Market Overview

Houston Wire & Cable Company Reports Results for the Quarter Ended June 30, 2019

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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  
             
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