The company has issued a corrected press release to clarify the
disclosures regarding wire and cable sales for its project and MRO
businesses. The corrected release follows:
Houston Wire & Cable Company (NASDAQ:HWCC) (the
“Company”) announced operating results for the third quarter ended
September 30, 2017.
Selected quarterly results were:
- Sales of $81.2 million up 24.5% over 2016
- Gross margin of 22.9% up 440 basis points
- Operating income of $2.0 million up $3.9 million over 2016
- Net loss of $1.7 million, adjusted non-GAAP net income of $0.9
million
- Diluted EPS $(0.11), adjusted non-GAAP diluted EPS $0.06
Third Quarter Summary
Jim Pokluda, President and Chief Executive
Officer commented, “Although our third quarter sales activity
started with an unspectacular July, improvement throughout the
quarter resulted in 24.5% revenue growth. An increase in
industrial demand coupled with disciplined execution of our
strategic business plan were the major drivers of the sales
improvement. We estimate that revenues for the quarter were
negatively impacted by the three major storms by less than
1%. I am pleased that sales of $81.2 million reached their
highest levels since the October 2016 acquisition of Vertex, and
excluding Vertex, the highest level since Q 3 2015’s $78.3 million.
Vertex contributed $7.8 million in sales, while sales of wire and
cable products increased $8.2 million or 12.6% over 2016. We
estimate that higher metals prices in 2017 represented
approximately 5% of the increase in wire and cable sales. We
estimate wire and cable sales for our project business, which
targets end markets for Utility Power Generation, Environmental
Compliance, Engineering & Construction, Industrials, and
Mechanical Wire Rope, decreased 5%, while Maintenance, Repair, and
Operations (MRO) sales increased 20%, as compared to 2016,
including the impact of higher metal prices.
Gross margin at 22.9% increased 440 basis points
from the third quarter of 2016 and was up 130 basis points
sequentially driven from a combination of strong pricing
discipline, metals inflation and Vertex. Operating expenses
at $16.5 million increased primarily due to the operating expenses
of Vertex.
Interest expense of $0.5 million was up $0.4
million, from $0.1 million in the prior year period, primarily due
to the incremental debt from the Vertex acquisition. Average debt
levels were $71.2 million in 2017 compared to $28.5 million in
2016, while the effective interest rate increased to 3.0% in 2017
from 1.7% in 2016. The income tax expense of $3.2
million was higher than the $0.5 million benefit in 2016 primarily
due to a change in the estimated annual earnings for 2017, the
cumulative effect of which is reflected in the current quarter, and
a valuation allowance on deferred tax assets not expected to be
realized.
The results of operations produced a net loss of $1.7 million
versus a net loss of $1.4 million in 2016. As adjusted to reflect
income taxes at the statutory rate, a non-GAAP measure, net income
is $0.9 million as compared to a net loss of $1.2 million in the
prior year period. (See attached reconciliation of Non-GAAP
measures).
Nine month summaryMr. Pokluda further
commented, “We are pleased that the final accounting for the
purchase of Vertex has been completed. Accordingly, our results for
the first nine month period include the inventory purchase step-up
which negatively impacted our gross profit by $0.2 million and
non-recurring integration expense which negatively impacted our
operating expenses by an estimated $0.5 million”
Sales for the nine month period were $235.6
million, up 22.4% or $43.2 million, including $23.6 million from
Vertex and $19.5 million or 10.2% from wire and cable products. We
estimate that higher metals prices in 2017 represented
approximately 3% of the increase in wire and cable sales. We
estimate wire and cable sales for our project business, which
targets end markets for Utility Power Generation, Environmental
Compliance, Engineering & Construction, Industrials, and
Mechanical Wire Rope, decreased 6%, while MRO sales increased 17%,
as compared to 2016, including the impact of higher metal
prices.
Gross margin at 22.0%, which included the impact of Vertex’s
higher margins, was up 230 basis points from the 19.7% level in the
2016 period.
Operating expenses at $50.2 million increased $7.4 million from
the prior year of which $4.9 million was related to Vertex and
includes non-recurring integration expenses estimated at $0.5
million
Interest expense of $1.5 million increased from
$0.5 million in the prior year period, mainly due to the additional
debt incurred for the Vertex acquisition. In addition, average
interest rates increased to 2.8% in 2017 from 1.7% in the prior
year period.
The income tax expense of $2.4 million
fluctuated from the $1.2 million income tax benefit in 2016
primarily due to a change in the estimated annual earnings for 2017
and a $2.3 million valuation allowance on deferred tax assets not
expected to be realized.
The results of operations generated a net loss
of $2.2 million primarily due to the valuation allowance, compared
to a net loss of $4.2 million in 2016. As adjusted to reflect
income taxes at the statutory rate (and in 2016, the impact of an
impairment charge), a non-GAAP measure, net income is $0.1 million,
as compared to net loss of $1.8 million in the prior year period.
(See attached reconciliation of Non-GAAP measures),
Conference CallThe Company will host a
conference call to discuss third quarter results today, Thursday,
November 9, 2017, at 10:00 a.m., C.S.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.
Live call dial-in numbers are as follow:Toll-Free: (800)
936-7954International: (720) 545-0048Conference ID # 4297639
Approximately two hours after the completion of the live call, a
telephone replay will be available until November 16, 2017.
Replay, Toll-Free #: 855-859-2056 Replay, Toll #: 404-537-3406
Conference ID # 4297639
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.
CONTACT:
Nicol G. GrahamChief Financial Officer Direct:
713.609.2125Fax:
713.609.2168ngraham@houwire.com
HOUSTON WIRE & CABLE
COMPANYReconciliation of Non-GAAP
Measures(Unaudited) (In thousands, except per share
data)
Non-GAAP Financial Disclosures and
Reconciliations
While the Company reports financial results in
accordance with U.S. GAAP, this press release includes information
on adjusted net income and adjusted earnings per share, non-GAAP
measures. We use the non-GAAP measures to evaluate and manage our
operations and provide the information to assist investors in
performing financial analysis that is consistent with financial
models developed by research analysts. Investors should consider
non-GAAP measures in addition to, not as a substitute for, or as
superior to, measures of financial performance prepared in
accordance with GAAP.
The following table shows the reconciliation
between the net (loss) as reported under GAAP and the adjusted net
income (loss) for the period. The Company believes presenting this
information as adjusted for the impact of the non-cash valuation
allowance involving deferred taxes and in the prior year period the
impact of the non-cash impairment charge enhances some investors’
understanding of the Company’s performance.
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2017 |
|
Three Months EndedSeptember 30, 2016 |
|
|
|
Net Income |
|
Diluted EPS |
|
Net Income |
|
Diluted EPS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss), as reported
under GAAP |
|
$ |
(1,711 |
) |
$ |
(0.11 |
) |
) |
$ |
(1,439 |
) |
$ |
(0.09 |
) |
|
Income tax as reported,
which includes the valuation allowance |
|
|
3,215 |
|
|
0.20 |
|
|
|
(494 |
) |
|
(0.03 |
) |
|
Adjusted income (loss)
before income taxes |
|
|
1,504 |
|
|
0.09 |
|
|
|
(1,933 |
) |
|
(0.12 |
) |
|
Pro-forma tax expense
(benefit) at the statutory rate |
|
|
587 |
|
|
0.03 |
|
|
|
(754 |
) |
|
(0.05 |
) |
|
Adjusted net income
(loss) – non-GAAP |
|
$ |
917 |
|
$ |
0.06 |
|
|
$ |
(1,179 |
) |
$ |
(0.07 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2017 |
|
Nine Months EndedSeptember 30, 2016 |
|
|
|
Net Income |
|
Diluted EPS |
|
Net Income |
|
Diluted EPS |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss), as reported
under GAAP |
|
$ |
(2,218 |
) |
$ |
(0.14 |
) |
$ |
(4,180 |
) |
$ |
(0.26 |
) |
|
Impairment charge |
|
|
— |
|
|
— |
|
|
2,384 |
|
|
0.15 |
|
|
Income tax as reported,
which includes the valuation allowance |
|
|
2,361 |
|
|
0.15 |
|
|
(1,178 |
) |
|
(0.07 |
) |
|
Adjusted
income (loss) before income taxes and impairment charge |
|
143 |
|
|
0.01 |
|
|
(2,974 |
) |
|
(0.18 |
) |
|
Pro-forma tax expense
(benefit) at the statutory rate |
|
|
56 |
|
|
0.00 |
|
|
(1,160 |
) |
|
(0.07 |
) |
|
Adjusted net income
(loss) – non-GAAP |
|
$ |
87 |
|
$ |
0.01 |
|
$ |
(1,814 |
) |
$ |
(0.11 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HOUSTON WIRE & CABLE
COMPANY Consolidated Balance
Sheets(In thousands, except share data)
|
|
|
|
|
|
|
|
|
September 30, |
|
|
December 31, |
|
|
|
2017 |
|
|
2016 |
|
|
|
|
(unaudited) |
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Accounts
receivable, net |
|
$ |
57,381 |
|
|
$ |
44,677 |
|
Inventories, net |
|
|
82,211 |
|
|
|
79,783 |
|
Income
taxes receivable |
|
|
2,690 |
|
|
|
1,948 |
|
Prepaids |
|
|
1,209 |
|
|
|
570 |
|
Total current
assets |
|
|
143,491 |
|
|
|
126,978 |
|
|
|
|
|
|
|
|
|
|
Property and equipment,
net |
|
|
11,243 |
|
|
|
11,261 |
|
Intangible assets,
net |
|
|
12,209 |
|
|
|
13,378 |
|
Goodwill |
|
|
22,354 |
|
|
|
22,770 |
|
Deferred income
taxes |
|
|
— |
|
|
|
892 |
|
Other assets |
|
|
455 |
|
|
|
591 |
|
Total assets |
|
$ |
189,752 |
|
|
$ |
175,870 |
|
|
|
|
|
|
|
|
|
|
Liabilities and
stockholders’ equity |
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
|
Book
overdraft |
|
$ |
1,888 |
|
|
$ |
3,181 |
|
Trade
accounts payable |
|
|
6,621 |
|
|
|
8,406 |
|
Accrued
and other current liabilities |
|
|
17,132 |
|
|
|
13,248 |
|
Total current
liabilities |
|
|
25,641 |
|
|
|
24,835 |
|
|
|
|
|
|
|
|
|
|
Debt |
|
|
72,530 |
|
|
|
60,388 |
|
Deferred income
taxes |
|
|
2,263 |
|
|
|
— |
|
Other long term
obligations |
|
|
702 |
|
|
|
516 |
|
Total liabilities |
|
|
101,136 |
|
|
|
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: 16,506,235 and16,457,525 outstanding at September
30, 2017 and December 31, 2016, respectively |
|
|
21 |
|
|
|
21 |
|
Additional paid-in-capital |
|
|
53,772 |
|
|
|
53,824 |
|
Retained
earnings |
|
|
95,340 |
|
|
|
97,550 |
|
Treasury
stock |
|
|
(60,517 |
) |
|
|
(61,264 |
) |
Total stockholders’
equity |
|
|
88,616 |
|
|
|
90,131 |
|
Total liabilities and
stockholders’ equity |
|
$ |
189,752 |
|
|
$ |
175,870 |
|
|
|
|
|
|
|
|
|
|
HOUSTON WIRE & CABLE
COMPANY Consolidated Statements of
Operations(Unaudited)(In thousands, except share and per
share data)
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales |
|
$ |
81,196 |
|
|
$ |
65,222 |
|
|
$ |
235,551 |
|
|
$ |
192,387 |
|
Cost of sales |
|
|
62,626 |
|
|
|
53,177 |
|
|
|
183,732 |
|
|
|
154,513 |
|
Gross profit |
|
|
18,570 |
|
|
|
12,045 |
|
|
|
51,819 |
|
|
|
37,874 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries
and commissions |
|
|
8,975 |
|
|
|
7,148 |
|
|
|
26,647 |
|
|
|
20,895 |
|
Other
operating expenses |
|
|
6,999 |
|
|
|
5,969 |
|
|
|
21,303 |
|
|
|
17,302 |
|
Depreciation and amortization |
|
|
549 |
|
|
|
732 |
|
|
|
2,234 |
|
|
|
2,198 |
|
Impairment charge |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,384 |
|
Total operating
expenses |
|
|
16,523 |
|
|
|
13,849 |
|
|
|
50,184 |
|
|
|
42,779 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss) |
|
|
2,047 |
|
|
|
(1,804 |
) |
|
|
1,635 |
|
|
|
(4,905 |
) |
Interest expense |
|
|
543 |
|
|
|
129 |
|
|
|
1,492 |
|
|
|
453 |
|
Income (loss) before
income taxes |
|
|
1,504 |
|
|
|
(1,933 |
) |
|
|
143 |
|
|
|
(5,358 |
) |
Income tax expense
(benefit) |
|
|
3,215 |
|
|
|
(494 |
) |
|
|
2,361 |
|
|
|
(1,178 |
) |
Net (loss) |
|
$ |
(1,711 |
) |
|
$ |
(1,439 |
) |
|
$ |
(2,218 |
) |
|
$ |
(4,180 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per
share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.11 |
) |
|
$ |
(0.09 |
) |
|
$ |
(0.14 |
) |
|
$ |
(0.26 |
) |
Diluted |
|
$ |
(0.11 |
) |
|
$ |
(0.09 |
) |
|
$ |
(0.14 |
) |
|
$ |
(0.26 |
) |
Weighted average common
shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
16,274,663 |
|
|
|
16,302,870 |
|
|
|
16,260,862 |
|
|
|
16,388,892 |
|
Diluted |
|
|
16,274,663 |
|
|
|
16,302,870 |
|
|
|
16,260,862 |
|
|
|
16,388,892 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividend declared per
share |
|
$ |
— |
|
|
$ |
0.03 |
|
|
$ |
— |
|
|
$ |
0.15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HOUSTON WIRE & CABLE
COMPANY Consolidated Statements of Cash
Flows(Unaudited)(In thousands)
|
|
|
|
|
|
Nine Months Ended September
30, |
|
|
|
2017 |
|
|
2016 |
|
|
|
|
|
|
|
|
Operating
activities |
|
|
|
|
|
|
|
|
Net (loss) |
|
$ |
(2,218 |
) |
|
$ |
(4,180 |
) |
Adjustments to
reconcile net loss to net cash provided by (used in) operating
activities: |
|
|
|
|
|
|
|
|
Impairment charge |
|
|
— |
|
|
|
2,384 |
|
Depreciation and amortization |
|
|
2,234 |
|
|
|
2,198 |
|
Amortization of unearned stock compensation |
|
|
770 |
|
|
|
626 |
|
Provision
for inventory obsolescence |
|
|
78 |
|
|
|
355 |
|
Deferred
income taxes |
|
|
3,163 |
|
|
|
(752 |
) |
Other non-cash items |
|
|
195 |
|
|
|
(11 |
) |
Changes
in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts
receivable |
|
|
(12,619 |
) |
|
|
3,360 |
|
Inventories |
|
|
(2,082 |
) |
|
|
11,859 |
|
Prepaids |
|
|
(639 |
) |
|
|
(447 |
) |
Income
taxes receivable |
|
|
(742 |
) |
|
|
(645 |
) |
Book
overdraft |
|
|
(1,293 |
) |
|
|
(2,599 |
) |
Trade
accounts payable |
|
|
(1,790 |
) |
|
|
2,108 |
|
Accrued
and other current liabilities |
|
|
4,031 |
|
|
|
1,486 |
|
Other
operating activities |
|
|
18 |
|
|
|
217 |
|
Net cash (used in)
provided by operating activities |
|
|
(10,894 |
) |
|
|
15,959 |
|
|
|
|
|
|
|
|
|
|
Investing
activities |
|
|
|
|
|
|
|
|
Expenditures for property and equipment |
|
|
(1,307 |
) |
|
|
(955 |
) |
Cash
received upon finalization of purchase price for acquisition |
|
|
193 |
|
|
|
— |
|
Net cash used in
investing activities |
|
|
(1,114 |
) |
|
|
(955 |
) |
|
|
|
|
|
|
|
|
|
Financing
activities |
|
|
|
|
|
|
|
|
Borrowings on revolver |
|
|
243,651 |
|
|
|
195,914 |
|
Payments
on revolver |
|
|
(231,509 |
) |
|
|
(206,483 |
) |
Payment
of dividends |
|
|
(60 |
) |
|
|
(2,477 |
) |
Purchase
of treasury stock |
|
|
(74 |
) |
|
|
(1,958 |
) |
Net cash provided by
(used in) financing activities |
|
|
12,008 |
|
|
|
(15,004 |
) |
|
|
|
|
|
|
|
|
|
Net change in cash |
|
|
— |
|
|
|
— |
|
Cash at beginning of
period |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
Cash at end of
period |
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
Houston Wire and Cable (NASDAQ:HWCC)
Historical Stock Chart
From Aug 2024 to Sep 2024
Houston Wire and Cable (NASDAQ:HWCC)
Historical Stock Chart
From Sep 2023 to Sep 2024