HOUSTON, TX--(Marketwired - Mar 10, 2016) - Houston Wire & Cable Company (
Selected quarterly results were:
- Sales of $70.3 million down 21.5% or 10% metals adjusted, from Q4 2014
- Net loss of $(0.2) million
- Adjusted net income (non-GAAP) of $0.4 million, excluding the impairment charge related to certain tradenames
- Diluted EPS of $(0.01), adjusted diluted EPS of $0.03
- Paid a dividend of $0.06 cents per share on November 27, 2015
- Repurchased 324,000 shares
Selected annual results were:
- Sales of $308.1 million down 21% or 14% metals adjusted, from 2014
- Net income of $2.0 million
- Adjusted net income of $5.2 million, excluding the impairment charge
- Diluted EPS of $0.12, adjusted diluted EPS of $0.30
- Declared dividends totaling $0.42 cents per share
- Record cash flow of $31.8 million
- Repurchased 859,000 shares
Fourth Quarter Summary
Jim Pokluda, President and Chief Executive Officer, commented, "Demand levels in the fourth quarter continued to trend downward, caused by extended lackluster industrial activity and the ongoing impact of the contraction in oil and gas markets. These factors combined with the impact of metals deflation depressed our operating results and comparisons to the prior year period. Sales decreased 21.5% or approximately 10% on a metals adjusted basis. We estimate that Maintenance, Repair and Operations (MRO) sales decreased approximately 25% or approximately 13% on a metals adjusted basis, while project sales decreased 15% or approximately 3% on a metals adjusted basis. Total transactional activity, as measured by invoice count, decreased by 8%."
Gross margin at 21.5% decreased 160 basis points from the fourth quarter of 2014 primarily due to lower product margins, lower vendor rebates and higher freight costs, partially offset by lower customer incentives. Operating expenses at $14.4 million were down 1% or $0.1 million from the prior year period and, excluding the $0.4 million impairment, down 4%. We continue to drive awareness across the entire company to minimize our operating expenses.
Pokluda commented, "Despite significant metals deflation and the depressed condition of the industrial market and oil and gas market, we have put additional emphasis on customer service and operational excellence to further enhance our customers' experience. Sales trends for our products outside our primary industrial markets were encouraging and continue to provide a solid complement to our legacy product lines. In addition, as we have done in several prior quarters, we are placing extreme emphasis on working capital efficiencies and aligning our expenses with current demand levels."
Interest expense of $0.2 million was 39.7% less than the prior year period as average debt of $39.8 million, fell 26.2% from $54.0 million in the fourth quarter of 2014. The expense was also favorably impacted by the effective interest rate of 1.5% which decreased from 2.2% in the prior year period, primarily due to the terms of the new loan agreement signed on October 1, 2015
Adjusted net income of $0.4 million decreased 88.2% from the fourth quarter of 2014. Adjusted diluted earnings per share were $0.03 compared to $0.21 in the prior year quarter. Adjusted net income and adjusted earnings per share are non-GAAP financial measures that exclude the impact of the impairment charge.
Twelve month summary
Sales for the year were $308.1 million, down 21% versus the prior year and approximately 14% on a metals adjusted basis. We estimate that MRO sales decreased 18% or approximately 11% on a metals adjusted basis, while project sales decreased 26%, or approximately 19% on a metals adjusted basis. Mr. Pokluda commented, "This has been an extremely difficult year as industrial demand fell dramatically from the prior year and the loss of leverage we obtain from higher sales levels severely compressed our operating profit and net income. The results were also impacted by the impairment charges for certain elements of the wire rope division, which was directly impacted by the low demand levels from the industrial and oil and gas sectors. I am pleased, however, with our ability to re-align our operations with current demand levels and with the record operating cash flow of $31.8 million, as we continued to drive more efficiencies in our inventory profiles and other aspects of our working capital investment. We were also able to return to our shareholders, dividends totaling $0.42 and a share buy-back total of 859,000 shares during the year."
Gross margin at 21.4% was down 60 basis points from 2014. Gross profit dollars decreased $20.0 million or 23.3%, primarily due to the sales shortfall.
Operating expenses of $56.5 million, excluding the impairment charge, decreased 6.7%, principally due to lower salaries, lower commissions due to reduced sales and gross profit and the continued impact of our cost reduction program.
Interest expense of $0.9 million was 22.9% lower than the prior year's $1.2 million, as average debt decreased by 21% to $43.9 million from $55.6 million and average interest rates declined to 1.9% from 2.1%.
The full year effective tax rate of 60.1% included the 20.0% effect of the non-deductible portion of the impairment charge and the 3.7% impact of forfeited equity awards.
Net income for 2015 of $2.0 million fell 86.3% from the $15.0 million level in the prior year, while diluted earnings per share of $0.12 fell 86% from $0.85. Excluding the impairment charge, adjusted net income was $5.1 million, while adjusted diluted earnings per share was $0.30.
Conference Call
The Company will host a conference call to discuss fourth quarter results on Thursday, March 10, 2016 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 March 17, 2016.
Replay, Toll-Free #: (855) 859-2056
Replay, Toll #: (404) 537-3406
Conference ID # 54000318
About the Company
With over 40 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, 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.
Non-GAAP Financial Disclosures and Reconciliations
While the Company reports financial results in accordance with U.S. GAAP, this press release includes non-GAAP measures. We use the non-GAAP measures to evaluate and manage our operations and provide the information to assist investors in performing financial analysis that is consistent with financial models developed by research analysts. Investors should consider non-GAAP measures in addition to, not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP.
| HOUSTON WIRE & CABLE COMPANY | ||||||||
| Reconciliation of Non-GAAP Measures | ||||||||
| (Unaudited) | ||||||||
| (In thousands, except per share data) | ||||||||
| Adjusted net income and adjusted diluted EPS | Three Months Ended December 31, 2015 |
|||||||
| Net Income | Diluted EPS | |||||||
| Net income (loss), as reported under GAAP | $ | (199 | ) | $ | (0.01 | ) | ||
| Impairment charge | 423 | 0.03 | ||||||
| Tax effect of impairment charge | 209 | 0.01 | ||||||
| Adjusted net income | $ | 433 | $ | 0.03 | ||||
| Adjusted net income and adjusted diluted EPS | Year Ended December 31, 2015 |
|||||||
| Net Income | Diluted EPS | |||||||
| Net income, as reported under GAAP | $ | 2,044 | $ | 0.12 | ||||
| Impairment charge | 3,417 | 0.20 | ||||||
| Tax effect of impairment charge | (263 | ) | (0.02 | ) | ||||
| Adjusted net income | $ | 5,198 | $ | 0.30 | ||||
| Houston Wire & Cable Company | |||||||||
| Consolidated Balance Sheets | |||||||||
| December 31, | |||||||||
| 2015 | 2014 | ||||||||
| (In thousands, except share data) |
|||||||||
| Assets | |||||||||
| Current assets: | |||||||||
| Accounts receivable, net | $ | 46,250 | $ | 61,599 | |||||
| Inventories, net | 75,777 | 88,958 | |||||||
| Deferred income taxes | 3,074 | 3,188 | |||||||
| Income taxes | 932 | 219 | |||||||
| Prepaids | 648 | 565 | |||||||
| Total current assets | 126,681 | 154,529 | |||||||
| Property and equipment, net | 10,899 | 8,954 | |||||||
| Intangible assets, net | 5,984 | 8,501 | |||||||
| Goodwill | 14,866 | 17,520 | |||||||
| Deferred income taxes | 264 | -- | |||||||
| Other assets | 419 | 309 | |||||||
| Total assets | $ | 159,113 | $ | 189,813 | |||||
| Liabilities and stockholders' equity | |||||||||
| Current liabilities: | |||||||||
| Book overdraft | $ | 3,701 | $ | 3,113 | |||||
| Trade accounts payable | 6,380 | 7,993 | |||||||
| Accrued and other current liabilities | 9,568 | 13,104 | |||||||
| Total current liabilities | 19,649 | 24,210 | |||||||
| Debt | 39,188 | 53,847 | |||||||
| Other long-term obligations | 275 | 274 | |||||||
| Deferred income taxes | -- | 175 | |||||||
| Total liabilities | 59,112 | 78,506 | |||||||
| Stockholders' equity: | |||||||||
| Preferred stock, $0.001 par value; 5,000,000 shares authorized, none issuedand outstanding | -- | -- | |||||||
| Common stock, $0.001 par value; 100,000,000 shares authorized: 20,988,952 shares issued: 16,712,626 and 17,508,015 shares outstanding at December 31, 2015 and 2014, respectively | 21 | 21 | |||||||
| Additional paid-in capital | 54,621 | 54,871 | |||||||
| Retained earnings | 106,048 | 111,233 | |||||||
| Treasury stock | (60,689 | ) | (54,818 | ) | |||||
| Total stockholders' equity | 100,001 | 111,307 | |||||||
| Total liabilities and stockholders' equity | $ | 159,113 | $ | 189,813 | |||||
| Houston Wire & Cable Company | ||||||||||||||
| Consolidated Statements of Income | ||||||||||||||
| Three Months Ended | Year Ended | |||||||||||||
| December 31, | December 31, | |||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||
| (In thousands, except share and per share data) | ||||||||||||||
| Sales | $ | 70,314 | $ | 89,530 | $ | 308,133 | $ | 390,011 | ||||||
| Cost of sales | 55,194 | 68,812 | 242,223 | 304,073 | ||||||||||
| Gross profit | 15,120 | 20,718 | 65,910 | 85,938 | ||||||||||
| Operating expenses: | ||||||||||||||
| Salaries and commissions | 6,820 | 7,356 | 28,537 | 31,196 | ||||||||||
| Other operating expenses | 6,394 | 6,478 | 25,023 | 26,400 | ||||||||||
| Depreciation and amortization | 740 | 677 | 2,915 | 2,919 | ||||||||||
| Impairment charge | 423 | -- | 3,417 | -- | ||||||||||
| Total operating expenses | 14,377 | 14,511 | 59,892 | 60,515 | ||||||||||
| Operating income | 743 | 6,207 | 6,018 | 25,423 | ||||||||||
| Interest expense | 182 | 302 | 901 | 1,168 | ||||||||||
| Income before income taxes | 561 | 5,905 | 5,117 | 24,255 | ||||||||||
| Income taxes | 760 | 2,237 | 3,073 | 9,283 | ||||||||||
| Net income | $ | (199 | ) | $ | 3,668 | $ | 2,044 | $ | 14,972 | |||||
| Earnings per share: | ||||||||||||||
| Basic | $ | (0.01 | ) | $ | 0.21 | $ | 0.12 | $ | 0.85 | |||||
| Diluted | $ | (0.01 | ) | $ | 0.21 | $ | 0.12 | $ | 0.85 | |||||
| Weighted average common shares outstanding: | ||||||||||||||
| Basic | 16,641,129 | 17,407,308 | 17,012,560 | 17,605,290 | ||||||||||
| Diluted | 16,641,129 | 17,500,014 | 17,067,593 | 17,683,931 | ||||||||||
| Dividend declared per share | $ | 0.06 | $ | 0.12 | $ | 0.42 | $ | 0.47 | ||||||
| Houston Wire & Cable Company | ||||||||||
| Consolidated Statements of Cash Flows | ||||||||||
| Year Ended December 31, | ||||||||||
| 2015 | 2014 | |||||||||
| (In thousands) | ||||||||||
| Operating activities | ||||||||||
| Net income | $ | 2,044 | $ | 14,972 | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||
| Impairment charge | 3,417 | -- | ||||||||
| Depreciation and amortization | 2,915 | 2,919 | ||||||||
| Amortization of unearned stock compensation | 886 | 868 | ||||||||
| Provision for inventory obsolescence | 397 | 1,002 | ||||||||
| Deferred income taxes | (485 | ) | (923 | ) | ||||||
| Other non-cash items | 38 | (43 | ) | |||||||
| Changes in operating assets and liabilities: | ||||||||||
| Accounts receivable | 15,352 | (1,144 | ) | |||||||
| Inventories | 12,784 | 6,147 | ||||||||
| Book overdraft | 588 | (1,481 | ) | |||||||
| Trade accounts payable | (1,613 | ) | (5,644 | ) | ||||||
| Accrued and other current liabilities | (3,557 | ) | (5,794 | ) | ||||||
| Income taxes | (713 | ) | 184 | |||||||
| Other operating activities | (224 | ) | 206 | |||||||
| Net cash provided by operating activities | 31,829 | 11,269 | ||||||||
| Investing activities | ||||||||||
| Expenditures for property and equipment | (3,123 | ) | (2,177 | ) | ||||||
| Proceeds from disposals of property and equipment | 8 | 25 | ||||||||
| Net cash used in investing activities | (3,115 | ) | (2,152 | ) | ||||||
| Financing activities | ||||||||||
| Borrowings on revolver | 310,366 | 405,884 | ||||||||
| Payments on revolver | (325,025 | ) | (399,989 | ) | ||||||
| Proceeds from exercise of stock options | 11 | 181 | ||||||||
| Payment of dividends | (7,172 | ) | (8,293 | ) | ||||||
| Excess tax benefit for options | -- | 7 | ||||||||
| Purchase of treasury stock | (6,894 | ) | (6,907 | ) | ||||||
| Net cash used in financing activities | (28,714 | ) | (9,117 | ) | ||||||
| Net change in cash | -- | -- | ||||||||
| Cash at beginning of year | -- | -- | ||||||||
| Cash at end of year | $ | -- | $ | -- | ||||||
| Supplemental disclosures | ||||||||||
| Cash paid during the year for interest | $ | 900 | $ | 1,160 | ||||||
| Cash paid during the year for income taxes | $ | 4,278 | $ | 10,029 | ||||||