Houston Wire & Cable Company Provides Quarterly Results, Update on Cost and Debt Reduction
05/07/2020 - 07:24 PM
HOUSTON, May 07, 2020 (GLOBE NEWSWIRE) -- 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 Call The 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)-936-7954 International: (720)-545-0048 Conference 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 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, 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 COMPANY Consolidated Balance Sheets (In thousands, except share data)
100%; border-collapse:collapse !important;"> March 31, December 31, 2020 2019 (unaudited) 74%; width:74% ; min-width:74% ;">Assets 1%; width:1% ; min-width:1% ;"> 1%; width:1% ; min-width:1% ;"> 10%; width:10% ; min-width:10% ;"> 1%; width:1% ; min-width:1% ;"> 1%; width:1% ; min-width:1% ;"> 1%; width:1% ; min-width:1% ;"> 10%; width:10% ; min-width:10% ;"> 1%; width:1% ; min-width:1% ;"> 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, $0.00 1 par value; 5,000,000 shares authorized, none issued and outstanding — — Common stock, $0.00 1 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 COMPANY Consolidated Statements of Operations (Unaudited) (In thousands, except share and per share data)
100%; border-collapse:collapse !important;"> 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 COMPANY Consolidated Statements of Cash Flows (Unaudited) (In thousands)
100%; border-collapse:collapse !important;"> Three Months Ended 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