Houston Wire & Cable CO (Form: 10-Q, Received: 08/06/2015 12:34:48)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2015

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 000-52046

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(Exact name of registrant as specified in its charter)

Delaware		36-4151663
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

10201 North Loop East
Houston, Texas		77029
(Address of principal executive offices)		(Zip Code)

(713) 609-2100

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days YES x NO ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES x NO ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act

Large Accelerated Filer ¨

Accelerated Filer x

Non-Accelerated Filer ¨

Smaller Reporting Company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) YES ¨ NO x

At August 1, 2015 there were 17,161,857 outstanding shares of the registrant’s common stock, $0.001 par value per share.

HOUSTON WIRE & CABLE COMPANY

Form 10-Q

For the Quarter Ended June 30, 2015

INDEX

PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)	1
	Consolidated Balance Sheets	1
	Consolidated Statements of Operations	2
	Consolidated Statements of Cash Flows	3
	Notes to Consolidated Financial Statements	4

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	7
	Overview	7
	Cautionary Statement for Purposes of the “Safe Harbor”	7
	Results of Operations	8
	Impact of Inflation and Commodity Prices	11
	Liquidity and Capital Resources	11
	Contractual Obligations	12

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	13

Item 4.	Controls and Procedures	13

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	13
Item 1A.	Risk Factors	13
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	13
Item 3.	Defaults Upon Senior Securities	13
Item 4.	Mine Safety Disclosures	13
Item 5.	Other Information	13
Item 6.	Exhibits	14

Signature Page		15

HOUSTON WIRE & CABLE COMPANY

Consolidated Balance Sheets

(In thousands, except share data)

	June 30,			December 31,
	2015			2014
	(unaudited)
Assets
Current assets:
Accounts receivable, net	$	52,961		$	61,599
Inventories, net		76,269			88,958
Deferred income taxes		3,398			3,188
Income taxes		1,288			219
Prepaids		1,000			565
Total current assets		134,916			154,529

Property and equipment, net		9,948			8,954
Intangible assets, net		7,274			8,501
Goodwill		14,866			17,520
Other assets		384			309
Deferred income taxes		245			—
Total assets	$	167,633		$	189,813

Liabilities and stockholders' equity
Current liabilities:
Book overdraft	$	1,230		$	3,113
Trade accounts payable		10,776			7,993
Accrued and other current liabilities		9,255			13,282
Total current liabilities		21,261			24,388

Debt		40,339			53,847
Other long term obligations		95			96
Deferred income taxes		—			175
Total liabilities		61,695			78,506

Stockholders' equity:
Preferred stock, $0.001 par value; 5,000,000 shares authorized, none issued and outstanding		—			—
Common stock, $0.001 par value; 100,000,000 shares authorized: 20,988,952 shares issued: 17,172,857 and 17,508,015 outstanding at June 30, 2015 and December 31, 2014, respectively		21			21
Additional paid-in-capital		55,543			54,871
Retained earnings		108,650			111,233
Treasury stock		(58,276	)		(54,818	)
Total stockholders' equity		105,938			111,307
Total liabilities and stockholders' equity	$	167,633		$	189,813

The accompanying Notes are an integral part of these Consolidated Financial Statements.

HOUSTON WIRE & CABLE COMPANY

Consolidated Statements of Operations

(Unaudited)

(In thousands, except share and per share data)

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2015			2014		2015		2014

Sales	$	77,959		$	103,461	$	159,559	$	203,760
Cost of sales		61,024			81,022		124,900		159,617
Gross profit		16,935			22,439		34,659		44,143

Operating expenses:
Salaries and commissions		7,168			8,061		14,406		16,184
Other operating expenses		6,281			6,728		12,329		13,220
Depreciation and amortization		726			762		1,438		1,503
Impairment charge		2,994			—		2,994		—
Total operating expenses		17,169			15,551		31,167		30,907

Operating income (loss)		(234	)		6,888		3,492		13,236
Interest expense		217			345		482		613
Income (loss) before income taxes		(451	)		6,543		3,010		12,623
Income taxes		168			2,512		1,443		4,847
Net income (loss)	$	(619	)	$	4,031	$	1,567	$	7,776

Earnings (loss) per share:
Basic	$	(0.04	)	$	0.23	$	0.09	$	0.44
Diluted	$	(0.04	)	$	0.23	$	0.09	$	0.44
Weighted average common shares outstanding:
Basic		17,101,952			17,647,936		17,198,927		17,748,863
Diluted		17,101,952			17,713,021		17,251,178		17,821,479

Dividend declared per share	$	0.12		$	0.12	$	0.24	$	0.23

The accompanying Notes are an integral part of these Consolidated Financial Statements.

HOUSTON WIRE & CABLE COMPANY

Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

	Six Months Ended June 30,
	2015			2014

Operating activities
Net income	$	1,567		$	7,776
Adjustments to reconcile net income to net cash provided by operating activities:
Impairment charge		2,994			—
Depreciation and amortization		1,438			1,503
Amortization of unearned stock compensation		463			450
Provision for inventory obsolescence		330			704
Deferred income taxes		(670	)		(319	)
Other non-cash items		83			89
Changes in operating assets and liabilities:
Accounts receivable		8,564			(3,626	)
Inventories		12,359			8,035
Book overdraft		(1,883	)		(2,176	)
Trade accounts payable		2,783			(2,007	)
Accrued and other current liabilities		(4,009	)		(5,880	)
Income taxes		(1,069	)		(289	)
Other operating activities		(520	)		(693	)
Net cash provided by operating activities		22,430			3,567

Investing activities
Expenditures for property and equipment		(1,545	)		(942	)
Net cash used in investing activities		(1,545	)		(942	)

Financing activities
Borrowings on revolver		151,366			204,327
Payments on revolver		(164,874	)		(199,118	)
Payment of dividends		(4,110	)		(4,077	)
Purchase of treasury stock		(3,267	)		(3,852	)
Other financing activities		—			95
Net cash used in financing activities		(20,885	)		(2,625	)

Net change in cash		—			—
Cash at beginning of period		—			—

Cash at end of period	$	—		$	—

The accompanying Notes are an integral part of these Consolidated Financial Statements.

HOUSTON WIRE & CABLE COMPANY
Notes to Consolidated Financial Statements

(Unaudited)

(in thousands, except share data)

Basis of Presentation and Principles of Consolidation

Houston Wire & Cable Company (the “Company”), through its wholly owned subsidiaries, HWC Wire & Cable Company, Advantage Wire & Cable and Cable Management Services Inc., provides wire and cable, hardware and related services to the U.S. market through nineteen locations in fourteen states throughout the United States. The Company has no other business activity.

The consolidated financial statements as of June 30, 2015 and for the six months ended June 30, 2015 and 2014 have been prepared following accounting principles generally accepted in the United States (“GAAP”) for interim financial information and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, considered necessary for a fair presentation of the results of these interim periods have been included. The results of operations for the interim periods are not necessarily indicative of the results that may be expected for the full year. All significant inter-company balances and transactions have been eliminated. The Company has evaluated subsequent events through the time these financial statements in this Form 10-Q were filed with the Securities and Exchange Commission (the “SEC”).

The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The most significant estimates are those relating to the inventory obsolescence reserve, the reserve for returns and allowances, vendor rebates and asset impairments. Actual results could differ materially from the estimates and assumptions used for the preparation of the financial statements.

For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014 filed with the SEC.

Recent Accounting Pronouncements

In April 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015-03, “Simplifying the Presentation of Debt Issuance Costs” (Subtopic 835-30). The amendments in this ASU require debt issuance costs to be presented on the balance sheet as a direct reduction from the carrying amount of the related debt liability. The amendments in the ASU are to be applied retrospectively and are effective for interim and annual reporting periods beginning after December 15, 2015. Early adoption is permitted. The Company is currently evaluating the timing of adoption of this ASU which impacts only the balance sheet presentation.

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers” (Topic 606), which supersedes the revenue recognition requirements in Accounting Standards Codification (“ASC”) Topic 605, “Revenue Recognition,” and most industry-specific guidance. This ASU is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments, and assets recognized from costs incurred to obtain or fulfill a contract. The amendments in the ASU must be applied using one of two retrospective methods and are effective for annual and interim periods beginning after December 15, 2017. Early adoption for annual and interim periods beginning after December 31, 2016 is permitted. As the Company recognizes revenue only once product has shipped, it does not believe this ASU will have a significant impact on its revenue recognition policy. However, the Company is still evaluating the impact of this ASU on its financial position and results of operations before it makes a final determination of the impact of this ASU and which implementation method the Company will use.

Earnings (loss) per Share

Basic earnings (loss) per share are calculated by dividing net income (loss) by the weighted average number of common shares outstanding. Diluted earnings (loss) per share include the dilutive effects of stock options and unvested restricted stock awards and units.

The following reconciles the denominator used in the calculation of diluted earnings (loss) per share:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2015		2014		2015		2014
Denominator:
Weighted average common shares for basic earnings (loss) per share		17,101,952		17,647,936		17,198,927		17,748,863
Effect of dilutive securities		—		65,085		52,251		72,616
Weighted average common shares for diluted earnings (loss) per share		17,101,952		17,713,021		17,251,178		17,821,479

The weighted average common shares for diluted earnings (loss) per share exclude stock options to purchase 600,364 and 521,747 shares for the three months ended June 30, 2015 and 2014, respectively, and 591,436 and 484,949 shares for the six months ended June 30, 2015 and 2014. These options have been excluded from the calculation, as including them would have an anti-dilutive effect on earnings (loss) per share for the respective periods.

Impairment of Goodwill and Intangibles

During the second quarter of 2015 and prior to the annual impairment test of goodwill in October, the Company concluded that impairment indicators existed at the Southwest Wire Rope (Southwest) reporting unit, due to a decline in the overall financial performance and overall market demand. Impairment indicators also existed for certain of the Company’s tradenames related to the Southwest and Southern Wire reporting units.

The Company performed step one of the impairment test and concluded that the fair value of the Southwest reporting unit was less than its carrying value. Therefore, the Company performed step two of the impairment analysis. The step one test also concluded that certain of the tradenames were impaired and the Company has recorded a non-cash charge of $0.4 million against the tradenames during the period ended June 30, 2015.

Step two of the impairment analysis measures the impairment charge by allocating the reporting unit’s fair value to all of the assets and liabilities of the reporting unit in a hypothetical analysis that calculates implied fair value of goodwill in the same manner as if the reporting unit was being acquired in a business combination and recording the deferred tax impact. Any excess of the carrying value of the reporting unit’s goodwill over the implied fair value of the reporting unit’s goodwill is recorded as an impairment loss.

The fair value of the Southwest reporting unit and tradenames were estimated using a discounted cash flow model. The material assumptions used for the income approach included a weighted average cost of capital of 13% and a long-term growth rate of 5-7%. The carrying value of the Southwest reporting unit’s goodwill was $2.6 million and its implied fair value resulting from step two of the impairment test was zero. As a result, the Company has recorded a non-cash goodwill impairment charge of $2.6 million during the period ended June 30, 2015.

The fair value for goodwill and tradenames (indefinite-lived intangible assets) were both determined using a Level 3 measurement approach. The Level 3 value of all the Company’s tradenames at June 30, 2015 was $4,516.

Debt

On September 30, 2011, HWC Wire & Cable Company, as borrower, entered into the Third Amended and Restated Loan and Security Agreement (“2011 Loan Agreement”), with certain lenders and Bank of America, N.A., as agent, and the Company, as guarantor, executed a Second Amended and Restated Guaranty of the borrower’s obligations thereunder. The 2011 Loan Agreement provides for a $100 million revolving credit facility, bears interest at the agent’s base rate, with a London Interbank Offered Rate (“LIBOR”) option and expires on September 30, 2016. The 2011 Loan Agreement is secured by a lien on substantially all the property of the Company, other than real estate. Availability under the 2011 Loan Agreement is limited to a borrowing base equal to 85% of the value of eligible accounts receivable, plus 65% of the value of eligible inventory, less certain reserves.

Portions of the loan may be converted to LIBOR loans in minimum amounts of $1,000 and integral multiples of $100. LIBOR loans bear interest at the British Bankers Association LIBOR Rate plus 125 to 200 basis points based on availability, and loans not converted to LIBOR loans bear interest at a fluctuating rate equal to the greatest of the agent’s prime rate, the federal funds rate plus 50 basis points, or 30-day LIBOR plus 150 basis points. Unused commitment fees are 25 or 30 basis points, depending on the amount of the unused commitment.

The 2011 Loan Agreement includes, among other things, covenants that require the Company to maintain a specified minimum fixed charge coverage ratio and availability levels. Additionally, the 2011 Loan Agreement allows for the unlimited payment of dividends and repurchases of stock, subject to the absence of events of default and maintenance of a fixed charge coverage ratio and minimum level of availability. The 2011 Loan Agreement contains certain provisions that may cause the debt to be classified as a current liability, in accordance with GAAP, if availability falls below certain thresholds, even though the ultimate maturity date under the Loan Agreement remains as September 30, 2016. Availability has remained above these thresholds. On November 3, 2014, the Company entered into a Second Amendment to the 2011 Loan Agreement, which added an availability-based covenant as an alternative to the existing fixed charge coverage ratio. At June 30, 2015, the Company was in compliance with the availability-based covenants governing its indebtedness.

The carrying amount of long term debt approximates fair value as it bears interest at variable rates. The carrying amount is a Level 2 measurement as defined in ASC Topic 820, “Fair Value Measurement.”

Stockholders’ Equity

During each of the first and second quarters of 2015, the Board of Directors approved a quarterly dividend of $0.12 per share payable to stockholders. Dividends paid were $4,110 and $4,077 during the six months ended June 30, 2015 and 2014, respectively.

Stock Based Compensation

Stock Option Awards

There were no stock option awards granted during the first six months of 2015.

Restricted Stock Awards and Restricted Stock Units

Following the Annual Meeting of Stockholders on May 5, 2015, the Company awarded restricted stock units with a value of $50 to each non-employee director who was elected or re-elected, for an aggregate of 38,290 restricted stock units. Each award of restricted stock units vests at the date of the 2016 Annual Meeting of Stockholders. Each non-employee director is entitled to receive a number of shares of the Company's common stock equal to the number of vested restricted stock units, together with dividend equivalents from the date of grant, at such time as the director’s service on the board terminates for any reason.

On May 5, 2015 new members of the management team received a total of 11,000 restricted stock awards. These shares vest in one third increments, on the third, fourth and fifth anniversaries of the date of grant. Any dividends declared will be accrued and paid to the recipient if and when the related shares vest as long as the recipient is still employed by the Company.

Total stock-based compensation cost was $246 and $237 for the three months ended June 30, 2015 and 2014 respectively and $463 and $450 for the six months ended June 30, 2015 and 2014, respectively, and is included in salaries and commissions.

Commitments and Contingencies

As part of the acquisition of Southwest Wire Rope and Southern Wire made in 2010, the Company assumed the liability for the post-remediation monitoring of the water quality at one of the acquired facilities in Louisiana. The expected liability of $95 at June 30, 2015 relates to the cost of the monitoring, which the Company estimates will be incurred over approximately the next 2 years, and also the cost to plug the wells. Remediation work was completed prior to the acquisition in accordance with the requirements of the Louisiana Department of Environmental Quality.

The Company, along with many other defendants, has been named in a number of lawsuits in the state courts of Illinois, Minnesota, North Dakota, and South Dakota alleging that certain wire and cable which may have contained asbestos caused injury to the plaintiffs who were exposed to this wire and cable. These lawsuits are individual personal injury suits that seek unspecified amounts of money damages as the sole remedy. It is not clear whether the alleged injuries occurred as a result of the wire and cable in question or whether the Company, in fact, distributed the wire and cable alleged to have caused any injuries. The Company maintains general liability insurance that, to date, has covered the defense of and all costs associated with these claims. In addition, the Company did not manufacture any of the wire and cable at issue, and the Company would rely on any warranties from the manufacturers of such cable if it were determined that any of the wire or cable that the Company distributed contained asbestos which caused injury to any of these plaintiffs. In connection with ALLTEL’s sale of the Company in 1997, ALLTEL provided indemnities with respect to costs and damages associated with these claims that the Company believes it could enforce if its insurance coverage proves inadequate.

There are no legal proceedings pending against or involving the Company that, in management’s opinion, based on the current known facts and circumstances, are expected to have a material adverse effect on the Company’s consolidated financial position, cash flows, or results from operations.

Subsequent Events

On August 4, 2015, the Board of Directors approved a dividend on the shares of common stock of the Company in the amount of $0.12 per share, payable on August 28, 2015, to stockholders of record at the close of business on August 17, 2015.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following Management’s Discussion and Analysis (“MD&A”) is intended to help the reader understand the Company’s financial position and results of operations. MD&A is provided as a supplement to the Company’s Consolidated Financial Statements (unaudited) and the accompanying Notes to Consolidated Financial Statements (unaudited) and should be read in conjunction with the MD&A included in the Company’s Form 10-K for the year ended December 31, 2014.

Overview

We are one of the largest distributors of wire and cable and related services to the U.S. market. We provide our customers with a single-source solution for wire and cable, hardware and related services by offering a large selection of in-stock items, exceptional customer service and high levels of product expertise.

Critical Accounting Policies

The preparation of our consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities, revenue and expenses. On an on-going basis, we make and evaluate estimates and judgments, including those related to the reserve for returns and allowances, the inventory reserve, intangible assets, vendor rebates and goodwill. We base our estimates on historical experience and various other assumptions that we believe are reasonable under the circumstances; the results of which form the basis for making judgments about amounts and timing of revenue and expenses, the carrying values of assets and the recorded amounts of liabilities that are not readily apparent from other sources. Actual results may differ from these estimates and such estimates may change if the underlying conditions or assumptions change. We have discussed the development and selection of critical accounting policies and estimates with the Audit Committee of our Board of Directors, and the Audit Committee has reviewed our related disclosures. The critical accounting policies related to the estimates and judgments are discussed in our Annual Report on Form 10-K for the year ended December 31, 2014 under Management’s Discussion and Analysis of Financial Condition and Results of Operations. There have been no changes to our critical accounting policies and estimates during the six months ended June 30, 2015.

Cautionary Statement for Purposes of the “Safe Harbor”

Forward-looking statements in this report are made in reliance upon the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements may relate to, but are not limited to, information or assumptions about our sales and marketing strategy, sales (including pricing), income, operating income or gross margin improvements, working capital, cash flow, interest rates, impact of changes in accounting standards, future economic performance, management’s plans, goals and objectives for future operations, performance and growth or the assumptions relating to any of the forward-looking statements. These statements can be identified by the fact that they do not relate strictly to historical or current facts. They use words such as “aim”, “anticipate”, “believe”, “could”, “estimate”, “expect”, “intend”, “may”, “plan”, “project”, “should”, “will be”, “will continue”, “will likely result”, “would” and other words and terms of similar meaning in conjunction with a discussion of future operating or financial performance. The Company cautions that forward-looking statements are not guarantees because there are inherent difficulties in predicting future results. Actual results could differ materially from those expressed or implied in the forward-looking statements. The factors listed under “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014, as well as any cautionary language in this report, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements.

Results of Operations

The following table shows, for the periods indicated, information derived from our consolidated statements of operations, expressed as a percentage of net sales for the periods presented.

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2015			2014			2015			2014

Sales		100.0	%		100.0	%		100.0	%		100.0	%
Cost of sales		78.3	%		78.3	%		78.3	%		78.3	%
Gross profit		21.7	%		21.7	%		21.7	%		21.7	%

Operating expenses:
Salaries and commissions		9.2	%		7.8	%		9.0	%		7.9	%
Other operating expenses		8.1	%		6.5	%		7.7	%		6.5	%
Depreciation and amortization		0.9	%		0.7	%		0.9	%		0.7	%
Impairment charge		3.8	%		—			1.9	%		—
Total operating expenses:		22.0	%		15.0	%		19.5	%		15.2	%

Operating income (loss)		(0.3	)%		6.7	%		2.2	%		6.5	%
Interest expense		0.3	%		0.3	%		0.3	%		0.3	%

Income (loss) before income taxes		(0.6	)%		6.3	%		1.9	%		6.2	%
Income (loss) taxes		0.2	%		2.4	%		0.9	%		2.4	%

Net income		(0.8	)%		3.9	%		1.0	%		3.8	%

Note: Due to rounding, percentages may not add up to total operating expenses, operating income (loss), income (loss) before income taxes or net income (loss).

Comparison of the Three Months Ended June 30, 2015 and 2014

Sales

	Three Months Ended
	June 30,
(Dollars in millions)	2015		2014		Change
Sales	$	78.0	$	103.5	$	(25.5	)	(24.6	)%

Our sales for the second quarter decreased 24.6% to $78.0 million in 2015 from $103.5 million in 2014. We estimate that, when adjusted for the fluctuation in metal prices, sales for 2015 were down approximately 20% compared to the second quarter of 2014. Our project business, which includes our key growth initiatives encompassing Environmental Compliance, Engineering & Construction, Industrials, Utility Power Generation, and Mechanical Wire Rope, is estimated to have decreased 35%, or approximately 30% on a metals adjusted basis, from 2014. Maintenance, Repair, and Operations (MRO) fell 20%, or approximately 15% when adjusted for metals from 2014.

Gross Profit

	Three Months Ended
	June 30,
(Dollars in millions)	2015			2014			Change
Gross profit	$	16.9		$	22.4		$	(5.5	)	(24.5	)%
Gross margin		21.7	%		21.7	%		0.0	%

Gross profit decreased 24.5% to $16.9 million in 2015 from $22.4 million in 2014. The decrease in gross profit was primarily attributed to the lower sales in 2015. Gross margin (gross profit as a percentage of sales) remained consistent at 21.7% in 2015 and 2014.

Operating Expenses

	Three Months Ended
	June 30,
(Dollars in millions)	2015			2014			Change
Operating expenses:
Salaries and commissions	$	7.2		$	8.1		$	(0.9	)	(11.1	)%
Other operating expenses		6.3			6.7			(0.4	)	(6.7	)%
Depreciation and amortization		0.7			0.8			0.0		(4.7	)%
Impairment charge		3.0			—			3.0		N/A
Total operating expenses	$	17.2		$	15.6		$	(1.7	)	(10.4	)%

Operating expenses as a percent of sales		22.0	%		15.0	%		7.0	%

Note: Due to rounding, numbers may not add up to total operating expenses.

Salaries and commissions decreased $0.9 million between the periods as sales and gross margin declined reducing commissions and due to a lower headcount.

Other operating expenses decreased $0.4 million primarily due to lower employee related expenses due to the headcount reduction, reduced warehouse supplies, and a decrease in public company and professional expenses, partially offset by the moving costs associated with the consolidation of the Southwest Houston facilities.

Depreciation and amortization remained consistent between the periods.

Impairment charge relates to the write-off of goodwill on the Southwest reporting unit and the write-down of tradenames at the Southwest and Southern Wire reporting units. (See Note 3)

Operating expenses as a percentage of sales increased to 22.0% in 2015 from 15.0% in 2014, due to the decrease in sales levels and the impact of the impairment charge.

Interest Expense

Interest expense decreased 37.1% from $0.3 million to $0.2 million in 2015 due to lower average debt levels and lower interest rates. Average debt was $45.0 million in 2015 compared to $61.2 million in 2014. The average effective interest rate was 2.0% in 2015 compared to 2.1 % in 2014.

Income Taxes

Income tax expense of $0.2 million decreased by approximately $2.3 million in 2015 from $2.5 million in 2014, a decrease of 93.3%, primarily due to the reduction in pre-tax income and the non-deductible portion of the impairment charge.

Net Income (Loss)

We incurred a net loss of $0.6 million in 2015 compared to net income of $4.0 million in 2014, a decrease of 115.4% primarily due to the decline in sales and the impairment charge.

Comparison of the Six Months Ended June 30, 2015 and 2014

Sales

	Six Months Ended
	June 30,
(Dollars in millions)	2015		2014		Change
Sales	$	159.6	$	203.8	$	(44.2	)	(21.7	)%

Our sales for the six month period decreased 21.7% to $159.6 million in 2015 from $203.8 million in 2014. We estimate that, when adjusted for the fluctuation in metal prices, sales for 2015 were down approximately 17% compared to the first six months of 2014. Our project business, which includes our key growth initiatives encompassing Environmental Compliance, Engineering & Construction, Industrials, Utility Power Generation, and Mechanical Wire Rope, is estimated to have decreased 35%, or approximately 30% on a metals adjusted basis, from 2014. MRO fell 14%, or approximately 9% when adjusted for metals from 2014.

Gross Profit

	Six Months Ended
	June 30,
(Dollars in millions)	2015			2014			Change
Gross profit	$	34.7		$	44.1		$	(9.5	)	(21.5	)%
Gross margin		21.7	%		21.7	%		0.0	%

Gross profit decreased 21.5% to $34.7 million in 2015 from $44.1 million in 2014. The decrease in gross profit was primarily attributed to the lower sales in 2015. Gross margin was flat at 21.7% in 2015 and 2014.

Operating Expenses

	Six Months Ended
	June 30,
(Dollars in millions)	2015			2014			Change
Operating expenses:
Salaries and commissions	$	14.4		$	16.2		$	(1.8	)	(11.0	)%
Other operating expenses		12.3			13.2			(0.9	)	(6.7	)%
Depreciation and amortization		1.4			1.5			(0.1	)	(4.3	)%
Impairment charge		3.0			—			3.0		N/A
Total operating expenses	$	31.2		$	30.9		$	0.3		0.8	%

Operating expenses as a percent of sales		19.5	%		15.2	%		4.3	%

Note: Due to rounding, numbers may not add up to total operating expenses.

Salaries and commissions decreased $1.8 million between the periods as sales and gross margin declined reducing commissions and due to a lower headcount.

Other operating expenses decreased $0.9 million primarily due to lower warehouse supplies, a decrease in public company and professional expenses, and employee related expenses from the headcount reduction, partially offset by the moving costs associated with the consolidation of the Southwest Houston facilities.

Depreciation and amortization remained consistent between the periods.

Impairment charge relates to the write-off of goodwill at the Southwest reporting unit and the write-down of tradenames at the Southwest and Southern Wire reporting units. (See Note 3)

Operating expenses as a percentage of sales increased to 19.5% in 2015 from 15.2% in 2014, due to the decrease in sales levels and the impact of the impairment charge.

Interest Expense

Interest expense decreased 21.4% to $0.5 million in 2015 from $0.6 million in 2014 due to lower average debt levels. Average debt was $47.1 million in 2015 compared to $58.1 million in 2014. The average effective interest rate remained consistent between periods at 2.0%.

Income Taxes

Income tax expense of $1.4 million decreased by approximately $3.4 million in 2015 from $4.8 million in 2014, a decrease of 70.2%, primarily due to the reduction in pre-tax income and the non-deductible portion of the impairment charge.

Net Income

We achieved net income of $1.6 million in 2015 compared to a net income of $7.8 million in 2014.

Impact of Inflation and Commodity Prices

Our results of operations are affected by changes in the inflation rate and commodity prices. Moreover, because copper, steel, aluminum and petrochemical products are components of the wire and cable and related hardware we sell, fluctuations in the costs of these and other commodities have historically affected our operating results. To the extent commodity prices decline, the net realizable value of our existing inventory could also decline, and our gross profit could be adversely affected because of either reduced selling prices or lower of cost or market adjustments in the carrying value of our inventory. If we turn our inventory approximately three times a year, the impact of changes in commodity prices in any particular quarter would primarily affect the results of the succeeding four months. If we are unable to pass on to our customers future cost increases due to inflation or rising commodity prices, our operating results could be adversely affected.

Liquidity and Capital Resources

Our primary capital needs are for working capital obligations, capital expenditures, dividend payments, our stock repurchase program and other general corporate purposes, including acquisitions. Our primary sources of working capital are cash from operations supplemented by bank borrowings.

Liquidity is defined as the ability to generate adequate amounts of cash to meet the current need for cash. We assess our liquidity in terms of our ability to generate cash to fund our operating activities. Significant factors which could affect liquidity include the following:

	·		the adequacy of available bank lines of credit;
	·		cash flows generated from operating activities;
	·		capital expenditures;
	·		additional stock repurchases;
	·		payment of dividends;
	·		acquisitions; and
	·		the ability to attract long-term capital with satisfactory terms

Comparison of the Six Months Ended June 30, 2015 and 2014

Our net cash provided by operating activities was $22.4 million for the six months ended June 30, 2015 compared to $3.6 million in 2014. Our net income decreased by $6.2 million or 79.8% to $1.6 million in 2014 from $7.8 million in 2014.

Changes in our operating assets and liabilities resulted in cash provided by operating activities of $16.2 million in the first half of 2015. A reduction in our inventory investment of $12.4 million as inventory profiles were reduced to meet current activity levels, a decrease in accounts receivable of $8.6 million due to the decrease in sales and the collection of vendor rebates and an increase in accounts payable of $2.8 million were the main sources of cash. Partially offsetting these sources of cash was the reduction of accrued and other current liabilities of $4.0 million as customer incentives were paid and a reduction in the bank overdraft of $1.9 million.

Net cash used in investing activities was $1.5 million in 2015 compared to $0.9 million in 2014. The increase was primarily attributable to the higher renovation costs of a facility purchased in December 2013 into which the four existing Southwest locations in Houston moved and which became operational in July 2015.

Net cash used in financing activities was $20.9 million in 2015 compared to $2.6 million in 2014. Net payments on the revolver of $13.5 million, the payment of dividends of $4.1 million and the purchase of treasury stock of $3.3 million were the components of financing activities in 2015.

Indebtedness

Our principal source of liquidity at June 30, 2015 was working capital of $113.7 million compared to $130.1 million at December 31, 2014. We also had additional available borrowing capacity of approximately $46.9 million at June 30, 2015 and $46.8 million at December 31, 2014 under our loan agreement.

We believe that we will have adequate availability of capital to fund our present operations, meet our commitments on our existing debt, continue to fund our dividend payments and stock repurchase program, and fund anticipated growth over the next twelve months, including expansion in existing and targeted market areas. We continually seek potential acquisitions and from time to time hold discussions with acquisition candidates. If suitable acquisition opportunities or working capital needs arise that would require additional financing, we believe that our financial position and earnings history provide a solid base for obtaining additional financing resources at competitive rates and terms. Additionally, based on market conditions, we may decide to issue additional shares of common or preferred stock to raise funds.

Loan and Security Agreement

On September 30, 2011, we entered into a Third Amended and Restated Loan and Security Agreement (the “2011 Loan Agreement”) with certain lenders and Bank of America, N.A., as agent. The 2011 Loan Agreement provides for a $100 million revolving credit facility and expires on September 30, 2016. Availability under the 2011 Loan Agreement is limited to a borrowing base equal to 85% of the value of eligible accounts receivable, plus 65% of the value of eligible inventory, less certain reserves. The 2011 Loan Agreement is secured by a lien on substantially all our property, other than real estate.

Portions of the loan under the 2011 Loan Agreement may be converted to LIBOR loans in minimum amounts of $1.0 million and integral multiples of $0.1 million. LIBOR loans bear interest at the British Bankers Association LIBOR Rate plus 125 to 200 basis points based on availability, and loans not converted to LIBOR loans bear interest at a fluctuating rate equal to the greatest of the agent’s prime rate, the federal funds rate plus 50 basis points, or 30-day LIBOR plus 150 basis points. Additionally, we are obligated to pay a facility fee on the unused portion of the loan commitment. Unused commitment fees are 25 or 30 basis points, depending on the amount of the unused commitment.

Covenants in the 2011 Loan Agreement require us to maintain certain minimum financial ratios and availability levels. Repaid amounts can be re-borrowed subject to the borrowing base. On November 3, 2014, we entered into a Second Amendment to the 2011 Loan Agreement, which added an availability-based covenant as an alternative to the existing fixed charge coverage ratio. As of June 30, 2015, we met the availability-based covenant.

Contractual Obligations

The following table summarizes our loan commitment at June 30, 2015:

In thousands	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years

Total debt	$	40,339	$	—	$	40,339	$	—	$	—

There were no material changes in operating lease obligations or non-cancellable purchase obligations since December 31, 2014.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

There were no material changes to our market risk as set forth in Items 7A and 7 of our Annual Report on Form 10-K for the year ended December 31, 2014.

Item 4. Controls and Procedures

As of June 30, 2015, an evaluation was performed by the Company’s management, under the supervision and with the participation of the Company’s chief executive officer and chief financial officer, of the effectiveness of the Company’s disclosure controls and procedures. Based on that evaluation, the chief executive officer and the chief financial officer concluded that the Company’s disclosure controls and procedures were effective. There were no changes in the Company’s internal control over financial reporting that occurred during the quarter ended June 30, 2015 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Part II. Other Information

Item 1 – Not applicable and has been omitted.

Item 1A. Risk Factors

There were no material changes in the risk factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2014.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table provides information about our purchases of common stock for the three months ended June 30, 2015.

Period		Total number of shares purchased		Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs ⁽¹⁾		Maximum dollar value that may yet be used for purchases under the plan ⁽¹⁾
	April 1 – 30, 2015		105,696	$	9.68		105,696	$	15,384,708
	May 1 – 31, 2015		38,100		9.37		38,100		15,027,900
	June 1 – 30, 2015		10,954		9.38		10,954		14,925,115
	Total		154,750	$	9.58		154,750

(1)	The board authorized a stock repurchase program of $25 million in March 2014. The program has no expiration date.

Item 3 – Not applicable and has been omitted.

Item 4 – Not applicable and has been omitted.

Item 5 – Not applicable and has been omitted.

Item 6. Exhibits

(a)

Exhibits required by Item 601 of Regulation S-K.

Exhibit Number		Document Description

10.1*		Form of 2006 Stock Plan Restricted Stock Unit Award Agreement for Non-Employee Directors

10.2*		Form of 2006 Stock Plan Director Nonqualified Stock Option Agreement

10.3*		Form of 2006 Stock Plan Stock Award Agreement for Key Employees

10.4*		Form of 2006 Stock Plan Employee Nonqualified Stock Option Agreement

31.1		Certification by James L. Pokluda III pursuant to Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification by Nicol G. Graham pursuant to Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification by James L. Pokluda III and Nicol G. Graham pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		XBRL Instance Document ⁽¹⁾

101.SCH		XBRL Taxonomy Extension Schema

101.CAL		XBRL Taxonomy Extension Calculation Linkbase

101.DEF		XBRL Taxonomy Extension Definition Linkbase

101.LAB		XBRL Taxonomy Extension Label Linkbase

101.PRE		XBRL Taxonomy Extension Presentation Linkbase

Management contract or compensatory plan or arrangement

⁽¹⁾

Attached as exhibit 101 to this report are the following documents formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheets at June 30, 2015 and December 31, 2014; (ii) the Consolidated Statements of Operations for the three month and six month periods ended June 30, 2015 and 2014; (iii) the Consolidated Statements of Cash Flows for the six month periods ended June 30, 2015 and 2014; and (vi) Notes to the Consolidated Financial Statements.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: August 6, 2015	HOUSTON WIRE & CABLE COMPANY

	BY:	/s/ Nicol G. Graham
	Nicol G. Graham, Chief Financial Officer

EXHIBIT INDEX

Exhibit Number		Document Description

10.1*		Form of 2006 Stock Plan Restricted Stock Unit Award Agreement for Non-Employee Directors

10.2*		Form of 2006 Stock Plan Director Nonqualified Stock Option Agreement

10.3*		Form of 2006 Stock Plan Stock Award Agreement for Key Employees

10.4*		Form of 2006 Stock Plan Employee Nonqualified Stock Option Agreement

31.1		Certification by James L. Pokluda III pursuant to Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification by Nicol G. Graham pursuant to Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification by James L. Pokluda III and Nicol G. Graham pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		XBRL Instance Document ⁽¹⁾

101.SCH		XBRL Taxonomy Extension Schema

101.CAL		XBRL Taxonomy Extension Calculation Linkbase

101.DEF		XBRL Taxonomy Extension Definition Linkbase

101.LAB		XBRL Taxonomy Extension Label Linkbase

101.PRE		XBRL Taxonomy Extension Presentation Linkbase

Management contract or compensatory plan or arrangement

⁽¹⁾

Exhibit 10.1

HOUSTON WIRE & CABLE COMPANY
2006 STOCK PLAN
(As Amended and Restated Effective March 1, 2015)

RESTRICTED STOCK UNIT AWARD AGREEMENT
FOR NON-EMPLOYEE DIRECTORS

A Restricted Stock Unit (“RSU”) Award (the “Award”) is hereby granted by Houston Wire & Cable Company, a Delaware corporation (the “Company”), to the non-employee Director named below (the “Grantee”), relating to the Common Stock of the Company:

Director:
Date of Award:
Number of RSUs Subject to Award:

End of Vesting Period:

The Award shall be subject to the following terms and conditions and the provisions of the Houston Wire & Cable Company 2006 Stock Plan, as amended and restated effective March 1, 2015 (the “Plan”), a copy of which is attached hereto and the terms of which are hereby incorporated by reference:

1. Grant of RSUs . The Company hereby grants to the Grantee the Award of RSUs. An RSU is the right, subject to the terms and conditions of the Plan and this Agreement, to receive a distribution of a share of Common Stock for each RSU as described in Section 6 of this Agreement.

2. Acceptance by Grantee . The receipt of the Award is conditioned upon its acceptance by the Grantee in the space provided therefor at the end of this Agreement and the return of an executed copy of this Agreement to the Secretary of the Company no later than _______________. If the Grantee shall fail to return this executed Agreement by the due date, the Grantee’s Award shall be forfeited to the Company.

3. RSU Account . The Company shall maintain an account (“RSU Account”) on its books in the name of the Grantee which shall reflect the number of RSUs awarded to the Grantee and any dividend equivalents paid to the Grantee as described in Section 4.

4. Dividend Equivalents . Upon the payment of any dividends on Common Stock occurring during the period beginning on the date of the Award and ending on the date the RSUs are settled in Common Stock and distributed to the Grantee as described in Section 6 (or if earlier, the date the RSUs are forfeited), the Company shall credit the Grantee’s RSU Account with an amount equal in value to the dividends that the Grantee would have received had the Grantee been the actual owner of the number of shares of Common Stock represented by the RSUs in the Grantee’s RSU Account on that date. Such amounts shall be paid to the Grantee in cash at the time and to the extent the RSU Account is distributed to the Grantee. Any dividend equivalents relating to RSUs that are forfeited shall also be forfeited.

5. Vesting .

(a) Except as described in (b) and (c) below, the Grantee shall become vested in his Award on the date of the Company’s ____ Annual Meeting of Stockholders if he remains in continuous service on the Board until such date.

(b) If the Grantee’s service on the Board terminates prior to the date of the Company’s ____ Annual Meeting of Stockholders due to death or disability, the Award shall become vested on the date of such death or disability. For this purpose “disability” means (as determined by the Committee in its sole discretion) the inability of the Grantee to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which is expected to result in death or disability or which has lasted or can be expected to last for a continuous period of not less than 12 months.

(c) The Award shall be forfeited to the Company upon the Grantee’s termination of service on the Board for any reason other than the Grantee’s death or disability (as described in Section 3(b) above) that occurs prior to the date the RSUs vest as provided in Section 3(a) above.

6. Settlement of Award . Within 30 days following the date of the Grantee’s termination of service on the Board, the Company shall distribute to him, or his personal representative, beneficiary or estate, as applicable, (a) a number of shares of Common Stock equal to the number of vested RSUs subject to the Award and held in his RSU Account, and (b) a cash payment equal to the dividend equivalents credited to his RSU Account attributable to such vested RSUs.

7. Change in Control . Notwithstanding the foregoing provisions of the Agreement:

(a) Upon a Change in Control of the Company where the Award is not assumed or continued, (i) the Grantee shall become vested in any then unvested Award and (ii) the Company shall immediately distribute to the Grantee his RSU Account as described in Section 6(a) and (b); provided, however, that if the Change in Control does not constitute a “change in control” as described in Treas. Reg. §1.409A-3(i)(5), then distribution of the RSU Account shall be deferred until the date of the Grantee’s termination of service on the Board.

(b) If any Award is assumed or continued after a Change in Control of the Company, the vesting provisions of Section 5 shall continue in effect, provided that if the Grantee’s service on the Board terminates on or after the Change in Control, (i) the Grantee shall become vested in any then unvested Award and (ii) the Company shall immediately distribute to the Grantee his RSU Account as described in Section 6(a) and (b).

8. Rights as Stockholder . The Grantee shall not be entitled to any of the rights of a stockholder of the Company with respect to the Award, including the right to vote and to receive dividends and other distributions, until and to the extent the Award is settled in shares of Common Stock.

9. Award Not Transferable . The Award may not be transferred other than by will or the applicable laws of descent or distribution or pursuant to a qualified domestic relations order. The Award shall not otherwise be assigned, transferred, or pledged for any purpose whatsoever and is not subject, in whole or in part, to attachment, execution or levy of any kind. Any attempted assignment, transfer, pledge, or encumbrance of the Award, other than in accordance with its terms, shall be void and of no effect.

10. Share Delivery . Delivery of the shares of Common Stock subject to the Award will be by book-entry credit to an account in the Grantee’s name established by the Company with the Company’s transfer agent; provided that the Company shall, upon written request from the Grantee (or his estate or personal representative, as the case may be), issue certificates in the name of the Grantee (or his estate or personal representative) representing such Award shares.

11. Administration . The Award shall be administered in accordance with such regulations as the Committee shall from time to time adopt.

12. Plan Governs . If there is any inconsistency between the terms of this Agreement and the terms of the Plan, the Plan’s terms shall govern. All capitalized terms shall have the meanings ascribed to them in the Plan, unless specifically set forth otherwise herein.

13. Governing Law . This Agreement, and the Award, shall be construed, administered and governed in all respects under and by the laws of the State of Delaware.

IN WITNESS WHEREOF, this Agreement is executed by the Company this __th day of ________, _____, effective as of the ___day of ________, _____.

	HOUSTON WIRE & CABLE COMPANY

	By:

AGREED AND ACCEPTED :

I acknowledge receipt of the Houston Wire & Cable Company 2006 Stock Plan, as amended and restated effective March 1, 2015 (the “Plan”) and hereby accept this Restricted Stock Unit Award subject to all the terms and conditions thereof. I agree to accept as binding, conclusive and final all decisions and interpretations of the Committee regarding any questions arising under the Plan or this Award Agreement.

GRANTEE

Print Name:

Signature:

Date:

Exhibit 10.2

HOUSTON WIRE & CABLE COMPANY
2006 STOCK PLAN
(As Amended and Restated Effective March 1, 2015)

FORM OF DIRECTOR
NONQUALIFIED STOCK OPTION AGREEMENT

[DATE]

[NAME]

[ADDRESS]

Dear [NAME]:

I am pleased to inform you that on [DATE], pursuant to the Houston Wire & Cable Company 2006 Stock Plan, as amended and restated effective March 1, 2015 (the “ Plan ”), the Board of Directors (the “ Board ”) of Houston Wire & Cable Company (the “ Company ”) granted to you a Non-Qualified Stock Option (the “ Option ”) to acquire shares of common stock, par value $0.01 per share (“ Shares ”), of the Company. This letter agreement constitutes your Stock Option Agreement under the Plan with respect to the Option.

1. Option Grant . On [DATE] (the “ Date of Grant ”), you were granted the Option to purchase, subject to the terms and conditions of this Stock Option Agreement and the Plan, all or any part of [NUMBER OF SHARES] Shares at a price of [$____] per Share. The number of Shares and the price per Share are subject to adjustment, as provided in the Plan.

2. Term . The term of the Option shall be for a period of ten years from the date hereof and shall expire at the close of regular business hours at the Company’s principal office, Houston Wire & Cable Company, 10201 North Loop East, Houston, Texas 77029 on the last day of the term of the Option, unless the Option terminates earlier as herein provided. Notwithstanding the foregoing, (a) if your service as a member of the Board terminates for any reason other than your death or Disability, the then vested portion of the Option shall continue to be exercisable until the earlier of (i) the 60 ^th day after the date of such termination or (ii) ten years after the date hereof, and (b) if your service as a member of the Board terminates due to your death or Disability, the then vested portion of the Option shall continue to be exercisable until the earlier of (i) 12 months after the date of such termination or (ii) ten years after the date hereof. In any event, any portion of the Option that is not vested as of the date of termination of your service shall expire as of such date and shall not be exercisable. “Disability” means that, in the sole judgment of the Committee, you are (x) unable to perform your duties with the Company for 60 consecutive days or 90 cumulative days during any six-month period or (y) eligible for long-term disability benefits under the Company’s plans, programs or policies, in either case as a result of injury, mental illness or physical illness.

3. Vesting . Subject to the other terms and conditions of this Stock Option Agreement and the Plan, the Option shall vest entirely on [DATE]. This Option may be exercised only to the extent, if any, that it is then vested.

4. Exercise . You may not exercise any vested portion of this Option more than once in any calendar year without the Company’s prior written consent and the Option may not be exercised after it expires or terminates as provided in paragraph 2. The Option may be exercised by giving written notice (in a form substantially similar to Appendix A attached hereto) to the Treasurer of the Company at its principal office, stating the number of Shares with respect to which the vested Option is being exercised and tendering payment for the full purchase price of such Shares. The purchase price must be paid in cash, unless another method is authorized by the Committee. You are responsible for the payment of any taxes (other than stock transfer taxes) arising in connection with the issuance or transfer of Shares pursuant to the Option and will promptly pay any taxes required to be collected or withheld by the Company or its subsidiary upon the Company’s or such subsidiary’s demand.

5. Insider Trading Policy . The exercise of the Option and any sale of the Shares issuable upon such exercise are subject to the provisions of the Company’s Insider Trading Policy, as in effect from time to time.

6. Nontransferability . You may not transfer, sell, pledge, encumber or otherwise dispose of the Option, except that you may, with the prior written approval of the Committee, transfer the Option to the following persons or entities: (i) immediate family members, (ii) custodianships under the Uniform Transfers to Minors Act or any similar statute, (iii) trusts for the benefit of any immediate family member, (iv) trusts created by you for your primary benefit, and (v) upon termination of a custodianship under the Uniform Transfers to Minors Act or similar statute or the termination of a trust by the custodian or trustee thereof, or the partial or complete liquidation of an entity, to the person or persons who, in accordance with the terms of such custodianship, trust or entity, are entitled to receive Options held in custody, trust or by the entity.

7. Plan Governs . The terms of this Stock Option Agreement shall be subject to the terms of the Plan. If there is any inconsistency between the terms of this Stock Option Agreement and the terms of the Plan, the Plan’s terms shall govern. All capitalized terms shall have the meanings ascribed to them in the Plan, unless otherwise set forth herein. A copy of the Plan is attached hereto and the terms of the Plan are hereby incorporated by reference.

8. Stockholder Status . This Stock Option Agreement does not confer upon you or any holder hereof any right as a stockholder of the Company prior to the issuance of Shares pursuant to the exercise of the Option.

9. Acceptance . The exercise of the Option is conditioned upon your acceptance of this Stock Option Agreement and your return of an executed copy to the Treasurer of the Company within 30 days after receipt hereof.

- 2 -

	HOUSTON WIRE & CABLE COMPANY

	By:

	Its:

AGREED AND ACCEPTED

I acknowledge receipt of the Houston Wire & Cable Company 2006 Stock Plan, as amended and restated effective March 1, 2015 (the “ Plan ”) and hereby accept this Nonqualified Stock Option subject to all the terms and conditions thereof. I agree to accept as binding, conclusive and final all decisions and interpretations of the Board or the Committee regarding any questions arising under the Plan or this Stock Option Agreement.

Dated:

	Print Name:

	Signature:

- 3 -

APPENDIX A

Houston Wire & Cable Company

10201 North Loop East

Houston, Texas 77029

Attn: Treasurer

NOTICE OF EXERCISE OF NONQUALIFIED STOCK OPTION

I hereby give notice of my election to exercise, to the extent stated below, the nonqualified stock option (“ Option ”) granted to me on [DATE] to purchase [NUMBER OF SHARES] shares of common stock, par value $0.01 per share, of Houston Wire & Cable Company (“ Shares ”) at a price of [$____] per Share, pursuant to the HOUSTON WIRE & CABLE COMPANY 2006 STOCK PLAN. I hereby elect to exercise such Option to the extent of ________________ Shares. Payment in the amount of $__________ equal to the full purchase price of such Shares is enclosed.

Dated:
			(signature)


			(printed name)


			(address)


			(city, state, zip code)


			(Social Security Number)

THIS DOCUMENT IS TO BE USED TO EXERCISE YOUR STOCK OPTIONS.

Exhibit 10.3

HOUSTON WIRE & CABLE COMPANY
2006 STOCK PLAN
(As Amended and Restated Effective March 1, 2015)

STOCK AWARD AGREEMENT FOR KEY EMPLOYEES

A Stock Award (the “Award”) is hereby granted by Houston Wire & Cable Company, a Delaware corporation (the “Company”), to the Key Employee named below (the “Grantee”), relating to the Common Stock of the Company:

Key Employee:

Date of Award:

Number of Shares Subject to Award:

1. Grant of Award . The Company hereby grants to the Grantee a Stock Award for the number of shares of Common Stock described above.

3. Delivery of Share Certificates . The certificates representing the shares of Common Stock subject to the Award shall be issued in the Grantee’s name and shall be held by the Secretary of the Company and delivered to the Grantee if and when the shares of Common Stock vest pursuant to Section 7. At such time, the Secretary of the Company shall deliver promptly to the Grantee the certificate or certificates evidencing the shares that then become vested. Alternatively, in the discretion of the Committee, delivery of the Award shares will be by book-entry credit to an account in the Grantee’s name established by the Company with the Company’s transfer agent; provided that the Company shall, upon written request from the Grantee (or his estate or personal representative, as the case may be), issue certificates in the name of the Grantee (or his estate or personal representative) representing any vested Award shares.

4. Dividends . All dividends and other distributions payable with respect to the unvested Award shall be accrued by the Company and paid to the Grantee on the vesting date (if any) of the shares of Common Stock with respect to which the dividends have accrued.

5. Section 83(b) Election . The Grantee may make an election pursuant to Section 83(b) of the Internal Revenue Code (“Section 83(b)”) to recognize income with respect to the Award before it vests by filing an election with the Internal Revenue Service and providing a copy of that filing to the Secretary of the Company. The Grantee acknowledges that such election, if Recipient chooses to make it, must be filed within 30 days after the Date of Award set forth above. THE GRANTEE SHOULD CONSULT WITH HIS OR HER TAX ADVISOR TO DETERMINE THE TAX CONSEQUENCES OF ACQUIRING THE SHARES AND THE ADVANTAGES AND DISADVANTAGES OF FILING THE SECTION 83(b) ELECTION. THE GRANTEE ACKNOWLEDGES THAT IT IS THE SOLE RESPONSIBILITY OF THE GRANTEE, AND NOT THE COMPANY, TO FILE A TIMELY SECTION 83(b) ELECTION SHOULD THE GRANTEE, AFTER CONSULTING WITH HIS OR HER TAX ADVISOR, DECIDE TO MAKE ONE.

6. Nontransferability . Except as set forth in Section 11 of the Plan, none of the shares of Common Stock subject to the Award shall be sold, assigned, pledged, encumbered or otherwise transferred, voluntarily or involuntarily, until such shares vest in accordance with Section 7.

7. Vesting .

(a) Except as set forth in (b), (c) and (d) below, the Grantee shall become vested in the Award as follows:

(i) ____% of the shares subject to the Award shall vest on ___________.

(ii) ____% of the shares subject to the Award shall vest on ___________.

(iii) ____% of the shares subject to the Award shall vest on ___________.

(b) In the event that the Grantee’s employment with the Company and all subsidiaries terminates due to the Grantee’s death or disability, a prorata number of unvested shares of Common Stock subject to the Award shall vest, such number to be determined by multiplying the number of unvested shares by a fraction, the numerator of which is the number of full months that have elapsed from the Date of Award to the termination of employment and the denominator of which is the number of full months in the vesting period. Award shares that do not vest shall be forfeited. For this purpose “disability” has the meaning, and will be determined, as set forth in the Company’s long term disability program in which the Grantee participates.

(c) Any unvested shares of Common Stock subject to the Award shall be forfeited to the Company upon termination of the Grantee’s employment with the Company and all subsidiaries for any reason other than death or disability as described in Section 7(b) above. In the event that the Grantee forfeits any or all of the unvested shares, all of the Grantee’s rights, title and interest with respect to such forfeited shares, including the right to receive any cash dividends accrued with respect thereto, shall automatically lapse and be of no further force or effect. The Grantee hereby irrevocably designates and appoints the Secretary of the Company as the Grantee’s agent and attorney in fact, to act for or on behalf of the Grantee and in his or her name and stead, for the limited purpose of executing any documents and instruments to further evidence the forfeiture of the unvested shares and the transfer of such shares back to the Company.

(d) The foregoing provisions of this Section 7 shall be subject to the provisions of any written employment or severance agreement that has been or may be executed by the Grantee and the Company, and the provisions in such employment or severance agreement concerning the vesting of an Award shall supersede any inconsistent or contrary provision of this Section 7.

8. Withholding Taxes . The Grantee shall pay to the Company an amount sufficient to satisfy all minimum Federal, state and local withholding tax requirements prior to the delivery of any vested shares of Common Stock covered by the Award. Payment of such taxes may be made by one or more of the following methods: (a) in cash, (b) in cash, received from a broker-dealer to whom the Grantee has submitted a notice and irrevocable instructions to deliver to the Company proceeds from the sale of a portion of the shares subject to the Award, (c) by delivery to the Company of other Common Stock owned by the Grantee that is acceptable to the Company, valued at its then fair market value, and/or (d) by directing the Company to withhold such number of shares of Common Stock otherwise issuable in connection with the Award with a fair market value equal to the amount of tax to be withheld.

9. Rights as Stockholder . To the extent the Award has not been forfeited, the Grantee shall be entitled to all of the rights of a stockholder of the Company with respect to the Award, including the right to vote and to receive dividends and other distributions (subject to Section 4).

10. Insider Trading Policy . The sale or transfer of any vested shares of Common Stock subject to the Award is subject to the provisions of the Company’s Insider Trading Policy, as in effect from time to time.

11. Recoupment . Notwithstanding any other provision of this Agreement, to the extent required by applicable law, including the Dodd-Frank Wall Street Reform and Consumer Protection Act, or pursuant to the Company’s Incentive Recoupment Policy or any similar policy as may be in effect, the Company shall have the right to seek recoupment of all or any portion of an Award (including by forfeiture of any outstanding Award or by the Grantee’s remittance to the Company of vested Award shares or of a cash payment equal to the vested Award shares). The value with respect to which such recoupment is sought shall be determined by the Committee. The Committee shall be entitled, as permitted by applicable law, to deduct the amount of such payment from any amounts the Company may owe to the Grantee.

12. Employment Status . This Agreement does not give the Grantee the right to be retained as an employee of the Company.

13. Administration . The Award shall be administered in accordance with such regulations as the Committee shall from time to time adopt.

14. Plan Governs . If there is any inconsistency between the terms of this Agreement and the terms of the Plan, the Plan’s terms shall govern. All capitalized terms shall have the meanings ascribed to them in the Plan, unless specifically set forth otherwise herein.

15. Governing Law . This Agreement, and the Award, shall be construed, administered and governed in all respects under and by the laws of the State of Delaware.

IN WITNESS WHEREOF, this Agreement is executed by the Company this __th day of ________, _____, effective as of the ___day of ________, _____.

	HOUSTON WIRE & CABLE COMPANY

	By:

AGREED AND ACCEPTED :

I acknowledge receipt of the Houston Wire & Cable Company 2006 Stock Plan, as amended and restated effective March 1, 2015 (the “Plan”) and hereby accept this Stock Award subject to all the terms and conditions thereof. I agree to accept as binding, conclusive and final all decisions and interpretations of the Committee regarding any questions arising under the Plan or this Stock Award Agreement.

GRANTEE

Print Name:

Signature:

Date:

Exhibit 10.4

HOUSTON WIRE & CABLE COMPANY
2006 STOCK PLAN
(As Amended and Restated Effective March 1, 2015)

FORM OF EMPLOYEE
NONQUALIFIED STOCK OPTION AGREEMENT

[DATE]

[NAME]

[ADDRESS]

Dear [NAME]:

I am pleased to inform you that on [DATE], pursuant to the Houston Wire & Cable Company 2006 Stock Plan, as amended and restated effective March 1, 2015 (the “ Plan ”), the Compensation Committee of the Board of Directors (the “ Committee ”) of Houston Wire & Cable Company (the “ Company ”) granted to you a Non-Qualified Stock Option (the “ Option ”) to acquire shares of common stock, par value $0.01 per share (“ Shares ”), of the Company. This letter agreement constitutes your Stock Option Agreement under the Plan with respect to the Option.

2. Term . The term of the Option shall be for a period of ten years from the date hereof and shall expire at the close of regular business hours at the Company’s principal office, Houston Wire & Cable Company, 10201 North Loop East, Houston, Texas 77029 on the last day of the term of the Option, unless the Option terminates earlier as herein provided. Notwithstanding the foregoing, (a) if your employment with the Company or any of its subsidiaries terminates for any reason other than your death or Disability, the then vested portion of the Option shall continue to be exercisable until the earlier of (i) the 60 ^th day after the date of such termination or (ii) ten years after the date hereof, and (b) if your employment with the Company or any of its subsidiaries terminates due to your death or Disability, the then vested portion of the Option shall continue to be exercisable until the earlier of (i) 12 months after the date of such termination or (ii) ten years after the date hereof. In any event, any portion of the Option that is not vested as of the date of termination of your employment shall expire as of such date and shall not be exercisable. “Disability” has the meaning, and will be determined, as set forth in the Company’s long term disability program in which you participate.

3. Vesting . Subject to the other terms and conditions of this Stock Option Agreement and the Plan, the Option shall become vested and exercisable as set forth below:

Vesting Date		Number of Shares That Vest
[DATE]		[Percentage of Shares]
[DATE]		[Percentage of Shares]
[DATE]		[Percentage of Shares]
[DATE]		[Percentage of Shares]
[DATE]		[Percentage of Shares]

If the number of Shares covered by this Option is adjusted as provided in paragraph 1, then the above vesting numbers shall be proportionately adjusted by the Board or the Committee, as defined in the Plan. This Option may be exercised only to the extent, if any, that it is then vested.

6. Recoupment . Notwithstanding any other provision of this Agreement, to the extent required by applicable law, including the Dodd-Frank Wall Street Reform and Consumer Protection Act, or pursuant to the Company’s Incentive Recoupment Policy or any similar policy as may be in effect, the Company shall have the right to seek recoupment of all or any portion of the Option (including by forfeiture of any outstanding Option or by your remittance to the Company of Shares or of a cash payment equal to the Shares acquired upon exercise of the Option). The value with respect to which such recoupment is sought shall be determined by the Committee. The Committee shall be entitled, as permitted by applicable law, to deduct the amount of such payment from any amounts the Company may owe to you.

7. Nontransferability . You may not transfer, sell, pledge, encumber or otherwise dispose of the Option, except that you may, with the prior written approval of the Committee, transfer the Option to the following persons or entities: (i) immediate family members, (ii) custodianships under the Uniform Transfers to Minors Act or any similar statute, (iii) trusts for the benefit of any immediate family member, (iv) trusts created by you for your primary benefit, and (v) upon termination of a custodianship under the Uniform Transfers to Minors Act or similar statute or the termination of a trust by the custodian or trustee thereof, or the partial or complete liquidation of an entity, to the person or persons who, in accordance with the terms of such custodianship, trust or entity, are entitled to receive Options held in custody, trust or by the entity.

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8. Plan Governs . The terms of this Stock Option Agreement shall be subject to the terms of the Plan. If there is any inconsistency between the terms of this Stock Option Agreement and the terms of the Plan, the Plan’s terms shall govern. All capitalized terms shall have the meanings ascribed to them in the Plan, unless otherwise set forth herein. A copy of the Plan is attached hereto and the terms of the Plan are hereby incorporated by reference.

9. Employment and Stockholder Status . This Stock Option Agreement neither gives you the right to be retained as an employee of the Company, nor confers upon you or any holder hereof any right as a stockholder of the Company prior to the issuance of Shares pursuant to the exercise of the Option.

10. Acceptance . The exercise of the Option is conditioned upon your acceptance of this Stock Option Agreement and your return of an executed copy to the Treasurer of the Company within 30 days after receipt hereof.

	HOUSTON WIRE & CABLE COMPANY

	By:

	Its:

AGREED AND ACCEPTED

I acknowledge receipt of the Houston Wire & Cable Company 2006 Stock Plan, as amended and restated effective March 1, 2015 (the “ Plan ”) and hereby accept this Nonqualified Stock Option subject to all the terms and conditions thereof. I agree to accept as binding, conclusive and final all decisions and interpretations of the Committee regarding any questions arising under the Plan or this Stock Option Agreement.

Dated:

	Print Name:

	Signature:

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APPENDIX A

Houston Wire & Cable Company

10201 North Loop East

Houston, Texas 77029

Attn: Treasurer

NOTICE OF EXERCISE OF NONQUALIFIED STOCK OPTION

Dated:
			(signature)


			(printed name)


			(address)


			(city, state, zip code)


			(Social Security Number)

THIS DOCUMENT IS TO BE USED TO EXERCISE YOUR STOCK OPTIONS.

Exhibit 31.1

Certification of CEO Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, James L. Pokluda III, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2015 of Houston Wire & Cable Company;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal controls over financial reporting, or caused such internal controls over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 6, 2015	/s/ James L. Pokluda III
	James L. Pokluda III
	Chief Executive Officer

Exhibit 31.2

Certification of CFO Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Nicol G. Graham, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2015 of Houston Wire & Cable Company;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(a)

(b)

(c)

(d)

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 6, 2015	/s/ Nicol G. Graham
	Nicol G. Graham
	Chief Financial Officer

Exhibit 32.1

Certifications of CEO and CFO Pursuant to 18 U.S.C. Section 1350,

as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q of Houston Wire & Cable Company (the “Corporation”) for the fiscal quarter ended June 30, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), James L. Pokluda III, as Chief Executive Officer of the Corporation, and Nicol G. Graham, as Chief Financial Officer of the Corporation, each hereby certifies, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, to the best of his knowledge, that:

(1)	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

Date: August 6, 2015	/s/ James L. Pokluda III
	James L. Pokluda III
	Chief Executive Officer

Date: August 6, 2015	/s/ Nicol G. Graham
	Nicol G. Graham
	Chief Financial Officer

This certification accompanies the Report pursuant to section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by Houston Wire & Cable Company for purposes of section 18 of the Securities Exchange Act of 1934, as amended.