HOUSTON, Aug. 11, 2008 (PRIME NEWSWIRE) -- Houston Wire & Cable Company (Nasdaq:HWCC) (the "Company") announced record sales and earnings per share for the second quarter and first half of 2008.
Selected highlights for the second quarter of 2008 are:
* Sales increased 9.2% to a record $97.4 million from $89.2 million in 2007 * Organic growth accounted for the entire increase in sales * Fully diluted earnings per share (EPS) set a new record high at $0.44 * Paid quarterly dividend of $0.085 per share * Repurchased 1.1% of its outstanding shares
Selected highlights for the first half of 2008 compared to the first half of 2007:
* Sales increased 9.3% to a record $186.8 million from $171.0 million * Organic growth accounted for the entire increase in sales * Fully diluted EPS was $0.80 vs. $0.75 * Repurchased 5.0% of its outstanding shares
Sales of $97.4 million reached a new second quarter sales record. The Company achieved a 9.2% increase over last year's record second quarter. Internal growth from the Company's five major growth initiatives, encompassing Emission Controls, Engineering & Construction, Selected Industrials, LifeGuard(tm) (and other private branded products) and Utility Power Generation, accounted for the entire increase in sales. The Company estimates that sales from these initiatives increased by approximately 20% to 25% over the second quarter of 2007, while second quarter sales in its Repair and Replacement sector, also referred to as Maintenance Repair & Operation (MRO), were slightly down, as we believe this sector is selectively deferring discretionary expenses due to the challenging economic environment.
First half sales growth of 9.3%, from $171.0 million in 2007 to $186.8 million in 2008, also set another sales record. The continuing drivers of the increasing sales levels are the Company's five major growth initiatives, which target infrastructure, power generation and selected industrials.
Gross Margin for the quarter of 24.9%, was lower than the comparative year quarter because of unusually high gross margin in 2007 versus historical trends. On a year-to-date basis, gross margin was 25.1% and in line with longer term historical trends.
Operating Expenses at 11.5% of sales in the second quarter were 40 basis points higher than the prior year's second quarter. The increase is due to increased commissions, higher salary expense due to additional sales personnel required to support the growth plan and an increase in stock compensation expense. Operating Expenses as a percent of sales for the first six months of 2008 were flat with 2007 at 12.0%.
Operating cash flow was $2.0 million in 2008, lower than the $5.0 million generated in 2007, reflecting additional working capital investments. The increase in interest expense to $0.5 million in the second quarter of 2008 from $0.2 million in 2007 and on a year-to-date basis to $1.0 million from $0.4 million in 2007 was principally due to increased borrowings to support the continued purchase of treasury stock.
Net Income for the second quarter and for the first six months was lower than the prior periods by 8.0% and 7.9%, respectively, as continued sales increases were unable to mitigate decreased gross margins and higher levels of operating expenses.
Basic and diluted EPS for the second quarter of 2008 were $0.44 compared to $0.40 in 2007, as the reduction in the number of shares outstanding more than made up for the decrease in net income. For the first six months of 2008, basic and fully diluted earnings per share were $0.81 and $0.80, respectively, compared to $0.75 per share for the comparable 2007 period.
President and CEO, Charles Sorrentino commented, "We were pleased to see the continuing increase in sales at 9.2% despite the current economic conditions and what appears to be flat to slightly positive industry sales growth. Our five growth initiatives continue to be the primary driver of our organic sales increases. These growth initiatives are embedded in the core industrial and infrastructure base of the economy, which we believe to be more resilient than other sectors of the general economy.
"We are benefiting from the recent additions to our sales force, enhanced sales training and product line expansions. We have repurchased an additional 5.0% of our outstanding shares in 2008. Since adopting our buyback program in August 2007, we have purchased a total of 15.9% of the outstanding shares, and at June 30, 2008, the remaining authorization to repurchase shares under the program was $20.3 million. The Company continued to pay a quarterly dividend at a rate of $0.085 cents per share. These actions represent our continuing commitment to shareholders to manage capital in an efficient manner while still maintaining adequate resources to make acquisitions and fund future organic growth.
"A special thanks to all Houston Wire & Cable Company team members for a job well done throughout the first half in a tough economic environment."
Conference Call
The Company will host a conference call to discuss second quarter results on Monday, August 11th 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.
A live audio web cast of the call will be available on the Investor Relations section of the Company's website, www.houwire.com. A replay of the webcast will be available for 30 days. A replay of the conference call will be available approximately two hours after the conclusion of the call. This audio replay will be available until August 18, 2008. Interested parties should use the following replay phone numbers:
Domestic Replay Number: (888) 203-1112 International Replay Number: (719) 457-0820 Participant Password: 3125594
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.
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.
The Houston Wire & Cable Company logo is available at http://www.primenewswire.com/newsroom/prs/?pkgid=2807
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)
June 30, December 31,
2008 2007
----------- -----------
(unaudited)
Assets
Current assets:
Cash and short-term investments $ 1,143 $ --
Accounts receivable, net 63,190 58,202
Inventories, net 72,245 69,299
Deferred income taxes 1,099 1,054
Prepaid expenses 1,209 832
Income taxes receivable -- 2,004
----------- -----------
Total current assets 138,886 131,391
----------- -----------
Property and equipment, net 3,189 3,234
Goodwill 2,996 2,996
Deferred income taxes 1,674 1,356
Other assets 127 114
----------- -----------
Total assets $ 146,872 $ 139,091
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Liabilities and stockholders' equity
Current liabilities:
Book overdraft $ -- $ 3,854
Trade accounts payable 15,625 12,297
Accrued and other current liabilities 10,446 17,263
Income taxes payable 205 --
----------- -----------
Total current liabilities 26,276 33,414
----------- -----------
Long term obligations 50,406 34,507
Stockholders' equity:
Common stock, $0.001 par value; 100,000,000
shares authorized; 20,988,952 shares
issued: 17,695,969 and 18,577,727
outstanding at June 30, 2008 and
December 31, 2007, respectively 21 21
Additional paid-in-capital 55,443 54,131
Retained earnings 68,688 57,846
Treasury stock (53,962) (40,828)
----------- -----------
Total stockholders' equity 70,190 71,170
----------- -----------
Total liabilities and stockholders' equity $ 146,872 $ 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 Six Months Ended
June 30, June 30,
---------------------- ----------------------
2008 2007 2008 2007
---------- ---------- ---------- ----------
Sales $ 97,384 $ 89,210 $ 186,825 $ 170,998
Cost of sales 73,153 65,486 139,927 124,665
---------- ---------- ---------- ----------
Gross profit 24,231 23,724 46,898 46,333
Operating expenses:
Salaries and
commissions 6,095 5,499 12,171 11,177
Other operating
expenses 5,001 4,300 9,985 9,066
Depreciation and
amortization 129 109 256 219
---------- ---------- ---------- ----------
Total operating
expenses 11,225 9,908 22,412 20,462
---------- ---------- ---------- ----------
Operating income 13,006 13,816 24,486 25,871
Interest expense 450 186 991 371
---------- ---------- ---------- ----------
Income before income
taxes 12,556 13,630 23,495 25,500
Income taxes 4,811 5,209 9,013 9,782
---------- ---------- ---------- ----------
Net income $ 7,745 $ 8,421 $ 14,482 $ 15,718
========== ========== ========== ==========
Earnings per share:
Basic $ 0.44 $ 0.40 $ 0.81 $ 0.75
========== ========== ========== ==========
Diluted $ 0.44 $ 0.40 $ 0.80 $ 0.75
========== ========== ========== ==========
Weighted average common
shares outstanding:
Basic 17,760,989 20,960,621 17,955,381 20,914,580
========== ========== ========== ==========
Diluted 17,798,403 21,042,872 17,993,823 21,019,981
========== ========== ========== ==========
Dividends declared per
share $ 0.085 $ -- $ 0.17 $ --
========== ========== ========== ==========
HOUSTON WIRE & CABLE COMPANY
Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
Six Months Ended
June 30,
--------------------
2008 2007
--------- ---------
Operating activities
Net income $ 14,482 $ 15,718
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 256 219
Amortization of capitalized loan costs 40 32
Amortization of unearned stock compensation 1,058 855
Provision for doubtful accounts 14 (299)
Provision for returns and allowances 27 (156)
Provision for inventory obsolescence (6) (54)
Deferred income taxes (363) (257)
Changes in operating assets and liabilities:
Accounts receivable (5,029) (5,206)
Inventories (2,940) (7,819)
Prepaid expenses (377) (390)
Other assets (53) (29)
Book overdraft (3,854) 1,294
Trade accounts payable 3,328 2,731
Accrued and other current liabilities (6,817) (481)
Income taxes payable/receivable 2,209 (1,128)
--------- ---------
Net cash provided by operating activities 1,975 5,030
Investing activities
Expenditures for property and equipment (211) (264)
--------- ---------
Net cash used in investing activities (211) (264)
Financing activities
Borrowings on revolver 192,696 166,628
Payments on revolver (176,797) (172,687)
Proceeds from exercise of stock options 54 90
Excess tax benefit for stock options 255 1,203
Payment of dividends (3,040) --
Purchase of treasury stock (13,789) --
--------- ---------
Net cash used in financing activities (621) (4,766)
--------- ---------
Net change in cash 1,143 --
Cash at beginning of period -- --
--------- ---------
Cash at end of period $ 1,143 $ --
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