Houston Wire & Cable Company (HWCC)

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Scott Redmond

Houston Wire & Cable Company (HWCC),^[1] is a non commodity specialty distributor of wire and cable used in a diverse set of markets including utility and industrial companies in North America. Founded in 1975, HWCC is one of the largest distributors in the US market. It has 11 sales and distribution centers.

History

Brought public by Code Hennessy and Simons and primarily underwritten by William Blair, the initial success was influenced by reconstruction activity caused by devastation from hurricanes Katrina, Rita, and Wilma. HWCC went public to eliminate most of its debt and open access to other capital markets to fund growth.

Exposure to Copper Prices

The company benefits from rising copper prices as they can pass through higher prices of inventory even though they may have bought when copper prices were lower. The company tends to lower prices more slowly when copper prices decline.

Growth Plan

LifeGuard, a low smoke, zero-halogen product. Most damage from fires is not heat damage, it comes from the acid gasses (halogens) produced by the fire. These molecules are highly reactive and will corrode many materials they contact. See http://www.houwire.com/lifeguard/ to find a demonstration. LifeGuard is one of only a few products made by the company. The exterior sheaths are durable, flame retardant, and virtually smoke-free under combustion. It is suited for use where nearby equiptment is expensive and safty is important.

Utility power genration compliance markets. Utility companies need to maintain certain compliance standards regarding the servicability of the wires used within the plant. It does not make transmission wires, which is considered a high volume commodity product. New plant construction helps sales of this market.

Environmental compliance market for emission control as scrubbers and selective catalytic reduction units remove toxic Sulfur and Nitrogen compounds.

Engineering and construction market

Targetted Industrial Companies that use specialty wires and require just-in-time delivery

Overall shift from fossil fuels to electric power should be beneficial Houston Wire & Cable as well.

Financial History

Sales have grown through internal growth and acquisition

04 $173 million
05 $213 million
06 $323 million

Operating Margin

04 7%
05 10%
06 16%

EPS

04 0.29
05 0.75
06 1.62 

References:

HWCC   all information supplied by company

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References

1. ↑ HWCC