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Houston Wire & Cable Company Reports Results for the Quarter Ended March 31, 2017

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HOUSTON, May 10, 2017 (GLOBE NEWSWIRE) -- Houston Wire & Cable Company (NASDAQ:HWCC) (the "Company") announced operating results for the first quarter ended March 31, 2017.

Selected quarterly results were:

  • Sales of $78.7 million up 21.6% from the first quarter of 2016
  • Sequential sales increased 13.7%
  • Organic sales, excluding Vertex,  increased 9.6% from the first quarter of 2016
  • Net loss from operations of $(0.5) million
  • Diluted EPS of $(0.03)

First Quarter Summary
Jim Pokluda, President and Chief Executive Officer commented, "Market conditions appear to be improving as we experienced increasing activity levels in each of the three months compared to prior year levels. This manifested itself in higher invoice counts which rose (excluding Vertex) by 7%. Sales levels in the month of March (excluding Vertex) reached their highest per day level since October 2015. Sales increased 21.6% over the prior period and 9.6% excluding Vertex. We estimate that when adjusted for the fluctuation in metal prices, sales for 2017 when compared to sales on a pro-forma basis to include Vertex in the comparable prior year period were up 5.5%. We estimate our project business, which targets end markets encompassing Utility Power Generation and Environmental Compliance, Engineering & Construction, Industrials, and Mechanical Wire Rope, decreased 31%, or approximately 34% on a metals adjusted basis, from 2016. Maintenance, Repair, and Operations (MRO) increased 21%, or approximately 18% when adjusted for metals, from the first quarter of 2016.

Gross margin at 21.5% increased 80 basis points from the first quarter of 2016, primarily due to the impact of higher margins generated by Vertex, improving market conditions, and the higher metals prices. Overall, however, market conditions remain extremely competitive and it is difficult to discern any clear pricing trends. Operating expenses at $17.2 million increased 27.9% or $3.7 million from Q1 2016 mainly due to the inclusion of the operating expenses of Vertex, overall higher operating expenses, and costs incurred with the Vertex integration.

Interest expense of $0.5 million was up $0.3 million from $0.2 million in the prior year period, due primarily to the additional debt to purchase Vertex. In addition, average interest rates increased to 2.6% in 2017 from 1.7% in 2016. 

The results of operations produced a net loss of $0.5 million, compared to a net loss of $0.2 million in the prior year period.

Mr. Pokluda further commented "We are still not seeing the level of large project activity that we need to generate acceptable returns to our shareholders. However, I am pleased that MRO activity, which includes contributions from product line expansion targeting the commercial market, and higher oil and gas related business has improved.  I am also pleased with the ongoing integration of Vertex and our efforts to improve its sales through improved regional inventory profiles, distribution discipline and more aggressive selling efforts. We continue to focus our attention on superior customer service, improving our working capital investment and the level of operating expenses."

Conference Call
The Company will host a conference call to discuss first quarter results on Wednesday, May 10, 2017 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, 2017.

Replay, Toll-Free #: 855-859-2056
Replay, Toll #: 404-537-3406
Conference ID # 10566662

About the Company
With over 40 years' experience in the industry, Houston Wire & Cable Company, an industrial distributor, is a large provider of industrial 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)  
   
    March 31,     December 31,  
    2017     2016  
    (unaudited)        
Assets                
Current assets:                
Accounts receivable, net   $ 51,469     $ 44,677  
Inventories, net     80,308       79,783  
Income taxes     2,055       1,948  
Prepaids     1,201       570  
Total current assets     135,033       126,978  
                 
Property and equipment, net     11,589       11,261  
Intangible assets, net     12,860       13,378  
Goodwill     22,629       22,770  
Deferred income taxes     1,049       892  
Other assets     504       591  
Total assets   $ 183,664     $ 175,870  
                 
Liabilities and stockholders' equity                
Current liabilities:                
Book overdraft   $ 818     $ 3,181  
Trade accounts payable     8,630       8,406  
Accrued and other current liabilities     11,977       13,248  
Total current liabilities     21,425       24,835  
                 
Debt     71,849       60,388  
Other long term obligations     461       516  
Total liabilities     93,735       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: 16,501,791 and 16,457,525 outstanding at March 31, 2017 and December 31, 2016, respectively     21       21  
Additional paid-in-capital     53,454       53,824  
Retained earnings     97,097       97,550  
Treasury stock     (60,643 )     (61,264 )
Total stockholders' equity     89,929       90,131  
Total liabilities and stockholders' equity   $ 183,664     $ 175,870  
                 


   
HOUSTON WIRE & CABLE COMPANY  
Consolidated Statements of Operations  
(Unaudited)  
(In thousands, except share and per share data)  
   
    Three Months Ended  
    March 31,  
    2017     2016  
             
Sales   $ 78,709     $ 64,711  
Cost of sales     61,778       51,312  
Gross profit     16,931       13,399  
                 
Operating expenses:                
Salaries and commissions     8,844       6,909  
Other operating expenses     7,477       5,837  
Depreciation and amortization     860       692  
Total operating expenses     17,181       13,438  
                 
Operating loss     (250 )     (39 )
Interest expense     450       175  
Loss before income taxes     (700 )     (214 )
Income tax benefit     (247 )     (30 )
Net loss   $ (453 )   $ (184 )
                 
Loss per share:                
Basic   $ (0.03 )   $ (0.01 )
Diluted   $ (0.03 )   $ (0.01 )
Weighted average common shares outstanding:                
Basic     16,241,215       16,481,122  
Diluted     16,241,215       16,481,122  
                 
Dividends declared per share   $     $ 0.06  


   
   
HOUSTON WIRE & CABLE COMPANY  
Consolidated Statements of Cash Flows  
(Unaudited)  
(In thousands)  
   
    Three Months
Ended March 31,
 
    2017       2016  
             
Operating activities                
Net loss   $ (453 )     $ (184 )
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:                
Depreciation and amortization     860         692  
Amortization of unearned stock compensation     275         209  
Provision for inventory obsolescence     27         166  
Deferred income taxes     (16       (205 )
Other non-cash items     29         30  
Changes in operating assets and liabilities:                
Accounts receivable     (6,810       3,153  
Inventories     (552       5,175  
Book overdraft     (2,363       (2,115 )
Trade accounts payable     224         1,457  
Accrued and other current liabilities     (981       (729 )
Prepaids     (631       (551 )
Income taxes     (107       186  
Other operating activities     21         302  
Net cash (used in) provided by operating activities     (10,477 )       7,586  
                 
Investing activities                
Expenditures for property and equipment     (930       (337 )
Net cash used in investing activities     (930       (337 )
                 
Financing activities                
Borrowings on revolver     81,991         61,842  
Payments on revolver     (70,530       (67,383 )
Payment of dividends     (30       (989 )
Purchase of treasury stock/stock surrendered on vested awards     (24       (719 )
Net cash provided by (used in) financing activities     11,407         (7,249 )
                 
Net change in cash              
Cash at beginning of period              
                 
Cash at end of period   $       $  
   

CONTACT:
Nicol G. Graham
Chief Financial Officer 
Direct:  713.609.2125
Fax:  713.609.2168
ngraham@houwire.com

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