HOUSTON, TX--(Marketwire - May 10, 2012) - Houston Wire & Cable Company (
Selected highlights were:
- Sales of $94.5 million
- Gross margin reached 22.4%
- Operating margins reached 7.2%
- Net income of $4.0 million
- Diluted EPS of $0.23
- Declared dividends totaling $0.09 cents per share
Jim Pokluda, President and Chief Executive Officer, commented, "I am pleased that our sales in the quarter rebounded from the fourth quarter of 2011, increasing 8%, albeit falling short of the prior year period by just over 5%. Comparisons for the first half of 2012 are difficult, because the 2011 period experienced significant project billings and strong MRO demand from formerly delayed work during the recession. Typically, on a sequential basis, sales performance in the first quarter is similar to that of the fourth quarter in the prior year. Although both project and MRO sales were down on a year-over-year basis, I believe our sequential growth, to be a positive indicator of improving market conditions.
"We have continued to invest in additional sales and marketing resources and expanded our product line. The mechanical product is now being housed in four additional distribution facilities and electrical wire is now being carried in one more facility. All business development initiatives drove continued market penetration and resulted in 107 new customers being added during the quarter."
First Quarter Summary
Overall market strength remained intact and project activity within the five long-term growth initiatives of Utility Power Generation, Environmental Compliance, Engineering & Construction, Industrials and LifeGuard™, our proprietary private-label product, remained a significant component of overall revenue. New project opportunities and sales increased as a result of several small to medium sized orders from plant expansions and upgrades. However total project sales compared to the prior year period, decreased approximately 5% for the quarter due to a reduction in "mega" project billings.
Sales activity in the Repair and Replacement market, also referred to as Maintenance, Repair and Operations (MRO), was down approximately 5% versus the prior year period, which was primarily due to the slow start in activity during the first two months of the quarter. Management also estimates that copper fluctuations had little or no impact on revenues during the quarter.
While gross margins fell slightly on a sequential basis, the resulting 22.4% was still higher than the prior year period and continued the recent upward trend.
Operating expenses increased 1.7% or $0.2 million from the prior year period, primarily the result of costs associated with a higher headcount and higher levels of consulting and professional fees. The sequential increase in sales, coupled with our continuing focus on expense control, moved operating margins up 110 basis points sequentially to 7.2%. The resulting operating income at $6.8 million was up 28.2% sequentially.
Interest expense of $0.3 million was lower than the prior year period, as average debt levels fell from $55.4 million in 2011 to $47.6 million in the first quarter of 2012 and the effective interest rate declined from 2.3% in 2011 to 2.1% in 2012. The effective tax rate for the quarter of 38.6% remained in line with the 2011 annual rate, but was up slightly from the 38.4% level in 2011, primarily due to the impact of higher state income taxes.
Net income increased sequentially by 31.6% to $4.0 million, showing the leverage of our model. Diluted earnings per share were $0.23, compared to the $0.17 on a sequential basis.
Conference Call
The Company will host a conference call to discuss first quarter results on Thursday, May 10, 2012 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 May 17, 2012.
Replay Dial In: 855.859.2056
International Replay: 404.537.3406
Confirmation Code: 77394778
About the Company
With over 35 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, 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) | |||||||||
| March 31, | December 31, | ||||||||
| 2012 | 2011 | ||||||||
| (unaudited) | |||||||||
| Assets | |||||||||
| Current assets: | |||||||||
| Accounts receivable, net | $ | 64,964 | $ | 59,731 | |||||
| Inventories, net | 81,650 | 69,517 | |||||||
| Deferred income taxes | 2,158 | 2,268 | |||||||
| Income taxes | -- | 1,693 | |||||||
| Prepaids | 1,029 | 828 | |||||||
| Total current assets | 149,801 | 134,037 | |||||||
| Property and equipment, net | 5,831 | 6,029 | |||||||
| Intangible assets, net | 13,266 | 13,700 | |||||||
| Goodwill | 25,082 | 25,082 | |||||||
| Other assets | 302 | 305 | |||||||
| Total assets | $ | 194,282 | $ | 179,153 | |||||
| Liabilities and stockholders' equity | |||||||||
| Current liabilities: | |||||||||
| Book overdraft | $ | 5,586 | $ | 2,270 | |||||
| Trade accounts payable | 14,807 | 10,099 | |||||||
| Accrued and other current liabilities | 16,160 | 19,101 | |||||||
| Income taxes | 874 | -- | |||||||
| Total current liabilities | 37,427 | 31,470 | |||||||
| Debt | 54,561 | 47,967 | |||||||
| Other long term obligations | 125 | 128 | |||||||
| Deferred income taxes | 2,038 | 2,250 | |||||||
| Total liabilities | 94,151 | 81,815 | |||||||
| 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: 17,830,851 and 17,811,806 outstanding at March 31, 2012 and December 31, 2011, respectively | 21 | 21 | |||||||
| Additional paid-in-capital | 55,652 | 55,760 | |||||||
| Retained earnings | 96,011 | 93,588 | |||||||
| Treasury stock | (51,553 | ) | (52,031 | ) | |||||
| Total stockholders' equity | 100,131 | 97,338 | |||||||
| Total liabilities and stockholders' equity | $ | 194,282 | $ | 179,153 | |||||
The accompanying Notes are an integral part of these Consolidated Financial Statements.
| HOUSTON WIRE & CABLE COMPANY | |||||||
| Consolidated Statements of Income | |||||||
| (Unaudited) | |||||||
| (In thousands, except share and per share data) | |||||||
| Three Months Ended | |||||||
| March 31, | |||||||
| 2012 | 2011 | ||||||
| Sales | $ | 94,462 | $ | 99,727 | |||
| Cost of sales | 73,324 | 77,475 | |||||
| Gross profit | 21,138 | 22,252 | |||||
| Operating expenses: | |||||||
| Salaries and commissions | 7,229 | 7,304 | |||||
| Other operating expenses | 6,374 | 6,063 | |||||
| Depreciation and amortization | 733 | 727 | |||||
| Total operating expenses | 14,336 | 14,094 | |||||
| Operating income | 6,802 | 8,158 | |||||
| Interest expense | 266 | 333 | |||||
| Income before income taxes | 6,536 | 7,825 | |||||
| Income taxes | 2,520 | 3,007 | |||||
| Net income | $ | 4,016 | $ | 4,818 | |||
| Earnings per share: | |||||||
| Basic | $ | 0.23 | $ | 0.27 | |||
| Diluted | $ | 0.23 | $ | 0.27 | |||
| Weighted average common shares outstanding: | |||||||
| Basic | 17,698,600 | 17,664,890 | |||||
| Diluted | 17,814,902 | 17,775,598 | |||||
| Dividend declared per share | $ | 0.09 | $ | 0.085 | |||
The accompanying Notes are an integral part of these Consolidated Financial Statements.
| HOUSTON WIRE & CABLE COMPANY | ||||||||||
| Consolidated Statements of Cash Flows | ||||||||||
| (Unaudited) | ||||||||||
| (In thousands) | ||||||||||
| Three Months Ended March 31, |
||||||||||
| 2012 | 2011 | |||||||||
| Operating activities | ||||||||||
| Net income | $ | 4,016 | $ | 4,818 | ||||||
| Adjustments to reconcile net income to net cash used in operating activities: | ||||||||||
| Depreciation and amortization | 733 | 727 | ||||||||
| Amortization of capitalized loan costs | 5 | 14 | ||||||||
| Amortization of unearned stock compensation | 268 | 554 | ||||||||
| Provision for doubtful accounts | 9 | 34 | ||||||||
| Provision for returns and allowances | (96 | ) | 69 | |||||||
| Provision for inventory obsolescence | 158 | (148 | ) | |||||||
| Deferred income taxes | (108 | ) | (351 | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||||
| Accounts receivable | (5,146 | ) | 3,177 | |||||||
| Inventories | (12,291 | ) | (6,166 | ) | ||||||
| Prepaids | (201 | ) | 129 | |||||||
| Other assets | (2 | ) | -- | |||||||
| Book overdraft | 3,316 | (1,294 | ) | |||||||
| Trade accounts payable | 4,708 | (1,663 | ) | |||||||
| Accrued and other current liabilities | (2,941 | ) | (4,751 | ) | ||||||
| Income taxes payable | 2,564 | 2,207 | ||||||||
| Other long term obligations | (3 | ) | (4 | ) | ||||||
| Net cash used in operating activities | (5,011 | ) | (2,648 | ) | ||||||
| Investing activities | ||||||||||
| Expenditures for property and equipment | (101 | ) | (207 | ) | ||||||
| Cash paid for acquisition | -- | (343 | ) | |||||||
| Net cash used in investing activities | (101 | ) | (550 | ) | ||||||
| Financing activities | ||||||||||
| Borrowings on revolver | 94,060 | 104,302 | ||||||||
| Payments on revolver | (87,466 | ) | (99,724 | ) | ||||||
| Proceeds from exercise of stock options | 137 | 92 | ||||||||
| Excess tax benefit for stock options | 28 | 29 | ||||||||
| Payment of dividends | (1,593 | ) | (1,501 | ) | ||||||
| Purchase of treasury stock | (54 | ) | -- | |||||||
| Net cash provided by financing activities | 5,112 | 3,198 | ||||||||
| Net change in cash | -- | -- | ||||||||
| Cash at beginning of period | -- | -- | ||||||||
| Cash at end of period | $ | -- | $ | -- | ||||||
The accompanying Notes are an integral part of these Consolidated Financial Statements.
Contact Information:
CONTACT:
Nicol G. Graham
Chief Financial Officer
Direct: 713.609.2125
Fax: 713.609.2168
ngraham@houwire.com