Houston Wire & Cable Company
Annual Report 2015

Plain-text annual report

H O U S T O N W I R E & C A B L E C O M P A N Y 2 0 1 5 A N N U A L R E P O R T HOUSTON WIRE & CABLE COMPANY 1-800-HOUWIRE 10201 NORTH LOOP EAST HOUSTON, TEXAS 77029 PHONE: 713 609 2100 FAX: 713 609 2101 E L E C T R I C A L A N D M E C H A N I C A L W I R E A N D C A B L E F O R I N D U S T R Y A N D I N F R A S T R U C T U R E FINANCIAL HIGHLIGHTS (Dollars in thousands except per share data) 2015* 2014 2013** 2012 2011 Net Sales Sales Per Employee Operating Income Operating Margin Net Income Diluted Earnings Per Share Total Assets Long-term Obligations Stockholders’ Equity $ 308,133 $ 390,011 $ 383,292 $ 393,036 $ 396,410 856 9,435 1,017 908 954 1,010 25,423 24,667 28,926 33,377 3.06% 6.52% 6.44% 7.36% 8.42% 5,171 0.30 14,972 14,594 17,039 19,677 0.85 0.82 0.96 1.11 159,113 189,813 196,175 197,155 179,153 39,463 54,121 48,478 60,361 50,345 100,001 111,307 110,694 109,080 97,338 * Non-GAAP excludes the impact of the impairment charge of $3,417. See notes 3 and 11 to the consolidated financial statements. 2015 results as reported were operating income of $6,018, net income of $2,044, and diluted earnings per share of $0.12. ** Non-GAAP excludes the impact of the impairment charge of $7,562. See notes 3 and 11 to the consolidated financial statements. 2013 results as reported were operating income of $17,105, net income of $7,902, and diluted earnings per share of $0.44. James L. Pokluda III President, CEO and Director DEAR SHAREHOLDERS 2015 was a year that presented Houston Wire & We also produced record operating cash flow, and Cable Company (HWCC) with many challenges. End returned significant capital to our shareholders through market demand for the majority of our products and dividends and share repurchases. services significantly declined versus the prior year due to the reduction in the price of oil and the strength HWCC’s primary end markets include Utility Power of the U.S. Dollar, and deflation in copper, steel and Generation and Environmental Compliance, Industrials aluminum which are major cost components of our and Infrastructure. products applied pricing pressure in a very competitive market environment. As HWCC has a high concentration The Power Generation and Environmental of wire and cable designed for use in industrial markets, Compliance end market includes large investor-owned our model suffers when the broad industrial economy utilities, rural cooperatives and municipal power experiences reductions in demand and spend for authorities. HWCC performed well in this market in maintenance, repair and operations, and large 2015 and backlog from previously booked projects, capital projects. ongoing success in fossil fuel power generation and environmental compliance, and greater penetration Despite these headwinds, we did perform into alternative fuel power generation produced near exceptionally well in several key areas of our business. double digit growth over 2014. Product line expansions We reduced expenses, improved business processes, to support daily maintenance repair and operations, honed our organizational structure and initiated multiple and small project demand for cables used in the strategies to offer new products and gain market share. transmission of electricity, also gained traction. The industrial market, which includes oil and gas, large telecommunications project that had been ongoing is HWCC’s largest target market and one of the largest for several years. Activity in transportation, public works, segments of the U.S. economy. It is composed of a and waste water also decreased, which we believe was diverse base of manufacturing, processing and in part due to the negative effects of reduced investments production companies. We provide thousands of in industrial end markets which was driven by the highly engineered wire and cable products for use reduction in the price of oil. in this market, the highest concentration of which targets petrochemical extraction, transportation, storage In summary, 2015 was a difficult year for HWCC’s and refining. end markets and our financial performance suffered as a result. Although we are certainly proud of several Although we experienced growth in certain areas of accomplishments including our ability to launch new the industrial market, including general manufacturing, products, drive superior operational excellence, hold the unprecedented market forces that drove the gross margin, reduce expenses, maintain a strong reduction in activity in oil and gas markets negatively balance sheet, reduce debt, deliver strong operational impacted our results in the overall industrial market. cash flow and return significant capital to our Upstream, midstream and downstream oil and gas shareholders in the form of dividends and share activity reduced significantly year-over-year, as new repurchases, we enter 2016 hopeful that demand from investments for hydrocarbon extraction became less the broad industrial economy will improve. viable at reduced oil and gas prices, and although activity involving large capital projects for downstream We believe we have taken the appropriate steps to refining did begin to accelerate, several projects execute in today’s difficult operating environment and we remained frustratingly slow to fully engage. In addition, enter 2016 with a group of highly motivated and talented other projects deploying the most expensive and individuals who are deeply committed to driving superior sophisticated technologies such as Gas-to-Liquids performance despite any market headwinds that they (GTL) were cancelled. may encounter. The infrastructure market is the smallest of HWCC’s On behalf of our Board of Directors and employees, three targeted markets. The year-over-year decline in this I thank you all for your continued support and confidence market was primarily the result of the completion of a you have placed in our Company. James L. Pokluda III President, CEO and Director H O U S T O N W I R E & C A B L E C O M P A N Y 2 0 1 5 A N N U A L R E P O R T HOUSTON WIRE & CABLE COMPANY 1-800-HOUWIRE 10201 NORTH LOOP EAST HOUSTON, TEXAS 77029 PHONE: 713 609 2100 FAX: 713 609 2101 E L E C T R I C A L A N D M E C H A N I C A L W I R E A N D C A B L E F O R I N D U S T R Y A N D I N F R A S T R U C T U R E FINANCIAL HIGHLIGHTS (Dollars in thousands except per share data) 2015* 2014 2013** 2012 2011 Net Sales Sales Per Employee Operating Income Operating Margin Net Income Diluted Earnings Per Share Total Assets Long-term Obligations Stockholders’ Equity $ 308,133 $ 390,011 $ 383,292 $ 393,036 $ 396,410 856 9,435 1,017 908 954 1,010 25,423 24,667 28,926 33,377 3.06% 6.52% 6.44% 7.36% 8.42% 5,171 0.30 14,972 14,594 17,039 19,677 0.85 0.82 0.96 1.11 159,113 189,813 196,175 197,155 179,153 39,463 54,121 48,478 60,361 50,345 100,001 111,307 110,694 109,080 97,338 * Non-GAAP excludes the impact of the impairment charge of $3,417. See notes 3 and 11 to the consolidated financial statements. 2015 results as reported were operating income of $6,018, net income of $2,044, and diluted earnings per share of $0.12. ** Non-GAAP excludes the impact of the impairment charge of $7,562. See notes 3 and 11 to the consolidated financial statements. 2013 results as reported were operating income of $17,105, net income of $7,902, and diluted earnings per share of $0.44. Left to right: G. Gary Yetman, Michael T. Campbell, Wilson B. Sexton, James L. Pokluda III, Ian Stewart Farwell, Mark A. Ruelle, William H. Sheffield, DI RE CT OR S G. Gary Yetman Former Chief Executive Officer & President of Coleman Cable, Inc. Michael T. Campbell Independent Director Wilson B. Sexton Chairman of the Board of POOLCORP James L. Pokluda III President & Chief Executive Officer of Houston Wire & Cable Company Ian Stewart Farwell Independent Director Mark A. Ruelle President and Chief Executive Officer of Westar Energy, Inc. William H. Sheffield Chairman of the Board of Houston Wire & Cable Company CORPORATE HEAD QUA RT E RS Houston Wire & Cable Company 10201 North Loop East Houston, Texas 77029-1415 Telephone (713) 609-2100 ANNUAL MEETING The Annual Meeting of Shareholders will be held May 3, 2016, at 8:30 a.m. CDT, at the Company’s corporate headquarters in Houston, Texas. COMMON STOCK LIST IN G Ticker Symbol: HWCC Nasdaq Stock Exchange TRANSFER AGENT American Stock Transfer & Trust Company 59 Maiden Lane New York, New York 10038 INDEPENDENT AUDITOR S Ernst & Young, LLP 1401 McKinney Street, Suite 1200 Houston, Texas 77010 LEGAL COUNSEL Schiff Hardin, LLP 233 South Wacker Drive 6600 Willis Tower Chicago, Illinois 60606 INVESTOR RELATIONS A complimentary copy of this report can be found online at www.houwire.com or by sending a written request to our corporate headquarters address, calling (713) 609-2227 or contacting: investor.relations@houwire.com. WEBSITE www.houwire.com 

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