, Baton Rouge, Charlotte, Chicago, Denver, Houston, Los Angeles, Philadelphia, San Francisco, Seattle and Tampa.
The Houston Wire & Cable Company logo is available athttp://www.primenewswire.com/newsroom/prs/?pkgid=2807
Standard stock items available for immediate delivery include continuous and interlocked armor, instrumentation, medium voltage, high temperature, portable cord, power cables and private branded products, including LifeGuard(tm), a low-smoke, zero-halogen cable. HWCC's 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.
Forward-Looking Statements
This release contains information about 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. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors which include, but are not limited to, economic downturns and cyclicality in the markets served, risks associated with inventory, fluctuations in the prices of copper and other commodities, changes in relationships with customers, dependence on third-party manufacturers and suppliers, changes in the terms of vendor rebate programs, loss of key personnel or difficulties recruiting and retaining new qualified personnel, market acceptance of private branded products, success of initiatives to penetrate targeted markets, future capital needs and uncertainty of additional financing, new or changed competitors, other risks and challenges. For a complete discussion of risk factors, please review our Annual Report on Form 10-K for the year ended December 31, 2007, filed with the SEC on March 17, 2008.
Additionally, the forward-looking statements included in this press release represent the Company's views as of the date of this press release and these views could change. However, while the Company may elect to update these forward-looking statements at some point, the Company specifically disclaims any obligation to do so, other than as required by federal securities laws. These forward-looking statements should not be relied upon as representing the Company's views as of any date subsequent to the date of this press release.
HOUSTON WIRE & CABLE COMPANY
Consolidated Balance Sheets
(In thousands, except share data)
March 31, Dec. 31,
2008 2007
--------- ---------
(unaudited)
Assets
Current assets:
Accounts receivable, net $ 55,831 $ 58,202
Inventories, net 69,554 69,299
Deferred income taxes 1,344 1,054
Prepaid expenses 1,025 832
Income taxes -- 2,004
--------- ---------
Total current assets 127,754 131,391
--------- ---------
Property and equipment, net 3,223 3,234
Goodwill 2,996 2,996
Deferred income taxes 1,513 1,356
Other assets 112 114
--------- ---------
Total assets $ 135,598 $ 139,091
========= =========
Liabilities and stockholders' equity
Current liabilities:
Book overdraft $ 1,889 $ 3,854
Trade accounts payable 13,676 12,297
Accrued and other current liabilities 11,457 17,263
Income taxes payable 2,529 --
--------- ---------
Total current liabilities 29,551 33,414
--------- ---------
Long term obligations 39,277 34,507
Stockholders' equity:
Common stock, $0.001 par value; 100,000,000
shares authorized: 20,988,952 shares issued
and 17,858,550 outstanding at March 31, 2008
and 20,988,952 issued and 18,577,727
outstanding at December 31, 2007 21 21
Additional paid-in-capital 54,691 54,131
Retained earnings 62,934 57,846
Treasury stock (50,876) (40,828)
--------- ---------
Total stockholders' equity 66,770 71,170
--------- ---------
Total liabilities and stockholders' equity $ 135,598 $ 139,091
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HOUSTON WIRE & CABLE COMPANY
Consolidated Statements of Income
(Unaudited)
(In thousands, except share and per share data)
Three Months Ended
March 31,
-------------------------
2008 2007
----------- -----------
Sales $ 89,441 $ 81,788
Cost of sales 66,774 59,179
----------- -----------
Gross profit 22,667 22,609
Operating Expenses:
Salaries and commissions 6,076 5,678
Other operating expenses 4,984 4,766
Depreciation and amortization 127 110
----------- -----------
Total operating expenses 11,187 10,554
----------- -----------
Operating income 11,480 12,055
Interest expense 541 185
----------- -----------
Income before income taxes 10,939 11,870
Income taxes 4,202 4,573
----------- -----------
Net income $ 6,737 $ 7,297
=========== ===========
Earnings per share:
Basic $ 0.37 $ 0.35
=========== ===========
Diluted $ 0.37 $ 0.35
=========== ===========
Weighted average common shares
outstanding
Basic 18,081,809 20,868,027
=========== ===========
Diluted 18,121,280 20,996,579
=========== ===========
Dividends declared per share $ 0.085 $ --
=========== ===========
HOUSTON WIRE & CABLE COMPANY
Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
Three Months Ended
March 31,
--------------------
2008 2007
-------- --------
Operating activities
Net income $ 6,737 $ 7,297
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 127 110
Amortization of capitalized loan costs 20 16
Amortization of unearned stock compensation 519 290
Provision for returns and allowances (11) (116)
Provision for inventory obsolescence (6) 16
Deferred income taxes (447) (211)
Changes in operating assets and liabilities:
Accounts receivable 2,382 1,163
Inventories (249) (7,468)
Prepaid expenses (193) (589)
Other assets (18) 3
Book overdraft (1,965) 2,190
Trade accounts payable 1,379 2,793
Accrued and other current liabilities (5,806) (1,390)
Income taxes payable/receivable 4,533 3,685
-------- --------
Net cash provided by operating activities 7,002 7,789
Investing activities
Expenditures for property, plant, and
equipment (116) (96)
-------- --------
Net cash used in investing activities (116) (96)
Financing activities
Borrowings on revolver 91,157 75,494
Payments on revolver (86,387) (83,766)
Proceeds from exercise of stock options 18 31
Excess tax benefit for stock options 41 548
Payment of dividends (1,527) --
Purchase of treasury stock (10,188) --
-------- --------
Net cash used in financing activities (6,886) (7,693)
-------- --------
Net change in cash -- --
Cash at beginning of period -- --
-------- --------
Cash at end of period $ -- $ --
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