HOUSTON, Aug. 08, 2019 (GLOBE NEWSWIRE) -- Houston Wire & Cable Company (NASDAQ: HWCC) (the “Company”) announced operating results for the second quarter ended June 30, 2019.

Selected quarterly results versus the second quarter of 2018 were:

• Sales of $85.3 million, down 9.1%
• Gross margin of 24.1%, up 30 basis points
• Operating expense improved $448 thousand
• Quarter end debt decreased $7.0 million and average debt down $8.2 million
• Net income of $1.6 million, down 37%
• Fully diluted EPS of $0.10, down $0.06

Second Quarter Summary
Jim Pokluda, President and Chief Executive Officer commented, “Industrial market demand weakened versus the prior year period, and revenue declines in oil and gas, fastener, and offshore drilling end markets negatively impacted our results.  We estimate that sales decreased approximately 7.0% from the prior year quarter when adjusted for aggregate changes in metals prices.  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 2%, while Maintenance, Repair, and Operations (MRO) sales were down 11%, as compared to the second quarter of 2018. 

Despite recent market headwinds, we continued to make good progress with gross profit improvement and reduction of expenses.  Gross margin at 24.1% increased 30 basis points from the prior period, primarily due to improved pricing discipline and product mix.  Operating expenses at $17.5 million were down $0.4 million from prior period.”

Debt at the end of the second quarter of 2019 was $73.1 million, a reduction of $7.0 million and $5.8 million from the second quarter of 2018 and the first quarter of 2019, respectively.   This reduction in debt is consistent with our seasonal business patterns. Average debt in the second quarter of 2019 was $74.3 million, which was $8.2 million lower than the average in the second quarter of 2018.  The average effective interest rate was 3.9%, which was flat with the first quarter of 2019 and a 20 basis point increase over the second quarter 2018.   The result is that interest expense for the second quarter of 2019 was flat sequentially and decreased 4.5% or $35 thousand to $738 thousand versus the prior year.

Net income was $1.6 million, as compared to $2.6 million in the same period of the prior year.

Mr. Pokluda further commented “as we move into the second half of the year, despite seeing lessened activity in certain industrial end markets, we continue to manage what is within our control, and are performing well in many areas of our business that will help offset some of the market pressures.  Our operational excellence is at peak levels, customer satisfaction is very high, and expense management, working capital management, and prudent allocation of capital remain as our top priorities.” 

Conference Call
The Company will host a conference call to discuss fourth quarter results tomorrow, [Friday], August 9th, 2019, at 10:00 a.m., C.D.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 www.houwire.com.  

Live call dial-in numbers are as follows:
Toll-Free: (800)-936-7954
International: (720)-545-0048
Conference ID # 7158919

Approximately two hours after the completion of the live call, a telephone replay will be available until August 16, 2019.

Replay, Toll-Free #: (855)-859-2056
Replay, Toll #: (404)-537-3406
Conference ID # 7158919

About the Company 
With 44 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)

		June 30,				December 31,
		2019				2018
		(unaudited)
Assets
Current assets:
Cash		$	—			$	1,393
Accounts receivable, net:
Trade			55,877				52,946
Other			3,313				6,847
Inventories, net			106,273				94,325
Income taxes			577				435
Prepaids			2,108				737
Other current assets			490				—
Total current assets			168,638				156,683
Property and equipment, net			12,033				11,456
Intangible assets, net			10,790				11,179
Goodwill			22,353				22,353
Operating lease right-of-use assets, net			11,176				—
Deferred income taxes			571				930
Other assets			490				456
Total assets		$	226,051			$	203,057
Liabilities and stockholders’ equity
Current liabilities:
Book overdraft		$	330			$	—
Trade accounts payable			13,359				11,253
Accrued and other current liabilities			21,612				19,232
Operating lease liabilities			2,961				—
Total current liabilities			38,262				30,485
Debt			73,107				71,316
Operating lease long term liabilities			8,628				—
Other long term liabilities			706				578
Total liabilities			120,703				102,379
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: 16,645,182 and 16,611,651 outstanding at June 30, 2019 and December 31, 2018, respectively			21				21
Additional paid-in-capital			53,620				53,514
Retained earnings			110,003				105,975
Treasury stock			(58,296	)			(58,832	)
Total stockholders’ equity			105,348				100,678
Total liabilities and stockholders’ equity		$	226,051			$	203,057

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,
		2019				2018				2019				2018
Sales		$	85,326			$	93,852			$	170,596			$	178,878
Cost of sales			64,789				71,505				128,800				136,042
Gross profit			20,537				22,347				41,796				42,836
Operating expenses:
Salaries and commissions			9,244				9,906				18,424				19,100
Other operating expenses			7,729				7,508				15,392				14,988
Depreciation and amortization			534				541				1,087				1,086
Total operating expenses			17,507				17,955				34,903				35,174
Operating income			3,030				4,392				6,893				7,662
Interest expense			738				773				1,479				1,417
Income before income taxes			2,292				3,619				5,414				6,245
Income tax expense			649				1,013				1,487				1,692
Net income		$	1,643			$	2,606			$	3,927			$	4,553
Earnings per share:
Basic		$	0.10			$	0.16			$	0.24			$	0.28
Diluted		$	0.10			$	0.16			$	0.24			$	0.28
Weighted average common shares outstanding:
Basic			16,504,471				16,387,112				16,491,236				16,368,610
Diluted			16,597,496				16,489,671				16,571,113				16,459,736

  

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

		Six Months Ended June 30,
		2019				2018
Operating activities
Net income		$	3,927			$	4,553
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization			1,087				1,086
Amortization of unearned stock compensation			707				703
Non-cash lease expense			1,968				—
Provision for refund liability			471				108
Provision for inventory obsolescence			459				191
Deferred income taxes			460				(82	)
Other non-cash items			83				21
Changes in operating assets and liabilities:
Accounts receivable			75				(5,403	)
Inventories			(12,407	)			105
Prepaids			(1,371	)			196
Other assets			(550	)			(12	)
Lease payments			(1,963	)			—
Book overdraft			330				(1,716	)
Trade accounts payable			2,106				(439	)
Accrued and other current liabilities			2,235				(4,483	)
Income taxes			(142	)			(399	)
Other operating activities			359				(104	)
Net cash used in operating activities			(2,166	)			(5,675	)
Investing activities
Expenditures for property and equipment			(875	)			(741	)
Net cash used in investing activities			(875	)			(741	)
Financing activities
Borrowings on revolver			175,417				179,994
Payments on revolver			(173,626	)			(173,401	)
Payment of dividends			(30	)			(39	)
Purchase of treasury stock/stock surrendered on vested awards			(65	)			(138	)
Lease payments			(48	)			—
Net cash provided by financing activities			1,648				6,416
Net change in cash			(1,393	)			—
Cash at beginning of period			1,393				—
Cash at end of period		$	—			$	—

 

CONTACT:

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