Market Overview

Houston Wire & Cable Company Provides Quarterly Results, Update on Cost and Debt Reduction

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HOUSTON, May 07, 2020 (GLOBE NEWSWIRE) -- Houston Wire & Cable Company (NASDAQ:HWCC) (the "Company") announced operating results for the first quarter ended March 31, 2020 and progress on its cost and debt reduction programs.

  • Net income was $0.5 million, or $0.7 million after adjusting for a $0.2 million non-cash trade name impairment charge, which compares to net income of $2.3 million in the first quarter of 2019 
  • Fully diluted earnings per share of $0.03, or $0.04 as adjusted
  • Executing cost and debt reduction programs
    • Targeting expense savings of up to $14 million annualized
    • Reduced net debt by $11.7 million from $82.4 million at quarter end to $70.7 million at May 5 and by over $20 million from its first quarter peak

James Pokluda, President and Chief Executive Officer commented, "Throughout these challenging times, Houston Wire & Cable Company has excelled in serving the value chain as an essential business with superior operational performance while protecting the safety of its employees.  Our teams mobilized quickly with virtual enterprise management solutions. Those employees who were able to work remotely shifted to their home offices, and our staff that was not able to work remotely practiced safe work and hygiene habits as guided by government authorities. The leadership team and I feel extraordinary gratitude for the outstanding efforts of our coworkers, and are humbled by the sacrifices they have made for the company.

During the first quarter, we were on track for sales growth until the impact of the global pandemic began in March. While we were taking actions to assure business continuity and superior customer service, we also increased our focus on prudent expense reduction and balance sheet improvement. We are well underway with expense reduction initiatives targeted to generate annualized savings of approximately $14 million and over $8 million in 2020. Our debt reduction actions during March and April have produced immediate results:  as of May 5th, net debt reduced by $11.7 million, to $70.7 million, from the end of the first quarter and by over $20 million from its peak during the quarter. Our banking relationship is strong, we are in compliance with the availability-based covenants and are focused on achieving a year-end debt target of $40 million through monetization of working capital. We will continue to report on our results throughout the year as we progress toward our year-end target."

In addition to our expense reduction, on May 4th, we received a loan under the Small Business Administration's Payroll Protection Program. These funds will be used to maintain employment and pay permissible operational expenses under the terms of the program.

Mr. Pokluda concluded "We are combating the current economic challenges without compromising customer service, are properly equipped and structured to provide the essential products and services our country and customers require for recovery, and are getting immediate results with the actions we are taking to strengthen the Company."

Conference Call
The Company will host a conference call to discuss first quarter results tomorrow, Friday, May 8, 2020, 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. This will be the last scheduled call, as the Company has determined to discontinue quarterly earnings calls going forward.  However, we will continue to provide regular written updates on our business performance through our press releases and SEC filings.

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 # 2499159

Approximately two hours after the completion of the live call, a telephone replay will be available until May 15, 2020.

Replay, Toll-Free #: (855)-859-2056
Replay, Toll #: (404)-537-3406
Conference ID # 2499159

About the Company 
With 45 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, the Company's Current Report on Form 8‑K dated April 29, 2020 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,  
    2020     2019  
    (unaudited)        
Assets                
Current assets:                
  Cash   $ 3,536     $ 4,096  
Accounts receivable, net:                
  Trade     55,054       50,325  
  Other     2,114       6,640  
  Inventories, net     109,383       114,069  
  Income taxes     1,017       1,353  
  Prepaids and other current assets     3,157       1,833  
Total current assets     174,261       178,316  
                 
Property and equipment, net     15,399       14,589  
Intangible assets, net     9,888       10,282  
Goodwill     22,353       22,353  
Deferred income taxes     704       600  
Operating lease right-of-use assets, net     12,962       13,481  
Other assets     506       527  
Total assets   $ 236,073     $ 240,148  
                 
Liabilities and stockholders' equity                
Current liabilities:                
 Trade accounts payable   14,651     $ 13,858  
 Accrued and other current liabilities     15,332       23,261  
 Operating lease liabilities     2,783       2,742  
Total current liabilities     32,766       39,861  
                 
Debt     85,920       83,500  
Operating lease long term liabilities     10,652       11,182  
Other long term liabilities     2,234       1,977  
Total liabilities     131,572       136,520  
                 
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: 16,584,460 and 16,611,651 outstanding at March 31, 2020 and December 31, 2019, respectively     21       21  
Additional paid-in-capital     52,276       52,304  
Retained earnings     109,171       108,626  
Treasury stock     (56,967 )     (57,323 )
Total stockholders' equity     104,501       103,628  
Total liabilities and stockholders' equity   $ 236,073     $ 240,148  
 


HOUSTON WIRE & CABLE COMPANY
Consolidated Statements of Operations
(Unaudited)
(In thousands, except share and per share data)

    Three Months Ended  
    March 31,  
    2020     2019  
             
Sales   $ 83,533     $ 85,270  
Cost of sales     63,941       64,011  
Gross profit     19,592       21,259  
                 
Operating expenses:                
Salaries and commissions     9,474       9,180  
Other operating expenses     7,565       7,663  
Depreciation and amortization     767       553  
Impairment charge     200        
Total operating expenses     18,006       17,396  
                 
Operating income     1,586       3,863  
Interest expense     813       741  
Income before income taxes     773       3,122  
Income tax expense     228       838  
Net income   $ 545     $ 2,284  
                 
Earnings per share:                
Basic   $ 0.03     $ 0.14  
Diluted   $ 0.03     $ 0.14  
Weighted average common shares outstanding:                
Basic     16,387,460       16,477,855  
Diluted     16,436,293       16,577,126  
 


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

    Three Months
Ended March 31,
 
    2020     2019  
             
Operating activities                
Net income   $ 545     $ 2,284  
Adjustments to reconcile net income to net cash used in operating activities:                
Impairment charge     200        
Depreciation and amortization     767       553  
Amortization of unearned stock compensation     328       342  
Non-cash lease expense     904       986  
Provision for refund liability     18       559  
Provision for inventory obsolescence     173       170  
Deferred income taxes     (104 )     284  
Other non-cash items     62       34  
Changes in operating assets and liabilities:                
Accounts receivable     (253     (723 )
Inventories     4,513       (1,170 )
Prepaids     (1,238 )     (1,005 )
Other assets     (77 )     (549 )
Lease payments     (907 )     (982 )
Trade accounts payable     793       (3,424
Accrued and other current liabilities     (8,281 )     (6,460 )
Income taxes     336       534  
Other operating activities     257       93  
Net cash used in operating activities     (1,964 )     (8,474 )
                 
Investing activities                
 Expenditures for property and equipment     (857 )     (278 )
Net cash used in investing activities     (857 )     (278 )
                 
Financing activities                
 Borrowings on revolver     85,653       94,333  
 Payments on revolver     (83,233 )     (86,709 )
 Release of treasury stock/stock surrendered on vested awards           8  
 Lease payments     (159 )     (17 )
Net cash provided by financing activities     2,261       7,615  
                 
Net change in cash     (560     (1,137
Cash at beginning of period     4,096       1,393  
                 
Cash at end of period   $ 3,536     $ 256  
Supplemental disclosures of non-cash activities                
  Purchase of assets under finance leases   $ 526     $ 11  

  

CONTACT:

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

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