HOUSTON, TX — (Marketwired) — 08/06/15 — In the news release, “Houston Wire & Cable Company Reports Results for the Quarter Ended June 30, 2015” issued earlier today by Houston Wire & Cable Company (NASDAQ: HWCC), we are advised by the company that the headline following the bulleted quarterly highlights list, should read “Second Quarter Summary” rather than “First Quarter Summary” as originally issued. Complete corrected text follows.
HOUSTON, TX — Aug 6, 2015 — Houston Wire & Cable Company (NASDAQ: HWCC) (the “Company”) announced operating results for the second quarter ended June 30, 2015.
Selected quarterly highlights were:
Sales of $78 million
Completed the Southwest Wire Rope Houston facility consolidation
Net loss of $0.6 million
Adjusted net income of $1.5 million excluding the impairment charge relating to the Southwest Wire division and certain tradenames.
Debt decreased to $40.3 million, lowest level since Q 1 2010
Declared a dividend of $0.12 cents per share on August 4, 2015
Jim Pokluda, President and Chief Executive Officer commented, “Market conditions did not improve in the second quarter and the combination of reduced demand in oil and gas and industrial markets and deflation in the price of metals significantly impacted our operating results. Sales decreased 24.6% from the second quarter of 2014, or approximately 20% when adjusted for declining metals prices. We estimate that Maintenance, Repair and Operations (MRO) sales fell 20% or approximately 15% on a metals-adjusted basis, while project sales decreased approximately 35%, or 30% on a metals-adjusted basis. Metals adjusted project and total sales excluding the negative impact resulting from a decline in a large and ongoing infrastructure project fell approximately 13% and 14%, respectively. Total transactional invoice activity decreased by 11%.”
Gross margin at 21.7% was flat with the second quarter of 2014. Operating expenses at $17.2 million included an impairment charge for the goodwill associated with the Southwest Wire Rope division and certain tradenames totaling $3.0 million. Net of this charge operating expenses were $14.2 million, a decrease of 8.8% from the $15.6 million level in 2014.
Pokluda commented, “Given today–s challenging operating environment we have amplified our efforts to drive exceptionally high levels of focus and strong organizational execution involving new business development, expense management, efficient working capital utilization, gross margin optimization and customer satisfaction. Similar to the first quarter, new business development initiatives involving product line expansions into highly engineered power and control cable, aluminum cable and most recently flexible cable, continue to gain traction. Year-over-year expenses continue to decrease, largely as a result of our major expense reduction initiative implemented in early 2014. Inventory re-profiling has driven significant investment reductions which have favorably impacted working capital requirements, cash flow and debt. Gross margins have remained at levels experienced in more robust economic conditions, and operational excellence at 98% + order accuracy and on-time performance, continue to produce very high levels of customer satisfaction.”
Interest expense of $0.2 million decreased 37% from $0.3 million in the prior year period. Average debt levels decreased by 26% from $61.2 million in 2014 to $45.1 million in 2015, while the effective interest rate decreased from 2.1% in 2014 to 2.0% in 2015.
Adjusted net income of $1.5 million decreased by $2.5 million from the second quarter of 2014. Diluted earnings per share excluding the impairment were $0.09 compared to $0.23 in the prior year quarter.
Mr Pokluda further commented, “Despite the current demand levels, we delivered strong operating cash flow, debt reduction continued, and our strong balance sheet again allowed us to return funds to our shareholders through the $0.12 per share dividend.”
Sales for the six month period were down 21.7% versus the prior year period and down approximately 17% on a metals adjusted basis. We estimate that MRO sales decreased 9%, and project sales decreased 30%, on a metals adjusted basis. Metals adjusted project and total sales excluding the negative impact resulting from a decline in a large and ongoing infrastructure project fell approximately 12% and 10% respectively.
Gross margin at 21.7% was flat with the 2014 period. “Pricing remains very competitive in the marketplace, especially in those regions where demand for product remains depressed and on large projects. Despite the continuing market pricing pressure, the achievement of this level of gross margin is a testimony to the ability of our sales force to execute under difficult conditions,” said Mr. Pokluda. Gross profit dollars decreased $9.5 million or 21.5%, primarily due to the decrease in sales.
Operating expenses increased $0.3 million or 0.8%, primarily driven by the $3.0 million impairment charge. Absent this charge, operating expenses decreased 8.8% from $30.9 million to $28.2 million.
Interest expense of $0.5 million decreased 21% from $0.6 million. Average debt levels decreased 19% from $58.1 million in 2014 to $47.1 million in 2015, while interest rates remained flat at 2%.
Adjusted net income of $3.7 million decreased $4.1 million from the $7.8 million level in the prior year period.
The Company will host a conference call to discuss first quarter results on Thursday, August 6, 2015 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 at .
Approximately two hours after the completion of the live call, a telephone replay will be available until August 13, 2015.
Replay, Toll-Free #: 855-859-2056
Replay, Toll #: 404-537-3406
Conference ID # 97965630
With over 40 years of 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 a low-smoke, zero-halogen cable, and related hardware, including , lifting products and . 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.
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 .
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.
While the Company reports financial results in accordance with U.S. GAAP, this press release includes non-GAAP measures. We use the non-GAAP measures to evaluate and manage our operations and provide the information to assist investors in performing financial analysis that is consistent with financial models developed by research analysts. Investors should consider non-GAAP measures in addition to, not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP.
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