Houston Wire & Cable Company (HWCC, Financial) filed Quarterly Report for the period ended 2010-09-30.
Houston Wire & Cable Company has a market cap of $220 million; its shares were traded at around $12.39 with a P/E ratio of 28.2 and P/S ratio of 0.9. The dividend yield of Houston Wire & Cable Company stocks is 2.7%.HWCC is in the portfolios of Chuck Royce of Royce& Associates, Chuck Royce of Royce& Associates.
Sales in the third quarter of 2010 increased 42.4% to $90.5 million from $63.6 million in the third quarter of 2009. Most of the sales increase was attributed to the June 2010 acquisition of SWWR and SW (“Acquisition”) which generated sales of $21.1 million in the quarter. We estimate the balance of the increase is from both of our core business sectors which are capital projects and Repair and Replacement, also referred to as Maintenance, Repair and Operations (“MRO”). Sales within our five internal growth initiatives encompassing Emission Controls, Engineering & Construction, Industrials, LifeGuard™ (and other private branded products) and Utility Power Generation continued to improve as broad economic conditions slowly return to historical levels. Project activity remained strong due to previously funded backlog demand, and we estimate sales were up approximately 20% during the quarter. We believe sales in our Repair and Replacement sector were up approximately 6% and also benefited from the recovering economy.
Depreciation and amortization increased to $0.7 million in 2010 from $0.1 million in 2009 due to depreciation and amortization on the assets acquired in the Acquisition.
Interest expense increased 127.1% or $0.2 million to $0.3 million in 2010 from $0.1 million in 2009 due to higher debt levels as the Acquisition was funded entirely from the Company s Loan Agreement. Average debt was $57.1 million in 2010 compared to $19.0 million in 2009. The average effective interest rate increased to 2.1% in 2010 from 1.8% in 2009. This increase was due to a higher percentage of debt in LIBOR borrowings in 2009, which is at a lower interest rate than revolving loan borrowings.
Income taxes increased $0.1 million to $1.5 million in 2010 from $1.4 million in 2009 as pre-tax income increased slightly. Our effective income tax rate increased to 40.4% in 2010 from 38.5% in 2009. This rate increased due to acquisition expenses that were not deductible for federal income tax.
Sales for the first nine months of 2010 increased 12.4% to $215.0 million from $191.3 million in the first nine months of 2009. The primary reason for the increase in sales is due to $21.9 million of sales generated from the Acquisition. We estimate sales in our core Repair and Replacement sector were essentially flat as a result of the challenging economy which we believe lowered overall demand and discretionary spending. We estimate sales increased within our five internal growth initiatives encompassing Emission Controls, Engineering & Construction, Industrials, LifeGuard™ (and other private branded products) and Utility Power Generation. Sales within our growth initiatives remained more resilient to the overall market and economy as projects in these areas were already in progress before the economic downturn and had been previously funded. Project activity for our growth initiatives in 2010 remained active and we estimate sales were up approximately 7% as a result of our continued penetration into these markets.
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Houston Wire & Cable Company has a market cap of $220 million; its shares were traded at around $12.39 with a P/E ratio of 28.2 and P/S ratio of 0.9. The dividend yield of Houston Wire & Cable Company stocks is 2.7%.HWCC is in the portfolios of Chuck Royce of Royce& Associates, Chuck Royce of Royce& Associates.
Highlight of Business Operations:
We maintain an allowance for doubtful accounts receivable for estimated losses resulting from the inability of our customers to make required payments. We perform periodic credit evaluations of our customers and typically do not require collateral. Consistent with industry practices, we require payment from most customers within 30 days of invoice date. We have an estimation procedure, based on historical data, current economic conditions and recent changes in the aging of these receivables, which we use to record reserves throughout the year. In the last five years, write-offs against our allowance for doubtful accounts have averaged $0.1 million per year. A 20% change in our estimate at September 30, 2010 would have resulted in a change in income before income taxes of $0.1 million.Sales in the third quarter of 2010 increased 42.4% to $90.5 million from $63.6 million in the third quarter of 2009. Most of the sales increase was attributed to the June 2010 acquisition of SWWR and SW (“Acquisition”) which generated sales of $21.1 million in the quarter. We estimate the balance of the increase is from both of our core business sectors which are capital projects and Repair and Replacement, also referred to as Maintenance, Repair and Operations (“MRO”). Sales within our five internal growth initiatives encompassing Emission Controls, Engineering & Construction, Industrials, LifeGuard™ (and other private branded products) and Utility Power Generation continued to improve as broad economic conditions slowly return to historical levels. Project activity remained strong due to previously funded backlog demand, and we estimate sales were up approximately 20% during the quarter. We believe sales in our Repair and Replacement sector were up approximately 6% and also benefited from the recovering economy.
Depreciation and amortization increased to $0.7 million in 2010 from $0.1 million in 2009 due to depreciation and amortization on the assets acquired in the Acquisition.
Interest expense increased 127.1% or $0.2 million to $0.3 million in 2010 from $0.1 million in 2009 due to higher debt levels as the Acquisition was funded entirely from the Company s Loan Agreement. Average debt was $57.1 million in 2010 compared to $19.0 million in 2009. The average effective interest rate increased to 2.1% in 2010 from 1.8% in 2009. This increase was due to a higher percentage of debt in LIBOR borrowings in 2009, which is at a lower interest rate than revolving loan borrowings.
Income taxes increased $0.1 million to $1.5 million in 2010 from $1.4 million in 2009 as pre-tax income increased slightly. Our effective income tax rate increased to 40.4% in 2010 from 38.5% in 2009. This rate increased due to acquisition expenses that were not deductible for federal income tax.
Sales for the first nine months of 2010 increased 12.4% to $215.0 million from $191.3 million in the first nine months of 2009. The primary reason for the increase in sales is due to $21.9 million of sales generated from the Acquisition. We estimate sales in our core Repair and Replacement sector were essentially flat as a result of the challenging economy which we believe lowered overall demand and discretionary spending. We estimate sales increased within our five internal growth initiatives encompassing Emission Controls, Engineering & Construction, Industrials, LifeGuard™ (and other private branded products) and Utility Power Generation. Sales within our growth initiatives remained more resilient to the overall market and economy as projects in these areas were already in progress before the economic downturn and had been previously funded. Project activity for our growth initiatives in 2010 remained active and we estimate sales were up approximately 7% as a result of our continued penetration into these markets.
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