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Houston Wire & Cable Company Announces Results for the Quarter Ended September 30, 2020, Update on Continuing Cost and Debt Reduction

Houston Wire & Cable Company (HWCC) reported its third-quarter 2020 results, showing a 5.2% increase in revenue to $70.2 million compared to Q2 2020.

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Rhea-AI Summary

Houston Wire & Cable Company (HWCC) reported its third-quarter 2020 results, showing a 5.2% increase in revenue to $70.2 million compared to Q2 2020. Operating expenses fell by 20.5% year-over-year, leading to a positive EBITDA of $0.4 million. The company successfully reduced revolver debt by 25.8% sequentially, totaling $55.3 million. Despite these improvements, HWCC reported a net loss of ($0.7 million), consistent with Q3 2019. The company continues to navigate economic challenges, focusing on profitability and cost controls.

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Positive

  • Revenue increased by 5.2% to $70.2 million from Q2 2020.
  • Operating expenses decreased by 20.5% year-over-year.
  • Successful debt reduction of 25.8% to $55.3 million compared to Q2 2020.
  • Return to positive EBITDA of $0.4 million.

Negative

  • Net loss remains at ($0.7 million), unchanged from Q3 2019.
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HOUSTON, Nov. 05, 2020 (GLOBE NEWSWIRE) -- Houston Wire & Cable Company (NASDAQ: HWCC) (the “Company”) announced operating results for the third quarter ended September 30, 2020 and progress on its continuing cost and debt reduction programs.

Third Quarter 2020

  • Revenue of $70.2 million up 5.2% sequentially from $66.8 million in Q2
  • Operating expenses as a percentage of sales decreased 252 bps, a 5.6% improvement sequentially versus Q2
  • Revolver debt decreased $19.3 million or 25.8% sequentially versus Q2 and $30.6 million or 35.7% versus Q1 2020
  • Return to positive EBITDA of $0.4 million for Q3
  • Net loss of ($0.7) million identical to a net loss of ($0.7) million in the third quarter of 2019

Operational Update

President & Chief Executive Officer James Pokluda commented, “Throughout the third quarter, the Company made notable progress with the execution of its business recovery plan. Performance improved in several key areas including total gross profit contribution, operating expense reduction, debt reduction, and return to positive EBITDA. Given present market conditions, and understanding that economic recovery will evolve overtime, we exit the quarter an increasingly lean and profitable Company and better positioned for the period ahead.”

Third quarter results were generally better sequentially versus the second quarter, although COVID headwinds persisted. Reduced petrochemical prices curtailed investments in upstream and midstream oil and gas markets, and diminished consumer confidence stalled investments in large capital projects. Given the continued economic uncertainty of today’s operating environment, our goals remain to control what is within our realm, increase profitability through gross margin optimization and expense management, and to manage working capital prudently to drive positive cash flow.

Third quarter highlights include:

  • Total operating expenses of $15.5 million improved 20.5% or $4.0 million over Q3 2019, $0.9 million or 5.6% sequentially over Q2, and $2.5 million or 13.9% over Q1 2020
  • Revolver debt at $55.3 million decreased $22.6 million or 29.0% from Q3 2019, $19.3 million or 25.8% sequentially over Q2, and $30.6 million or 35.7% versus Q1 2020
  • Cash provided by operating activities was $14.6 million, as we monetized working capital
  • Revenue increased 5.2% sequentially
  • Return to positive EBITDA

The operating expense measures taken in the second and third quarters reduced third quarter operating expenses by $0.9 million, or approximately 5.6% sequentially versus the second quarter. Second quarter operating expenses included severance and accrued vacation payments, and other expenses generated by shrinking our cost structure. We hope to realize additional savings in the fourth quarter, as we see the full impact of our expense reduction initiatives, as well as savings from on-going LEAN projects, processes and controls.


Selected Third Quarter 2020 Financial Highlights

 Three Months Ended September 30
 2020
 2019
 (in thousands, except per share data)
Sales$70,247  $85,403 
Gross Margin (1) 21.3%  22.8%
Operating Expenses
Interest Expense		$
$		15,509
344