Houston Wire & Cable Company Reports Results for the Quarter Ended March 31, 2015
Marketwired
HOUSTON, TX--(Marketwired - May 7, 2015) - Houston Wire & Cable Company (NASDAQ: HWCC) (the "Company") announced operating results for the first quarter ended March 31, 2015.
Selected quarterly highlights were:
Sales of $81.6 million
Net income of $2.2 million
Diluted EPS of $0.13
Cash flow of $10.3 million
Declared a dividend of $0.12 cents per share on May 5, 2015
First Quarter Summary Jim Pokluda, President and Chief Executive Officer commented, "The sharp decline in oil prices in the latter part of 2014, which depressed industrial demand, and the deflation in the price of metals, both affected the level of our business activity during the first quarter. Sales decreased 18.6% from the first quarter of 2014, or approximately 14.3% when adjusted for declining metals prices. We estimate that Maintenance, Repair and Operations (MRO) sales fell 9% or approximately 5% on a metals-adjusted basis, while project sales decreased approximately 33%, or 29% on a metals-adjusted basis. Metals adjusted project and total sales excluding the negative impact resulting from a decline in a large and ongoing infrastructure project fell 9% and 7% respectively. Total transactional invoice activity decreased by approximately 5%."
Gross margin at 21.7% increased 10 basis points from the first quarter of 2014. Operating expenses at $14.0 million fell 8.8% or $1.4 million from Q1 2014 and by $0.5 million on a sequential basis. Pokluda commented "Despite a very difficult operating environment, our gross margin controls and cost savings initiatives are working and I am pleased with the results of those efforts.
"Reduced market demand has not compromised HWCC's pricing power in the core area of our business involving MRO transactions, and although the present day pull-back in large capital project spend is frustrating, the long term fundamentals for this market opportunity are intact. Channel feedback continues to indicate exceptionally high levels of customer satisfaction, continued growth in market share and increasing support for our product line expansions into highly engineered power and control cable, aluminum cable and specialty oil and gas cable."
Interest expense of $0.3 million was flat with the prior year period. Average debt levels decreased by 10.7% from $54.9 million in 2014 to $49.1 million in 2015, while the effective interest rate increased from 1.9% in 2014 to 2.0% in 2015. The effective tax rate for the quarter of 36.8% was down from the 2014 tax rate of 38.4% primarily due to lower state tax rates in 2015.
Net income of $2.2 million decreased 41.6% from the first quarter of 2014. Diluted earnings per share were $0.13 compared to $0.21 in the prior year quarter.
Mr Pokluda further commented "As we move further into the year, prudent use of working capital, expense management, gross margin optimization, and new business development initiatives will remain top priorities."
Conference Call The Company will host a conference call to discuss first quarter results on Thursday, May 7, 2015 at 10:00 a.m., C.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 May 14, 2015.
About the Company With over 39 years of experience in the industry, Houston Wire & Cable Company is one of the largest providers of wire and cable in the U.S. market. Headquartered in Houston, Texas, the Company 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, primary and secondary aluminum distribution 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. 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
(In thousands, except share data)
March 31,
December 31,
2015
2014
(unaudited)
Assets
Current assets:
Accounts receivable, net
$
55,158
$
61,599
Inventories, net
81,630
88,958
Deferred income taxes
3,444
3,188
Income taxes
--
219
Prepaids
1,014
565
Total current assets
141,246
154,529
Property and equipment, net
9,116
8,954
Intangible assets, net
8,067
8,501
Goodwill
17,520
17,520
Other assets
294
309
Total assets
$
176,243
$
189,813
Liabilities and stockholders' equity
Current liabilities:
Book overdraft
$
1,479
$
3,113
Trade accounts payable
7,520
7,993
Accrued and other current liabilities
8,034
13,282
Income taxes
1,478
--
Total current liabilities
18,511
24,388
Debt
47,719
53,847
Other long term obligations
95
96
Deferred income taxes
48
175
Total liabilities
66,373
78,506
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: 17,316,607 and 17,508,015 outstanding at March 31, 2015 and December 31, 2014, respectively
21
21
Additional paid-in-capital
55,470
54,871
Retained earnings
111,341
111,233
Treasury stock
(56,962
)
(54,818
)
Total stockholders' equity
109,870
111,307
Total liabilities and stockholders' equity
$
176,243
$
189,813
HOUSTON WIRE & CABLE COMPANY
Consolidated Statements of Income
(Unaudited)
(In thousands, except share and per share data)
Three Months Ended
March 31,
2015
2014
Sales
$
81,600
$
100,299
Cost of sales
63,876
78,595
Gross profit
17,724
21,704
Operating expenses:
Salaries and commissions
7,238
8,123
Other operating expenses
6,048
6,492
Depreciation and amortization
712
741
Total operating expenses
13,998
15,356
Operating income
3,726
6,348
Interest expense
265
268
Income before income taxes
3,461
6,080
Income taxes
1,275
2,335
Net income
$
2,186
$
3,745
Earnings per share:
Basic
$
0.13
$
0.21
Diluted
$
0.13
$
0.21
Weighted average common shares outstanding:
Basic
17,296,978
17,850,911
Diluted
17,376,928
17,944,010
Dividends declared per share
$
0.12
$
0.11
HOUSTON WIRE & CABLE COMPANY
Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
Three Months Ended March 31,
2015
2014
Operating activities
Net income
$
2,186
$
3,745
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization
712
741
Amortization of unearned stock compensation
217
213
Provision for inventory obsolescence
356
412
Deferred income taxes
(419
)
(243
)
Other non-cash items
44
17
Changes in operating assets and liabilities:
Accounts receivable
6,402
(6,632
)
Inventories
6,972
3,763
Book overdraft
(1,634
)
(1,646
)
Trade accounts payable
(473
)
(111
)
Accrued and other current liabilities
(5,331
)
(9,264
)
Income taxes payable
1,697
2,522
Other operating activities
(440
)
(529
)
Net cash provided by (used in) operating activities
10,289
(7,012
)
Investing activities
Expenditures for property and equipment
(440
)
(655
)
Net cash used in investing activities
(440
)
(655
)
Financing activities
Borrowings on revolver
76,746
99,007
Payments on revolver
(82,874
)
(88,789
)
Payment of dividends
(2,070
)
(1,959
)
Purchase of treasury stock
(1,651
)
(626
)
Other financing activities
--
34
Net cash (used in) provided by financing activities
