Houston Wire & Cable Company Provides Quarterly Results, Update on Cost and Debt Reduction
07 Maio 2020 - 8:24PM
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 CallThe 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)-936-7954International: (720)-545-0048Conference 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 StatementsThis
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
COMPANYConsolidated 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
COMPANYConsolidated 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
COMPANYConsolidated Statements of Cash
Flows(Unaudited)(In thousands)
|
|
Three MonthsEnded 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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