SOURCE: Houston Wire & Cable Company

March 15, 2011 08:21 ET

Houston Wire & Cable Company Reports Results for the Fourth Quarter and Year Ended December 31, 2010

HOUSTON, 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 Information

  • CONTACT:
    Hope M. Novosad
    Manager, Investor Relations
    Direct: 713.609.2110
    Fax: 713.609.2168
    Email Contact