Houston Wire & Cable Company Provides Quarterly Results, Update on Cost and Debt Reduction


HOUSTON, May 07, 2020 (GLOBE NEWSWIRE) -- Houston Wire & Cable Company (NASDAQ: HWCC) (the “Company”) announced operating results for the first quarter ended March 31, 2020 and progress on its cost and debt reduction programs.

  • Net income was $0.5 million, or $0.7 million after adjusting for a $0.2 million non-cash trade name impairment charge, which compares to net income of $2.3 million in the first quarter of 2019 
  • Fully diluted earnings per share of $0.03, or $0.04 as adjusted
  • Executing cost and debt reduction programs
    • Targeting expense savings of up to $14 million annualized
    • Reduced net debt by $11.7 million from $82.4 million at quarter end to $70.7 million at May 5 and by over $20 million from its first quarter peak

James Pokluda, President and Chief Executive Officer commented, “Throughout these challenging times, Houston Wire & Cable Company has excelled in serving the value chain as an essential business with superior operational performance while protecting the safety of its employees.  Our teams mobilized quickly with virtual enterprise management solutions. Those employees who were able to work remotely shifted to their home offices, and our staff that was not able to work remotely practiced safe work and hygiene habits as guided by government authorities. The leadership team and I feel extraordinary gratitude for the outstanding efforts of our coworkers, and are humbled by the sacrifices they have made for the company.

During the first quarter, we were on track for sales growth until the impact of the global pandemic began in March. While we were taking actions to assure business continuity and superior customer service, we also increased our focus on prudent expense reduction and balance sheet improvement. We are well underway with expense reduction initiatives targeted to generate annualized savings of approximately $14 million and over $8 million in 2020. Our debt reduction actions during March and April have produced immediate results:  as of May 5th, net debt reduced by $11.7 million, to $70.7 million, from the end of the first quarter and by over $20 million from its peak during the quarter. Our banking relationship is strong, we are in compliance with the availability-based covenants and are focused on achieving a year-end debt target of $40 million through monetization of working capital. We will continue to report on our results throughout the year as we progress toward our year-end target.”

In addition to our expense reduction, on May 4th, we received a loan under the Small Business Administration’s Payroll Protection Program. These funds will be used to maintain employment and pay permissible operational expenses under the terms of the program.

Mr. Pokluda concluded “We are combating the current economic challenges without compromising customer service, are properly equipped and structured to provide the essential products and services our country and customers require for recovery, and are getting immediate results with the actions we are taking to strengthen the Company.”

Conference Call
The Company will host a conference call to discuss first quarter results tomorrow, Friday, May 8, 2020, 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. This will be the last scheduled call, as the Company has determined to discontinue quarterly earnings calls going forward.  However, we will continue to provide regular written updates on our business performance through our press releases and SEC filings.

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 # 2499159

Approximately two hours after the completion of the live call, a telephone replay will be available until May 15, 2020.

Replay, Toll-Free #: (855)-859-2056
Replay, Toll #: (404)-537-3406
Conference ID # 2499159

About the Company 
With 45 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, the Company’s Current Report on Form 8‑K dated April 29, 2020 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, 
  2020  2019 
  (unaudited)    
Assets        
Current assets:        
  Cash $3,536  $4,096 
Accounts receivable, net:        
  Trade  55,054   50,325 
  Other  2,114   6,640 
  Inventories, net  109,383   114,069 
  Income taxes  1,017   1,353 
  Prepaids and other current assets  3,157   1,833 
Total current assets  174,261   178,316 
         
Property and equipment, net  15,399   14,589 
Intangible assets, net  9,888   10,282 
Goodwill  22,353   22,353 
Deferred income taxes  704   600 
Operating lease right-of-use assets, net  12,962   13,481 
Other assets  506   527 
Total assets $236,073  $240,148 
         
Liabilities and stockholders’ equity        
Current liabilities:        
 Trade accounts payable 14,651  $13,858 
 Accrued and other current liabilities  15,332   23,261 
 Operating lease liabilities  2,783   2,742 
Total current liabilities  32,766   39,861 
         
Debt  85,920   83,500 
Operating lease long term liabilities  10,652   11,182 
Other long term liabilities  2,234   1,977 
Total liabilities  131,572   136,520 
         
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: 16,584,460 and 16,611,651 outstanding at March 31, 2020 and December 31, 2019, respectively  21   21 
Additional paid-in-capital  52,276   52,304 
Retained earnings  109,171   108,626 
Treasury stock  (56,967)  (57,323)
Total stockholders’ equity  104,501   103,628 
Total liabilities and stockholders’ equity $236,073  $240,148 
 


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

  Three Months Ended 
  March 31, 
  2020  2019 
       
Sales $83,533  $85,270 
Cost of sales  63,941   64,011 
Gross profit  19,592   21,259 
         
Operating expenses:        
Salaries and commissions  9,474   9,180 
Other operating expenses  7,565   7,663 
Depreciation and amortization  767   553 
Impairment charge  200    
Total operating expenses  18,006   17,396 
         
Operating income  1,586   3,863 
Interest expense  813   741 
Income before income taxes  773   3,122 
Income tax expense  228   838 
Net income $545  $2,284 
         
Earnings per share:        
Basic $0.03  $0.14 
Diluted $0.03  $0.14 
Weighted average common shares outstanding:        
Basic  16,387,460   16,477,855 
Diluted  16,436,293   16,577,126 
 


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

  Three Months
Ended March 31,
 
  2020  2019 
       
Operating activities        
Net income $545  $2,284 
Adjustments to reconcile net income to net cash used in operating activities:        
Impairment charge  200    
Depreciation and amortization  767   553 
Amortization of unearned stock compensation  328   342 
Non-cash lease expense  904   986 
Provision for refund liability  18   559 
Provision for inventory obsolescence  173   170 
Deferred income taxes  (104)  284 
Other non-cash items  62   34 
Changes in operating assets and liabilities:        
Accounts receivable  (253  (723)
Inventories  4,513   (1,170)
Prepaids  (1,238)  (1,005)
Other assets  (77)  (549)
Lease payments  (907)  (982)
Trade accounts payable  793   (3,424
Accrued and other current liabilities  (8,281)  (6,460)
Income taxes  336   534 
Other operating activities  257   93 
Net cash used in operating activities  (1,964)  (8,474)
         
Investing activities        
 Expenditures for property and equipment  (857)  (278)
Net cash used in investing activities  (857)  (278)
         
Financing activities        
 Borrowings on revolver  85,653   94,333 
 Payments on revolver  (83,233)  (86,709)
 Release of treasury stock/stock surrendered on vested awards     8 
 Lease payments  (159)  (17)
Net cash provided by financing activities  2,261   7,615 
         
Net change in cash  (560  (1,137
Cash at beginning of period  4,096   1,393 
         
Cash at end of period $3,536  $256 
Supplemental disclosures of non-cash activities        
  Purchase of assets under finance leases $526  $11 

  


            

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