x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
¨
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
Delaware
|
36-4151663
|
(State
or other jurisdiction of incorporation or
organization)
|
(I.R.S.
Employer Identification No.)
|
10201
North Loop East
Houston,
Texas
|
77029
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Large
Accelerated Filer ¨
|
Accelerated
Filer x
|
Non-Accelerated
Filer ¨
|
Smaller
Reporting Company ¨
|
PART
I. FINANCIAL INFORMATION
|
|
Item
1. Financial Statements (Unaudited)
|
2 |
Consolidated
Balance Sheets
|
2 |
Consolidated
Statements of Income
|
3 |
Consolidated
Statements of Cash Flows
|
4
|
Notes
to Consolidated Financial Statements
|
5 |
|
|
Item
2. Management’s Discussion and Analysis of Financial Condition
and Results of Operations
|
8 |
Overview
|
8 |
Results
of Operations
|
10 |
Impact
of Inflation and Commodity Prices
|
13 |
Liquidity
and Capital Resources
|
13 |
Contractual
Obligations
|
14 |
Cautionary
Statement for the Purposes of the “Safe Harbor”
|
15 |
Item
3. Quantitative and Qualitative Disclosures about Market
Risk
|
15 |
Item
4. Controls and Procedures
|
15 |
PART
II. OTHER INFORMATION
|
|
Item
1. Legal Proceedings
|
15 |
Item
1A. Risk Factors
|
15 |
Item
2. Unregistered Sales of Equity Securities
and Use of Proceeds
|
15 |
Item
3. Defaults Upon Senior
Securities
|
16 |
Item
4. Submission of Matters to a Vote of
Security Holders
|
16 |
Item
5. Other Information
|
16 |
Item
6. Exhibits
|
16 |
|
|
Signature
Page
|
17 |
September
30,
|
December
31,
|
|||||||
2009
|
2008
|
|||||||
(unaudited)
|
||||||||
Assets
|
||||||||
Current
assets:
|
||||||||
Accounts
receivable, net
|
$
|
42,169
|
$
|
50,798
|
||||
Inventories,
net
|
71,948
|
73,459
|
||||||
Deferred
income taxes
|
1,674
|
1,591
|
||||||
Prepaid
expenses
|
817
|
829
|
||||||
Total
current assets
|
116,608
|
126,677
|
||||||
Property
and equipment, net
|
3,114
|
3,274
|
||||||
Goodwill
|
2,362
|
2,362
|
||||||
Deferred
income taxes
|
2,757
|
2,353
|
||||||
Other
assets
|
28
|
87
|
||||||
Total
assets
|
$
|
124,869
|
$
|
134,753
|
||||
Liabilities
and stockholders' equity
|
||||||||
Current
liabilities:
|
||||||||
Book
overdraft
|
$
|
1,656
|
$
|
4,933
|
||||
Trade
accounts payable
|
13,940
|
10,091
|
||||||
Accrued
and other current liabilities
|
12,297
|
11,682
|
||||||
Income
taxes payable
|
344
|
1,644
|
||||||
Total
current liabilities
|
28,237
|
28,350
|
||||||
Long
term obligations
|
16,707
|
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: 17,652,737 and 17,642,552 outstanding at September 30, 2009 and
December 31, 2008, respectively
|
21
|
21
|
||||||
Additional
paid-in-capital
|
57,414
|
55,901
|
||||||
Retained
earnings
|
77,190
|
75,540
|
||||||
Treasury
stock
|
(54,700
|
)
|
(54,867
|
)
|
||||
Total
stockholders' equity
|
79,925
|
76,595
|
||||||
Total
liabilities and stockholders' equity
|
$
|
124,869
|
$
|
134,753
|
Three Months Ended
September
30,
|
Nine Months Ended
September
30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Sales
|
$
|
63,579
|
$
|
98,854
|
$
|
191,293
|
$
|
285,679
|
||||||||
Cost
of sales
|
50,117
|
76,214
|
151,046
|
216,141
|
||||||||||||
Gross
profit
|
13,462
|
22,640
|
40,247
|
69,538
|
||||||||||||
Operating
expenses:
|
||||||||||||||||
Salaries
and commissions
|
5,143
|
6,159
|
15,882
|
18,330
|
||||||||||||
Other
operating expenses
|
4,395
|
5,302
|
13,527
|
15,287
|
||||||||||||
Depreciation
and amortization
|
138
|
136
|
421
|
392
|
||||||||||||
Total
operating expenses
|
9,676
|
11,597
|
29,830
|
34,009
|
||||||||||||
Operating
income
|
3,786
|
11,043
|
10,417
|
35,529
|
||||||||||||
Interest
expense
|
140
|
472
|
403
|
1,463
|
||||||||||||
Income
before income taxes
|
3,646
|
10,571
|
10,014
|
34,066
|
||||||||||||
Income
taxes
|
1,405
|
3,996
|
3,864
|
13,009
|
||||||||||||
Net
income
|
$
|
2,241
|
$
|
6,575
|
$
|
6,150
|
$
|
21,057
|
||||||||
Earnings
per share:
|
||||||||||||||||
Basic
|
$
|
0.13
|
$
|
0.37
|
$
|
0.35
|
$
|
1.18
|
||||||||
Diluted
|
$
|
0.13
|
$
|
0.37
|
$
|
0.35
|
$
|
1.18
|
||||||||
Weighted
average common shares outstanding:
|
||||||||||||||||
Basic
|
17,651,074
|
17,676,468
|
17,647,334
|
17,839,160
|
||||||||||||
Diluted
|
17,666,284
|
17,704,818
|
17,659,425
|
17,874,238
|
||||||||||||
Dividends
declared per share
|
$
|
0.085
|
$
|
0.085
|
$
|
0.255
|
$
|
0.255
|
Nine
Months Ended
September
30,
|
||||||||
2009
|
2008
|
|||||||
Operating
activities
|
||||||||
Net
income
|
$
|
6,150
|
$
|
21,057
|
||||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||
Depreciation
and amortization
|
421
|
392
|
||||||
Amortization
of capitalized loan costs
|
91
|
60
|
||||||
Amortization
of unearned stock compensation
|
1,699
|
1,570
|
||||||
Provision
for doubtful accounts
|
—
|
114
|
||||||
Provision
for returns and allowances
|
(106
|
)
|
33
|
|||||
Provision
for inventory obsolescence
|
366
|
(43
|
)
|
|||||
Deferred
income taxes
|
(541
|
)
|
(545
|
)
|
||||
Changes
in operating assets and liabilities:
|
||||||||
Accounts
receivable
|
8,735
|
(8,578
|
)
|
|||||
Inventories
|
1,145
|
(1,711
|
)
|
|||||
Prepaid
expenses
|
12
|
(139
|
)
|
|||||
Other
assets
|
(31
|
)
|
(53
|
)
|
||||
Book
overdraft
|
(3,277
|
)
|
252
|
|||||
Trade
accounts payable
|
3,849
|
4,141
|
||||||
Accrued
and other current liabilities
|
615
|
(3,484
|
)
|
|||||
Income
taxes payable/receivable
|
(1,300
|
)
|
1,293
|
|||||
Net
cash provided by operating activities
|
17,828
|
14,359
|
||||||
Investing
activities
|
||||||||
Expenditures
for property and equipment
|
(262
|
)
|
(384
|
)
|
||||
Net
cash used in investing activities
|
(262
|
)
|
(384
|
)
|
||||
Financing
activities
|
||||||||
Borrowings
on revolver
|
193,524
|
289,165
|
||||||
Payments
on revolver
|
(206,625
|
)
|
(283,472
|
)
|
||||
Proceeds
from exercise of stock options
|
22
|
57
|
||||||
Excess
tax benefit for stock options
|
13
|
264
|
||||||
Payment
of dividends
|
(4,500
|
)
|
(4,544
|
)
|
||||
Purchase
of treasury stock
|
—
|
(15,445
|
)
|
|||||
Net
cash used in financing activities
|
(17,566
|
)
|
(13,975
|
)
|
||||
Net
change in cash
|
—
|
—
|
||||||
Cash
at beginning of period
|
—
|
—
|
||||||
Cash
at end of period
|
$
|
—
|
$
|
—
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
September
30,
|
September
30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Weighted
average common shares for basic earnings per share
|
17,651,074
|
17,676,468
|
17,647,334
|
17,839,160
|
||||||||||||
Effect
of dilutive securities
|
15,210
|
28,350
|
12,091
|
35,078
|
||||||||||||
Weighted
average common shares for diluted earnings per share
|
17,666,284
|
17,704,818
|
17,659,425
|
17,874,238
|
2009
|
2008
|
|||||||
Expected
volatility
|
81 | % | 69 | % | ||||
Expected
life in years
|
2.0
years
|
5.5
years
|
||||||
Risk-free
interest rate
|
1.00 | % | 3.81 | % | ||||
Dividend
yield
|
3.29 | % | 2.28 | % |
|
·
|
continuous and interlocked armor
cable (cable encapsulated in either a seamless or interlocked aluminum
protective sheath);
|
|
·
|
control and power cable (single
or multiple conductor industrial
cable);
|
|
·
|
electronic wire and cable
(computer, audio and signal
cable);
|
|
·
|
flexible and portable cords
(flexible, heavy duty industrial
cable);
|
|
·
|
instrumentation and thermocouple
cable (cable used for transmitting signals for instruments and heat
sensing devices);
|
|
·
|
lead and high temperature cable
(single conductor cable used for low or high temperature
applications);
|
|
·
|
medium voltage cable (cable used
for applications between 2,001 volts and 35,000 volts);
and
|
|
·
|
premise and category wire and
cable (cable used for home and high speed data
applications).
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
September
30,
|
September
30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Sales
|
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
Cost
of sales
|
78.8 | % | 77.1 | % | 79.0 | % | 75.7 | % | ||||||||
Gross
profit
|
21.2 | % | 22.9 | % | 21.0 | % | 24.3 | % | ||||||||
Operating
expenses:
|
||||||||||||||||
Salaries
and commissions
|
8.1 | % | 6.2 | % | 8.3 | % | 6.4 | % | ||||||||
Other
operating expenses
|
6.9 | % | 5.4 | % | 7.1 | % | 5.4 | % | ||||||||
Depreciation
and amortization
|
0.2 | % | 0.1 | % | 0.2 | % | 0.1 | % | ||||||||
Total
operating expenses:
|
15.2 | % | 11.7 | % | 15.6 | % | 11.9 | % | ||||||||
Operating
income
|
6.0 | % | 11.2 | % | 5.4 | % | 12.4 | % | ||||||||
Interest
expense
|
0.2 | % | 0.5 | % | 0.2 | % | 0.5 | % | ||||||||
Income
before income taxes
|
5.7 | % | 10.7 | % | 5.2 | % | 11.9 | % | ||||||||
Income
taxes
|
2.2 | % | 4.0 | % | 2.0 | % | 4.6 | % | ||||||||
Net
income
|
3.5 | % | 6.7 | % | 3.2 | % | 7.4 | % |
Three Months
Ended
September 30,
|
||||||||||||||||
(
Dollars in millions )
|
2009
|
2008
|
Change
|
|||||||||||||
Sales
|
$ | 63.6 | $ | 98.9 | $ | (35.3 | ) | (35.7 | )% |
Three Months Ended
|
||||||||||||||||
September
30,
|
||||||||||||||||
(
Dollars in millions )
|
2009
|
2008
|
Change
|
|||||||||||||
Gross
profit
|
$ | 13.5 | $ | 22.6 | $ | (9.2 | ) | (40.5 | )% | |||||||
Gross
profit as a percent of sales
|
21.2 | % | 22.9 | % | (1.7 | )% |
Three Months Ended
|
||||||||||||||||
September
30,
|
||||||||||||||||
(
Dollars in millions )
|
2009
|
2008
|
Change
|
|||||||||||||
Operating
expenses:
|
|
|||||||||||||||
Salaries
and commissions
|
$ | 5.1 | $ | 6.2 | $ | (1.0 | ) | (16.5 | )% | |||||||
Other
operating expenses
|
4.4 | 5.3 | (0.9 | ) | (17.1 | )% | ||||||||||
Depreciation
and amortization
|
0.1 | 0.1 | 0.0 | 1.5 | % | |||||||||||
Total
operating expenses
|
$ | 9.7 | $ | 11.6 | $ | (1.9 | ) | (16.6 | )% | |||||||
Operating
expenses as a percent of sales
|
15.2 | % | 11.7 | % | 3.5 | % |
Nine
Months Ended
|
||||||||||||||||
September 30,
|
||||||||||||||||
( Dollars in millions )
|
2009
|
2008
|
Change
|
|||||||||||||
Sales
|
$ | 191.3 | $ | 285.7 | $ | (94.4 | ) | (33.0 | )% |
Nine
Months Ended
|
||||||||||||||||
September
30,
|
||||||||||||||||
(Dollars
in millions )
|
2009
|
2008
|
Change
|
|||||||||||||
Gross
profit
|
$ | 40.2 | $ | 69.5 | $ | (29.3 | ) | (42.1 | )% | |||||||
Gross
profit as a percent of sales
|
21.0 | % | 24.3 | % | (3.3 | )% |
Nine
Months Ended
|
||||||||||||||||
September
30,
|
||||||||||||||||
(
Dollars in millions )
|
2009
|
2008
|
Change
|
|||||||||||||
Operating
expenses:
|
|
|||||||||||||||
Salaries
and commissions
|
$ | 15.9 | $ | 18.3 | $ | (2.4 | ) | (13.4 | )% | |||||||
Other
operating expenses
|
13.5 | 15.3 | (1.8 | ) | (11.5 | )% | ||||||||||
Depreciation
and amortization
|
0.4 | 0.4 | 0.0 | 7.4 | % | |||||||||||
Total
operating expenses
|
$ | 29.8 | $ | 34.0 | $ | (4.2 | ) | (12.3 | )% | |||||||
Operating
expenses as a percent of sales
|
15.6 | % | 11.9 | % | 3.7 | % |
|
•
|
the adequacy of available bank
lines of credit;
|
|
•
|
the ability to attract long-term
capital with satisfactory
terms;
|
|
•
|
additional stock
repurchases;
|
|
•
|
cash flows generated from
operating activities;
|
|
•
|
payment of
dividends;
|
|
•
|
capital expenditures;
and
|
|
•
|
acquisitions.
|
Total
|
Less
than
1 year
|
1-3
years
|
3-5
years
|
More
than
5
years
|
||||||||||||||||
(In
thousands)
|
||||||||||||||||||||
Loans
payable
|
$
|
16,707
|
$
|
—
|
$
|
—
|
$
|
16,707
|
$
|
—
|
Period
|
Total number of
shares
purchased
|
Average
price paid
per share
|
Total number of
shares purchased
as part of publicly
announced plans or
programs (1)
|
Maximum
dollar value that
may yet be used
for purchases
under the plan
|
||||||||||||
July
1 – 31, 2009
|
—
|
$
|
—
|
—
|
$
|
19,385,303
|
||||||||||
August
1 – 31, 2009
|
—
|
$
|
—
|
—
|
$
|
19,385,303
|
||||||||||
September
1 – 30, 2009
|
—
|
$
|
—
|
—
|
$
|
19,385,303
|
||||||||||
Total
|
—
|
$
|
—
|
—
|
(1)
|
The board authorized a stock
buyback program of $30 million in August 2007. This amount was increased
to $50 million in September 2007 and to $75 million effective January
2008. There were no purchases made under the Company’s stock repurchase
program in the third quarter of
2009.
|
Exhibit Number
|
Document Description
|
|
31.1
|
Certification
by Charles A. Sorrentino pursuant to Rule 13a-14(a) and 15d-14(a), as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
|
31.2
|
Certification
by Nicol G. Graham pursuant to Rule 13a-14(a) and 15d-14(a), as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
|
32.1
|
Certification
by Charles A. Sorrentino and Nicol G. Graham pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
Date: November
9, 2009
|
HOUSTON
WIRE & CABLE COMPANY
|
BY: /s/
Nicol G. Graham
|
|
Nicol G. Graham,
Chief Financial Officer
|
Exhibit Number
|
Document Description
|
|
31.1
|
Certification
by Charles A. Sorrentino pursuant to Rule 13a-14(a) and 15d-14(a), as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
|
31.2
|
Certification
by Nicol G. Graham pursuant to Rule 13a-14(a) and 15d-14(a), as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
|
32.1
|
Certification
by Charles A. Sorrentino and Nicol G. Graham pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|