Houston Wire & Cable Company Reports Results for the Fourth Quarter and Year Ended December 31, 2010HOUSTON, TX -- (Marketwire - March 15, 2011) - Houston Wire & Cable Company (NASDAQ: HWCC) (the "Company") announced operating results for the fourth quarter and fiscal year ended December 31, 2010.
Selected highlights for the quarter:
- Record sales of $93.5 million
- Gross margin up 110 basis points over the fourth quarter of 2009
- Revenues increased 47.3% over the fourth quarter of 2009
- Net income up 54.3% over fourth quarter of 2009
- Fully diluted earnings per share (EPS) were $0.16
- The Company declared a dividend of $0.085 per share
- Increased market share with the addition of 98 new customers
Revenues in the fourth quarter of 2010 increased 47.3% when compared to the fourth quarter of 2009. The Company's organic sales growth was 22.5%. The businesses acquired in late June contributed sales of $15.7 million, nearly all of which was Maintenance, Repair and Operations (MRO) sales.
Management estimates that commodity inflation favorably impacted sales by approximately 7% during the fourth quarter, as compared to 2009. As in prior quarters, previously committed futures for several major projects mitigated the effect of commodity inflation in the quarter. Management estimates that organic sales within the growth initiatives encompassing Utility Power Generation, Environmental Compliance, Engineering & Construction, Industrials and LifeGuard™, our proprietary private-label product, increased by 30 - 35% over the prior year quarter. MRO organic sales increased by an estimated 7 - 10% over the fourth quarter of 2009. Project bookings and backlog also remained solid due to previously funded backlog demand and continued penetration into our targeted markets. Sales from the acquired companies were within our expectations, as the fourth quarter is generally the slowest quarter of the year. In addition, business was negatively impacted by the status of the offshore drilling industry in the Gulf of Mexico.
During the quarter, gross profit increased 55.5% to $19.8 million from the fourth quarter of 2009. Gross margin increased by 110 basis points over the fourth quarter of 2009 and reached its highest level of the year at 21.1%.
Operating expenses increased by 56.8% from the fourth quarter of 2009, due to the businesses acquired in June 2010. The operating expenses of our historical company increased at a lesser rate than the sales activity expansion. Acquisition expenses for the quarter were $0.3 million. Interest expense of $0.4 million was significantly higher than the fourth quarter of 2009, as average debt levels rose from $16.2 million in 2009 to $54.9 million in 2010 as a result of the June 2010 acquisitions. Operating income of $5.1 million was 51.7% higher than 2009 and up 25.2% sequentially from the third quarter of 2010. Net income increased 54.3% over 2009 and was 30.0% higher than the third quarter of 2010. The effective tax rate for the quarter of 38.3% decreased from 40.4% in the third quarter, as the third quarter tax rate was impacted by non-deductible acquisition expenses.
Year-end Results
Sales for the year increased by 21.1% to $308.5 million, as the June 2010 acquisitions contributed 14.8% of the total increase. Gross profit increased 18.2% to $62.6 million in 2010 from $53.0 million in 2009. Operating income improved 9% from 2009, after absorbing acquisition expenses of $0.9 million. Net income increased 7.3% and fully diluted EPS increased from $0.45 to $0.49.
Chuck Sorrentino, President and Chief Executive Officer, commented, "During the fourth quarter, we were pleased to see continued indications of a broad market recovery, increased customer activity and improving demand. We are encouraged by this trend, but remain mindful that we are a later cycle business that lags macro market indicators and as such, must continue to exercise discipline with cost controls and revenue expectations as the business environment slowly improves. I was very pleased with our performance in the latter part of the year. Gross margins continue improving and we continue gaining market share with the addition of new customers. Project business was good in the fourth quarter and the outlook remains solid.
"Momentum appears to be building for 2011, as the rate of growth in our booked orders in the fourth quarter was greater than our sales. Integration of the two acquired companies is going well and we are on schedule. We expect 2011 to be an exciting year for our Company as we look forward to leveraging our combined national sales and distribution network to serve complementary end markets, including oil and gas, marine transportation, utilities, infrastructure and industrial.
"On behalf of the Board of Directors, I would like to thank our team for their commitment to our Company and their outstanding service to our customers. I would also like to thank our customers for their long-term relationships and our investors for their confidence and support."
Conference Call
The Company will host a conference call to discuss fourth quarter and year-end results on Tuesday, March 15th at 10:00 am CT. Hosting the call will be Charles Sorrentino, 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 March 22, 2010.
Replay Dial In: 888.203.1112
International Replay: 719.457.0820
Confirmation Code: 5990361
About the Company
With 35 years experience in the industry, Houston Wire & Cable Company is one of the largest providers of wire and cable in the U.S. end user market. Headquartered in Houston, Texas, HWCC has sales and distribution facilities strategically located throughout the nation.
Standard stock items available for immediate delivery include continuous and interlocked armor, instrumentation, medium voltage, high temperature, portable cord, power cables, 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. HWCC's comprehensive value-added services include same-day shipping, knowledgeable sales staff, inventory management programs, just-in-time delivery, logistics support, customized internet-based 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
December 31,
-----------------------
2010 2009
---------- ----------
(In thousands, except
share data)
Assets
Current assets:
Accounts receivable, net $ 67,838 $ 46,859
Inventories, net 67,503 61,325
Deferred income taxes 2,399 1,776
Prepaids 763 3,649
---------- ----------
Total current assets 138,503 113,609
Property and equipment, net 6,255 3,169
Intangible assets, net 15,557 --
Goodwill 25,082 2,362
Deferred income taxes -- 2,855
Other assets 93 19
---------- ----------
Total assets $ 185,490 $ 122,014
========== ==========
Liabilities and stockholders' equity
Current liabilities:
Book overdraft $ 3,055 $ 907
Trade accounts payable 19,987 11,610
Accrued and other current liabilities 19,781 10,924
Income taxes 1,036 281
---------- ----------
Total current liabilities 43,859 23,722
Debt 54,825 17,479
Other long-term obligations 141 --
Deferred income taxes 945 --
---------- ----------
Total liabilities 99,770 41,201
---------- ----------
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:
17,748,487 and 17,732,737 shares outstanding at
December 31, 2010 and 2009, respectively 21 21
Additional paid-in capital 58,642 56,609
Retained earnings 80,187 77,571
Treasury stock (53,130) (53,388)
---------- ----------
Total stockholders' equity 85,720 80,813
---------- ----------
Total liabilities and stockholders' equity $ 185,490 $ 122,014
========== ==========
Houston Wire & Cable Company
Consolidated Statements of Income
Three Months Ended Year Ended
December 31, December 31,
------------------------ ------------------------
2010 2009 2010 2009
----------- ----------- ----------- -----------
Sales $ 93,549 $ 63,526 $ 308,522 $ 254,819
Cost of sales 73,793 50,819 245,932 201,865
----------- ----------- ----------- -----------
Gross profit 19,756 12,707 62,590 52,954
Operating expenses:
Salaries and
commissions 7,800 4,714 25,281 20,596
Other operating
expenses 6,102 4,496 20,565 18,023
Depreciation and
amortization 766 142 1,738 563
----------- ----------- ----------- -----------
Total operating expenses 14,668 9,352 47,584 39,182
----------- ----------- ----------- -----------
Operating income 5,088 3,355 15,006 13,772
Interest expense 378 117 844 520
----------- ----------- ----------- -----------
Income before income
taxes 4,710 3,238 14,162 13,252
Income taxes 1,806 1,356 5,543 5,220
----------- ----------- ----------- -----------
Net income $ 2,904 $ 1,882 $ 8,619 $ 8,032
=========== =========== =========== ===========
Earnings per share:
Basic $ 0.16 $ 0.11 $ 0.49 $ 0.46
=========== =========== =========== ===========
Diluted $ 0.16 $ 0.11 $ 0.49 $ 0.45
=========== =========== =========== ===========
Weighted average common
shares outstanding:
Basic 17,662,291 17,652,737 17,657,682 17,648,696
=========== =========== =========== ===========
Diluted 17,731,157 17,683,349 17,710,123 17,665,924
=========== =========== =========== ===========
Dividend declared per
share $ 0.085 $ 0.085 $ 0.34 $ 0.34
=========== =========== =========== ===========
Houston Wire & Cable Company
Consolidated Statements of Cash Flows
Year Ended December 31,
-----------------------
2010 2009
---------- ----------
Operating activities
Net income $ 8,619 $ 8,032
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,738 563
Amortization of capitalized loan costs 46 99
Amortization of unearned stock compensation 2,260 2,205
Provision for doubtful accounts 93 --
Provision for returns and allowances (118) (109)
Provision for inventory obsolescence 734 529
(Gain) loss on disposals of property and
equipment 26 (15)
Deferred income taxes (1,603) (741)
Changes in operating assets and liabilities:
Accounts receivable (9,785) 4,048
Inventories 1,059 11,606
Prepaids 2,954 (2,820)
Other assets 354 (31)
Book overdraft 1,668 (4,026)
Trade accounts payable 5,010 1,519
Accrued and other current liabilities 5,466 (758)
Long term liabilities (3) --
Income taxes 755 (1,363)
---------- ----------
Net cash provided by operating activities 19,273 18,738
Investing activities
Expenditures for property and equipment (459) (462)
Proceeds from disposals of property and
equipment 956 19
Cash paid for acquisition (51,162) --
---------- ----------
Net cash used in investing activities (50,665) (443)
Financing activities
Borrowings on revolver 352,276 255,829
Payments on revolver (314,930) (268,158)
Proceeds from exercise of stock options 42 22
Payment of dividends (6,003) (6,001)
Excess tax benefit for options 7 13
Purchase of treasury stock -- --
---------- ----------
Net cash provided by (used in) financing activities 31,392 (18,295)
---------- ----------
Net change in cash -- --
Cash at beginning of year -- --
---------- ----------
Cash at end of year $ -- $ --
========== ==========
Supplemental disclosures
Cash paid during the year for interest $ 743 $ 514
========== ==========
Cash paid during the year for income taxes $ 6,191 $ 7,352
========== ==========
CONTACT:
Hope M. Novosad
Manager, Investor Relations
Direct: 713.609.2110
Fax: 713.609.2168
hnovosad@houwire.com
