Houston Wire & Cable Company (HWCC) saw its loss widen to $0.45 million, or $0.03 a share for the quarter ended Mar. 31, 2017. In the previous year period, the company reported a loss of $0.18 million, or $0.01 a share. Revenue during the quarter grew 21.63 percent to $78.71 million from $64.71 million in the previous year period. Gross margin for the quarter expanded 80 basis points over the previous year period to 21.51 percent. Operating margin for the quarter stood at negative 0.32 percent as compared to a negative 0.06 percent for the previous year period.
Operating loss for the quarter was $0.25 million, compared with an operating loss of $0.04 million in the previous year period.
Jim Pokluda, president and chief executive officer commented, “Market conditions appear to be improving as we experienced increasing activity levels in each of the three months compared to prior year levels. This manifested itself in higher invoice counts which rose (excluding Vertex) by 7%. Sales levels in the month of March (excluding Vertex) reached their highest per day level since October 2015. Sales increased 21.6% over the prior period and 9.6% excluding Vertex. We estimate that when adjusted for the fluctuation in metal prices, sales for 2017 when compared to sales on a pro-forma basis to include Vertex in the comparable prior year period were up 5.5%. We estimate our project business, which targets end markets encompassing Utility Power Generation and Environmental Compliance, Engineering & Construction, Industrials, and Mechanical Wire Rope, decreased 31%, or approximately 34% on a metals adjusted basis, from 2016. Maintenance, Repair, and Operations (MRO) increased 21%, or approximately 18% when adjusted for metals, from the first quarter of 2016.
Operating cash flow turns negative
Houston Wire & Cable Company has spent $10.48 million cash to meet operating activities during the quarter as against cash inflow of $7.59 million in the last year period. The company has spent $0.93 million cash to meet investing activities during the quarter as against cash outgo of $0.34 million in the last year period.
Cash flow from financing activities was $11.41 million for the quarter as against cash outgo of $7.25 million in the last year period.
Working capital increases
Houston Wire & Cable Company has recorded an increase in the working capital over the last year. It stood at $113.61 million as at Mar. 31, 2017, up 12.79 percent or $12.89 million from $100.72 million on Mar. 31, 2016. Current ratio was at 6.30 as on Mar. 31, 2017, down from 6.51 on Mar. 31, 2016.
Cash conversion cycle (CCC) has decreased to 105 days for the quarter from 181 days for the last year period. Days sales outstanding went down to 58 days for the quarter compared with 64 days for the same period last year.
Days inventory outstanding has decreased to 58 days for the quarter compared with 130 days for the previous year period. At the same time, days payable outstanding went down to 11 days for the quarter from 13 for the same period last year.
Debt increases substantially
Houston Wire & Cable Company has witnessed an increase in total debt over the last one year. It stood at $72.67 million as on Mar. 31, 2017, up 106.25 percent or $37.43 million from $35.23 million on Mar. 31, 2016. Total debt was 39.57 percent of total assets as on Mar. 31, 2017, compared with 23.37 percent on Mar. 31, 2016. Debt to equity ratio was at 0.81 as on Mar. 31, 2017, up from 0.36 as on Mar. 31, 2016.
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