Electrical and industrial products distributor Houston Wire & Cable Company reported its 2019 fourth quarter and full-year financial results last week, showing modest sales declines in both periods, with accelerated declines in the latest quarter.
The company — a distributor cable and wire, rope and lifting products, fasteners, hose clamps and rivets — said that total 2019 sales of $338 million decreased 5.2 percent from 2018, while gross margin of 23.6 percent dipped 30 basis points. Total profit of $2.6 million sunk 70.5 percent from 2018's $8.6 million.
For the fourth quarter, sales of $82 million were down 6.4 percent year-over-year, while a net loss of $0.7 million compared with a $1.6 million profit a year earlier.
“2019 was a year of significant operational change for HWCC as we completed multiple strategic projects that strengthened our value proposition," said James Pokluda, company president and CEO. "In response to new tariffs, we reset international supply lines; LEAN processes and methodologies drove continuous improvement and expense reductions; we closed our largest fastener distribution center and relocated the inventory to two new facilities that are highly efficient and better located to service customer demand; and we completed a multi-year information technology upgrade that increased our digital capabilities and enhanced enterprise strategy. With these and several additional projects and non-recurring expenses now behind us, we enter 2020 well positioned to serve our diverse customer base.”
HWCC estimates that supply chain disruptions caused by ongoing trade negotiations with China negatively impacted sales 1 percent and that lower metals prices in 2019 added another 2 percent decrease compared to 2018. Adjusting for those factors, the company estimates sales for its projects business decreased 2 percent, while MRO sales decreased 3 percent.
HWCC said the Attleboro, MA fastener distribution center warehouse closure and asset relocation cost $3.3 million and will result in annual operating savings of about $1 million.
HWCC said Q4 fastener supply disruptions caused by China trade negotiations and lower metals prices represented a 2 percent sales decrease year-over-year. The company estimates sales for its projects business decreased 16 percent, while MRO sales dipped 2 percent.
“Fourth quarter results were disappointing, as positive sales trends experienced early in the quarter reduced significantly in the second half of the quarter due primarily to reduced project activity in oil and gas and fastener end markets," Pokluda said.