HOUSTON, TX--(Marketwire - May 5, 2011) - Houston Wire & Cable Company (NASDAQ: HWCC) (the "Company") announced record operating results for the first quarter of 2011.
Selected highlights for the first quarter of 2011 compared to the prior year period:
-- Record sales of $99.7 million, up 63.0% -- Organic sales up 34.5% -- Gross margin up 190 basis points -- Net income up 182.6% -- Fully diluted earnings per share (EPS) of $0.27
Revenues from the businesses acquired in June 2010 of $17.4 million and our 34.5% organic growth combined for a 63.0% increase in sales in the first quarter of 2011 compared to the prior year period. The $99.7 million in sales was the highest quarterly level ever attained by the Company.
Excluding the acquired businesses, sales in the core Repair and Replacement business, also referred to as Maintenance, Repair and Operations (MRO), were up approximately 20 - 25% for the quarter, as the broad economy began to improve. Sales within the five long-term growth initiatives of Utility Power Generation, Environmental Compliance, Engineering & Construction, Industrials and LifeGuard™, our proprietary private-label product, were up approximately 50 - 55% for the quarter. Management estimates that copper inflation, which primarily affects our stock shipments and lags broad market moves due to our average cost inventory accounting treatment, had a favorable impact on sales of approximately 9% of revenues.
Gross profit increased 77.9% to $22.3 million due to the higher sales volume and a 22.3% gross margin level, which was 190 basis points greater than the first quarter of 2010.
Operating expenses increased by 46.0% from the prior year period, primarily due to the businesses acquired in June 2010. Operating expenses as a percentage of sales decreased to 14.1% in the first quarter of 2011 from 15.8% in the prior year period, due to operating leverage and ongoing cost control initiatives. Interest expense of $0.3 million was significantly higher than the first quarter of 2010, as average debt levels rose from $12.6 million in the first quarter of 2010 to $55.4 million in the first quarter of 2011 as a result of the June 2010 acquisition. Operating income of $8.2 million was 186.1% higher than the prior year period and 60.3% higher than the fourth quarter of 2010. The effective tax rate for the quarter of 38.4% was fairly consistent with the fourth quarter of 2010.
Chuck Sorrentino, Chief Executive Officer, commented, "Congratulations are in order as our team is beginning to see the benefit from the share gains they worked so hard to achieve during the recession. We hope to continue building on this increased market share and will drive for an outstanding 2011. We anticipate improving sales along with leverage, as confidence returns to our customers thus leading to increased capital spending.
"We achieved strong results in the quarter, led by the addition of more than 50 new customers. Throughout the recession, we maintained a large sales force and strong inventory levels, both of which we believe led to significant share gains.
"Industrial demand appears to be increasing, albeit somewhat inconsistently, as we still see areas of the United States where activity is soft. Nonetheless, we achieved strong results in the first quarter and we obtained operating leverage from the higher sales throughput. The net income contribution at 4.8% was the highest since the third quarter of 2008.
"The acquisition integration is progressing, as the Southern Wire locations are now utilizing our systems.
"While I am pleased with our sales momentum, I remain cautiously optimistic about our ability to continue improving as the economy strengthens."
Conference Call
The Company will host a conference call to discuss first quarter results on Thursday, May 5th at 10:00 am CT. Hosting the call will be Scott Thompson, Chairman of the Board; Charles Sorrentino, Chief Executive Officer; James Pokluda, President 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 12, 2011.
Replay Dial In: 888.203.1112 International Replay: 719.457.0820 Confirmation Code: 5602070
About the Company
With 35 years 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, HWCC 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, 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. HWCC's 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,
2011 2010
------------- -------------
(unaudited)
Assets
Current assets:
Accounts receivable, net $ 64,558 $ 67,838
Inventories, net 73,817 67,503
Deferred income taxes 2,517 2,399
Prepaids 634 763
------------- -------------
Total current assets 141,526 138,503
Property and equipment, net 6,202 6,255
Intangible assets, net 15,090 15,557
Goodwill 25,082 25,082
Other assets 79 93
------------- -------------
Total assets $ 187,979 $ 185,490
============= =============
Liabilities and stockholders' equity
Current liabilities:
Book overdraft $ 1,761 $ 3,055
Trade accounts payable 18,324 19,987
Accrued and other current liabilities 14,687 19,781
Income taxes payable 3,243 1,036
------------- -------------
Total current liabilities 38,015 43,859
Debt 59,403 54,825
Other long term obligations 137 141
Deferred income taxes 712 945
------------- -------------
Total liabilities 98,267 99,770
------------- -------------
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:
17,763,237 and 17,748,487 outstanding at
March 31, 2011 and December 31, 2010,
respectively 21 21
Additional paid-in-capital 59,075 58,642
Retained earnings 83,504 80,187
Treasury stock (52,888) (53,130)
------------- -------------
Total stockholders' equity 89,712 85,720
------------- -------------
Total liabilities and stockholders' equity $ 187,979 $ 185,490
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HOUSTON WIRE & CABLE COMPANY
Consolidated Statements of Income
(Unaudited)
(In thousands, except share and per share data)
Three Months Ended
March 31,
-------------------------
2011 2010
------------ ------------
Sales $ 99,727 $ 61,168
Cost of sales 77,475 48,661
------------ ------------
Gross profit 22,252 12,507
Operating expenses:
Salaries and commissions 7,304 5,119
Other operating expenses 6,063 4,395
Depreciation and amortization 727 142
------------ ------------
Total operating expenses 14,094 9,656
------------ ------------
Operating income 8,158 2,851
Interest expense 333 76
------------ ------------
Income before income taxes 7,825 2,775
Income taxes 3,007 1,070
------------ ------------
Net income $ 4,818 $ 1,705
============ ============
Earnings per share:
Basic $ 0.27 $ 0.10
============ ============
Diluted $ 0.27 $ 0.10
============ ============
Weighted average common shares outstanding:
Basic 17,664,890 17,652,881
============ ============
Diluted 17,775,598 17,703,953
============ ============
Dividend declared per share $ 0.085 $ 0.085
============ ============
HOUSTON WIRE & CABLE COMPANY
Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
Three Months
Ended March 31,
-------------------------
2011 2010
------------ ------------
Operating activities
Net income $ 4,818 $ 1,705
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 727 142
Amortization of capitalized loan costs 14 9
Amortization of unearned stock compensation 554 562
Provision for doubtful accounts 34 60
Provision for returns and allowances 69 (62)
Provision for inventory obsolescence (148) 137
Deferred income taxes (351) (213)
Changes in operating assets and liabilities:
Accounts receivable 3,177 3,075
Inventories (6,166) 4,925
Prepaids 129 2,789
Book overdraft (1,294) (484)
Trade accounts payable (1,663) (1,764)
Accrued and other current liabilities (4,751) (1,993)
Income taxes payable 2,207 1,191
Other long term obligations (4) --
------------ ------------
Net cash provided by (used in) operating
activities (2,648) 10,079
Investing activities
Expenditures for property and equipment (207) (109)
Cash paid for acquisition (343) --
------------ ------------
Net cash used in investing activities (550) (109)
Financing activities
Borrowings on revolver 104,302 53,825
Payments on revolver (99,724) (62,304)
Proceeds from exercise of stock options 92 9
Excess tax benefit for stock options 29 --
Payment of dividends (1,501) (1,500)
------------ ------------
Net cash provided by (used in) financing
activities 3,198 (9,970)
------------ ------------
Net change in cash -- --
Cash at beginning of period -- --
------------ ------------
Cash at end of period $ -- $ --
============ ============
Contact Information: CONTACT: Hope M. Novosad Manager, Investor Relations Direct: 713.609.2110 Fax: 713.609.2168