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
|
Overview
|
|
Results
of Operations
|
|
Impact
of Inflation and Commodity Prices
|
|
Liquidity
and Capital Resources
|
|
Contractual
Obligations
|
|
Cautionary
Statement
|
|
June
30,
|
December
31,
|
|||||||
2007
|
2006
|
|||||||
(unaudited)
|
||||||||
Assets
|
||||||||
Current
assets:
|
||||||||
Accounts
receivable, net
|
$ |
57,789
|
$ |
52,128
|
||||
Inventories,
net
|
64,202
|
56,329
|
||||||
Income
taxes receivable
|
608
|
—
|
||||||
Deferred
income taxes
|
1,221
|
1,165
|
||||||
Prepaid
expenses
|
840
|
450
|
||||||
Total
current assets
|
124,660
|
110,072
|
||||||
Property
and equipment, net
|
3,017
|
2,973
|
||||||
Goodwill
|
2,996
|
2,996
|
||||||
Deferred
income taxes
|
889
|
688
|
||||||
Other
assets
|
133
|
135
|
||||||
Total
assets
|
$ |
131,695
|
$ |
116,864
|
||||
Liabilities
and stockholders' equity
|
||||||||
Current
liabilities:
|
||||||||
Book
overdraft
|
$ |
2,559
|
$ |
1,265
|
||||
Trade
accounts payable
|
13,719
|
10,988
|
||||||
Accrued
and other current liabilities
|
9,877
|
10,358
|
||||||
Income
taxes payable
|
—
|
520
|
||||||
Total
current liabilities
|
26,155
|
23,131
|
||||||
Long
term obligations
|
6,000
|
12,059
|
||||||
Stockholders'
equity:
|
||||||||
Common
stock, $0.001 par value; 100,000,000 shares authorized:
|
||||||||
20,987,077
shares issued and outstanding at June 30, 2007 and 20,867,172 at
December
31, 2006
|
21
|
21
|
||||||
Additional
paid-in-capital
|
53,127
|
50,979
|
||||||
Retained
earnings
|
46,392
|
30,674
|
||||||
Total
stockholders' equity
|
99,540
|
81,674
|
||||||
Total
liabilities and stockholders' equity
|
$ |
131,695
|
$ |
116,864
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
June
30,
|
June
30,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
Sales
|
$ |
89,210
|
$ |
84,184
|
$ |
170,998
|
$ |
150,612
|
||||||||
Cost
of sales
|
65,486
|
59,657
|
124,665
|
108,094
|
||||||||||||
Gross
profit
|
23,724
|
24,527
|
46,333
|
42,518
|
||||||||||||
Operating
expenses:
|
||||||||||||||||
Salaries
and commissions
|
5,499
|
5,947
|
11,177
|
11,019
|
||||||||||||
Other
operating expenses
|
4,300
|
3,844
|
9,066
|
7,592
|
||||||||||||
Management
fee
|
—
|
83
|
—
|
208
|
||||||||||||
Depreciation
and amortization
|
109
|
90
|
219
|
183
|
||||||||||||
Total
operating expenses
|
9,908
|
9,964
|
20,462
|
19,002
|
||||||||||||
Operating
income
|
13,816
|
14,563
|
25,871
|
23,516
|
||||||||||||
Interest
expense
|
186
|
1,120
|
371
|
2,174
|
||||||||||||
Income
before income taxes
|
13,630
|
13,443
|
25,500
|
21,342
|
||||||||||||
Income
taxes
|
5,209
|
5,189
|
9,782
|
8,286
|
||||||||||||
Net
income
|
$ |
8,421
|
$ |
8,254
|
$ |
15,718
|
$ |
13,056
|
||||||||
Earnings
per share:
|
||||||||||||||||
Basic
|
$ |
0.40
|
$ |
0.48
|
$ |
0.75
|
$ |
0.77
|
||||||||
Diluted
|
$ |
0.40
|
$ |
0.48
|
$ |
0.75
|
$ |
0.77
|
||||||||
Weighted
average common shares outstanding:
|
||||||||||||||||
Basic
|
20,960,621
|
17,084,206
|
20,914,580
|
16,850,196
|
||||||||||||
Diluted
|
21,042,872
|
17,186,940
|
21,019,981
|
16,948,576
|
Six
Months Ended
June
30,
|
||||||||
2007
|
2006
|
|||||||
Operating
activities
|
||||||||
Net
income
|
$ |
15,718
|
$ |
13,056
|
||||
Adjustments
to reconcile net income to net cash provided by (used in) operating
activities:
|
||||||||
Depreciation
and amortization
|
219
|
183
|
||||||
Amortization
of capitalized loan costs
|
32
|
157
|
||||||
Amortization
of unearned stock compensation
|
855
|
56
|
||||||
Provision
for doubtful accounts
|
(299 | ) |
—
|
|||||
Provision
for returns and allowances
|
(156 | ) |
325
|
|||||
Provision
for inventory obsolescence
|
(54 | ) |
224
|
|||||
Deferred
income taxes
|
(257 | ) |
9
|
|||||
Changes
in operating assets and liabilities:
|
||||||||
Accounts
receivable
|
(5,206 | ) | (10,597 | ) | ||||
Inventories
|
(7,819 | ) | (22,909 | ) | ||||
Prepaid
expenses
|
(390 | ) |
37
|
|||||
Other
assets
|
(29 | ) | (30 | ) | ||||
Book
overdraft
|
1,294
|
2,631
|
||||||
Trade
accounts payable
|
2,731
|
8,936
|
||||||
Accrued
and other current liabilities
|
(481 | ) |
1,473
|
|||||
Income
taxes payable/receivable
|
(1,128 | ) |
1,432
|
|||||
Net
cash provided by (used in) operating activities
|
5,030
|
(5,017 | ) | |||||
Investing
activities
|
||||||||
Expenditures
for property, plant, and equipment
|
(264 | ) | (257 | ) | ||||
Net
cash used in investing activities
|
(264 | ) | (257 | ) | ||||
Financing
activities
|
||||||||
Borrowings
on revolver
|
166,628
|
150,953
|
||||||
Payments
on revolver
|
(172,687 | ) | (185,417 | ) | ||||
Payments
on long-term obligations
|
—
|
(10,187 | ) | |||||
Proceeds
from exercise of common stock options
|
90
|
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
|
1,203
|
20
|
||||||
Net
cash provided by (used in) financing activities
|
(4,766 | ) |
5,274
|
|||||
Net
change in cash
|
—
|
—
|
||||||
Cash
at beginning of period
|
—
|
—
|
||||||
Cash
at end of period
|
$ |
—
|
$ |
—
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
June
30,
|
June
30,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
Weighted
average common shares for basic earnings per share
|
20,961
|
17,084
|
20,915
|
16,850
|
||||||||||||
Effect
of dilutive securities
|
82
|
103
|
105
|
99
|
||||||||||||
Denominator
of diluted earnings per share
|
21,043
|
17,187
|
21,020
|
16,949
|
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
|
Six
Months Ended
|
|||||||||||||||
June
30,
|
June
30,
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
Sales
|
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
Cost
of sales
|
73.4 | % | 70.9 | % | 72.9 | % | 71.8 | % | ||||||||
Gross
profit
|
26.6 | % | 29.1 | % | 27.1 | % | 28.2 | % | ||||||||
Operating
expenses:
|
||||||||||||||||
Salaries
and commissions
|
6.2 | % | 7.1 | % | 6.5 | % | 7.3 | % | ||||||||
Other
operating expenses
|
4.8 | % | 4.6 | % | 5.3 | % | 5.0 | % | ||||||||
Management
fee
|
0.0 | % | 0.1 | % | 0.0 | % | 0.1 | % | ||||||||
Depreciation
and amortization
|
0.1 | % | 0.1 | % | 0.1 | % | 0.1 | % | ||||||||
Total
operating expenses
|
11.1 | % | 11.8 | % | 12.0 | % | 12.6 | % | ||||||||
Operating
income
|
15.5 | % | 17.3 | % | 15.1 | % | 15.6 | % | ||||||||
Interest
expense
|
0.2 | % | 1.3 | % | 0.2 | % | 1.4 | % | ||||||||
Income
before income taxes
|
15.3 | % | 16.0 | % | 14.9 | % | 14.2 | % | ||||||||
Income
taxes
|
5.8 | % | 6.2 | % | 5.7 | % | 5.5 | % | ||||||||
Net
income
|
9.4 | % | 9.8 | % | 9.2 | % | 8.7 | % |
Three
Months Ended
|
||||||||||||||||
June
30,
|
||||||||||||||||
(in
millions)
|
2007
|
2006
|
Change
|
|||||||||||||
Sales
|
$ |
89.2
|
$ |
84.2
|
$ |
5.0
|
6.0 | % |
Three
Months Ended
|
||||||||||||||||
June
30,
|
||||||||||||||||
(in
millions)
|
2007
|
2006
|
Change
|
|||||||||||||
Gross
profit
|
$ |
23.7
|
$ |
24.5
|
$ | (0.8 | ) | (3.3 | )% | |||||||
Gross
profit as a percent of sales
|
26.6 | % | 29.1 | % | (2.5 | )% |
Three
Months Ended
|
||||||||||||||||
June
30,
|
||||||||||||||||
(in
millions)
|
2007
|
2006
|
Change
|
|||||||||||||
Operating
expenses:
|
||||||||||||||||
Salaries
and commissions
|
$ |
5.5
|
$ |
5.9
|
$ | (0.4 | ) | (7.5 | )% | |||||||
Other
operating expenses
|
4.3
|
3.8
|
0.5
|
11.9 | % | |||||||||||
Management
fee
|
0.0
|
0.1
|
(0.1 | ) | (100.0 | )% | ||||||||||
Depreciation
and amortization
|
0.1
|
0.1
|
0.0
|
21.1 | % | |||||||||||
Total
operating expenses
|
$ |
9.9
|
$ |
10.0
|
$ | (0.1 | ) | (0.6 | )% | |||||||
Operating
expenses as a % of sales
|
11.1 | % | 11.8 | % | (0.7 | )% |
Six
Months Ended
|
||||||||||||||||
June
30,
|
||||||||||||||||
(in
millions)
|
2007
|
2006
|
Change
|
|||||||||||||
Sales
|
$ |
171.0
|
$ |
150.6
|
$ |
20.4
|
13.5 | % |
Six
Months Ended
|
||||||||||||||||
June
30,
|
||||||||||||||||
(in
millions)
|
2007
|
2006
|
Change
|
|||||||||||||
Gross
profit
|
$ |
46.3
|
$ |
42.5
|
$ |
3.8
|
9.0 | % | ||||||||
Gross
profit as a percent of sales
|
27.1 | % | 28.2 | % | (1.1 | )% |
Six
Months Ended
|
||||||||||||||||
June
30,
|
||||||||||||||||
(in
millions)
|
2007
|
2006
|
Change
|
|||||||||||||
Operating
Expenses:
|
||||||||||||||||
Salaries
and commissions
|
$ |
11.2
|
$ |
11.0
|
$ |
0.2
|
1.4 | % | ||||||||
Other
operating expenses
|
9.1
|
7.6
|
1.5
|
19.4 | % | |||||||||||
Management
fee
|
0.0
|
0.2
|
(0.2 | ) | (100.0 | )% | ||||||||||
Depreciation
and amortization
|
0.2
|
0.2
|
0.0
|
19.7 | % | |||||||||||
Total
operating expenses
|
$ |
20.5
|
$ |
19.0
|
$ |
1.5
|
7.7 | % | ||||||||
Operating
expenses as a % of sales
|
12.0 | % | 12.6 | % | (0.6 | )% |
|
•
|
the
adequacy of available bank lines of
credit;
|
|
•
|
the
ability to attract long-term capital with satisfactory
terms;
|
|
•
|
cash
flows generated from operating
activities;
|
|
•
|
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
|
$ |
6,000
|
$ |
-
|
$ |
6,000
|
$ |
-
|
$ |
-
|
NOMINEES
|
FOR
|
WITHHELD
|
||
|
||||
I.
Stewart Farwell
|
18,060,075
|
58,681
|
||
Peter
M. Gotsch
|
16,247,564
|
1,871,192
|
||
Robert
G. Hogan
|
18,018,398
|
100,358
|
||
Wilson
B. Sexton
|
18,042,346
|
76,410
|
||
William
H. Sheffield
|
18,040,750
|
78,006
|
||
Charles
A. Sorrentino
|
18,030,873
|
87,883
|
||
Scott
L. Thompson
|
18,041,578
|
77,178
|
Exhibit
Number
|
Document
Description
|
|
10.1
|
Material
Contract, Eleventh Amendment to the Amended and Restated Loan and
Security
Agreement
|
|
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: August
1, 2007
|
HOUSTON
WIRE & CABLE COMPANY
|
|
BY: /s/
Nicol G. Graham
|
||
|
||
|
Nicol G. Graham,
Chief Financial Officer,
|
Exhibit
Number
|
Document
Description
|
|
Material
Contract, Eleventh Amendment to the Amended and Restated Loan and
Security
Agreement
|
||
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.
|