HOUSTON, March 16, 2018 (GLOBE NEWSWIRE) -- Houston Wire & Cable Company (NASDAQ:HWCC) (the “Company”) announced operating results for the fourth quarter and year ended December 31, 2017.
Selected quarterly results were:
· Sales of $82.1 million up 18.6% over 2016
· Gross margin of 25.4% up 360 basis points
· Operating income of $3.0 million compared to a loss of $(1.6) million in 2016
· Net income of $2.0 million compared to a net loss of $(1.8) million in 2016
· Diluted EPS of $0.12
Selected annual results were:
· Sales of $317.7 million, up 21.4%
· Gross margin of 22.9% up 270 basis points
· Operating income of $4.6 million compared to a loss of $(6.5) million in 2016, of which $2.4 million was attributable to an impairment charge,
· Net loss of $(0.2) million compared to a net loss of $(6.0) million in 2016
· Diluted EPS of $(0.01)
*Fourth Quarter Summary *
Jim Pokluda, President and Chief Executive Officer commented, “We are pleased that the upward momentum we experienced in the third quarter continued in the fourth quarter. Although not unexpected, demand in the latter part of the quarter fell in line with the normal lackluster historical trend for this time of year. We estimate that higher metals prices in 2017 represented approximately 7% of the increase in sales. 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 33%, while Maintenance, Repair, and Operations (MRO) sales increased 16%, as compared to the fourth quarter of 2016.
Gross margin at 25.4% increased 360 basis points from the fourth quarter of 2016, primarily due to incrementally higher product margins driven by continued pricing discipline, prudent purchasing, and metals inflation. Sequentially, gross margin increased 250 basis points, which is indicative that our margin improvement plan is working. Operating expenses at $17.9 million were up $1.2 million or 7.0% from the prior year period, primarily due to higher variable compensation, as sales and profitability improved, and to higher distribution labor costs to handle the volume increase. Operating expenses as a percentage of revenue decreased 230 basis points from 24.1% in Q4 2016 to 21.8% in Q4 2017.
Interest expense of $0.6 million was up 48.2% from $0.4 million in the prior year period, primarily due to the additional debt incurred to fund the 2016 Vertex acquisition and additional funds for working capital to service the higher activity levels. Average debt levels for the quarter increased 19.8% from $62.8 million in 2016 to $75.3 in 2017, while the effective interest rate increased from 2.4% in 2016 to 3.0% in 2017.
The effective tax rate for the quarter was 16.4%, which included a credit for a valuation allowance of 43.7% and additional deferred tax expense of 13.7%, both due to the impact of the Tax Cuts and Jobs Act (“the Act”).
Mr. Pokluda further commented, “We are encouraged that we have now experienced two quarters of increased sales and improved operating performance. A full year of Vertex activities, coupled with increasing contributions from our commercial products lines and generally higher demand for our products and services, all contributed to these improved results.”*Twelve Month Summary*
Sales for the twelve month period were $317.7 million, up 21.4% from the $261.6 million level in 2016. We estimate that higher metals prices in 2017 represented approximately 3% of the revenue increase. We estimate sales for our project business, increased 3%, while MRO sales increased 15%, as compared to 2016.
Gross margin at 22.9% was up 270 basis points from the 2016 period. “Improved pricing discipline, higher product margins from Vertex for a full year in 2017, and greater customer product demand, contributed to the margin increase” said Mr. Pokluda.
Operating expenses at $68.1 million increased 14.4% from the prior year amount of $59.5 million. The majority of the increase was due to a full year of Vertex’s operating expenses in 2017, as compared to only three months in 2016, partially offset by the absence in 2017 of the $2.4 million impairment charge recorded in 2016. Operating expenses as a percentage of revenue decreased 130 basis points from 22.7% in 2016 to 21.4% in 2017.
Interest expense of $2.1 million increased 145% from $0.8 million in 2016 due primarily to higher debt levels and an increase in average interest rates which moved from 2.0% in 2016 to 2.8% in 2017.
The full year effective tax rate of 108.8% included a 41% charge for a valuation allowance on deferred tax assets not currently expected to be realized, 15.2% for stock compensation expense and 12.9% for deferred tax assets in respect of the Act rate change.
The results of operations generated a net loss of $0.2 million, compared to a net loss of $6.0 million in 2016.
*Conference Call*
The Company will host a conference call to discuss fourth quarter results today, Friday, March 16, 2018, at 10:00 a.m., C.D.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. * *
Live call dial-in numbers are as follow:
Toll-Free: (800) 936-7954
International: (720) 545-0048
Conference ID # 5139879
Approximately two hours after the completion of the live call, a telephone replay will be available until March 23, 2018.
Replay, Toll-Free #: (855)859-2056
Replay, Toll #: (404) 537-3406
Conference ID # 5139879
*About the Company *
With over 40 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)
December 31,
2017 2016
Assets
Current assets:
Accounts receivable, net $ 57,396 $ 44,677
Inventories, net 88,115 79,783
Income taxes 449 1,948
Prepaids 1,938 570
Total current assets 147,898 126,978
Property and equipment, net 11,355 11,261
Intangible assets, net 12,015 13,378
Goodwill 22,353 22,770
Deferred income taxes — 892
Other assets 418 591
Total assets $ 194,039 $ 175,870
Liabilities and stockholders’ equity
Current liabilities:
Book overdraft $ 3,028 $ 3,181
Trade accounts payable 8,449 8,406
Accrued and other current liabilities 16,823 13,248
Total current liabilities 28,300 24,835
Debt 73,555 60,388
Deferred income taxes 414 —
Other long-term obligations 1,026 516
Total liabilities 103,295 85,739
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: 16,491,181 and 16,457,525 shares outstanding at December 31, 2017 and 2016, respectively 21 21
Additional paid-in capital 54,006 53,824
Retained earnings 97,336 97,550
Treasury stock (60,619 ) (61,264 )
Total stockholders’ equity 90,744 90,131
Total liabilities and stockholders’ equity $ 194,039 $ 175,870
*Houston Wire & Cable Company
Consolidated Statements of Operations
*(In thousands except, share and per share data)
* * Three Months Ended Year Ended * *
* * December 31, December 31, * *
* * 2017 2016 2017 2016 * *
Sales $ 82,146 $ 69,257 $ 317,697 $ 261,644
Cost of sales 61,303 54,181 245,035 208,694
Gross profit 20,843 15,076 72,662 52,950
Operating expenses:
Salaries and commissions 9,923 8,474 36,570 29,369
Other operating expenses 7,413 7,412 28,716 24,714
Depreciation and amortization 538 820 2,772 3,018
Impairment charge — — — 2,384
Total operating expenses 17,874 16,706 68,058 59,485
Operating income 2,969 (1,630 ) 4,604 (6,535 )
Interest expense 581 392 2,073 845
Income before income taxes 2,388 (2,022 ) 2,531 (7,380 )
Income taxes 392 (196 ) 2,753 (1,374 )
Net income $ 1,996 $ (1,826 ) $ (222 ) $ (6,006 )
Earnings per share:
Basic $ 0.12 $ (0.11 ) $ (0.01 ) $ (0.37 )
Diluted $ 0.12 $ (0.11 ) $ (0.01 ) $ (0.37 )
Weighted average common shares outstanding:
Basic 16,295,570 16,216,978 16,269,611 16,345,679
Diluted 16,391,330 16,216,978 16,269,611 16,345,679
Dividend declared per share $ — $ — $ — $ 0.15
*Houston Wire & Cable Company*
*Consolidated Statements of Cash Flows*
(In thousands)
Year Ended December 31,
2016 2015
Operating activities
Net income $ (222 ) $ (6,006 )
Adjustments to reconcile net income to net cash provided by
operating activities:
Impairment charge — 2,384
Depreciation and amortization 2,772 3,018
Amortization of unearned stock compensation 1,176 856
Provision for doubtful accounts 68 285
Provision for inventory obsolescence 34 93
Deferred income taxes 1,314 6
Other non-cash items 222 (116 )
Changes in operating assets and liabilities:
Accounts receivable (12,719 ) 4,019
Inventories (7,942 ) 10,483
Book overdraft (153 ) (517 )
Trade accounts payable 38 896
Accrued and other current liabilities 3,571 2,473
Income taxes 1,499 (1,016 )
Prepaid expenses (1,368 ) 124
Other operating activities 368 147
Net cash provided by operating activities (11,342 ) 17,243
Investing activities
Expenditures for property and equipment (1,769 ) (1,319 )
Proceeds from disposals of property and equipment 8 5
Cash paid for acquisition 193 (32,370 )
Net cash used in investing activities (1,568 ) (33,684 )
Financing activities
Borrowings on revolver 333,301 302,898
Payments on revolver (320,133 ) (281,698 )
Proceeds from exercise of stock options — —
Payment of dividends (81 ) (2,495 )
Purchase of treasury stock (177 ) (2,264 )
Net cash used in financing activities 12,910 16,441
Net change in cash — —
Cash at beginning of year — —
Cash at end of year $ — $ —
Supplemental disclosures
Cash paid during the year for interest $ 1,961 $ 728
Cash paid during the year for income taxes $ 64 $ 233
CONTACT: CONTACT:
Nicol G. Graham
Chief Financial Officer
Direct: 713.609.2125
Fax: 713.609.2168
ngraham@houwire.com Reported by GlobeNewswire 40 minutes ago.
Selected quarterly results were:
· Sales of $82.1 million up 18.6% over 2016
· Gross margin of 25.4% up 360 basis points
· Operating income of $3.0 million compared to a loss of $(1.6) million in 2016
· Net income of $2.0 million compared to a net loss of $(1.8) million in 2016
· Diluted EPS of $0.12
Selected annual results were:
· Sales of $317.7 million, up 21.4%
· Gross margin of 22.9% up 270 basis points
· Operating income of $4.6 million compared to a loss of $(6.5) million in 2016, of which $2.4 million was attributable to an impairment charge,
· Net loss of $(0.2) million compared to a net loss of $(6.0) million in 2016
· Diluted EPS of $(0.01)
*Fourth Quarter Summary *
Jim Pokluda, President and Chief Executive Officer commented, “We are pleased that the upward momentum we experienced in the third quarter continued in the fourth quarter. Although not unexpected, demand in the latter part of the quarter fell in line with the normal lackluster historical trend for this time of year. We estimate that higher metals prices in 2017 represented approximately 7% of the increase in sales. 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 33%, while Maintenance, Repair, and Operations (MRO) sales increased 16%, as compared to the fourth quarter of 2016.
Gross margin at 25.4% increased 360 basis points from the fourth quarter of 2016, primarily due to incrementally higher product margins driven by continued pricing discipline, prudent purchasing, and metals inflation. Sequentially, gross margin increased 250 basis points, which is indicative that our margin improvement plan is working. Operating expenses at $17.9 million were up $1.2 million or 7.0% from the prior year period, primarily due to higher variable compensation, as sales and profitability improved, and to higher distribution labor costs to handle the volume increase. Operating expenses as a percentage of revenue decreased 230 basis points from 24.1% in Q4 2016 to 21.8% in Q4 2017.
Interest expense of $0.6 million was up 48.2% from $0.4 million in the prior year period, primarily due to the additional debt incurred to fund the 2016 Vertex acquisition and additional funds for working capital to service the higher activity levels. Average debt levels for the quarter increased 19.8% from $62.8 million in 2016 to $75.3 in 2017, while the effective interest rate increased from 2.4% in 2016 to 3.0% in 2017.
The effective tax rate for the quarter was 16.4%, which included a credit for a valuation allowance of 43.7% and additional deferred tax expense of 13.7%, both due to the impact of the Tax Cuts and Jobs Act (“the Act”).
Mr. Pokluda further commented, “We are encouraged that we have now experienced two quarters of increased sales and improved operating performance. A full year of Vertex activities, coupled with increasing contributions from our commercial products lines and generally higher demand for our products and services, all contributed to these improved results.”*Twelve Month Summary*
Sales for the twelve month period were $317.7 million, up 21.4% from the $261.6 million level in 2016. We estimate that higher metals prices in 2017 represented approximately 3% of the revenue increase. We estimate sales for our project business, increased 3%, while MRO sales increased 15%, as compared to 2016.
Gross margin at 22.9% was up 270 basis points from the 2016 period. “Improved pricing discipline, higher product margins from Vertex for a full year in 2017, and greater customer product demand, contributed to the margin increase” said Mr. Pokluda.
Operating expenses at $68.1 million increased 14.4% from the prior year amount of $59.5 million. The majority of the increase was due to a full year of Vertex’s operating expenses in 2017, as compared to only three months in 2016, partially offset by the absence in 2017 of the $2.4 million impairment charge recorded in 2016. Operating expenses as a percentage of revenue decreased 130 basis points from 22.7% in 2016 to 21.4% in 2017.
Interest expense of $2.1 million increased 145% from $0.8 million in 2016 due primarily to higher debt levels and an increase in average interest rates which moved from 2.0% in 2016 to 2.8% in 2017.
The full year effective tax rate of 108.8% included a 41% charge for a valuation allowance on deferred tax assets not currently expected to be realized, 15.2% for stock compensation expense and 12.9% for deferred tax assets in respect of the Act rate change.
The results of operations generated a net loss of $0.2 million, compared to a net loss of $6.0 million in 2016.
*Conference Call*
The Company will host a conference call to discuss fourth quarter results today, Friday, March 16, 2018, at 10:00 a.m., C.D.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. * *
Live call dial-in numbers are as follow:
Toll-Free: (800) 936-7954
International: (720) 545-0048
Conference ID # 5139879
Approximately two hours after the completion of the live call, a telephone replay will be available until March 23, 2018.
Replay, Toll-Free #: (855)859-2056
Replay, Toll #: (404) 537-3406
Conference ID # 5139879
*About the Company *
With over 40 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)
December 31,
2017 2016
Assets
Current assets:
Accounts receivable, net $ 57,396 $ 44,677
Inventories, net 88,115 79,783
Income taxes 449 1,948
Prepaids 1,938 570
Total current assets 147,898 126,978
Property and equipment, net 11,355 11,261
Intangible assets, net 12,015 13,378
Goodwill 22,353 22,770
Deferred income taxes — 892
Other assets 418 591
Total assets $ 194,039 $ 175,870
Liabilities and stockholders’ equity
Current liabilities:
Book overdraft $ 3,028 $ 3,181
Trade accounts payable 8,449 8,406
Accrued and other current liabilities 16,823 13,248
Total current liabilities 28,300 24,835
Debt 73,555 60,388
Deferred income taxes 414 —
Other long-term obligations 1,026 516
Total liabilities 103,295 85,739
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: 16,491,181 and 16,457,525 shares outstanding at December 31, 2017 and 2016, respectively 21 21
Additional paid-in capital 54,006 53,824
Retained earnings 97,336 97,550
Treasury stock (60,619 ) (61,264 )
Total stockholders’ equity 90,744 90,131
Total liabilities and stockholders’ equity $ 194,039 $ 175,870
*Houston Wire & Cable Company
Consolidated Statements of Operations
*(In thousands except, share and per share data)
* * Three Months Ended Year Ended * *
* * December 31, December 31, * *
* * 2017 2016 2017 2016 * *
Sales $ 82,146 $ 69,257 $ 317,697 $ 261,644
Cost of sales 61,303 54,181 245,035 208,694
Gross profit 20,843 15,076 72,662 52,950
Operating expenses:
Salaries and commissions 9,923 8,474 36,570 29,369
Other operating expenses 7,413 7,412 28,716 24,714
Depreciation and amortization 538 820 2,772 3,018
Impairment charge — — — 2,384
Total operating expenses 17,874 16,706 68,058 59,485
Operating income 2,969 (1,630 ) 4,604 (6,535 )
Interest expense 581 392 2,073 845
Income before income taxes 2,388 (2,022 ) 2,531 (7,380 )
Income taxes 392 (196 ) 2,753 (1,374 )
Net income $ 1,996 $ (1,826 ) $ (222 ) $ (6,006 )
Earnings per share:
Basic $ 0.12 $ (0.11 ) $ (0.01 ) $ (0.37 )
Diluted $ 0.12 $ (0.11 ) $ (0.01 ) $ (0.37 )
Weighted average common shares outstanding:
Basic 16,295,570 16,216,978 16,269,611 16,345,679
Diluted 16,391,330 16,216,978 16,269,611 16,345,679
Dividend declared per share $ — $ — $ — $ 0.15
*Houston Wire & Cable Company*
*Consolidated Statements of Cash Flows*
(In thousands)
Year Ended December 31,
2016 2015
Operating activities
Net income $ (222 ) $ (6,006 )
Adjustments to reconcile net income to net cash provided by
operating activities:
Impairment charge — 2,384
Depreciation and amortization 2,772 3,018
Amortization of unearned stock compensation 1,176 856
Provision for doubtful accounts 68 285
Provision for inventory obsolescence 34 93
Deferred income taxes 1,314 6
Other non-cash items 222 (116 )
Changes in operating assets and liabilities:
Accounts receivable (12,719 ) 4,019
Inventories (7,942 ) 10,483
Book overdraft (153 ) (517 )
Trade accounts payable 38 896
Accrued and other current liabilities 3,571 2,473
Income taxes 1,499 (1,016 )
Prepaid expenses (1,368 ) 124
Other operating activities 368 147
Net cash provided by operating activities (11,342 ) 17,243
Investing activities
Expenditures for property and equipment (1,769 ) (1,319 )
Proceeds from disposals of property and equipment 8 5
Cash paid for acquisition 193 (32,370 )
Net cash used in investing activities (1,568 ) (33,684 )
Financing activities
Borrowings on revolver 333,301 302,898
Payments on revolver (320,133 ) (281,698 )
Proceeds from exercise of stock options — —
Payment of dividends (81 ) (2,495 )
Purchase of treasury stock (177 ) (2,264 )
Net cash used in financing activities 12,910 16,441
Net change in cash — —
Cash at beginning of year — —
Cash at end of year $ — $ —
Supplemental disclosures
Cash paid during the year for interest $ 1,961 $ 728
Cash paid during the year for income taxes $ 64 $ 233
CONTACT: CONTACT:
Nicol G. Graham
Chief Financial Officer
Direct: 713.609.2125
Fax: 713.609.2168
ngraham@houwire.com Reported by GlobeNewswire 40 minutes ago.
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