HOUSTON, TX--(Marketwire - March 15, 2011) - Houston Wire & Cable Company (
Selected highlights for the quarter:
- Record sales of $93.5 million
- Gross margin up 110 basis points over the fourth quarter of 2009
- Revenues increased 47.3% over the fourth quarter of 2009
- Net income up 54.3% over fourth quarter of 2009
- Fully diluted earnings per share (EPS) were $0.16
- The Company declared a dividend of $0.085 per share
- Increased market share with the addition of 98 new customers
Revenues in the fourth quarter of 2010 increased 47.3% when compared to the fourth quarter of 2009. The Company's organic sales growth was 22.5%. The businesses acquired in late June contributed sales of $15.7 million, nearly all of which was Maintenance, Repair and Operations (MRO) sales.
Management estimates that commodity inflation favorably impacted sales by approximately 7% during the fourth quarter, as compared to 2009. As in prior quarters, previously committed futures for several major projects mitigated the effect of commodity inflation in the quarter. Management estimates that organic sales within the growth initiatives encompassing Utility Power Generation, Environmental Compliance, Engineering & Construction, Industrials and LifeGuard™, our proprietary private-label product, increased by 30 - 35% over the prior year quarter. MRO organic sales increased by an estimated 7 - 10% over the fourth quarter of 2009. Project bookings and backlog also remained solid due to previously funded backlog demand and continued penetration into our targeted markets. Sales from the acquired companies were within our expectations, as the fourth quarter is generally the slowest quarter of the year. In addition, business was negatively impacted by the status of the offshore drilling industry in the Gulf of Mexico.
During the quarter, gross profit increased 55.5% to $19.8 million from the fourth quarter of 2009. Gross margin increased by 110 basis points over the fourth quarter of 2009 and reached its highest level of the year at 21.1%.
Operating expenses increased by 56.8% from the fourth quarter of 2009, due to the businesses acquired in June 2010. The operating expenses of our historical company increased at a lesser rate than the sales activity expansion. Acquisition expenses for the quarter were $0.3 million. Interest expense of $0.4 million was significantly higher than the fourth quarter of 2009, as average debt levels rose from $16.2 million in 2009 to $54.9 million in 2010 as a result of the June 2010 acquisitions. Operating income of $5.1 million was 51.7% higher than 2009 and up 25.2% sequentially from the third quarter of 2010. Net income increased 54.3% over 2009 and was 30.0% higher than the third quarter of 2010. The effective tax rate for the quarter of 38.3% decreased from 40.4% in the third quarter, as the third quarter tax rate was impacted by non-deductible acquisition expenses.
Year-end Results
Sales for the year increased by 21.1% to $308.5 million, as the June 2010 acquisitions contributed 14.8% of the total increase. Gross profit increased 18.2% to $62.6 million in 2010 from $53.0 million in 2009. Operating income improved 9% from 2009, after absorbing acquisition expenses of $0.9 million. Net income increased 7.3% and fully diluted EPS increased from $0.45 to $0.49.
Chuck Sorrentino, President and Chief Executive Officer, commented, "During the fourth quarter, we were pleased to see continued indications of a broad market recovery, increased customer activity and improving demand. We are encouraged by this trend, but remain mindful that we are a later cycle business that lags macro market indicators and as such, must continue to exercise discipline with cost controls and revenue expectations as the business environment slowly improves. I was very pleased with our performance in the latter part of the year. Gross margins continue improving and we continue gaining market share with the addition of new customers. Project business was good in the fourth quarter and the outlook remains solid.
"Momentum appears to be building for 2011, as the rate of growth in our booked orders in the fourth quarter was greater than our sales. Integration of the two acquired companies is going well and we are on schedule. We expect 2011 to be an exciting year for our Company as we look forward to leveraging our combined national sales and distribution network to serve complementary end markets, including oil and gas, marine transportation, utilities, infrastructure and industrial.
"On behalf of the Board of Directors, I would like to thank our team for their commitment to our Company and their outstanding service to our customers. I would also like to thank our customers for their long-term relationships and our investors for their confidence and support."
Conference Call
The Company will host a conference call to discuss fourth quarter and year-end results on Tuesday, March 15th 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.
Approximately two hours after the completion of the live call, a telephone replay will be available until March 22, 2010.
| Replay Dial In: | 888.203.1112 | ||
| International Replay: | 719.457.0820 | ||
| Confirmation Code: | 5990361 | ||
About the Company
With 35 years experience in the industry, Houston Wire & Cable Company is one of the largest providers of wire and cable in the U.S. end user market. Headquartered in Houston, Texas, HWCC has sales and distribution facilities strategically located throughout the nation.
Standard stock items available for immediate delivery include continuous and interlocked armor, instrumentation, medium voltage, high temperature, portable cord, power cables, 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. 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 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 | |||||||||
| December 31, | |||||||||
| 2010 | 2009 | ||||||||
| (In thousands, except share data) |
|||||||||
| Assets | |||||||||
| Current assets: | |||||||||
| Accounts receivable, net | $ | 67,838 | $ | 46,859 | |||||
| Inventories, net | 67,503 | 61,325 | |||||||
| Deferred income taxes | 2,399 | 1,776 | |||||||
| Prepaids | 763 | 3,649 | |||||||
| Total current assets | 138,503 | 113,609 | |||||||
| Property and equipment, net | 6,255 | 3,169 | |||||||
| Intangible assets, net | 15,557 | -- | |||||||
| Goodwill | 25,082 | 2,362 | |||||||
| Deferred income taxes | -- | 2,855 | |||||||
| Other assets | 93 | 19 | |||||||
| Total assets | $ | 185,490 | $ | 122,014 | |||||
| Liabilities and stockholders' equity | |||||||||
| Current liabilities: | |||||||||
| Book overdraft | $ | 3,055 | $ | 907 | |||||
| Trade accounts payable | 19,987 | 11,610 | |||||||
| Accrued and other current liabilities | 19,781 | 10,924 | |||||||
| Income taxes | 1,036 | 281 | |||||||
| Total current liabilities | 43,859 | 23,722 | |||||||
| Debt | 54,825 | 17,479 | |||||||
| Other long-term obligations | 141 | -- | |||||||
| Deferred income taxes | 945 | -- | |||||||
| Total liabilities | 99,770 | 41,201 | |||||||
| 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: 17,748,487 and 17,732,737 shares outstanding at December 31, 2010 and 2009, respectively | 21 | 21 | |||||||
| Additional paid-in capital | 58,642 | 56,609 | |||||||
| Retained earnings | 80,187 | 77,571 | |||||||
| Treasury stock | (53,130 | ) | (53,388 | ) | |||||
| Total stockholders' equity | 85,720 | 80,813 | |||||||
| Total liabilities and stockholders' equity | $ | 185,490 | $ | 122,014 | |||||
| Houston Wire & Cable Company | |||||||||||||
| Consolidated Statements of Income | |||||||||||||
| Three Months Ended | Year Ended | ||||||||||||
| December 31, | December 31, | ||||||||||||
| 2010 | 2009 | 2010 | 2009 | ||||||||||
| Sales | $ | 93,549 | $ | 63,526 | $ | 308,522 | $ | 254,819 | |||||
| Cost of sales | 73,793 | 50,819 | 245,932 | 201,865 | |||||||||
| Gross profit | 19,756 | 12,707 | 62,590 | 52,954 | |||||||||
| Operating expenses: | |||||||||||||
| Salaries and commissions | 7,800 | 4,714 | 25,281 | 20,596 | |||||||||
| Other operating expenses | 6,102 | 4,496 | 20,565 | 18,023 | |||||||||
| Depreciation and amortization | 766 | 142 | 1,738 | 563 | |||||||||
| Total operating expenses | 14,668 | 9,352 | 47,584 | 39,182 | |||||||||
| Operating income | 5,088 | 3,355 | 15,006 | 13,772 | |||||||||
| Interest expense | 378 | 117 | 844 | 520 | |||||||||
| Income before income taxes | 4,710 | 3,238 | 14,162 | 13,252 | |||||||||
| Income taxes | 1,806 | 1,356 | 5,543 | 5,220 | |||||||||
| Net income | $ | 2,904 | $ | 1,882 | $ | 8,619 | $ | 8,032 | |||||
| Earnings per share: | |||||||||||||
| Basic | $ | 0.16 | $ | 0.11 | $ | 0.49 | $ | 0.46 | |||||
| Diluted | $ | 0.16 | $ | 0.11 | $ | 0.49 | $ | 0.45 | |||||
| Weighted average common shares outstanding: | |||||||||||||
| Basic | 17,662,291 | 17,652,737 | 17,657,682 | 17,648,696 | |||||||||
| Diluted | 17,731,157 | 17,683,349 | 17,710,123 | 17,665,924 | |||||||||
| Dividend declared per share | $ | 0.085 | $ | 0.085 | $ | 0.34 | $ | 0.34 | |||||
| Houston Wire & Cable Company | ||||||||||
| Consolidated Statements of Cash Flows | ||||||||||
| Year Ended December 31, | ||||||||||
| 2010 | 2009 | |||||||||
| Operating activities | ||||||||||
| Net income | $ | 8,619 | $ | 8,032 | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||
| Depreciation and amortization | 1,738 | 563 | ||||||||
| Amortization of capitalized loan costs | 46 | 99 | ||||||||
| Amortization of unearned stock compensation | 2,260 | 2,205 | ||||||||
| Provision for doubtful accounts | 93 | -- | ||||||||
| Provision for returns and allowances | (118 | ) | (109 | ) | ||||||
| Provision for inventory obsolescence | 734 | 529 | ||||||||
| (Gain) loss on disposals of property and equipment | 26 | (15 | ) | |||||||
| Deferred income taxes | (1,603 | ) | (741 | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||||
| Accounts receivable | (9,785 | ) | 4,048 | |||||||
| Inventories | 1,059 | 11,606 | ||||||||
| Prepaids | 2,954 | (2,820 | ) | |||||||
| Other assets | 354 | (31 | ) | |||||||
| Book overdraft | 1,668 | (4,026 | ) | |||||||
| Trade accounts payable | 5,010 | 1,519 | ||||||||
| Accrued and other current liabilities | 5,466 | (758 | ) | |||||||
| Long term liabilities | (3 | ) | -- | |||||||
| Income taxes | 755 | (1,363 | ) | |||||||
| Net cash provided by operating activities | 19,273 | 18,738 | ||||||||
| Investing activities | ||||||||||
| Expenditures for property and equipment | (459 | ) | (462 | ) | ||||||
| Proceeds from disposals of property and equipment | 956 | 19 | ||||||||
| Cash paid for acquisition | (51,162 | ) | -- | |||||||
| Net cash used in investing activities | (50,665 | ) | (443 | ) | ||||||
| Financing activities | ||||||||||
| Borrowings on revolver | 352,276 | 255,829 | ||||||||
| Payments on revolver | (314,930 | ) | (268,158 | ) | ||||||
| Proceeds from exercise of stock options | 42 | 22 | ||||||||
| Payment of dividends | (6,003 | ) | (6,001 | ) | ||||||
| Excess tax benefit for options | 7 | 13 | ||||||||
| Purchase of treasury stock | -- | -- | ||||||||
| Net cash provided by (used in) financing activities | 31,392 | (18,295 | ) | |||||||
| Net change in cash | -- | -- | ||||||||
| Cash at beginning of year | -- | -- | ||||||||
| Cash at end of year | $ | -- | $ | -- | ||||||
| Supplemental disclosures | ||||||||||
| Cash paid during the year for interest | $ | 743 | $ | 514 | ||||||
| Cash paid during the year for income taxes | $ | 6,191 | $ | 7,352 | ||||||
Contact Information:
CONTACT:
Hope M. Novosad
Manager, Investor Relations
Direct: 713.609.2110
Fax: 713.609.2168