Houston Wire & Cable Company Reports Results for the Quarter Ended September 30, 2018

HOUSTON, Nov. 08, 2018 (GLOBE NEWSWIRE) -- Houston Wire & Cable Company (NASDAQ: HWCC) (the “Company”) announced operating results for the third quarter ended September 30, 2018.

Third Quarter 2018 Highlights

• Net income of $2.5 million, or $0.15 per diluted share
• Reduced debt by $6.7 million
• Sales of $90.1 million increased 10.9% over 2017
• Gross margin of 23.8% up 90 basis points compared with 2017

Third Quarter Summary
Houston Wire & Cable Company reported net income of $2.5 million, or $0.15 per diluted share, for the quarter ended September 30, 2018, compared to a net loss of $1.7 million, or a loss of $0.11 per diluted share, for the same quarter in 2017.  Operating income in the third quarter 2018 was $3.0 million compared to $2.0 million during the third quarter of 2017.

Jim Pokluda, President and Chief Executive Officer, commented, “We were pleased to post our fifth consecutive quarter of year-over-year revenue growth, as customer demand and end market strength remained much improved over the prior year. 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 13%, while Maintenance, Repair, and Operations (MRO) sales were up 10%, as compared to the third quarter of 2017.”

Gross margin at 23.8% increased 90 basis points from the third quarter of 2017, primarily due to higher product margins driven by ongoing pricing discipline and product mix as metals prices remained relatively consistent year over year. Operating expenses at $18.3 million were up $1.8 million from Q3 2017 and $0.4 million sequentially.  During the quarter, these expenses were elevated by approximately $0.4 million as the Company completed two warehouse moves and one warehouse reorganization. Operating expenses as a percentage of revenue remained relatively flat to 2017 at 20.4%.

Debt for the quarter decreased by $6.7 million to $73.4 million, primarily from increased earnings and improved working capital efficiency, while the effective interest rate increased from 3.7% in the second quarter to 3.8% in the third quarter of 2018.

The effective tax rate for the quarter was a benefit of 6.4%, which included the impact of a release of the Company’s $1.0 million valuation allowance established in 2017 and the impact of lower corporate tax rates under the 2017 Tax Cuts and Jobs Act.

Mr. Pokluda further commented, “Our improved year-over-year results are being driven by on-going recovery of end-market activity, customer demand, and excellent execution of our strategic plan.  We are encouraged by these results, and remain laser focused on driving above market performance in the period ahead.”   

Conference Call
The Company will host a conference call to discuss fourth quarter results today, Friday, November 9^th, 2018, at 10:00 a.m., C.S.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 at www.houwire.com.  

Live call dial-in numbers are as follow:
Toll-Free: (800)-936-7954
International: (720)-545-0048
Conference ID # 2295115

Approximately two hours after the completion of the live call, a telephone replay will be available until November 16^th, 2018.

Replay, Toll-Free #: (855)-859-2056
Replay, Toll #: (404)-537-3406
Conference ID # 2295115

About the Company 
With 43 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 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)

		September 30,				December 31,
		2018				2017
		(unaudited)
Assets
Current assets:
Accounts receivable, net
Trade		$	60,022			$	51,031
Other			4,981				6,365
Inventories, net			86,469				88,115
Income taxes			550				449
Prepaids			1,622				1,938
Total current assets			153,644				147,898
Property and equipment, net			11,522				11,355
Intangible assets, net			11,433				12,015
Goodwill			22,353				22,353
Deferred income taxes			1,123				—
Other assets			578				418
Total assets		$	200,653			$	194,039
Liabilities and stockholders' equity
Current liabilities:
Book overdraft		$	1,728			$	3,028
Trade accounts payable			9,350				8,449
Accrued and other current liabilities			16,517				16,823
Total current liabilities			27,595				28,300
Debt			73,403				73,555
Deferred income taxes			—				414
Other long term obligations			784				1,026
Total liabilities			101,782				103,295
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: 16,523,439 and 16,491,181 outstanding at September 30, 2018 and December 31, 2017, respectively			21				21
Additional paid-in-capital			54,571				54,006
Retained earnings			104,344				97,336
Treasury stock			(60,065	)			(60,619	)
Total stockholders' equity			98,871				90,744
Total liabilities and stockholders' equity		$	200,653			$	194,039

 HOUSTON WIRE & CABLE COMPANY
Consolidated Statements of Operations
(Unaudited)
(In thousands, except share and per share data)

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2018				2017				2018				2017
Sales		$	90,074			$	81,196			$	268,952			$	235,551
Cost of sales			68,681				62,626				204,723				183,732
Gross profit			21,393				18,570				64,229				51,819
Operating expenses:
Salaries and commissions			9,778				8,975				28,878				26,647
Other operating expenses			8,028				6,999				23,016				21,303
Depreciation and amortization			541				549				1,627				2,234
Total operating expenses			18,347				16,523				53,521				50,184
Operating income			3,046				2,047				10,708				1,635
Interest expense			739				543				2,156				1,492
Income before income taxes			2,307				1,504				8,552				143
Income tax (benefit) expense			(148	)			3,215				1,544				2,361
Net income (loss)		$	2,455			$	(1,711	)		$	7,008			$	(2,218	)
Earnings (loss) per share:
Basic		$	0.15			$	(0.11	)		$	0.43			$	(0.14	)
Diluted		$	0.15			$	(0.11	)		$	0.42			$	(0.14	)
Weighted average common shares outstanding:
Basic			16,404,805				16,274,663				16,380,807				16,260,862
Diluted			16,563,245				16,274,663				16,492,217				16,260,862

HOUSTON WIRE & CABLE COMPANY
Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)

		Nine Months Ended September 30,
		2018				2017
Operating activities
Net income (loss)		$	7,008			$	(2,218	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization			1,627				2,234
Stock-based compensation			1,085				770
Provision for inventory obsolescence			813				78
Deferred income taxes			(1,537	)			3,163
Other non-cash items			93				195
Changes in operating assets and liabilities:
Accounts receivable			(7,668	)			(12,619	)
Inventories			833				(2,082	)
Prepaids			316				(639	)
Income taxes			(101	)			(742	)
Book overdraft			(1,300	)			(1,293	)
Trade accounts payable			901				(1,790	)
Accrued and other current liabilities			(267	)			4,031
Other operating activities			(264	)			18
Net cash provided by (used in) operating activities			1,539				(10,894	)
Investing activities
Expenditures for property and equipment			(1,210	)			(1,307	)
Cash received for acquisition			—				193
Net cash used in investing activities			(1,210	)			(1,114	)
Financing activities
Borrowings on revolver			270,609				243,651
Payments on revolver			(270,761	)			(231,509	)
Payment of dividends			(39	)			(60	)
Purchase of treasury stock/stock surrendered on vested awards			(138	)			(74	)
Net cash (used in) provided by financing activities			(329	)			12,008
Net change in cash			—				—
Cash at beginning of period			—				—
Cash at end of period		$	—			$	—

 

CONTACT:
                    
                    Christopher M. Micklas
                    Chief Financial Officer 
                    Direct:  713.609.2114
                    Fax:  713.609.2168
                    cmicklas@houwire.com