HOUSTON, May 09, 2019 (GLOBE NEWSWIRE) -- Houston Wire & Cable Company (NASDAQ: HWCC) (the “Company”) announced operating results for the first quarter ended March 31, 2019.
Selected quarterly results were:
- Net income of $2.3 million, up 17.3% from the first quarter of 2018
- Fully diluted EPS of $0.14, up $0.02 over the first quarter of 2018
- Sales of $85.3 million, up 0.3% from the same period in 2018
- Gross margin of 24.9%, up 80 basis points from the first quarter of 2018
- Sequential quarter operating expense declined $393 thousand
- Operating income of $3.9 million, an 18.1% increase from the same period in 2018
First Quarter Summary
Jim Pokluda, President and Chief Executive Officer commented, “We were pleased with the profitability improvements realized in the first quarter as these results represented our eighth consecutive quarter of year-over-year operating profit growth. Although reported revenue was only slightly positive, adjusting for one less business day and the headwinds experienced from metals, it is encouraging that end market activity remained stable, and that our team continued to make gains with key elements of our strategic plan including margin improvement. 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 5%, while Maintenance, Repair, and Operations (MRO) sales were down 1% as compared to the first quarter of 2018.”
Gross margin at 24.9% increased 80 basis points from the first quarter of 2018, primarily due to improved pricing discipline and product mix. Sequentially, gross margin increased 100 basis points. Operating expenses at $17.4 million were up $0.2 million from Q1 2018 and down $0.4 million sequentially.
Average debt levels for the quarter increased 3.5% sequentially consistent with the historical first quarter trend but decreased 4.5% from $76.9 million in Q1 2018 to $73.5 in 2019, while the effective interest rate increased from 3.3% in 2018 to 3.9% in 2019.
The effective tax rate for the quarter was 26.8%, compared to the 25.9% level in 2018.
Net income was $2.3 million, as compared to $1.9 million in the same period of the prior year. Mr. Pokluda further commented, “As a result of the attainment of higher margin levels and sequential reduction in operating expenses, we are able to report the highest level of first quarter operating income since 2014.”
Conference Call
The Company will host a conference call to discuss first quarter results tomorrow, Friday, May 10, 2019, at 2:00 p.m., C.D.T. The call was originally scheduled for 10:00 a.m. C.D.T., however due to concerns with the weather in the Houston area, we have chosen to move the call. 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 follows:
Toll-Free: (800)-936-7954
International: (720)-545-0048
Conference ID # 3298124
Approximately two hours after the completion of the live call, a telephone replay will be available until May 17, 2019.
Replay, Toll-Free #: (855)-859-2056
Replay, Toll #: (404)-537-3406
Conference ID # 3298124
About the Company
With 44 years’ 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 COMPANY
Consolidated Balance Sheets
(In thousands, except share data)
| March 31, | December 31, | ||||||
| 2019 | 2018 | ||||||
| (unaudited) | |||||||
| Assets | |||||||
| Current assets: | |||||||
| Cash | $ | 256 | $ | 1,393 | |||
| Accounts receivable, net: | |||||||
| Trade | 58,350 | 52,946 | |||||
| Other | 1,585 | 6,847 | |||||
| Inventories, net | 95,325 | 94,325 | |||||
| Income taxes | — | 435 | |||||
| Prepaids | 1,742 | 737 | |||||
| Other current assets | 490 | — | |||||
| Total current assets | 157,748 | 156,683 | |||||
| Property and equipment, net | 11,377 | 11,456 | |||||
| Intangible assets, net | 10,984 | 11,179 | |||||
| Goodwill | 22,353 | 22,353 | |||||
| Operating lease right-of-use assets, net | 11,954 | — | |||||
| Deferred income taxes | 747 | 930 | |||||
| Other assets | 503 | 456 | |||||
| Total assets | $ | 215,666 | $ | 203,057 | |||
| Liabilities and stockholders’ equity | |||||||
| Current liabilities: | |||||||
| Trade accounts payable | $ | 7,829 | $ | 11,253 | |||
| Accrued and other current liabilities | 12,583 | 19,232 | |||||
| Operating lease liabilities | 3,082 | — | |||||
| Income taxes | 99 | — | |||||
| Total current liabilities | 23,593 | 30,485 | |||||
| Debt | 78,940 | 71,316 | |||||
| Operating lease long term liabilities | 9,280 | — | |||||
| Other long term liabilities | 440 | 578 | |||||
| Total liabilities | 112,253 | 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: 16,612,396 and 16,611,651 outstanding at March 31, 2019 and December 31, 2018, respectively | 21 | 21 | |||||
| Additional paid-in-capital | 53,856 | 53,514 | |||||
| Retained earnings | 108,360 | 105,975 | |||||
| Treasury stock | (58,824 | ) | (58,832 | ) | |||
| Total stockholders’ equity | 103,413 | 100,678 | |||||
| Total liabilities and stockholders’ equity | $ | 215,666 | $ | 203,057 | |||
HOUSTON WIRE & CABLE COMPANY
Consolidated Statements of Operations
(Unaudited)
(In thousands, except share and per share data)
| Three Months Ended | |||||||
| March 31, | |||||||
| 2019 | 2018 | ||||||
| Sales | $ | 85,270 | $ | 85,026 | |||
| Cost of sales | 64,011 | 64,537 | |||||
| Gross profit | 21,259 | 20,489 | |||||
| Operating expenses: | |||||||
| Salaries and commissions | 9,180 | 9,194 | |||||
| Other operating expenses | 7,663 | 7,480 | |||||
| Depreciation and amortization | 553 | 545 | |||||
| Total operating expenses | 17,396 | 17,219 | |||||
| Operating income | 3,863 | 3,270 | |||||
| Interest expense | 741 | 644 | |||||
| Income before income taxes | 3,122 | 2,626 | |||||
| Income tax expense | 838 | 679 | |||||
| Net income | $ | 2,284 | $ | 1,947 | |||
| Earnings per share: | |||||||
| Basic | $ | 0.14 | $ | 0.12 | |||
| Diluted | $ | 0.14 | $ | 0.12 | |||
| Weighted average common shares outstanding: | |||||||
| Basic | 16,477,855 | 16,349,902 | |||||
| Diluted | 16,577,126 | 16,422,961 | |||||
HOUSTON WIRE & CABLE COMPANY
Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
| Three Months Ended March 31, | |||||||
| 2019 | 2018 | ||||||
| Operating activities | |||||||
| Net income | $ | 2,284 | $ | 1,947 | |||
| Adjustments to reconcile net income to net cash used in operating activities: | |||||||
| Depreciation and amortization | 553 | 545 | |||||
| Amortization of unearned stock compensation | 342 | 313 | |||||
| Non-cash lease expense | 986 | — | |||||
| Provision for refund liability | 559 | 50 | |||||
| Provision for inventory obsolescence | 170 | 224 | |||||
| Deferred income taxes | 284 | (137 | ) | ||||
| Other non-cash items | 34 | 11 | |||||
| Changes in operating assets and liabilities: | |||||||
| Accounts receivable | (723 | ) | 2,749 | ||||
| Inventories | (1,170 | ) | (5,511 | ) | |||
| Prepaids | (1,005 | ) | (1,435 | ) | |||
| Other assets | (549 | ) | — | ||||
| Lease payments | (982 | ) | — | ||||
| Book overdraft | — | 149 | |||||
| Trade accounts payable | (3,424 | ) | 297 | ||||
| Accrued and other current liabilities | (6,460 | ) | (6,204 | ) | |||
| Income taxes | 534 | 809 | |||||
| Other operating activities | 93 | 109 | |||||
| Net cash used in operating activities | (8,474 | ) | (6,084 | ) | |||
| Investing activities | |||||||
| Expenditures for property and equipment | (278 | ) | (452 | ) | |||
| Net cash used in investing activities | (278 | ) | (452 | ) | |||
| Financing activities | |||||||
| Borrowings on revolver | 94,333 | 91,514 | |||||
| Payments on revolver | (86,709 | ) | (84,886 | ) | |||
| Payment of dividends | — | (29 | ) | ||||
| Release (purchase) of treasury stock/stock surrendered on vested awards | 8 | (63 | ) | ||||
| Lease payments | (17 | ) | — | ||||
| Net cash provided by financing activities | 7,615 | 6,536 | |||||
| Net change in cash | (1,137 | ) | — | ||||
| Cash at beginning of period | 1,393 | — | |||||
| Cash at end of period | $ | 256 | $ | — | |||