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 ¨
|
Non-Accelerated
Filer x
|
PART I.
FINANCIAL INFORMATION
|
PART
II. OTHER INFORMATION
|
September
30,
|
December
31,
|
|||||||
2007
|
2006
|
|||||||
(unaudited)
|
||||||||
Assets
|
||||||||
Current
assets:
|
||||||||
Accounts
receivable, net
|
$ |
68,216
|
$ |
52,128
|
||||
Inventories,
net
|
60,310
|
56,329
|
||||||
Income
taxes receivable
|
93
|
—
|
||||||
Deferred
income taxes
|
1,239
|
1,165
|
||||||
Prepaid
expenses
|
1,019
|
450
|
||||||
Total
current assets
|
130,877
|
110,072
|
||||||
Property
and equipment, net
|
3,030
|
2,973
|
||||||
Goodwill
|
2,996
|
2,996
|
||||||
Deferred
income taxes
|
1,010
|
688
|
||||||
Other
assets
|
135
|
135
|
||||||
Total
assets
|
$ |
138,048
|
$ |
116,864
|
||||
Liabilities
and stockholders' equity
|
||||||||
Current
liabilities:
|
||||||||
Book
overdraft
|
$ |
2,382
|
$ |
1,265
|
||||
Trade
accounts payable
|
15,639
|
10,988
|
||||||
Accrued
and other current liabilities
|
12,583
|
10,358
|
||||||
Income
taxes payable
|
—
|
520
|
||||||
Total
current liabilities
|
30,604
|
23,131
|
||||||
Long
term obligations
|
28,595
|
12,059
|
||||||
Stockholders'
equity:
|
||||||||
Common
stock, $0.001 par value; 100,000,000 shares authorized: 20,988,952
shares
issued and 19,490,841 outstanding at September 30, 2007 and 20,867,172
issued and outstanding at December 31, 2006
|
21
|
21
|
||||||
Additional
paid-in-capital
|
53,638
|
50,979
|
||||||
Retained
earnings
|
53,132
|
30,674
|
||||||
Treasury
stock
|
(27,942 | ) |
—
|
|||||
Total
stockholders' equity
|
78,849
|
81,674
|
||||||
Total
liabilities and stockholders' equity
|
$ |
138,048
|
$ |
116,864
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
September
30,
|
September
30,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
Sales
|
$
|
98,922
|
$
|
89,963
|
$
|
269,920
|
$
|
240,575
|
||||||||
Cost
of sales
|
74,116
|
63,760
|
198,781
|
171,854
|
||||||||||||
Gross
profit
|
24,806
|
26,203
|
71,139
|
68,721
|
||||||||||||
Operating
expenses:
|
||||||||||||||||
Salaries
and commissions
|
6,298
|
6,005
|
17,475
|
17,024
|
||||||||||||
Other
operating expenses
|
4,818
|
4,248
|
13,884
|
11,840
|
||||||||||||
Management
fee
|
—
|
—
|
—
|
208
|
||||||||||||
Depreciation
and amortization
|
112
|
93
|
331
|
276
|
||||||||||||
Total
operating expenses
|
11,228
|
10,346
|
31,690
|
29,348
|
||||||||||||
Operating
income
|
13,578
|
15,857
|
39,449
|
39,373
|
||||||||||||
Interest
expense
|
290
|
492
|
661
|
2,666
|
||||||||||||
Income
before income taxes
|
13,288
|
15,365
|
38,788
|
36,707
|
||||||||||||
Income
taxes
|
4,994
|
5,897
|
14,776
|
14,183
|
||||||||||||
Net
income
|
$
|
8,294
|
$
|
9,468
|
$
|
24,012
|
$
|
22,524
|
||||||||
Earnings
per share:
|
||||||||||||||||
Basic
|
$
|
0.41
|
$
|
0.45
|
$
|
1.16
|
$
|
1.24
|
||||||||
Diluted
|
$
|
0.41
|
$
|
0.45
|
$
|
1.15
|
$
|
1.23
|
||||||||
Weighted
average common shares outstanding:
|
||||||||||||||||
Basic
|
20,395,199
|
20,867,172
|
20,739,550
|
18,203,902
|
||||||||||||
Diluted
|
20,452,695
|
20,984,949
|
20,828,983
|
18,308,748
|
Nine
Months Ended
|
||||||||
September
30,
|
||||||||
2007
|
2006
|
|||||||
Operating
activities
|
||||||||
Net
income
|
$ |
24,012
|
$ |
22,524
|
||||
Adjustments
to reconcile net income to net cash provided by (used in) operating
activities:
|
||||||||
Depreciation
and amortization
|
331
|
276
|
||||||
Amortization
of capitalized loan costs
|
48
|
242
|
||||||
Amortization
of unearned stock compensation
|
1,352
|
178
|
||||||
Provision
for doubtful accounts
|
(299 | ) |
—
|
|||||
Provision
for returns and allowances
|
(151 | ) |
211
|
|||||
Provision
for inventory obsolescence
|
(79 | ) |
345
|
|||||
Deferred
income taxes
|
(396 | ) | (52 | ) | ||||
Changes
in operating assets and liabilities:
|
||||||||
Accounts
receivable
|
(15,638 | ) | (16,785 | ) | ||||
Inventories
|
(3,902 | ) | (23,365 | ) | ||||
Prepaid
expenses
|
(569 | ) | (190 | ) | ||||
Other
assets
|
(48 | ) | (28 | ) | ||||
Book
overdraft
|
1,117
|
1,493
|
||||||
Trade
accounts payable
|
4,651
|
5,454
|
||||||
Accrued
and other current liabilities
|
2,225
|
3,500
|
||||||
Income
taxes payable/receivable
|
(613 | ) |
1,183
|
|||||
Net
cash provided by (used in) operating activities
|
12,041
|
(5,014 | ) | |||||
Investing
activities
|
||||||||
Expenditures
for property, plant, and equipment
|
(388 | ) | (334 | ) | ||||
Net
cash used in investing activities
|
(388 | ) | (334 | ) | ||||
Financing
activities
|
||||||||
Borrowings
on revolver
|
287,453
|
240,651
|
||||||
Payments
on revolver
|
(270,917 | ) | (274,928 | ) | ||||
Payments
on long-term obligations
|
—
|
(10,300 | ) | |||||
Proceeds
from exercise of common stock options
|
91
|
6
|
||||||
Proceeds
from sale of common stock
|
—
|
51,381
|
||||||
Payment
of common stock offering costs
|
—
|
(1,482 | ) | |||||
Excess
income tax benefit for common stock options
|
1,216
|
20
|
||||||
Payment
of cash dividends
|
(1,554 | ) |
—
|
|||||
Purchase
of treasury stock
|
(27,942 | ) |
—
|
|||||
Net
cash provided by (used in) financing activities
|
(11,653 | ) |
5,348
|
|||||
Net
change in cash
|
—
|
—
|
||||||
Cash
at beginning of period
|
—
|
—
|
||||||
Cash
at end of period
|
$ |
—
|
$ |
—
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
September
30,
|
September
30,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
Weighted
average common shares for basic earnings per share
|
20,395
|
20,867
|
20,740
|
18,204
|
||||||||||||
Effect
of dilutive securities
|
58
|
118
|
89
|
105
|
||||||||||||
Denominator
of diluted earnings per share
|
20,453
|
20,985
|
20,829
|
18,309
|
2007
|
|
Expected
volatility
|
42%
|
Expected
life in years
|
5.5
years
|
Risk-free
interest rate
|
4.59%
- 4.64%
|
Dividend
yield
|
0%
|
|
·
|
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 (cables 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 (cables 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,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
Sales
|
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
Cost
of sales
|
74.9 | % | 70.9 | % | 73.6 | % | 71.4 | % | ||||||||
Gross
profit
|
25.1 | % | 29.1 | % | 26.4 | % | 28.6 | % | ||||||||
Operating
expenses:
|
||||||||||||||||
Salaries
and commissions
|
6.4 | % | 6.7 | % | 6.5 | % | 7.1 | % | ||||||||
Other
operating expenses
|
4.9 | % | 4.7 | % | 5.1 | % | 4.9 | % | ||||||||
Management
fee
|
0.0 | % | 0.0 | % | 0.0 | % | 0.1 | % | ||||||||
Depreciation
and amortization
|
0.1 | % | 0.1 | % | 0.1 | % | 0.1 | % | ||||||||
Total
operating expenses
|
11.4 | % | 11.5 | % | 11.7 | % | 12.2 | % | ||||||||
Operating
income
|
13.7 | % | 17.6 | % | 14.6 | % | 16.4 | % | ||||||||
Interest
expense
|
0.3 | % | 0.5 | % | 0.2 | % | 1.1 | % | ||||||||
Income
before income taxes
|
13.4 | % | 17.1 | % | 14.4 | % | 15.3 | % | ||||||||
Income
taxes
|
5.0 | % | 6.6 | % | 5.5 | % | 5.9 | % | ||||||||
Net
income
|
8.4 | % | 10.5 | % | 8.9 | % | 9.4 | % |
Three
Months Ended
|
||||||||||||||||
September
30,
|
||||||||||||||||
(in
millions)
|
2007
|
2006
|
Change
|
|||||||||||||
Sales
|
$ |
98.9
|
$ |
90.0
|
$ |
9.0
|
10.0 | % |
Three
Months Ended
|
||||||||||||||||
September
30,
|
||||||||||||||||
(in
millions)
|
2007
|
2006
|
Change
|
|||||||||||||
Gross
profit
|
$ |
24.8
|
$ |
26.2
|
$ | (1.4 | ) | (5.3 | )% | |||||||
Gross
profit as a percent of sales
|
25.1 | % | 29.1 | % | (4.0 | )% |
Three
Months Ended
|
||||||||||||||||
September
30,
|
||||||||||||||||
(in
millions)
|
2007
|
2006
|
Change
|
|||||||||||||
Operating
expenses:
|
||||||||||||||||
Salaries
and commissions
|
$ |
6.3
|
$ |
6.0
|
$ |
0.3
|
4.9 | % | ||||||||
Other
operating expenses
|
4.8
|
4.2
|
0.6
|
13.4 | % | |||||||||||
Management
fee
|
—
|
—
|
—
|
—
|
% | |||||||||||
Depreciation
and amortization
|
0.1
|
0.1
|
—
|
20.4 | % | |||||||||||
Total
operating expenses
|
$ |
11.2
|
$ |
10.3
|
$ |
0.9
|
8.5 | % | ||||||||
Operating
expenses as a % of sales
|
11.4 | % | 11.5 | % | (0.1 | )% |
Nine
Months Ended
|
||||||||||||||||
September
30,
|
||||||||||||||||
(in
millions)
|
2007
|
2006
|
Change
|
|||||||||||||
Sales
|
$ |
269.9
|
$ |
240.6
|
$ |
29.3
|
12.2 | % |
Nine
Months Ended
|
||||||||||||||||
September
30,
|
||||||||||||||||
(in
millions)
|
2007
|
2006
|
Change
|
|||||||||||||
Gross
profit
|
$ |
71.1
|
$ |
68.7
|
$ |
2.4
|
3.5 | % | ||||||||
Gross
profit as a percent of sales
|
26.4 | % | 28.6 | % | (2.2 | )% |
Nine
Months Ended
|
||||||||||||||||
September
30,
|
||||||||||||||||
(in
millions)
|
2007
|
2006
|
Change
|
|||||||||||||
Operating
Expenses:
|
||||||||||||||||
Salaries
and commissions
|
$ |
17.5
|
$ |
17.0
|
$ |
0.5
|
2.6 | % | ||||||||
Other
operating expenses
|
13.9
|
11.8
|
2.0
|
17.3 | % | |||||||||||
Management
fee
|
—
|
0.2
|
(0.2 | ) | (100.0 | )% | ||||||||||
Depreciation
and amortization
|
0.3
|
0.3
|
0.1
|
19.9 | % | |||||||||||
Total
operating expenses
|
$ |
31.7
|
$ |
29.3
|
$ |
2.3
|
8.0 | % | ||||||||
Operating
expenses as a % of sales
|
11.7 | % | 12.2 | % | (0.5 | )% |
|
•
|
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)
|
||||||||||||||||||||
Term
loans and loans payable
|
$ |
28,595
|
$ |
—
|
$ |
28,595
|
$ |
—
|
$ |
—
|
Period
|
(a)
Total number of shares purchased
|
(b)
Average price paid per share
|
(c)
Total number of shares purchased as part of publicly announced plans
or
programs (1)
|
(d)
Maximum dollar value that may yet be used for purchases under the
plan
|
||||||||||||
July
1 – 31, 2007
|
—
|
—
|
—
|
—
|
||||||||||||
August
1 – 31, 2007
|
1,179,965
|
$ |
18.39
|
1,179,965
|
$ |
28,299,839
|
||||||||||
September
1 – 30, 2007
|
318,146
|
$ |
19.62
|
318,146
|
$ |
22,058,389
|
||||||||||
Total
|
1,498,111
|
$ |
18.65
|
1,498,111
|
$ |
22,058,389
|
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
2, 2007
|
HOUSTON
WIRE & CABLE COMPANY
|
|
BY: /s/
Nicol G. Graham
|
||
Nicol G. Graham, Chief Financial Officer, |
Exhibit
Number
|
Document
Description
|
|
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.
|
||
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.
|
||
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.
|