x
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QUARTERLY REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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¨
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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Delaware
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36-4151663
|
|
(State
or other jurisdiction of incorporation or
organization)
|
(I.R.S.
Employer Identification No.)
|
|
10201
North Loop East
Houston,
Texas
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77029
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|
(Address
of principal executive offices)
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(Zip
Code)
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Large
Accelerated Filer ¨
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Accelerated
Filer x
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Non-Accelerated
Filer ¨
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Smaller
Reporting Company ¨
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PART
I. FINANCIAL INFORMATION
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||
Item
1. Financial Statements (Unaudited)
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||
Consolidated
Balance Sheets
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2
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|
Consolidated
Statements of Income
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3
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Consolidated
Statements of Cash Flows
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4
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Notes
to Consolidated Financial Statements
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5
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Item
2. Management’s Discussion and Analysis of Financial Condition
and Results of Operations
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9
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|
Overview
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9
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|
Results
of Operations
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11
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|
Impact
of Inflation and Commodity Prices
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14
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Liquidity
and Capital Resources
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14
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Contractual
Obligations
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16
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|
Cautionary
Statement for Purposes of the “Safe Harbor”
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16
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Item
3. Quantitative and Qualitative Disclosures about Market
Risk
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16
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Item
4. Controls and Procedures
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16
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PART
II. OTHER INFORMATION
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17
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Item
1.
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Legal
Proceedings
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17
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Item 1A.
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Risk
Factors
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17
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Item
2.
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Unregistered
Sales of Equity Securities and Use of Proceeds
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17
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Item
3.
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Defaults
Upon Senior Securities
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17
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Item
4.
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(Removed
and reserved)
|
17
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Item
5.
|
Other
Information
|
17
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Item
6.
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Exhibits
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18
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||
Signature
Page
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19
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September 30,
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December 31,
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|||||||
2010
|
2009
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|||||||
(unaudited)
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||||||||
Assets
|
||||||||
Current
assets:
|
||||||||
Accounts
receivable, net
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$ | 65,605 | $ | 46,859 | ||||
Inventories,
net
|
64,707 | 61,325 | ||||||
Deferred
income taxes
|
2,833 | 1,776 | ||||||
Prepaids
|
944 | 3,649 | ||||||
Other
assets
|
200 | — | ||||||
Total
current assets
|
134,289 | 113,609 | ||||||
Property
and equipment, net
|
7,481 | 3,169 | ||||||
Intangible
assets, net
|
15,936 | — | ||||||
Goodwill
|
25,163 | 2,362 | ||||||
Deferred
income taxes
|
— | 2,855 | ||||||
Other
assets
|
95 | 19 | ||||||
Total
assets
|
$ | 182,964 | $ | 122,014 | ||||
Liabilities
and stockholders' equity
|
||||||||
Current
liabilities:
|
||||||||
Book
overdraft
|
$ | 1,472 | $ | 907 | ||||
Trade
accounts payable
|
21,296 | 11,610 | ||||||
Accrued
and other current liabilities
|
18,473 | 10,924 | ||||||
Income
taxes payable
|
321 | 281 | ||||||
Total
current liabilities
|
41,562 | 23,722 | ||||||
Debt
|
55,640 | 17,479 | ||||||
Other
long term obligations
|
144 | — | ||||||
Deferred
income taxes
|
1,862 | — | ||||||
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: 17,760,987 and 17,732,737 outstanding at September 30, 2010 and
December 31, 2009, respectively
|
21 | 21 | ||||||
Additional
paid-in-capital
|
57,876 | 56,609 | ||||||
Retained
earnings
|
78,784 | 77,571 | ||||||
Treasury
stock
|
(52,925 | ) | (53,388 | ) | ||||
Total
stockholders' equity
|
83,756 | 80,813 | ||||||
Total
liabilities and stockholders' equity
|
$ | 182,964 | $ | 122,014 |
Three Months Ended
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Nine Months Ended
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|||||||||||||||
September 30,
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September 30,
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|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
Sales
|
$ | 90,536 | $ | 63,579 | $ | 214,973 | $ | 191,293 | ||||||||
Cost
of sales
|
72,962 | 50,117 | 172,139 | 151,046 | ||||||||||||
Gross
profit
|
17,574 | 13,462 | 42,834 | 40,247 | ||||||||||||
Operating
expenses:
|
||||||||||||||||
Salaries
and commissions
|
7,191 | 5,143 | 17,481 | 15,882 | ||||||||||||
Other
operating expenses
|
5,644 | 4,395 | 14,463 | 13,527 | ||||||||||||
Depreciation
and amortization
|
676 | 138 | 972 | 421 | ||||||||||||
Total
operating expenses
|
13,511 | 9,676 | 32,916 | 29,830 | ||||||||||||
Operating
income
|
4,063 | 3,786 | 9,918 | 10,417 | ||||||||||||
Interest
expense
|
318 | 140 | 466 | 403 | ||||||||||||
Income
before income taxes
|
3,745 | 3,646 | 9,452 | 10,014 | ||||||||||||
Income
taxes
|
1,512 | 1,405 | 3,737 | 3,864 | ||||||||||||
Net
income
|
$ | 2,233 | $ | 2,241 | $ | 5,715 | $ | 6,150 | ||||||||
Earnings
per share:
|
||||||||||||||||
Basic
|
$ | 0.13 | $ | 0.13 | $ | 0.32 | $ | 0.35 | ||||||||
Diluted
|
$ | 0.13 | $ | 0.13 | $ | 0.32 | $ | 0.35 | ||||||||
Weighted
average common shares outstanding:
|
||||||||||||||||
Basic
|
17,660,056 | 17,651,074 | 17,656,129 | 17,647,334 | ||||||||||||
Diluted
|
17,697,934 | 17,666,284 | 17,705,643 | 17,659,425 | ||||||||||||
Dividend
declared per share
|
$ | 0.085 | $ | 0.085 | $ | 0.255 | $ | 0.255 |
Nine Months
Ended September 30,
|
||||||||
2010
|
2009
|
|||||||
Operating
activities
|
||||||||
Net
income
|
$
|
5,715
|
$
|
6,150
|
||||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||
Depreciation
and amortization
|
972
|
421
|
||||||
Amortization
of capitalized loan costs
|
28
|
91
|
||||||
Amortization
of unearned stock compensation
|
1,706
|
1,699
|
||||||
Provision
for doubtful accounts
|
75
|
—
|
||||||
Provision
for returns and allowances
|
(210
|
)
|
(106
|
)
|
||||
Provision
for inventory obsolescence
|
595
|
366
|
||||||
Gain
on disposals of property and equipment
|
(8
|
)
|
—
|
|||||
Deferred
income taxes
|
(721
|
)
|
(541
|
)
|
||||
Changes
in operating assets and liabilities:
|
||||||||
Accounts
receivable
|
(7,494
|
)
|
8,735
|
|||||
Inventories
|
3,495
|
1,145
|
||||||
Prepaids
|
2,773
|
12
|
||||||
Other
assets
|
140
|
(31
|
)
|
|||||
Book
overdraft
|
85
|
(3,277
|
)
|
|||||
Trade
accounts payable
|
6,319
|
3,849
|
||||||
Accrued
and other current liabilities
|
3,339
|
615
|
||||||
Income
taxes payable
|
(155
|
)
|
(1,300
|
)
|
||||
Net
cash provided by operating activities
|
16,654
|
17,828
|
||||||
Investing
activities
|
||||||||
Expenditures
for property and equipment
|
(374
|
)
|
(262
|
)
|
||||
Proceeds
from disposal of property and equipment
|
20
|
—
|
||||||
Cash
paid for acquisition
|
(50,000
|
)
|
—
|
|||||
Net
cash used in investing activities
|
(50,354
|
)
|
(262
|
)
|
||||
Financing
activities
|
||||||||
Borrowings
on revolver
|
253,392
|
193,524
|
||||||
Payments
on revolver
|
(215,231
|
)
|
(206,625
|
)
|
||||
Proceeds
from exercise of stock options
|
36
|
22
|
||||||
Excess
tax benefit for stock options
|
5
|
13
|
||||||
Payment
of dividends
|
(4,502
|
)
|
(4,500
|
)
|
||||
Net
cash provided by (used in) financing activities
|
33,700
|
(17,566
|
)
|
|||||
Net
change in cash
|
—
|
—
|
||||||
Cash
at beginning of period
|
—
|
—
|
||||||
Cash
at end of period
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$
|
—
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$
|
—
|
Three Months Ended
|
Nine Months Ended
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|||||||||||||||
September 30,
|
September 30,
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|||||||||||||||
2010
|
2009
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2010
|
2009
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|||||||||||||
Denominator:
|
||||||||||||||||
Weighted
average common shares for basic earnings per share
|
17,660,056
|
17,651,074
|
17,656,129
|
17,647,334
|
||||||||||||
Effect
of dilutive securities
|
37,878
|
15,210
|
49,514
|
12,091
|
||||||||||||
Weighted
average common shares for diluted earnings per share
|
17,697,934
|
17,666,284
|
17,705,643
|
17,659,425
|
At June 25, 2010
|
||||
Accounts
receivable
|
$ | 11,117 | ||
Inventories
|
7,472 | |||
Deferred
income taxes
|
825 | |||
Prepaids
|
68 | |||
Property
and equipment
|
4,486 | |||
Intangibles
|
16,370 | |||
Goodwill
|
22,801 | |||
Other
assets
|
445 | |||
Total
assets acquired
|
63,584 | |||
Book
overdraft
|
480 | |||
Trade
accounts payable
|
3,367 | |||
Accrued
and other current liabilities
|
3,010 | |||
Deferred
income taxes
|
5,383 | |||
Long
term obligations
|
144 | |||
Total
liabilities assumed
|
12,384 | |||
Net
assets purchased
|
$ | 51,200 |
Nine Months ended
September 30,
|
||||||||
2010
|
2009
|
|||||||
Sales
|
$
|
249,631
|
$
|
255,313
|
||||
Net
income
|
6,838
|
7,150
|
||||||
Basic
earnings per share
|
0.39
|
0.41
|
||||||
Diluted
earnings per share
|
0.39
|
0.40
|
2010
|
2009
|
|||||||
Expected
volatility
|
82 | % | 81 | % | ||||
Expected
life in years
|
2.0
years
|
2.0
years
|
||||||
Risk-free
interest rate
|
0.83 | % | 1.00 | % | ||||
Dividend
yield
|
2.74 | % | 3.29 | % |
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
Sales
|
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
Cost
of sales
|
80.6 | % | 78.8 | % | 80.1 | % | 79.0 | % | ||||||||
Gross
profit
|
19.4 | % | 21.2 | % | 19.9 | % | 21.0 | % | ||||||||
Operating
expenses:
|
||||||||||||||||
Salaries
and commissions
|
7.9 | % | 8.1 | % | 8.1 | % | 8.3 | % | ||||||||
Other
operating expenses
|
6.2 | % | 6.9 | % | 6.7 | % | 7.1 | % | ||||||||
Depreciation
and amortization
|
0.7 | % | 0.2 | % | 0.5 | % | 0.2 | % | ||||||||
Total
operating expenses:
|
14.9 | % | 15.2 | % | 15.3 | % | 15.6 | % | ||||||||
Operating
income
|
4.5 | % | 6.0 | % | 4.6 | % | 5.4 | % | ||||||||
Interest
expense
|
0.4 | % | 0.2 | % | 0.2 | % | 0.2 | % | ||||||||
Income
before income taxes
|
4.1 | % | 5.7 | % | 4.4 | % | 5.2 | % | ||||||||
Income
taxes
|
1.7 | % | 2.2 | % | 1.7 | % | 2.0 | % | ||||||||
Net
income
|
2.5 | % | 3.5 | % | 2.7 | % | 3.2 | % |
Three Months Ended
|
||||||||||||||||
September 30,
|
||||||||||||||||
(Dollars in millions)
|
2010
|
2009
|
Change
|
|||||||||||||
Sales
|
$ | 90.5 | $ | 63.6 | $ | 27.0 | 42.4 | % |
Three Months Ended
|
||||||||||||||||
September 30,
|
||||||||||||||||
(Dollars in millions)
|
2010
|
2009
|
Change
|
|||||||||||||
Gross
profit
|
$ | 17.6 | $ | 13.5 | $ | 4.1 | 30.5 | % | ||||||||
Gross
profit as a percent of sales
|
19.4 | % | 21.2 | % | (1.8 | )% |
Three Months Ended
|
||||||||||||||||
September 30,
|
||||||||||||||||
(Dollars in millions)
|
2010
|
2009
|
Change
|
|||||||||||||
Operating
expenses:
|
||||||||||||||||
Salaries
and commissions
|
$ | 7.2 | $ | 5.1 | $ | 2.0 | 39.8 | % | ||||||||
Other
operating expenses
|
5.6 | 4.4 | 1.2 | 28.4 | % | |||||||||||
Depreciation
and amortization
|
0.7 | 0.1 | 0.5 | 389.9 | % | |||||||||||
Total
operating expenses
|
$ | 13.5 | $ | 9.7 | $ | 3.8 | 39.6 | % | ||||||||
Operating
expenses as a percent of sales
|
14.9 | % | 15.2 | % | (0.3 | )% |
Nine Months Ended
|
||||||||||||||||
September 30,
|
||||||||||||||||
(Dollars in millions)
|
2010
|
2009
|
Change
|
|||||||||||||
Sales
|
$ | 215.0 | $ | 191.3 | $ | 23.7 | 12.4 | % |
Nine Months Ended
|
||||||||||||||||
September 30,
|
||||||||||||||||
(Dollars in millions)
|
2010
|
2009
|
Change
|
|||||||||||||
Gross
profit
|
$ | 42.8 | $ | 40.2 | $ | 2.6 | 6.4 | % | ||||||||
Gross
profit as a percent of sales
|
19.9 | % | 21.0 | % | (1.1 | )% |
Nine Months Ended
|
||||||||||||||||
September 30,
|
||||||||||||||||
(Dollars in millions)
|
2010
|
2009
|
Change
|
|||||||||||||
Operating
expenses:
|
||||||||||||||||
Salaries
and commissions
|
$ | 17.5 | $ | 15.9 | $ | 1.6 | 10.1 | % | ||||||||
Other
operating expenses
|
14.5 | 13.5 | 0.9 | 6.9 | % | |||||||||||
Depreciation
and amortization
|
1.0 | 0.4 | 0.6 | 130.9 | % | |||||||||||
Total
operating expenses
|
$ | 32.9 | $ | 29.8 | $ | 3.1 | 10.3 | % | ||||||||
Operating
expenses as a percent of sales
|
15.3 | % | 15.6 | % | (0.3 | )% |
|
•
|
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.
|
In
thousands
|
Total
|
Less than
1 year
|
1-3 years
|
3-5 years
|
More
than
5 years
|
|||||||||||||||
Total
debt
|
$
|
55,640
|
$
|
—
|
$
|
55,640
|
$
|
—
|
$
|
—
|
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, 2010
|
— | $ | — | — | $ | 19,385,303 | ||||||||||
August
1 – 31, 2010
|
— | — | — | 19,385,303 | ||||||||||||
September
1 – 30, 2010
|
— | — | — | $ | 19,385,303 | |||||||||||
Total
|
— | $ | — | — |
(1)
|
The board authorized a stock
repurchase 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
2010.
|
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, 2010
|
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.
|