Houston Wire & Cable Company (NASDAQ: HWCC) (the “Company”)
announced operating results for the second quarter ended June 30,
2018.
Second Quarter 2018 Highlights
- Net income of $2.6 million, or $0.16 per diluted share
- Sales of $93.9 million up 24.1% over 2017
- Gross margin of 23.8% up 220 basis points from the comparable
quarter in 2017
- Operating income of $4.4 million compared to a loss of $0.2
million in the second quarter of 2017
Second Quarter Summary Houston Wire & Cable
Company reported net income of $2.6 million, or $0.16 per diluted
share, for the quarter ended June 30, 2018, compared to a net loss
of $0.1 million, or zero cents loss per diluted share, for the same
quarter in 2017. Operating income in the second quarter 2018
was $4.4 million compared to an operating loss of $0.2 million
during the second quarter of 2017.
Jim Pokluda, President and Chief Executive Officer, commented,
“We were pleased to post our fourth consecutive quarter of
year-over-year revenue growth, as the upward momentum we
experienced in the first quarter of 2018 continued into the second
quarter. 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 26%, while Maintenance, Repair, and Operations
(MRO) sales were up 23% as compared to the second quarter of
2017.”
Gross margin at 23.8% increased 220 basis points from the second
quarter of 2017, primarily due to higher product margins driven by
ongoing pricing discipline and metals inflation. Operating expenses
at $18.0 million were up $1.5 million from Q2 2017 and $0.7 million
sequentially, as higher sales activity and margins resulted in more
sales commissions and warehouse activity. Operating expenses as a
percentage of revenue decreased 270 basis points to 19.1% for Q2
2018 and declined 120 basis points sequentially versus Q1 2018.
Average debt levels for the quarter increased 13.7% from $72.6
million in 2017 to $82.5 million in 2018, primarily for working
capital to support higher sales activity and commodity price
levels, while the effective interest rate increased from 2.7% in
2017 to 3.7% in 2018.
The effective tax rate for the quarter was 28.0% which includes
our best estimate of the impact of the 2017 Tax Cuts and Jobs
Act.
Mr. Pokluda further commented, “We are encouraged with the
continued improvement in sales, the attainment of higher margin
levels and our ability to realize operating expense leverage as
activity levels continued to increase. This has resulted in the
generation of the highest level of operating income since the
fourth quarter of 2014.”
Conference CallThe Company will host a
conference call to discuss fourth quarter results today, Thursday
August 9, 2018, 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.
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)-936-7954International: (720)-545-0048Conference ID #
7667594
Approximately two hours after the completion of the live call, a
telephone replay will be available until August 16, 2018.
Replay, Toll-Free #: (855)-859-2056 Replay, Toll #:
(404)-537-3406 Conference ID # 7667594
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
COMPANYConsolidated Balance Sheets(In
thousands, except share data)
|
|
|
|
|
|
|
|
|
June 30, |
|
|
December 31, |
|
|
|
2018 |
|
|
2017 |
|
|
|
(unaudited) |
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Accounts
receivable, net |
|
|
|
|
|
|
|
|
Trade |
|
$ |
59,685 |
|
|
$ |
51,031 |
|
Other |
|
|
3,006 |
|
|
|
6,365 |
|
Inventories, net |
|
|
87,819 |
|
|
|
88,115 |
|
Income
taxes |
|
|
848 |
|
|
|
449 |
|
Prepaids |
|
|
1,742 |
|
|
|
1,938 |
|
Total current
assets |
|
|
153,100 |
|
|
|
147,898 |
|
|
|
|
|
|
|
|
|
|
Property and equipment,
net |
|
|
11,399 |
|
|
|
11,355 |
|
Intangible assets,
net |
|
|
11,627 |
|
|
|
12,015 |
|
Goodwill |
|
|
22,353 |
|
|
|
22,353 |
|
Other assets |
|
|
409 |
|
|
|
418 |
|
Total assets |
|
$ |
198,888 |
|
|
$ |
194,039 |
|
|
|
|
|
|
|
|
|
|
Liabilities and
stockholders' equity |
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
|
Book
overdraft |
|
$ |
1,312 |
|
|
$ |
3,028 |
|
Trade
accounts payable |
|
|
8,010 |
|
|
|
8,449 |
|
Accrued
and other current liabilities |
|
|
12,301 |
|
|
|
16,823 |
|
Total current
liabilities |
|
|
21,623 |
|
|
|
28,300 |
|
|
|
|
|
|
|
|
|
|
Debt |
|
|
80,149 |
|
|
|
73,555 |
|
Deferred income
taxes |
|
|
332 |
|
|
|
414 |
|
Other long term
obligations |
|
|
752 |
|
|
|
1,026 |
|
Total liabilities |
|
|
102,856 |
|
|
|
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: 16,526,439 and 16,491,181
outstanding at June 30, 2018 and December 31, 2017,
respectively |
|
|
21 |
|
|
|
21 |
|
Additional paid-in-capital |
|
|
54,147 |
|
|
|
54,006 |
|
Retained
earnings |
|
|
101,889 |
|
|
|
97,336 |
|
Treasury
stock |
|
|
(60,025 |
) |
|
|
(60,619 |
) |
Total stockholders'
equity |
|
|
96,032 |
|
|
|
90,744 |
|
Total liabilities and
stockholders' equity |
|
$ |
198,888 |
|
|
$ |
194,039 |
|
|
|
|
|
|
|
|
|
|
HOUSTON WIRE & CABLE
COMPANYConsolidated Statements of
Operations(Unaudited)(In thousands, except share and per
share data)
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales |
|
$ |
93,852 |
|
|
$ |
75,646 |
|
|
$ |
178,878 |
|
|
$ |
154,355 |
|
Cost of sales |
|
|
71,505 |
|
|
|
59,328 |
|
|
|
136,042 |
|
|
|
121,106 |
|
Gross profit |
|
|
22,347 |
|
|
|
16,318 |
|
|
|
42,836 |
|
|
|
33,249 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries
and commissions |
|
|
9,906 |
|
|
|
8,828 |
|
|
|
19,100 |
|
|
|
17,672 |
|
Other
operating expenses |
|
|
7,508 |
|
|
|
6,827 |
|
|
|
14,988 |
|
|
|
14,304 |
|
Depreciation and amortization |
|
|
541 |
|
|
|
825 |
|
|
|
1,086 |
|
|
|
1,685 |
|
Total operating
expenses |
|
|
17,955 |
|
|
|
16,480 |
|
|
|
35,174 |
|
|
|
33,661 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss) |
|
|
4,392 |
|
|
|
(162 |
) |
|
|
7,662 |
|
|
|
(412 |
) |
Interest expense |
|
|
773 |
|
|
|
499 |
|
|
|
1,417 |
|
|
|
949 |
|
Income (loss) before
income taxes |
|
|
3,619 |
|
|
|
(661 |
) |
|
|
6,245 |
|
|
|
(1,361 |
) |
Income tax expense
(benefit) |
|
|
1,013 |
|
|
|
(607 |
) |
|
|
1,692 |
|
|
|
(854 |
) |
Net income (loss) |
|
$ |
2,606 |
|
|
$ |
(54 |
) |
|
$ |
4,553 |
|
|
$ |
(507 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per
share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.16 |
|
|
$ |
(0.00 |
) |
|
$ |
0.28 |
|
|
$ |
(0.03 |
) |
Diluted |
|
$ |
0.16 |
|
|
$ |
(0.00 |
) |
|
$ |
0.28 |
|
|
$ |
(0.03 |
) |
Weighted average common
shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
16,387,112 |
|
|
|
16,266,342 |
|
|
|
16,368,610 |
|
|
|
16,253,848 |
|
Diluted |
|
|
16,489,671 |
|
|
|
16,266,342 |
|
|
|
16,459,736 |
|
|
|
16,253,848 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HOUSTON WIRE & CABLE
COMPANYConsolidated Statements of Cash
Flows(Unaudited)(In thousands)
|
|
|
|
Six Months Ended June 30, |
|
|
|
2018 |
|
|
2017 |
|
|
|
|
|
|
|
|
Operating
activities |
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
4,553 |
|
|
$ |
(507 |
) |
Adjustments to
reconcile net income (loss) to net cash used in operating
activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
1,086 |
|
|
|
1,685 |
|
Amortization of unearned stock compensation |
|
|
703 |
|
|
|
513 |
|
Provision
for inventory obsolescence |
|
|
191 |
|
|
|
111 |
|
Deferred
income taxes |
|
|
(82 |
) |
|
|
1,033 |
|
Other non-cash items |
|
|
129 |
|
|
|
99 |
|
Changes
in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts
receivable |
|
|
(5,403 |
) |
|
|
(3,624 |
) |
Inventories |
|
|
105 |
|
|
|
1,172 |
|
Prepaids |
|
|
196 |
|
|
|
(740 |
) |
Income
taxes |
|
|
(399 |
) |
|
|
(1,826 |
) |
Book
overdraft |
|
|
(1,716 |
) |
|
|
(2,663 |
) |
Trade
accounts payable |
|
|
(439 |
) |
|
|
(2,132 |
) |
Accrued
and other current liabilities |
|
|
(4,483 |
) |
|
|
(1,454 |
) |
Other
operating activities |
|
|
(116 |
) |
|
|
(59 |
) |
Net cash used in
operating activities |
|
|
(5,675 |
) |
|
|
(8,392 |
) |
|
|
|
|
|
|
|
|
|
Investing
activities |
|
|
|
|
|
|
|
|
Expenditures for property and equipment |
|
|
(741 |
) |
|
|
(1,226 |
) |
Cash
received for acquisition |
|
|
— |
|
|
|
134 |
|
Net cash used in
investing activities |
|
|
(741 |
) |
|
|
(1,092 |
) |
|
|
|
|
|
|
|
|
|
Financing
activities |
|
|
|
|
|
|
|
|
Borrowings on revolver |
|
|
179,994 |
|
|
|
165,025 |
|
Payments
on revolver |
|
|
(173,401 |
) |
|
|
(155,483 |
) |
Payment
of dividends |
|
|
(39 |
) |
|
|
(34 |
) |
Purchase
of treasury stock/stock surrendered on vested awards |
|
|
(138 |
) |
|
|
(24 |
) |
Net cash provided by
financing activities |
|
|
6,416 |
|
|
|
9,484 |
|
|
|
|
|
|
|
|
|
|
Net change in cash |
|
|
— |
|
|
|
— |
|
Cash at beginning of
period |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
Cash at end of
period |
|
$ |
— |
|
|
$ |
— |
|
|
CONTACT:
Christopher M. Micklas
Chief Financial Officer
Direct: 713.609.2114
Fax: 713.609.2168
cmicklas@houwire.com
Grafico Azioni Houston Wire and Cable (NASDAQ:HWCC)
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