Houston Wire & Cable Company Increases Q2 Sales By 4 Percent

Houston Wire & Cable Company announced on Thursday its operating results for the second quarter which ended June 30, 2014.

Houston Wire & Cable Company (NASDAQ: HWCC) (the "Company") announced on Thursday its operating results for the second quarter ended June 30, 2014.

Selected highlights were:

  • Record sales of $103.5 million up 4.2 percent over Q2 2013
  • Net income of $4.0 million
  • Diluted EPS of $0.23 per share
  • Declared a dividend of $0.12 per share

Second Quarter Summary 
Jim Pokluda, President and Chief Executive Officer commented, "I am pleased to report another record sales quarter, as sales increased 4.2 percent over the prior year quarter, up approximately 7 percent when adjusted for deflation in metals prices, and 4 percent sequentially. Our revenue performance reflects continued execution in regional geographies where end markets have recovered from post-recession lows, despite disappointing weakness in certain regions where demand remains sluggish. In addition, we are pleased to see growing strength and activity involving the project end of our business, although overall market conditions in this space remain very competitive, pressuring our gross and operating margins.

We estimate Maintenance, Repair and Operations (MRO) sales increased 2 percent or approximately 5 percent on a metals adjusted basis, while project business increased 8 percent or approximately 11 percent on a metals adjusted basis over the prior year quarter. Our new product initiatives, including specialty oil and gas cables and aluminum cables, continued to help the top line."

Gross margin at 21.7 percent decreased 20 basis points from the second quarter of 2013 due to competitive pricing and the impact of lower metals prices. Operating expenses were up $0.7 million or 4.7 percent from the prior year period, principally due to the cost of operating three new distribution locations and additional operating salaries to support the increased sales.

Interest expense of $0.3 million was slightly higher than the prior year period, as outstanding debt at $53.2 million increased from $46.6 million at June 30, 2013, but decreased from March 31, 2014 by $5.0 million or 8.6 percent. The average effective interest rate remained flat year to year at 2.1 percent. The effective tax rate for the period of 38.4 percent was lower than the 38.7 percent rate in the prior year period, due to a slightly lower state tax rate in 2014.

Net income of $4.0 million was flat with the second quarter of 2013. Diluted earnings per share were $0.23 consistent with the prior year period. Pokluda further commented, "I am pleased that our financial performance and strong balance sheet again allowed us to return funds to our shareholders through the $0.12 per share dividend and the repurchase of approximately 243,000 shares of stock."

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