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* Fully diluted earnings per share (EPS) were $0.10 * Debt was reduced by 23.1% in the quarter and 65.6 % on a TTM basis * Operating cash flow was $6.8 million, a record for the second quarter and $15.6 million for the year-to-date period * The Company approved a quarterly dividend of $0.085 per share
Sales in the second quarter of 2009 were $61.9 million, down 6.0% from the first quarter of 2009 and down 36.5% when compared to the second quarter of 2008. The key drivers behind this sales decline were reduced product demand and reduced copper prices, which fell by more than 40% from the average price in the second quarter of 2008. Management estimates that the decrease in copper prices accounted for approximately one-half of the sales decline. Sales in both the Repair and Replacement sector also referred to as Maintenance Repair and Operations ("MRO") and within our five growth initiatives, Emission Controls, Engineering & Construction, Industrials, LifeGuard(tm) and Utility Power Generation decreased from the prior year period. After adjusting for copper deflation, our MRO business declined by double digits while sales from our growth initiatives increased in the range of 5-10%. Business from the larger capital projects appeared to hold firm in the quarter, while smaller project business declined. Furthermore, the Company did not experience its normal seasonal demand increase during the second quarter.
As expected, gross margin was below historical trends as continued weak industrial demand pressured pricing. In addition, the Company continued to sell certain high copper content inventory at market prices which blended gross margins below historical norms. However, gross margins remained consistent with the first quarter of 2009 at 21%.
The Company's focus on expense reduction and productivity improvements resulted in a 12.2% reduction in operating expenses in the second quarter of 2009, compared to the second quarter of 2008. Furthermore, expenses for the second quarter were 4.3% lower, than the first quarter of 2009. Operating income and net income for the second quarter of 2009 were both down approximately 76% from the second quarter of 2008, primarily as a result of the reduction in gross profit dollars from decreased sales and gross margin.
Chuck Sorrentino, President & CEO commented, "We are in the most severe economic downturn that the Company has ever experienced and market conditions continued to weaken during the second quarter, as evidenced by the lack of a seasonal increase. Despite these significantly poor business conditions, Houston Wire & Cable remained profitable. I am pleased that we were once again able to lower operating expenses, reduce our working capital investment, generate record operating cash flow for the quarter of $6.8 million and reduce our debt, by $5.2 million since March 2009, for a total debt reduction since the high point at June 2008, of $33.1 million or 65.6%. We have continued to gain market share as we added approximately 60 new customers in the second quarter of 2009, in spite of the difficult business conditions.
"The outlook for the balance of the year remains uncertain. While new large capital project commitments in the second quarter were even higher than that achieved in the first quarter of 2009, there appears to be less current activity with smaller, less capital intensive projects.
"We continue to improve our balance sheet, reduce our debt and take all steps necessary to improve the efficiency of our business model. We expect to further strengthen our financial position as we plan to renew our credit facility within the next several weeks. As a reminder, because of the broad based economic downturn and the lack of clarity on our top line, we will not issue guidance for the balance of 2009.
"A special thanks to Houston Wire & Cable team members, our directors and advisors for their continued support and contribution for a solid start to the year, despite the depressed market conditions."
Conference Call
The Company will host a conference call to discuss second quarter results on Monday, August 10, 2009 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. A replay of this webcast will be available until September 7, 2009. Approximately one hour after the completion of the live call, a telephone replay will be available until August 17, 2009.
Replay Dial In: 888.203.1112 International Replay: 719.457.0820 Confirmation Code: 4438855
About the Company
With more than 30 years experience in the electrical industry, Houston Wire & Cable Company is one of the largest distributors of specialty wire and cable and related services in the U.S. electrical distribution market. Headquartered in Houston, Texas, HWCC has sales and distribution facilities in Atlanta, Baton Rouge, Charlotte, Chicago, Denver, Houston, Los Angeles, Philadelphia, San Francisco, Seattle and Tampa.
Standard stock items available for immediate delivery include continuous and interlocked armor, instrumentation, medium voltage, high temperature, portable cord, power cables and private branded products, including LifeGuard(tm), a low-smoke, zero-halogen cable. 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.
The Houston Wire & Cable Company logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=2807
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.
Risk factors that may cause actual results to differ materially from statements made in this press release can be found in the MD&A Section of the Company's Annual Report on Form 10-K for the period ended December 31, 2008, filed with the SEC on March 16, 2009. This document and other SEC filings 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)
June 30, December 31,
2009 2008
------------ -----------
(unaudited)
Assets
Current assets:
Accounts receivable, net $ 40,497 $ 50,798
Inventories, net 72,316 73,459
Deferred income taxes 1,475 1,384
Prepaid expenses 1,078 829
Income taxes receivable 90 --
------------ -----------
Total current assets 115,456 126,470
------------ -----------
Property and equipment, net 3,176 3,274
Goodwill 2,996 2,996
Deferred income taxes 2,196 1,926
Other assets 78 87
------------ -----------
Total assets $ 123,902 $ 134,753
============ ===========
Liabilities and stockholders'
equity
Current liabilities:
Book overdraft $ 2,030 $ 4,933
Trade accounts payable 14,253 10,091
Accrued and other current
liabilities 11,610 11,682
Income taxes payable -- 1,644
Short term obligations 17,343 --
------------ -----------
Total current liabilities 45,236 28,350
------------ -----------
Long term obligations -- 29,808
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:
17,649,737 and 17,642,552
outstanding at June 30,
2009 and December 31, 2008,
respectively 21 21
Additional paid-in-capital 56,946 55,901
Retained earnings 76,449 75,540
Treasury stock (54,750) (54,867)
------------ -----------
Total stockholders' equity 78,666 76,595
------------ -----------
Total liabilities and
stockholders' equity $ 123,902 $ 134,753
============ ===========
HOUSTON WIRE & CABLE COMPANY
Consolidated Statements of Income
(Unaudited)
(In thousands, except share and per share data)
---------------------- ----------------------
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- ----------------------
2009 2008 2009 2008
---------- ---------- ---------- ----------
Sales $ 61,882 $ 97,384 $ 127,714 $ 186,825
Cost of sales 48,910 73,153 100,929 139,927
---------- ---------- ---------- ----------
Gross profit 12,972 24,231 26,785 46,898
Operating expenses:
Salaries and
commissions 5,201 6,095 10,739 12,171
Other operating
expenses 4,512 5,001 9,132 9,985
Depreciation and
amortization 141 129 283 256
---------- ---------- ---------- ----------
Total operating
expenses 9,854 11,225 20,154 22,412
---------- ---------- ---------- ----------
Operating income 3,118 13,006 6,631 24,486
Interest expense 108 450 263 991
---------- ---------- ---------- ----------
Income before income
taxes 3,010 12,556 6,368 23,495
Income taxes 1,165 4,811 2,459 9,013
---------- ---------- ---------- ----------
Net income $ 1,845 $ 7,745 $ 3,909 $ 14,482
========== ========== ========== ==========
Earnings per share:
Basic $ 0.10 $ 0.44 $ 0.22 $ 0.81
========== ========== ========== ==========
Diluted $ 0.10 $ 0.44 $ 0.22 $ 0.81
========== ========== ========== ==========
Weighted average
common shares
outstanding:
Basic 17,647,982 17,760,989 17,645,433 17,921,399
========== ========== ========== ==========
Diluted 17,663,522 17,798,403 17,656,445 17,959,842
========== ========== ========== ==========
Dividends declared
per share $ 0.085 $ 0.085 $ 0.17 $ 0.17
========== ========== ========== ==========
HOUSTON WIRE & CABLE COMPANY
Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
Six Months Ended
June 30,
---------------------
2009 2008
--------- ---------
Operating activities
Net income $ 3,909 $ 14,482
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 283 256
Amortization of capitalized loan costs 40 40
Amortization of unearned stock compensation 1,194 1,058
Provision for doubtful accounts -- 14
Provision for returns and allowances (45) 27
Provision for inventory obsolescence 238 (6)
Deferred income taxes (415) (363)
Changes in operating assets and liabilities:
Accounts receivable 10,346 (5,029)
Inventories 905 (2,940)
Prepaid expenses (249) (377)
Other assets (31) (53)
Book overdraft (2,903) (3,854)
Trade accounts payable 4,162 3,328
Accrued and other current liabilities (72) (6,817)
Income taxes payable/receivable (1,734) 2,209
--------- ---------
Net cash provided by operating activities 15,628 1,975
Investing activities
Expenditures for property and equipment (186) (211)
--------- ---------
Net cash used in investing activities (186) (211)
Financing activities
Borrowings on revolver 130,433 192,696
Payments on revolver (142,898) (176,797)
Proceeds from exercise of stock options 18 54
Excess tax benefit for stock options 5 255
Payment of dividends (3,000) (3,040)
Purchase of treasury stock -- (13,789)
--------- ---------
Net cash used in financing activities (15,442) (621)
--------- ---------
Net change in cash -- 1,143
Cash at beginning of period -- --
--------- ---------
Cash at end of period $ -- $ 1,143
========= =========
This news release was distributed by GlobeNewswire, www.globenewswire.com
SOURCE: Houston Wire & Cable Company
Houston Wire & Cable Company Hope M. Novosad, Manager, Investor Relations 713.609.2110 Fax: 713.609.2168 hnovosad@houwire.com
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