Houston Wire & Cable Company (NASDAQ: HWCC) (the “Company”)
announced operating results for the fourth quarter and year ended
December 31, 2019.
Full Year 2019
- Net income of $2.6 million, or $0.15 per diluted share; charges
for the Attleboro, MA closure negatively impacted earnings by $0.15
per share
- Sales of $338.3 million, down 5.2%
- Gross margin of 23.6%, decrease of 30 basis points
- Operating expense of $73.0 million, including $3.3 million of
closure costs, versus $71.3 million for 2018
- Anticipated $1.0 million annual savings from closure and
relocation of Attleboro facility
Fourth Quarter 2019
- Net loss of $0.7 million, or a loss of $0.04 per diluted share,
negatively impacted $0.05 per share by the Attleboro, MA
closure
- Sales of $82.3 million, down 6.4%
- Operating expense was down 0.3%, reflecting $1.0 million of
Attleboro closure costs
Twelve Month Summary
James Pokluda, President and Chief Executive Officer commented,
“2019 was a year of significant operational change for HWCC as we
completed multiple strategic projects that strengthened our value
proposition. In response to new tariffs, we reset
international supply lines; LEAN processes and methodologies drove
continuous improvement and expense reductions; we closed our
largest fastener distribution center and relocated the inventory to
two new facilities that are highly efficient and better located to
service customer demand; and we completed a multi-year information
technology upgrade that increased our digital capabilities and
enhanced enterprise strategy. With these and several
additional projects and non-recurring expenses now behind us, we
enter 2020 well positioned to serve our diverse customer base.”
Sales for the year ended December 31, 2019 were $338.3 million,
down 5.2% from $356.9 million in 2018. We estimate that the
supply disruptions caused by the on-going trade negotiations with
China negatively impacted sales 1% and that lower metals prices in
2019 represented an additional 2% decrease. Adjusting for the
impact of metals and the trade war, we estimate sales for our
project business decreased 2%, while MRO sales decreased 3%, as
compared to 2018.
Gross margin at 23.6% was down 30 basis points from 2018.
“We continue to focus on pricing discipline and maintaining
optimum inventory mix profiles to service customer demand, and are
pleased that we have been able to substantially maintain our
margins despite a decline in commodity prices,” said Mr.
Pokluda.
Operating expenses at $73.0 million increased 2.4% from the
prior year of $71.3 million. This increase was due to expenses of
$3.3 million for the closure and relocation of the Attleboro
warehouse facility. Excluding these one-time expenses,
operating expenses were down $1.6 million or 2.2%. Going
forward, it is anticipated that the net annual operating expense
savings resulting from these warehouse activities will be
approximately $1 million.
Interest expense of $3.1 million increased 5.2% from $2.9
million in 2018. The increase reflected $0.2 million lower
average debt of $76.6 million offset by a 10 basis point increase
in average interest rates to 3.8%.
The results of operations generated net income of $2.6 million,
compared to $8.6 million in 2018. $2.3 million of the decline
was due to the Attleboro closure and relocation expenses. Mr.
Pokluda commented “While our financial results were not where we
would like them, 2019 was a year of significant change for our
organization, and I am pleased with the extraordinary team efforts
that were necessary to complete multiple projects, maintain pricing
discipline, execute cost control and strengthened our position in
the market.”
Fourth Quarter Summary
Mr. Pokluda further commented, “Fourth quarter results were
disappointing, as positive sales trends experienced early in the
quarter reduced significantly in the second half of the quarter due
primarily to reduced project activity in oil and gas and fastener
end markets.”
Sales for the fourth quarter 2019 were $82.3 million, down 6.4%
from $87.9 million in 2018. We estimate the fastener supply
disruptions caused by the on-going trade negotiations with China
and lower metals prices represented a 2% sales decrease. We
estimate sales for our project business decreased 16%, while MRO
sales decreased 2%, as compared to 2018.
Gross margin at 22.7% decreased 120 basis points from the fourth
quarter of 2018 and was down 10 basis points sequentially, as
reduced demand in the latter half of the quarter significantly
increased pricing pressure. Operating expenses of $18.6
million were up 4.7% over 2018 but down 1.2% without the Attleboro
closure and relocation costs, and flat sequentially.
Quarterly interest expense of $0.8 million was up 2% from the
prior year period. Average debt levels for the quarter of
$80.8 million increased $10 million over 2018, while the effective
interest rate decreased from 4.1% to 3.5% in 2019. The debt
increase resulted from an increase in inventory caused by
inconsistency in our international supply lines and optimizing
vendor contractual agreements.
The results of operations produced net loss of $0.7 million for
the quarter, as compared to net income of $1.6 million in
2018. Excluding the closure and relocation expenses,
operations produced net income of $0.1 million or $0.01 per
share.
Conference CallThe Company will host a
conference call to discuss fourth quarter and full year results,
Friday, March 13, 2020, 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
www.houwire.com.
Live call dial-in numbers are as follow:Toll-Free: (800)
936-7954International: (720) 545-0048Conference ID #6259450
Approximately two hours after the completion of the live call, a
telephone replay will be available until March 20, 2020.
Replay, Toll-Free #: (855) 859-2056 Replay, Toll #: (404)
537-3406 Conference ID # 6259450
About the Company With 44 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 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.
Houston Wire & Cable
CompanyConsolidated Balance Sheets
|
December 31, |
|
|
2019 |
|
|
2018 |
|
|
|
|
|
|
|
|
(In thousands, exceptshare data) |
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
Cash |
$ |
4,096 |
|
|
$ |
1,393 |
|
Accounts receivable, net |
|
|
|
|
|
|
|
Trade |
|
50,325 |
|
|
|
52,946 |
|
Other |
|
6,640 |
|
|
|
6,847 |
|
Inventories, net |
|
114,069 |
|
|
|
94,325 |
|
Income tax receivable |
|
1,353 |
|
|
|
435 |
|
Prepaids and other current assets |
|
1,002 |
|
|
|
737 |
|
Other current assets |
|
831 |
|
|
|
— |
|
Total current assets |
|
178,316 |
|
|
|
156,683 |
|
|
|
|
|
|
|
|
|
Property and equipment,
net |
|
14,589 |
|
|
|
11,456 |
|
Intangible assets, net |
|
10,282 |
|
|
|
11,179 |
|
Goodwill |
|
22,353 |
|
|
|
22,353 |
|
Deferred income taxes |
|
600 |
|
|
|
930 |
|
Operating lease right-of-use
assets, net |
|
13,481 |
|
|
|
— |
|
Other assets |
|
527 |
|
|
|
456 |
|
Total assets |
$ |
240,148 |
|
|
$ |
203,057 |
|
|
|
|
|
|
|
|
|
Liabilities and stockholders’
equity |
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
Trade accounts payable |
$ |
13,858 |
|
|
$ |
11,253 |
|
Accrued and other current liabilities |
|
23,261 |
|
|
|
19,232 |
|
Operating lease liabilities |
|
2,742 |
|
|
|
— |
|
Total current liabilities |
|
39,861 |
|
|
|
30,485 |
|
|
|
|
|
|
|
|
|
Debt |
|
83,500 |
|
|
|
71,316 |
|
Operating lease long term
liabilities |
|
11,182 |
|
|
|
— |
|
Other long-term
obligations |
|
1,977 |
|
|
|
578 |
|
Total liabilities |
|
136,520 |
|
|
|
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: 16,556,950 and 16,611,651 shares
outstanding at December 31, 2019 and 2018, respectively |
|
21 |
|
|
|
21 |
|
Additional paid-in capital |
|
52,304 |
|
|
|
53,514 |
|
Retained earnings |
|
108,626 |
|
|
|
105,975 |
|
Treasury stock |
|
(57,323 |
) |
|
|
(58,832 |
) |
Total stockholders’
equity |
|
103,628 |
|
|
|
100,678 |
|
|
|
|
|
|
|
|
|
Total liabilities and
stockholders’ equity |
$ |
240,148 |
|
|
$ |
203,057 |
|
|
|
|
|
|
|
|
|
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, |
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales |
|
$ |
82,287 |
|
|
$ |
87,906 |
|
|
$ |
338,286 |
|
|
$ |
356,858 |
|
Cost of sales |
|
|
63,592 |
|
|
|
66,927 |
|
|
|
258,364 |
|
|
|
271,650 |
|
Gross profit |
|
|
18,695 |
|
|
|
20,979 |
|
|
|
79,922 |
|
|
|
85,208 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and commissions |
|
|
9,507 |
|
|
|
9,232 |
|
|
|
37,180 |
|
|
|
38,110 |
|
Other operating expenses |
|
|
8,244 |
|
|
|
7,946 |
|
|
|
33,238 |
|
|
|
30,962 |
|
Depreciation and amortization |
|
|
748 |
|
|
|
551 |
|
|
|
2,502 |
|
|
|
2,178 |
|
Impairment charge |
|
|
120 |
|
|
|
60 |
|
|
|
120 |
|
|
|
60 |
|
Total operating expenses |
|
|
18,619 |
|
|
|
17,789 |
|
|
|
73,040 |
|
|
|
71,310 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
|
76 |
|
|
|
3,190 |
|
|
|
6,882 |
|
|
|
13,898 |
|
Interest expense |
|
|
766 |
|
|
|
751 |
|
|
|
3,057 |
|
|
|
2,907 |
|
Income before income
taxes |
|
|
(690 |
) |
|
|
2,439 |
|
|
|
3,825 |
|
|
|
10,991 |
|
Income taxes |
|
|
(34 |
) |
|
|
811 |
|
|
|
1,275 |
|
|
|
2,355 |
|
Net income |
|
$ |
(656 |
) |
|
$ |
1,628 |
|
|
$ |
2,550 |
|
|
$ |
8,636 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.04 |
) |
|
$ |
0.10 |
|
|
$ |
0.16 |
|
|
$ |
0.53 |
|
Diluted |
|
$ |
(0.04 |
) |
|
$ |
0.10 |
|
|
$ |
0.15 |
|
|
$ |
0.52 |
|
Weighted average common shares
outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
16,310,534 |
|
|
|
16,416,785 |
|
|
|
16,433,644 |
|
|
|
16,389,876 |
|
Diluted |
|
|
16,310,534 |
|
|
|
16,563,221 |
|
|
|
16,552,866 |
|
|
|
16,523,599 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Houston Wire & Cable
CompanyConsolidated Statements of Cash
Flows(In thousands)
|
Year Ended December 31, |
|
|
2019 |
|
|
2018 |
|
|
|
|
|
|
|
|
|
Operating activities |
|
|
|
|
|
|
|
Net income |
$ |
2,550 |
|
|
$ |
8,636 |
|
Adjustments to reconcile net
income to net cash provided by operating activities: |
|
|
|
|
|
|
|
Impairment charge |
|
120 |
|
|
|
60 |
|
Depreciation and amortization |
|
2,502 |
|
|
|
2,178 |
|
Amortization of unearned stock compensation |
|
1,471 |
|
|
|
1,298 |
|
Non-cash lease expense |
|
5,887 |
|
|
|
— |
|
Provision for doubtful accounts |
|
119 |
|
|
|
73 |
|
Provision for refund liability |
|
84 |
|
|
|
37 |
|
Provision for inventory obsolescence |
|
515 |
|
|
|
615 |
|
Deferred income taxes |
|
431 |
|
|
|
(1,344 |
) |
Other non-cash items |
|
54 |
|
|
|
25 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
Accounts receivable |
|
2,625 |
|
|
|
(2,507 |
) |
Inventories |
|
(20,259 |
) |
|
|
(6,825 |
) |
Income taxes |
|
(918 |
) |
|
|
14 |
|
Prepaid expenses |
|
(265 |
) |
|
|
1,201 |
|
Lease payments |
|
(6,194 |
) |
|
|
— |
|
Book overdraft |
|
— |
|
|
|
(3,028 |
) |
Trade accounts payable |
|
2,605 |
|
|
|
2,804 |
|
Accrued and other current liabilities |
|
2,394 |
|
|
|
2,460 |
|
Other operating activities |
|
673 |
|
|
|
(359 |
) |
Net cash provided by (used in)
operating activities |
|
(5,606 |
) |
|
|
5,338 |
|
|
|
|
|
|
|
|
|
Investing activities |
|
|
|
|
|
|
|
Expenditures for property and equipment |
|
(2,379 |
) |
|
|
(1,503 |
) |
Proceeds from disposals of property and equipment |
|
5 |
|
|
|
20 |
|
Net cash used in investing
activities |
|
(2,374 |
) |
|
|
(1,483 |
) |
|
|
|
|
|
|
|
|
Financing activities |
|
|
|
|
|
|
|
Borrowings on revolver |
|
364,671 |
|
|
|
367,513 |
|
Payments on revolver |
|
(352,487 |
) |
|
|
(369,752 |
) |
Proceeds from exercise of stock options |
|
— |
|
|
|
— |
|
Payment of dividends |
|
(36 |
) |
|
|
(48 |
) |
Purchase of treasury stock/stock surrendered on vested awards |
|
(1,172 |
) |
|
|
(175 |
) |
Lease payments |
|
(293 |
) |
|
|
— |
|
Net cash used in financing
activities |
|
10,683 |
|
|
|
(2,462 |
) |
|
|
|
|
|
|
|
|
Net change in cash |
|
2,703 |
|
|
|
1,393 |
|
Cash at beginning of year |
|
1,393 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
Cash at end of year |
$ |
4,096 |
|
|
$ |
1,393 |
|
Supplemental disclosures |
|
|
|
|
|
|
|
Cash paid during the year for interest |
$ |
3,011 |
|
|
$ |
2,811 |
|
Cash paid during the year for income taxes |
$ |
1,762 |
|
|
$ |
3,696 |
|
CONTACT:
Chris Micklas
Chief Financial Officer
Direct: 713.609.2114
Fax: 713.609.2168
cmicklas@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)
Storico
Da Lug 2023 a Lug 2024