Houston Wire & Cable Company (NASDAQ:HWCC) (the “Company”)
announced operating results for the fourth quarter and year ended
December 31, 2016.
Selected quarterly results were:
- Sales of $69.3 million down 1.5% but up 1% metals
adjusted, from Q4 2015
- Net loss of $(1.8) million
- Adjusted net loss (non-GAAP) of $(1.2) million, excluding
Vertex acquisition expenses
- Diluted EPS of $(0.11)
- Adjusted diluted EPS (non-GAAP) of $(0.08), excluding
acquisition expenses
- Cash flow of $1.3 million
Selected annual results were:
- Sales of $261.6 million down 15.1% or down 8% metals adjusted,
from 2015
- Net loss of $(6.0) million
- Adjusted net loss (non-GAAP) of $(3.3) million, excluding
impairment charges and acquisition expenses
- Diluted EPS of $(0.37)
- Adjusted diluted EPS (non-GAAP) of $(0.21), excluding
impairment charges and acquisition expenses
- Cash flow of $17.2 million
- Completed the acquisition of Vertex in October 2016
Fourth Quarter Summary Jim Pokluda, President
and Chief Executive Officer commented, “During the quarter,
industrial market conditions including the oil and gas industry
remained inconsistent. Daily sales results were quite choppy
as we experienced several days of strong activity, followed by
others that were disappointing. Although such inconsistent
results are frustrating, in our experience this type of deviation
is usually an early sign of market recovery which is
encouraging. Sales decreased 1.5% from the fourth quarter of
2015, but increased 1% over 2015, when adjusted for the impact of
metals and increased 6.2% sequentially. Excluding the $7.0 million
of sales by Vertex, we estimate that Maintenance, Repair and
Operations (MRO) sales increased 7% or approximately 9% on a metals
adjusted basis, while project sales decreased 51% or approximately
49% on a metals adjusted basis."
Gross margin at 21.8% increased 30 basis points from the fourth
quarter of 2015, primarily due to the incrementally higher margins
generated by Vertex following the acquisition. Sequentially,
excluding Vertex, gross margin increased approximately 150 basis
points. We experienced higher freight and shrinkage costs, offset
by higher vendor rebates, due to Q4 activity and rising copper
prices. Operating expenses at $16.7 million (which included
approximately $0.7 million of acquisition expenses) were up $2.3
million or 16.2% from the prior year period, primarily due to the
inclusion of Vertex’s operating expenses from the acquisition date.
Excluding Vertex’s operating expenses and acquisition expenses,
operating expenses were $13.8 million, a decrease of 3.7% from
2015.
Interest expense of $0.4 million was up 115% from $0.2 million
in the prior year period, primarily due to the additional debt
taken on to fund the Vertex acquisition. Average debt levels
for the quarter increased 57.8% from $39.8 million in 2015 to $62.8
in 2016, while the effective interest rate increased from 1.5% in
2015 to 2.4% in 2016.
The results of operations produced a net loss of $1.8 million,
as compared to net loss of $0.2 million in the prior year
period.
Mr. Pokluda further commented, “Despite our disappointment in
the fourth quarter results, we were happy to see what we believe
were positive activity trends that arose throughout the quarter,
and are encouraged that those trends have continued into January,
February and early March of 2017. Sales, order counts and
overall gross margins have shown a more consistent recovery from
the levels experienced in the fourth quarter of 2016, which we
believe marked the bottom for our end markets that have
underperformed primarily due to the reduction of the price in oil
and gas. Our success in the expansion of our commercial
products line continued and was a welcome contributor to sales and
operating margins, and the acquisition of Vertex in early October
was the most recent example of our efforts to broaden our product
offering to the industrial market. I was also pleased that we again
achieved success in reducing our working capital investment and
generating operating cash flow.”
Twelve month summarySales for the twelve month
period were down 15.1% versus the prior year period and down
approximately 8% on a metals adjusted basis. Excluding the
$7.0 million of sales by Vertex, we estimate that MRO sales
increased 1% and project sales decreased 34%, in each case on a
metals adjusted basis. Mr. Pokluda commented, “This has been an
extremely difficult year as the level of industrial demand
continued to fall short of more normal historical levels. Our model
loses leverage at these activity levels which severely impacts
operating margin. The results were also affected by the impairment
charge for the HWC division, which was directly impacted by the low
demand levels from the industrial and oil and gas sectors. I am
pleased, however, with the progress we have made towards our
ability to re-align our operations with current demand levels and
with the operating cash flow of $17.2 million, as we continued to
drive more efficiencies in our inventory profiles and other aspects
of our working capital investment.”
Gross margin at 20.2% was down 120 basis points from the 2015
period. “The higher margins generated by Vertex helped the
overall margin, but legacy market conditions remained extremely
competitive and pricing and margin pressure continued,” said Mr.
Pokluda.
Operating expenses at $59.5 million (including Vertex) decreased
1% from the prior year amount of $59.9. Excluding the impairment
charges from both periods, the impact of Vertex’s operating
expenses and the acquisition expenses, operating expenses decreased
by 4.2% or $2.4 million, principally due to lower facility costs,
reduced commissions resulting from lower sales and gross margin,
and lower employee related expenses.
Interest expense of $0.9 million decreased 6.2% from 2015, while
interest rates increased from 1.9% in 2015 to 2.0% in 2016.
The full year effective tax rate of 18.8% included the 7.5%
effect of the non-deductible portion of the impairment charge and
the 9.9% impact of forfeited equity awards.
The results of operations generated a net loss of $6.0 million,
compared to net income of $2.0 million in 2015.
Conference CallThe Company will host a
conference call to discuss fourth quarter results today, Thursday,
March 16, 2017, at 10:00 a.m., C.D.T. Hosting the call will
be James Pokluda, 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 23, 2017.
Replay, Toll-Free #: 855-859-2056 Replay, Toll #: 404-537-3406
Conference ID # 77191821
About the Company With over 40 years’
experience in the industry, Houston Wire & Cable Company, an
industrial distributor, is a large provider of industrial 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 StatementsThis 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.
Non-GAAP Financial Disclosures and
ReconciliationsWhile the Company reports financial results
in accordance with U.S. GAAP, this press release includes non-GAAP
measures. We use the non-GAAP measures to evaluate and manage our
operations and provide the information to assist investors in
performing financial analysis that is consistent with financial
models developed by research analysts. Investors should consider
non-GAAP measures in addition to, not as a substitute for, or as
superior to, measures of financial performance prepared in
accordance with GAAP.
HOUSTON WIRE & CABLE
COMPANYReconciliation of Non-GAAP
Measures(Unaudited)(In thousands, except per share
data) |
|
Adjusted
net income (loss) and adjusted diluted EPS |
|
Three Months Ended December 31, 2016 |
|
|
|
Net Income (Loss) |
|
Diluted EPS |
|
|
|
|
|
|
|
Net income (loss), as
reported under GAAP |
|
$ |
(1,826 |
) |
|
$ |
(0.11 |
) |
|
Acquisition
expenses |
|
|
748 |
|
|
|
0.04 |
|
|
Tax effect of
acquisition expenses |
|
|
(106 |
) |
|
|
(0.01 |
) |
|
Adjusted net income
(loss) |
|
$ |
(1,184 |
) |
|
$ |
(0.08 |
) |
|
|
|
|
|
|
|
|
|
Adjusted net income (loss) and adjusted diluted EPS |
|
Year Ended December 31, 2016 |
|
|
|
Net Income (Loss) |
|
Diluted EPS |
|
|
|
|
|
|
|
Net income (loss), as
reported under GAAP |
|
$ |
(6,006 |
) |
|
$ |
(0.37 |
) |
|
Acquisition
expenses |
|
|
861 |
|
|
|
0.05 |
|
|
Impairment charge |
|
|
2,384 |
|
|
|
0.15 |
|
|
Tax effect of
acquisition expenses and impairment charge |
|
|
(547 |
) |
|
|
(0.04 |
) |
|
Adjusted net income
(loss) |
|
$ |
(3,346 |
) |
|
$ |
(0.21 |
) |
|
Houston Wire & Cable
CompanyConsolidated Balance Sheets(In
thousands, except share data) |
|
|
|
December 31, |
|
|
|
2016 |
|
|
2015 |
|
|
|
(unaudited) |
|
|
Assets |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Accounts
receivable, net |
|
$ |
44,677 |
|
|
$ |
46,250 |
|
Inventories, net |
|
|
79,783 |
|
|
|
75,777 |
|
Income
taxes |
|
|
1,948 |
|
|
|
932 |
|
Prepaids |
|
|
456 |
|
|
|
648 |
|
Total current
assets |
|
|
126,864 |
|
|
|
123,607 |
|
|
|
|
|
|
|
|
|
|
Property and equipment,
net |
|
|
11,261 |
|
|
|
10,899 |
|
Intangible assets,
net |
|
|
13,378 |
|
|
|
5,984 |
|
Goodwill |
|
|
22,770 |
|
|
|
14,866 |
|
Deferred income
taxes |
|
|
892 |
|
|
|
3,338 |
|
Other assets |
|
|
591 |
|
|
|
419 |
|
Total assets |
|
$ |
175,756 |
|
|
$ |
159,113 |
|
|
|
|
|
|
|
|
|
|
Liabilities and
stockholders’ equity |
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
|
Book
overdraft |
|
$ |
3,181 |
|
|
$ |
3,701 |
|
Trade
accounts payable |
|
|
8,406 |
|
|
|
6,380 |
|
Accrued
and other current liabilities |
|
|
13,134 |
|
|
|
9,568 |
|
Total current
liabilities |
|
|
24,721 |
|
|
|
19,649 |
|
|
|
|
|
|
|
|
|
|
Debt |
|
|
60,388 |
|
|
|
39,188 |
|
Other long-term
obligations |
|
|
516 |
|
|
|
275 |
|
Total liabilities |
|
|
85,739 |
|
|
|
59,112 |
|
|
|
|
|
|
|
|
|
|
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: 16,457,525 and 16,712,626 shares outstanding at
December 31, 2016 and 2015, respectively |
|
|
21 |
|
|
|
21 |
|
Additional paid-in capital |
|
|
53,824 |
|
|
|
54,621 |
|
Retained
earnings |
|
|
97,550 |
|
|
|
106,048 |
|
Treasury
stock |
|
|
(61,264 |
) |
|
|
(60,689 |
) |
Total stockholders’
equity |
|
|
90,131 |
|
|
|
100,001 |
|
|
|
|
|
|
|
|
|
|
Total liabilities and
stockholders’ equity |
|
$ |
175,756 |
|
|
$ |
159,113 |
|
Houston Wire & Cable
Company Consolidated Statements of Operations(In
thousands except, share and per share data) |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Year Ended |
|
|
|
December 31, |
|
|
December 31, |
|
|
|
2016 |
|
|
2015 |
|
|
2016 |
|
|
2015 |
|
|
|
(unaudited) |
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales |
|
$ |
69,257 |
|
|
$ |
70,314 |
|
|
$ |
261,644 |
|
|
$ |
308,133 |
|
Cost of sales |
|
|
54,181 |
|
|
|
55,194 |
|
|
|
208,694 |
|
|
|
242,223 |
|
Gross profit |
|
|
15,076 |
|
|
|
15,120 |
|
|
|
52,950 |
|
|
|
65,910 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries
and commissions |
|
|
8,474 |
|
|
|
6,820 |
|
|
|
29,369 |
|
|
|
28,537 |
|
Other
operating expenses |
|
|
7,412 |
|
|
|
6,394 |
|
|
|
24,714 |
|
|
|
25,023 |
|
Depreciation and amortization |
|
|
820 |
|
|
|
740 |
|
|
|
3,018 |
|
|
|
2,915 |
|
Impairment charge |
|
|
— |
|
|
|
423 |
|
|
|
2,384 |
|
|
|
3,417 |
|
Total operating
expenses |
|
|
16,706 |
|
|
|
14,377 |
|
|
|
59,485 |
|
|
|
59,892 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss) |
|
|
(1,630 |
) |
|
|
743 |
|
|
|
(6,535 |
) |
|
|
6,018 |
|
Interest expense |
|
|
392 |
|
|
|
182 |
|
|
|
845 |
|
|
|
901 |
|
Income before income
taxes (loss) |
|
|
(2,022 |
) |
|
|
561 |
|
|
|
(7,380 |
) |
|
|
5,117 |
|
Income taxes |
|
|
(196 |
) |
|
|
760 |
|
|
|
(1,374 |
) |
|
|
3,073 |
|
Net
income (loss) |
|
$ |
(1,826 |
) |
|
$ |
(199 |
) |
|
$ |
(6,006 |
) |
|
$ |
2,044 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
(loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.11 |
) |
|
$ |
(0.01 |
) |
|
$ |
(0.37 |
) |
|
$ |
0.12 |
|
Diluted |
|
$ |
(0.11 |
) |
|
$ |
(0.01 |
) |
|
$ |
(0.37 |
) |
|
$ |
0.12 |
|
Weighted average common
shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
16,216,978 |
|
|
|
16,641,129 |
|
|
|
16,345,679 |
|
|
|
17,012,560 |
|
Diluted |
|
|
16,216,978 |
|
|
|
16,641,129 |
|
|
|
16,345,679 |
|
|
|
17,067,593 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividend declared per
share |
|
$ |
— |
|
|
$ |
0.06 |
|
|
$ |
0.15 |
|
|
$ |
0.42 |
|
Houston Wire & Cable
CompanyConsolidated Statements of Cash
Flows(In thousands) |
|
|
Year Ended December 31, |
|
|
|
2016 |
|
|
2015 |
|
|
|
|
(unaudited) |
|
|
Operating
activities |
|
|
|
|
|
|
|
|
|
Net
income (loss) |
|
$ |
(6,006 |
) |
|
$ |
2,044 |
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities: |
|
|
|
|
|
|
|
|
|
Impairment charge |
|
|
2,384 |
|
|
|
3,417 |
|
|
Depreciation and amortization |
|
|
3,018 |
|
|
|
2,915 |
|
|
Amortization of unearned stock compensation |
|
|
856 |
|
|
|
886 |
|
|
Provision
for doubtful accounts |
|
|
285 |
|
|
|
97 |
|
|
Provision
for inventory obsolescence |
|
|
93 |
|
|
|
397 |
|
|
Deferred
income taxes |
|
|
6 |
|
|
|
(485 |
) |
|
Other
non-cash items |
|
|
(116 |
) |
|
|
(59 |
) |
|
Changes
in operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
Accounts
receivable |
|
|
4,019 |
|
|
|
15,352 |
|
|
Inventories |
|
|
10,483 |
|
|
|
12,784 |
|
|
Book
overdraft |
|
|
(517 |
) |
|
|
588 |
|
|
Trade
accounts payable |
|
|
896 |
|
|
|
(1,613 |
) |
|
Accrued
and other current liabilities |
|
|
2,473 |
|
|
|
(3,557 |
) |
|
Income
taxes |
|
|
(1,016 |
) |
|
|
(713 |
) |
|
Other
operating activities |
|
|
385 |
|
|
|
(224 |
) |
|
Net cash provided by
operating activities |
|
|
17,243 |
|
|
|
31,829 |
|
|
|
|
|
|
|
|
|
|
|
|
Investing
activities |
|
|
|
|
|
|
|
|
|
Expenditures for property and equipment |
|
|
(1,319 |
) |
|
|
(3,123 |
) |
|
Proceeds
from disposals of property and equipment |
|
|
5 |
|
|
|
8 |
|
|
Cash paid
for acquisition |
|
|
(32,370 |
) |
|
|
— |
|
|
Net cash used in
investing activities |
|
|
(33,684 |
) |
|
|
(3,115 |
) |
|
|
|
|
|
|
|
|
|
|
|
Financing
activities |
|
|
|
|
|
|
|
|
|
Borrowings on revolver |
|
|
302,898 |
|
|
|
310,366 |
|
|
Payments
on revolver |
|
|
(281,698 |
) |
|
|
(325,025 |
) |
|
Proceeds
from exercise of stock options |
|
|
— |
|
|
|
11 |
|
|
Payment
of dividends |
|
|
(2,495 |
) |
|
|
(7,172 |
) |
|
Excess
tax benefit for options |
|
|
— |
|
|
|
— |
|
|
Purchase
of treasury stock |
|
|
(2,264 |
) |
|
|
(6,894 |
) |
|
Net cash used in
financing activities |
|
|
16,441 |
|
|
|
(28,714 |
) |
|
|
|
|
|
|
|
|
|
|
|
Net change in cash |
|
|
— |
|
|
|
— |
|
|
Cash at beginning of
year |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
Cash at end of
year |
|
$ |
— |
|
|
$ |
— |
|
|
Supplemental
disclosures |
|
|
|
|
|
|
|
|
|
Cash paid
during the year for interest |
|
$ |
728 |
|
|
$ |
900 |
|
|
Cash paid
during the year for income taxes |
|
$ |
233 |
|
|
$ |
4,278 |
|
|
CONTACT:
Nicol G. Graham
Chief Financial Officer
Direct: 713.609.2125
Fax: 713.609.2168
ngraham@houwire.com
Grafico Azioni Houston Wire and Cable (NASDAQ:HWCC)
Storico
Da Giu 2024 a Lug 2024
Grafico Azioni Houston Wire and Cable (NASDAQ:HWCC)
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