Houston Wire & Cable Company Reports Record Fourth Quarter Sales for the Quarter Ended December 31, 2012HOUSTON, TX -- (Marketwire - March 18, 2013) - Houston Wire & Cable Company (NASDAQ: HWCC) (the "Company") announced operating results for the fourth quarter and year ended December 31, 2012.
Selected highlights for the fourth quarter of 2012 compared to the prior year period:
- Record fourth quarter sales of $104.4 million, a 19.3% increase
- Net income of $4.4 million increased 43.2% from $3.1 million
- Diluted EPS of $0.25 increased 47.1% from $0.17 per share
- Declared a dividend of $0.09 cents per share
- Operating cash flow of $8.6 million or 197% of net income
Selected highlights for 2012:
- Sales of $393 million decreased 1% from $396.4 million in 2011
- Diluted EPS of $0.96 versus $1.11 in 2011
- Declared dividend totaling $0.36 cents per share
- Debt to equity ratio of 53.7%
Fourth Quarter Summary
Jim Pokluda, President and Chief Executive Officer commented, "I was extremely pleased with our team's strong year-end sales performance. Activity was solid for the entire quarter. Our 19.3% year-over-year sales increase was the result of steady MRO demand and an increase in project business in both electrical and steel wire rope end markets. I was also pleased with the sequential sales increase of 8.6%.
"Similar to prior quarter experiences, we continued to benefit from resurgence in demand in several major markets. Nevertheless, there remained regions that performed below our expectations as we believe industrial activity has not fully returned to pre-recession levels in all areas of the United States. Despite inconsistent market conditions and customer activity, several strategic markets including Oil & Gas, Power Generation and Industrials performed well. We added 88 new customers during the quarter, and sales of recently introduced new products such as specialty oil and gas cables and aluminum cables exceeded our internal expectations."
Gross margin fell to 21.1% as a result of higher project sales. Operating expenses were flat compared to the prior year period and up 0.9% or $0.1 million on a sequential basis, primarily due to the increased headcount. Operating margins reached 7.1%, up 100 basis points from 2011.
Interest expense of $0.3 million was flat with the prior year period. While average debt levels increased 14.7% from the fourth quarter of 2011, the effective interest rate declined by 17.5%, from 2.5% in 2011 to 2.0% in 2012. The effective tax rate for the quarter of 38.6% remained in line with the 2011 annual rate and with the 38.7% level in the comparable 2011 quarter.
Net income of $4.4 million, increased by 43.2% or $1.3 million, from the fourth quarter of 2011. Diluted earnings per share of $0.25 were up 47.1% from the $0.17 level in the prior year quarter.
Twelve month summary
Sales for the year were $393 million and metal adjusted sales grew approximately 3% over 2011. Sales activity within the six long-term growth initiatives of Power Generation, Environmental Compliance, Engineering & Construction, Industrials, Mechanical Wire Rope and LifeGuard™, our proprietary private-label product, remained active and were largely driven by multiple small to medium sized projects. As expected, the mega-projects experienced in 2011 did not recur; however, the absence of these projects was largely offset by increased activity in oil and gas extraction and transportation, investments in new products and additional sales and marketing resources.
We closed the year with a positive book to bill ratio and throughout the year experienced growth in transactional activity and opportunity pipeline. Project business was up 2% and our MRO business was off roughly 3% owing to continued inconsistent post-recession demand and geographic market strength.
Gross margin was off slightly for the year finishing at 22.1%, down 30 basis points from 2011. "While we were able to hold margins in the face of very competitive market conditions, lower margin project business impacted the fourth quarter and caused a slight decrease over 2011," said Mr. Pokluda.
Operating expenses increased by 4.6% or $2.6 million in the current year. Excluding the impact of the $1.7 million expense reversal in 2011 resulting from a stock compensation adjustment, operating expenses increased 1.6% or $0.9 million, primarily due to the impact of the higher headcount and higher consulting and professional fees.
Interest expense of $1.3 million was lower than the prior year's $1.4 million as average debt levels fell by 1.0% from $58.5 million in 2011 to $58.0 million in 2012 and interest rates decreased 10.4% from 2.3% to 2.1%. The effective tax rate for the year of 38.4% was the same as in 2011.
Net income for the period of $17.0 million fell 13.4% from the $19.7 million level in the prior year, or 8.6% from the $18.6 million level (excluding the impact of the stock compensation reversal).
Conference Call
The Company will host a conference call to discuss fourth quarter results on Monday, March 18, 2013 at 10:00 a.m., C.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.
Approximately two hours after the completion of the live call, a telephone replay will be available until March 25, 2013.
Replay, Toll-Free #: (855) 859-2056
Replay, Toll #: (404) 537-3406
Conference ID # 22051643
About the Company
With over 35 years experience in the industry, Houston Wire & Cable Company is one of the largest providers of wire and cable in the U.S. market. Headquartered in Houston, Texas, the Company 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, primary and secondary aluminum distribution 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.
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,
------------------------
2012 2011
----------- -----------
(In thousands, except
share data)
Assets
Current assets:
Cash $ 274 $ --
Accounts receivable, net 65,892 59,731
Inventories, net 84,662 69,517
Deferred income taxes 2,455 2,268
Income taxes -- 1,693
Prepaids 841 828
----------- -----------
Total current assets 154,124 134,037
Property and equipment, net 5,824 6,029
Intangible assets, net 11,967 13,700
Goodwill 25,082 25,082
Other assets 158 305
----------- -----------
Total assets $ 197,155 $ 179,153
=========== ===========
Liabilities and stockholders' equity
Current liabilities:
Book overdraft $ -- $ 2,270
Trade accounts payable 12,330 10,099
Accrued and other current liabilities 15,379 19,101
Income taxes 5 --
----------- -----------
Total current liabilities 27,714 31,470
Debt 58,588 47,967
Other long-term obligations 103 128
Deferred income taxes 1,670 2,250
----------- -----------
Total liabilities 88,075 81,815
----------- -----------
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:
17,899,499 and 17,811,806 shares outstanding at
December 31, 2012 and 2011, respectively 21 21
Additional paid-in capital 55,291 55,760
Retained earnings 104,252 93,588
Treasury stock (50,484) (52,031)
----------- -----------
Total stockholders' equity 109,080 97,338
----------- -----------
Total liabilities and stockholders' equity $ 197,155 $ 179,153
=========== ===========
Houston Wire & Cable Company
Consolidated Statements of Income
Three Months Ended Year Ended
December 31, December 31,
----------------------- -----------------------
2012 2011 2012 2011
----------- ----------- ----------- -----------
(In thousands, except share and per share data)
Sales $ 104,379 $ 87,481 $ 393,036 $ 396,410
Cost of sales 82,362 67,564 306,017 307,515
----------- ----------- ----------- -----------
Gross profit 22,017 19,917 87,019 88,895
Operating expenses:
Salaries and commissions 7,611 7,511 30,013 28,053
Other operating expenses 6,221 6,399 25,139 24,513
Depreciation and
amortization 747 701 2,941 2,952
----------- ----------- ----------- -----------
Total operating expenses 14,579 14,611 58,093 55,518
----------- ----------- ----------- -----------
Operating income 7,438 5,306 28,926 33,377
Interest expense 323 325 1,252 1,424
----------- ----------- ----------- -----------
Income before income taxes 7,115 4,981 27,674 31,953
Income taxes 2,745 1,929 10,635 12,276
----------- ----------- ----------- -----------
Net income $ 4,370 $ 3,052 $ 17,039 $ 19,677
=========== =========== =========== ===========
Earnings per share:
Basic $ 0.25 $ 0.17 $ 0.96 $ 1.11
=========== =========== =========== ===========
Diluted $ 0.25 $ 0.17 $ 0.96 $ 1.11
=========== =========== =========== ===========
Weighted average common
shares outstanding:
Basic 17,735,998 17,685,489 17,723,277 17,679,524
=========== =========== =========== ===========
Diluted 17,825,976 17,798,404 17,815,401 17,801,134
=========== =========== =========== ===========
Dividend declared per share $ 0.09 $ 0.09 $ 0.36 $ 0.355
=========== =========== =========== ===========
Houston Wire & Cable Company
Consolidated Statements of Cash Flows
Year Ended December 31,
2012 2011
----------- -----------
(In thousands)
Operating activities
Net income $ 17,039 $ 19,677
Adjustments to reconcile net income to net cash
(used in) provided by operating activities:
Depreciation and amortization 2,941 2,952
Amortization of capitalized loan costs 18 14
Amortization of unearned stock compensation 1,040 (707)
Provision for doubtful accounts (19) (9)
Provision for returns and allowances (61) 66
Provision for inventory obsolescence 815 826
(Gain) loss on disposals of property and
equipment (7) (2)
Deferred income taxes (773) 283
Changes in operating assets and liabilities:
Accounts receivable (6,081) 8,050
Inventories (15,960) (2,840)
Prepaids (13) (65)
Other assets 129 (126)
Book overdraft (2,270) (785)
Trade accounts payable 2,231 (9,888)
Accrued and other current liabilities (3,722) (337)
Long term liabilities (25) (13)
Income taxes 1,685 (2,777)
----------- -----------
Net cash (used in) provided by operating
activities (3,033) 14,319
Investing activities
Expenditures for property and equipment (1,005) (1,319)
Proceeds from disposals of property and
equipment 9 452
Cash paid for acquisition -- (343)
----------- -----------
Net cash used in investing activities (996) (1,210)
Financing activities
Borrowings on revolver 402,231 405,741
Payments on revolver (391,610) (412,599)
Deferred loan cost -- (100)
Proceeds from exercise of stock options 137 114
Payment of dividends (6,375) (6,276)
Excess tax benefit for options 35 37
Purchase of treasury stock (115) (26)
----------- -----------
Net cash provided by (used in) financing
activities 4,303 (13,109)
----------- -----------
Net change in cash 274 --
Cash at beginning of year -- --
----------- -----------
Cash at end of year $ 274 $ --
=========== ===========
Supplemental disclosures
Cash paid during the year for interest $ 1,231 $ 1,445
=========== ===========
Cash paid during the year for income taxes $ 9,762 $ 14,732
=========== ===========
CONTACT:
Nicol G. Graham
Chief Financial Officer
Direct: 713.609.2125
Fax: 713.609.2168
ngraham@houwire.com
