Houston Wire & Cable Company Reports Results for the Quarter Ended September 30, 2018


HOUSTON, Nov. 08, 2018 (GLOBE NEWSWIRE) -- Houston Wire & Cable Company (NASDAQ: HWCC) (the “Company”) announced operating results for the third quarter ended September 30, 2018.

Third Quarter 2018 Highlights

  • Net income of $2.5 million, or $0.15 per diluted share
  • Reduced debt by $6.7 million
  • Sales of $90.1 million increased 10.9% over 2017
  • Gross margin of 23.8% up 90 basis points compared with 2017

Third Quarter Summary
Houston Wire & Cable Company reported net income of $2.5 million, or $0.15 per diluted share, for the quarter ended September 30, 2018, compared to a net loss of $1.7 million, or a loss of $0.11 per diluted share, for the same quarter in 2017.  Operating income in the third quarter 2018 was $3.0 million compared to $2.0 million during the third quarter of 2017.

Jim Pokluda, President and Chief Executive Officer, commented, “We were pleased to post our fifth consecutive quarter of year-over-year revenue growth, as customer demand and end market strength remained much improved over the prior year. 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 13%, while Maintenance, Repair, and Operations (MRO) sales were up 10%, as compared to the third quarter of 2017.”

Gross margin at 23.8% increased 90 basis points from the third quarter of 2017, primarily due to higher product margins driven by ongoing pricing discipline and product mix as metals prices remained relatively consistent year over year. Operating expenses at $18.3 million were up $1.8 million from Q3 2017 and $0.4 million sequentially.  During the quarter, these expenses were elevated by approximately $0.4 million as the Company completed two warehouse moves and one warehouse reorganization. Operating expenses as a percentage of revenue remained relatively flat to 2017 at 20.4%.

Debt for the quarter decreased by $6.7 million to $73.4 million, primarily from increased earnings and improved working capital efficiency, while the effective interest rate increased from 3.7% in the second quarter to 3.8% in the third quarter of 2018.

The effective tax rate for the quarter was a benefit of 6.4%, which included the impact of a release of the Company’s $1.0 million valuation allowance established in 2017 and the impact of lower corporate tax rates under the 2017 Tax Cuts and Jobs Act.

Mr. Pokluda further commented, “Our improved year-over-year results are being driven by on-going recovery of end-market activity, customer demand, and excellent execution of our strategic plan.  We are encouraged by these results, and remain laser focused on driving above market performance in the period ahead.”   

Conference Call
The Company will host a conference call to discuss fourth quarter results today, Friday, November 9th, 2018, at 10:00 a.m., C.S.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 at www.houwire.com.  

Live call dial-in numbers are as follow:
Toll-Free: (800)-936-7954
International: (720)-545-0048
Conference ID # 2295115

Approximately two hours after the completion of the live call, a telephone replay will be available until November 16th, 2018.

Replay, Toll-Free #: (855)-859-2056
Replay, Toll #: (404)-537-3406
Conference ID # 2295115

About the Company 
With 43 years of 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)

  September 30,  December 31, 
  2018  2017 
  (unaudited)     
Assets         
Current assets:        
Accounts receivable, net        
  Trade $60,022  $51,031 
  Other  4,981   6,365 
Inventories, net  86,469   88,115 
Income taxes  550   449 
Prepaids  1,622   1,938 
Total current assets  153,644   147,898 
         
Property and equipment, net  11,522   11,355 
Intangible assets, net  11,433   12,015 
Goodwill  22,353   22,353 
Deferred income taxes  1,123    
Other assets  578   418 
Total assets $200,653  $194,039 
         
Liabilities and stockholders' equity        
Current liabilities:        
Book overdraft $1,728  $3,028 
Trade accounts payable  9,350   8,449 
Accrued and other current liabilities  16,517   16,823 
Total current liabilities  27,595   28,300 
         
Debt  73,403   73,555 
Deferred income taxes     414 
Other long term obligations  784   1,026 
Total liabilities  101,782   103,295 
         
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: 16,523,439 and 16,491,181 outstanding at September 30, 2018 and December 31, 2017, respectively  21   21 
Additional paid-in-capital  54,571   54,006 
Retained earnings  104,344   97,336 
Treasury stock  (60,065)  (60,619)
Total stockholders' equity  98,871   90,744 
Total liabilities and stockholders' equity $200,653  $194,039 
         
         

 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, 
  2018  2017  2018  2017 
             
Sales $90,074  $81,196  $268,952  $235,551 
Cost of sales  68,681   62,626   204,723   183,732 
Gross profit  21,393   18,570   64,229   51,819 
                 
Operating expenses:                
Salaries and commissions  9,778   8,975   28,878   26,647 
Other operating expenses  8,028   6,999   23,016   21,303 
Depreciation and amortization  541   549   1,627   2,234 
Total operating expenses  18,347   16,523   53,521   50,184 
                 
Operating income  3,046   2,047   10,708   1,635 
Interest expense  739   543   2,156   1,492 
Income before income taxes  2,307   1,504   8,552   143 
Income tax (benefit) expense  (148  3,215   1,544   2,361 
Net income (loss) $2,455  $(1,711 $7,008  $(2,218)
                 
Earnings (loss) per share:                
Basic $0.15  $(0.11 $0.43  $(0.14)
Diluted $0.15  $(0.11 $0.42  $(0.14)
Weighted average common shares outstanding:                
Basic  16,404,805   16,274,663   16,380,807   16,260,862 
Diluted  16,563,245   16,274,663   16,492,217   16,260,862 
                 
                 
                 

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

  Nine Months
Ended September 30,
 
  2018  2017 
       
Operating activities        
Net income (loss) $7,008  $(2,218)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:        
Depreciation and amortization  1,627   2,234 
Stock-based compensation  1,085   770 
Provision for inventory obsolescence  813   78 
Deferred income taxes  (1,537)  3,163 
Other non-cash items  93   195 
Changes in operating assets and liabilities:        
Accounts receivable  (7,668)  (12,619
Inventories  833   (2,082
Prepaids  316   (639)
Income taxes  (101)  (742
Book overdraft  (1,300)  (1,293)
Trade accounts payable  901   (1,790
Accrued and other current liabilities  (267)  4,031 
Other operating activities  (264)  18 
Net cash provided by (used in) operating activities  1,539   (10,894
         
Investing activities        
Expenditures for property and equipment  (1,210)  (1,307)
Cash received for acquisition     193 
Net cash used in investing activities  (1,210)  (1,114)
         
Financing activities        
Borrowings on revolver  270,609   243,651 
Payments on revolver  (270,761)  (231,509)
Payment of dividends  (39)  (60)
Purchase of treasury stock/stock surrendered on vested awards  (138)  (74)
Net cash (used in) provided by financing activities  (329)  12,008 
         
Net change in cash      
Cash at beginning of period      
         
Cash at end of period $  $ 


 


            

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