HOUSTON — Houston Wire & Cable Company announced operating results for the second quarter ended June 30, 2018.
Second Quarter 2018 Highlights
- Net income of $2.6 million, or $0.16 per diluted share
- Sales of $93.9 million up 24.1% over 2017
- Gross margin of 23.8% up 220 basis points from the comparable quarter in 2017
- Operating income of $4.4 million compared to a loss of $0.2 million in the second quarter of 2017
Second Quarter Summary
Houston Wire & Cable Company reported net income of $2.6 million, or $0.16 per diluted share, for the quarter ended June 30, 2018, compared to a net loss of $0.1 million, or zero cents loss per diluted share, for the same quarter in 2017. Operating income in the second quarter 2018 was $4.4 million compared to an operating loss of $0.2 million during the second quarter of 2017.
Jim Pokluda, President and Chief Executive Officer, commented, “We were pleased to post our fourth consecutive quarter of year-over-year revenue growth, as the upward momentum we experienced in the first quarter of 2018 continued into the second quarter. We estimate sales for our project business, which targets end markets for Utility Power Generation, Environmental Compliance, Engineering & Construction, Industrials, and Mechanical Wire Rope, increased 26%, while Maintenance, Repair, and Operations (MRO) sales were up 23% as compared to the second quarter of 2017.”
Gross margin at 23.8% increased 220 basis points from the second quarter of 2017, primarily due to higher product margins driven by ongoing pricing discipline and metals inflation. Operating expenses at $18.0 million were up $1.5 million from Q2 2017 and $0.7 million sequentially, as higher sales activity and margins resulted in more sales commissions and warehouse activity. Operating expenses as a percentage of revenue decreased 270 basis points to 19.1% for Q2 2018 and declined 120 basis points sequentially versus Q1 2018.
Average debt levels for the quarter increased 13.7% from $72.6 million in 2017 to $82.5 million in 2018, primarily for working capital to support higher sales activity and commodity price levels, while the effective interest rate increased from 2.7% in 2017 to 3.7% in 2018.
The effective tax rate for the quarter was 28.0% which includes our best estimate of the impact of the 2017 Tax Cuts and Jobs Act.
Pokluda further commented, “We are encouraged with the continued improvement in sales, the attainment of higher margin levels and our ability to realize operating expense leverage as activity levels continued to increase. This has resulted in the generation of the highest level of operating income since the fourth quarter of 2014.”Tagged with financial, houston wire and cable