HOUSTON, TX -- (Marketwired) -- 08/06/15 -- In the news release, "Houston Wire & Cable Company Reports Results for the Quarter Ended June 30, 2015" issued earlier today by Houston Wire & Cable Company (NASDAQ: HWCC), we are advised by the company that the headline following the bulleted quarterly highlights list, should read "Second Quarter Summary" rather than "First Quarter Summary" as originally issued. Complete corrected text follows.
Houston Wire & Cable Company Reports Results for the Quarter Ended June 30, 2015
HOUSTON, TX -- Aug 6, 2015 -- Houston Wire & Cable Company (NASDAQ: HWCC) (the "Company") announced operating results for the second quarter ended June 30, 2015.
Selected quarterly highlights were:
- Sales of $78 million
- Completed the Southwest Wire Rope Houston facility consolidation
- Net loss of $0.6 million
- Adjusted net income of $1.5 million excluding the impairment charge relating to the Southwest Wire division and certain tradenames.
- Debt decreased to $40.3 million, lowest level since Q 1 2010
- Declared a dividend of $0.12 cents per share on August 4, 2015
Second Quarter Summary
Jim Pokluda, President and Chief Executive Officer commented, "Market conditions did not improve in the second quarter and the combination of reduced demand in oil and gas and industrial markets and deflation in the price of metals significantly impacted our operating results. Sales decreased 24.6% from the second quarter of 2014, or approximately 20% when adjusted for declining metals prices. We estimate that Maintenance, Repair and Operations (MRO) sales fell 20% or approximately 15% on a metals-adjusted basis, while project sales decreased approximately 35%, or 30% 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 approximately 13% and 14%, respectively. Total transactional invoice activity decreased by 11%."
Gross margin at 21.7% was flat with the second quarter of 2014. Operating expenses at $17.2 million included an impairment charge for the goodwill associated with the Southwest Wire Rope division and certain tradenames totaling $3.0 million. Net of this charge operating expenses were $14.2 million, a decrease of 8.8% from the $15.6 million level in 2014.
Pokluda commented, "Given today's challenging operating environment we have amplified our efforts to drive exceptionally high levels of focus and strong organizational execution involving new business development, expense management, efficient working capital utilization, gross margin optimization and customer satisfaction. Similar to the first quarter, new business development initiatives involving product line expansions into highly engineered power and control cable, aluminum cable and most recently flexible cable, continue to gain traction. Year-over-year expenses continue to decrease, largely as a result of our major expense reduction initiative implemented in early 2014. Inventory re-profiling has driven significant investment reductions which have favorably impacted working capital requirements, cash flow and debt. Gross margins have remained at levels experienced in more robust economic conditions, and operational excellence at 98% + order accuracy and on-time performance, continue to produce very high levels of customer satisfaction."
Interest expense of $0.2 million decreased 37% from $0.3 million in the prior year period. Average debt levels decreased by 26% from $61.2 million in 2014 to $45.1 million in 2015, while the effective interest rate decreased from 2.1% in 2014 to 2.0% in 2015.
Adjusted net income of $1.5 million decreased by $2.5 million from the second quarter of 2014. Diluted earnings per share excluding the impairment were $0.09 compared to $0.23 in the prior year quarter.
Mr Pokluda further commented, "Despite the current demand levels, we delivered strong operating cash flow, debt reduction continued, and our strong balance sheet again allowed us to return funds to our shareholders through the $0.12 per share dividend."
Six month summary
Sales for the six month period were down 21.7% versus the prior year period and down approximately 17% on a metals adjusted basis. We estimate that MRO sales decreased 9%, and project sales decreased 30%, 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 approximately 12% and 10% respectively.
Gross margin at 21.7% was flat with the 2014 period. "Pricing remains very competitive in the marketplace, especially in those regions where demand for product remains depressed and on large projects. Despite the continuing market pricing pressure, the achievement of this level of gross margin is a testimony to the ability of our sales force to execute under difficult conditions," said Mr. Pokluda. Gross profit dollars decreased $9.5 million or 21.5%, primarily due to the decrease in sales.
Operating expenses increased $0.3 million or 0.8%, primarily driven by the $3.0 million impairment charge. Absent this charge, operating expenses decreased 8.8% from $30.9 million to $28.2 million.
Interest expense of $0.5 million decreased 21% from $0.6 million. Average debt levels decreased 19% from $58.1 million in 2014 to $47.1 million in 2015, while interest rates remained flat at 2%.
Adjusted net income of $3.7 million decreased $4.1 million from the $7.8 million level in the prior year period.
Conference Call
The Company will host a conference call to discuss first quarter results on Thursday, August 6, 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 at www.houwire.com.
Approximately two hours after the completion of the live call, a telephone replay will be available until August 13, 2015.
Replay, Toll-Free #: 855-859-2056
Replay, Toll #: 404-537-3406
Conference ID # 97965630
About the Company
With over 40 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)
June 30, December 31,
2015 2014
------------ ------------
(unaudited)
Assets
Current assets:
Accounts receivable, net $ 52,961 $ 61,599
Inventories, net 76,269 88,958
Deferred income taxes 3,398 3,188
Income taxes 1,288 219
Prepaids 1,000 565
------------ ------------
Total current assets 134,916 154,529
Property and equipment, net 9,948 8,954
Intangible assets, net 7,274 8,501
Goodwill 14,866 17,520
Other assets 384 309
Deferred income taxes 245 --
------------ ------------
Total assets $ 167,633 $ 189,813
============ ============
Liabilities and stockholders' equity
Current liabilities:
Book overdraft $ 1,230 $ 3,113
Trade accounts payable 10,776 7,993
Accrued and other current liabilities 9,255 13,282
------------ ------------
Total current liabilities 21,261 24,388
Debt 40,339 53,847
Other long term obligations 95 96
Deferred income taxes -- 175
------------ ------------
Total liabilities 61,695 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: 17,172,857 and 17,508,015
outstanding at June 30, 2015 and December
31, 2014, respectively 21 21
Additional paid-in-capital 55,543 54,871
Retained earnings 108,650 111,233
Treasury stock (58,276) (54,818)
------------ ------------
Total stockholders' equity 105,938 111,307
------------ ------------
Total liabilities and stockholders' equity $ 167,633 $ 189,813
============ ============
HOUSTON WIRE & CABLE COMPANY
Consolidated Statements of Operations
(Unaudited)
(In thousands, except share and per share data)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ -----------------------
2015 2014 2015 2014
----------- ----------- ----------- -----------
Sales $ 77,959 $ 103,461 $ 159,559 $ 203,760
Cost of sales 61,024 81,022 124,900 159,617
----------- ----------- ----------- -----------
Gross profit 16,935 22,439 34,659 44,143
Operating expenses:
Salaries and commissions 7,168 8,061 14,406 16,184
Other operating expenses 6,281 6,728 12,329 13,220
Depreciation and
amortization 726 762 1,438 1,503
Impairment charge 2,994 -- 2,994 --
----------- ----------- ----------- -----------
Total operating expenses 17,169 15,551 31,167 30,907
----------- ----------- ----------- -----------
Operating income (loss) (234) 6,888 3,492 13,236
Interest expense 217 345 482 613
----------- ----------- ----------- -----------
Income (loss) before income
taxes (451) 6,543 3,010 12,623
Income taxes 168 2,512 1,443 4,847
----------- ----------- ----------- -----------
Net income (loss) $ (619) $ 4,031 $ 1,567 $ 7,776
=========== =========== =========== ===========
Earnings (loss) per share:
Basic $ (0.04) $ 0.23 $ 0.09 $ 0.44
=========== =========== =========== ===========
Diluted $ (0.04) $ 0.23 $ 0.09 $ 0.44
=========== =========== =========== ===========
Weighted average common
shares outstanding:
Basic 17,101,952 17,647,936 17,198,927 17,748,863
=========== =========== =========== ===========
Diluted 17,101,952 17,713,021 17,251,178 17,821,479
=========== =========== =========== ===========
Dividend declared per share $ 0.12 $ 0.12 $ 0.24 $ 0.23
=========== =========== =========== ===========
HOUSTON WIRE & CABLE COMPANY
Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
Six Months
Ended June 30,
-------------------------
2015 2014
----------- -----------
Operating activities
Net income $ 1,567 $ 7,776
Adjustments to reconcile net income to net cash
provided by operating activities:
Impairment charge 2,994 --
Depreciation and amortization 1,438 1,503
Amortization of unearned stock compensation 463 450
Provision for inventory obsolescence 330 704
Deferred income taxes (670) (319)
Other non-cash items 83 89
Changes in operating assets and liabilities:
Accounts receivable 8,564 (3,626)
Inventories 12,359 8,035
Book overdraft (1,883) (2,176)
Trade accounts payable 2,783 (2,007)
Accrued and other current liabilities (4,009) (5,880)
Income taxes (1,069) (289)
Other operating activities (520) (693)
----------- -----------
Net cash provided by operating activities 22,430 3,567
Investing activities
Expenditures for property and equipment (1,545) (942)
----------- -----------
Net cash used in investing activities (1,545) (942)
Financing activities
Borrowings on revolver 151,366 204,327
Payments on revolver (164,874) (199,118)
Payment of dividends (4,110) (4,077)
Purchase of treasury stock (3,267) (3,852)
Other financing activities -- 95
----------- -----------
Net cash used in financing activities (20,885) (2,625)
Net change in cash -- --
Cash at beginning of period -- --
----------- -----------
----------- -----------
Cash at end of period $ -- $ --
=========== ===========
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)
Three Months Ended
Adjusted net income and adjusted diluted EPS June 30, 2015
-------------------------
Net Income Diluted EPS
----------- -----------
Net income (loss), as reported under GAAP $ (619) $ (0.04)
Impairment charge 2,994 0.18
----------- -----------
2,375 0.14
Tax effect of impairment charge (838) (0.05)
----------- -----------
Adjusted net income $ 1,537 $ 0.09
=========== ===========
Adjusted net income and adjusted diluted EPS Six Months Ended
June 30, 2015
-------------------------
Net Income Diluted EPS
----------- -----------
Net income, as reported under GAAP $ 1,567 $ 0.09
Impairment charge 2,994 0.18
----------- -----------
4,561 0.27
Tax effect of impairment charge (838) (0.05)
----------- -----------
Adjusted net income $ 3,723 $ 0.22
=========== ===========
