Houston Wire & Cable Company Reports Results for the Quarter Ended March 31, 2019


HOUSTON, May 09, 2019 (GLOBE NEWSWIRE) -- Houston Wire & Cable Company (NASDAQ: HWCC) (the “Company”) announced operating results for the first quarter ended March 31, 2019.

Selected quarterly results were:

  • Net income of $2.3 million, up 17.3% from the first quarter of 2018
  • Fully diluted EPS of $0.14, up $0.02 over the first quarter of 2018
  • Sales of $85.3 million, up 0.3% from the same period in 2018
  • Gross margin of 24.9%, up 80 basis points from the first quarter of 2018
  • Sequential quarter operating expense declined $393 thousand
  • Operating income of $3.9 million, an 18.1% increase from the same period in 2018

First Quarter Summary
Jim Pokluda, President and Chief Executive Officer commented, “We were pleased with the profitability improvements realized in the first quarter as these results represented our eighth consecutive quarter of year-over-year operating profit growth.  Although reported revenue was only slightly positive, adjusting for one less business day and the headwinds experienced from metals, it is encouraging that end market activity remained stable, and that our team continued to make gains with key elements of our strategic plan including margin improvement. 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 5%, while Maintenance, Repair, and Operations (MRO) sales were down 1% as compared to the first quarter of 2018.”

Gross margin at 24.9% increased 80 basis points from the first quarter of 2018, primarily due to improved pricing discipline and product mix. Sequentially, gross margin increased 100 basis points. Operating expenses at $17.4 million were up $0.2 million from Q1 2018 and down $0.4 million sequentially.  

Average debt levels for the quarter increased 3.5% sequentially consistent with the historical first quarter trend but decreased 4.5% from $76.9 million in Q1 2018 to $73.5 in 2019, while the effective interest rate increased from 3.3% in 2018 to 3.9% in 2019.

The effective tax rate for the quarter was 26.8%, compared to the 25.9% level in 2018.

Net income was $2.3 million, as compared to $1.9 million in the same period of the prior year. Mr. Pokluda further commented, “As a result of the attainment of higher margin levels and sequential reduction in operating expenses, we are able to report the highest level of first quarter operating income since 2014.”

Conference Call
The Company will host a conference call to discuss first quarter results tomorrow, Friday, May 10, 2019, at 2:00 p.m., C.D.T. The call was originally scheduled for 10:00 a.m. C.D.T., however due to concerns with the weather in the Houston area, we have chosen to move the call. 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 # 3298124

Approximately two hours after the completion of the live call, a telephone replay will be available until May 17, 2019.

Replay, Toll-Free #: (855)-859-2056
Replay, Toll #: (404)-537-3406
Conference ID # 3298124

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.


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

 March 31,  December 31, 
 2019  2018 
 (unaudited)    
Assets       
Current assets:       
Cash$256  $1,393 
Accounts receivable, net:       
Trade 58,350   52,946 
Other 1,585   6,847 
Inventories, net 95,325   94,325 
Income taxes    435 
Prepaids 1,742   737 
Other current assets 490    
Total current assets 157,748   156,683 
        
Property and equipment, net 11,377   11,456 
Intangible assets, net 10,984   11,179 
Goodwill 22,353   22,353 
Operating lease right-of-use assets, net 11,954    
Deferred income taxes 747   930 
Other assets 503   456 
Total assets$215,666  $203,057 
        
Liabilities and stockholders’ equity       
Current liabilities:       
Trade accounts payable$7,829  $11,253 
Accrued and other current liabilities 12,583   19,232 
Operating lease liabilities 3,082    
Income taxes 99    
Total current liabilities 23,593   30,485 
        
Debt 78,940   71,316 
Operating lease long term liabilities 9,280    
Other long term liabilities 440   578 
Total liabilities 112,253   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: 16,612,396 and 16,611,651 outstanding at March 31, 2019 and December 31, 2018, respectively 21   21 
Additional paid-in-capital 53,856   53,514 
Retained earnings 108,360   105,975 
Treasury stock (58,824)  (58,832)
Total stockholders’ equity 103,413   100,678 
Total liabilities and stockholders’ equity$215,666  $203,057 

  

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

 Three Months Ended 
 March 31, 
 2019  2018 
      
Sales$85,270  $85,026 
Cost of sales 64,011   64,537 
Gross profit 21,259   20,489 
        
Operating expenses:       
Salaries and commissions 9,180   9,194 
Other operating expenses 7,663   7,480 
Depreciation and amortization 553   545 
Total operating expenses 17,396   17,219 
        
Operating income 3,863   3,270 
Interest expense 741   644 
Income before income taxes 3,122   2,626 
Income tax expense 838   679 
Net income$2,284  $1,947 
        
Earnings per share:       
Basic$0.14  $0.12 
Diluted$0.14  $0.12 
Weighted average common shares outstanding:       
Basic 16,477,855   16,349,902 
Diluted 16,577,126   16,422,961 

  

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

 Three Months
Ended March 31,
 
 2019  2018 
      
Operating activities       
Net income$2,284  $1,947 
Adjustments to reconcile net income to net cash used in operating activities:       
Depreciation and amortization 553   545 
Amortization of unearned stock compensation 342   313 
Non-cash lease expense 986    
Provision for refund liability 559   50 
Provision for inventory obsolescence 170   224 
Deferred income taxes 284   (137)
Other non-cash items 34   11 
Changes in operating assets and liabilities:       
Accounts receivable (723)  2,749 
Inventories (1,170)  (5,511)
Prepaids (1,005)  (1,435)
Other assets (549)   
Lease payments (982)   
Book overdraft    149 
Trade accounts payable (3,424)  297 
Accrued and other current liabilities (6,460)  (6,204)
Income taxes 534   809 
Other operating activities 93   109 
Net cash used in operating activities (8,474)  (6,084)
        
Investing activities       
Expenditures for property and equipment (278)  (452)
Net cash used in investing activities (278)  (452)
        
Financing activities       
Borrowings on revolver 94,333   91,514 
Payments on revolver (86,709)  (84,886)
Payment of dividends    (29)
Release (purchase) of treasury stock/stock surrendered on vested awards 8   (63)
Lease payments (17)   
Net cash provided by financing activities 7,615   6,536 
        
Net change in cash (1,137)   
Cash at beginning of period 1,393    
        
Cash at end of period$256  $ 
 

            

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