Encore Wire Corp. (WIRE, Financial) filed Quarterly Report for the period ended 2010-03-31.
Encore Wire Corp. has a market cap of $488.9 million; its shares were traded at around $21.11 with and P/S ratio of 0.8. The dividend yield of Encore Wire Corp. stocks is 0.4%. Encore Wire Corp. had an annual average earning growth of 9.2% over the past 10 years.WIRE is in the portfolios of Third Avenue Management, Chuck Royce of Royce& Associates, Jim Simons of Renaissance Technologies LLC.
Selling expenses, consisting of commissions and freight, for the first quarter of 2010 were $7.6 million, or 4.3% of net sales, compared to $7.6 million, or 5.2% of net sales, in the first quarter of 2009. Commissions paid to independent manufacturers representatives are calculated as a percentage of sales, and therefore, rose $696,000 in concert with the increased sales dollars. This increase in commissions was offset by freight costs, which decreased $646,000 due to the decrease in unit sales. General and administrative expenses increased to $4.3 million, or 2.4% of net sales, in the first quarter of 2010 compared to $3.0 million, or 2.1% of net sales, in the first quarter of 2009. The general and administrative costs rose primarily due to increased legal and administrative costs. The provision for bad debts was $75,000 in the first quarter of both 2010 and 2009.
The net interest and other income and expense category increased in expense to $2.7 million in the first quarter of 2010 from $288,000 expense in the first quarter of 2009, due primarily to the $2.6 million one-time charge associated with the early retirement of the Companys $100 million in long-term notes payable. Income taxes were accrued at an effective rate of negative 39.65% that benefited net income (by reducing the loss) in the first quarter of 2010 versus a 33.5% expense in the first quarter of 2009, consistent with the Companys estimated liabilities. The volatility of the effective rate is due to the fact that relatively small dollar amounts of book versus tax adjustments have a larger percentage impact when the pre-tax earnings are near break even.
On January 15, 2010, the Company used available cash to pay off all of its then outstanding debt, comprised of the Fixed Rate Senior Notes and the Floating Rate Senior Notes. The Company paid off the $100 million debt with a payment totaling $103.8 million, which included accrued and unpaid interest, along with a pre-payment fee applicable to the Fixed Rate Senior Notes. The Company incurred a one-time charge of $2.6 million in 2010 in connection with this transaction and expects to realize a
Cash provided by operating activities was $7.2 million in the first quarter of 2010 compared to $25.7 million in the first quarter of 2009. The following changes in components of cash flow were notable. The Company had a net loss in the first quarter of 2010 versus net income in the first quarter of 2009, providing $7.1 million less cash. Accounts receivable declined in the first quarter of 2009, providing $16.4 million in cash, while accounts receivable rose by $9.4 million in the first quarter of 2010, resulting in a use of cash and a $25.9 million negative swing in cash provided by operations. Other assets and liabilities decreased cash flow by $7.0 million in the first quarter of 2010 versus a $0.1 million contribution in the first quarter of 2009, primarily due to a $7.1 million increase in prepaid assets associated with prepaid copper inventory at March 31, 2010. These uses of cash in the first quarter of 2010 were offset by the following positive swings in cash flow from the first quarter of 2009 to the first quarter of 2010. The dollar value of inventories increased slightly in the first quarter of 2009, consuming $2.0 million in cash versus a source of cash of $10.0 million due to a decrease in inventory in the first quarter of 2010. Trade accounts payable and accrued liabilities had a $13.9 million increase in cash flow provided in the first quarter of 2010 versus the first quarter of 2009 due primarily to the increase in accounts payable, attributable to timing of inventory receipts at quarter end. These changes in cash flow were the primary drivers of the $18.5 million decrease in cash flow from operations in the first quarter of 2010 versus the first quarter of 2009.
Cash used in investing activities decreased to $3.1 million in the first quarter of 2010 from $12.2 million in the first quarter of 2009. In the first quarter of 2010, the funds were used primarily for equipment purchases, which were much lower. The $100.5 million of cash used in financing activities in the first quarter of 2010 was primarily the result of the Companys early retirement of long-term notes payable discussed above. In the first quarter of 2010, the Companys revolving line of credit remained at $0. The Companys cash balance was $130.4 million at March 31, 2010.
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Encore Wire Corp. has a market cap of $488.9 million; its shares were traded at around $21.11 with and P/S ratio of 0.8. The dividend yield of Encore Wire Corp. stocks is 0.4%. Encore Wire Corp. had an annual average earning growth of 9.2% over the past 10 years.WIRE is in the portfolios of Third Avenue Management, Chuck Royce of Royce& Associates, Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:
Cost of goods sold increased to $164.6 million, or 94.0% of net sales, in the first quarter of 2010, compared to $126.7 million, or 87.7% of net sales, in the first quarter of 2009. Gross profit decreased to $10.6 million, or 6.0% of net sales, in the first quarter of 2010 versus $17.8 million, or 12.3% of net sales, in the first quarter of 2009. The decreased gross profit and gross margin percentages were primarily the result of the increase in raw material costs (including LIFO adjustments) in percentage terms in 2010 versus 2009. In comparing the first quarter of 2010 to the first quarter of 2009, the average sales price of wire that contained a pound of copper increased 74.7%, while the average price of copper purchased during the quarter increased 106%. This resulted in total materials cost equaling 86.2% of net sales in the first quarter of 2010 versus 75.7% in the first quarter of 2009.Selling expenses, consisting of commissions and freight, for the first quarter of 2010 were $7.6 million, or 4.3% of net sales, compared to $7.6 million, or 5.2% of net sales, in the first quarter of 2009. Commissions paid to independent manufacturers representatives are calculated as a percentage of sales, and therefore, rose $696,000 in concert with the increased sales dollars. This increase in commissions was offset by freight costs, which decreased $646,000 due to the decrease in unit sales. General and administrative expenses increased to $4.3 million, or 2.4% of net sales, in the first quarter of 2010 compared to $3.0 million, or 2.1% of net sales, in the first quarter of 2009. The general and administrative costs rose primarily due to increased legal and administrative costs. The provision for bad debts was $75,000 in the first quarter of both 2010 and 2009.
The net interest and other income and expense category increased in expense to $2.7 million in the first quarter of 2010 from $288,000 expense in the first quarter of 2009, due primarily to the $2.6 million one-time charge associated with the early retirement of the Companys $100 million in long-term notes payable. Income taxes were accrued at an effective rate of negative 39.65% that benefited net income (by reducing the loss) in the first quarter of 2010 versus a 33.5% expense in the first quarter of 2009, consistent with the Companys estimated liabilities. The volatility of the effective rate is due to the fact that relatively small dollar amounts of book versus tax adjustments have a larger percentage impact when the pre-tax earnings are near break even.
On January 15, 2010, the Company used available cash to pay off all of its then outstanding debt, comprised of the Fixed Rate Senior Notes and the Floating Rate Senior Notes. The Company paid off the $100 million debt with a payment totaling $103.8 million, which included accrued and unpaid interest, along with a pre-payment fee applicable to the Fixed Rate Senior Notes. The Company incurred a one-time charge of $2.6 million in 2010 in connection with this transaction and expects to realize a
Cash provided by operating activities was $7.2 million in the first quarter of 2010 compared to $25.7 million in the first quarter of 2009. The following changes in components of cash flow were notable. The Company had a net loss in the first quarter of 2010 versus net income in the first quarter of 2009, providing $7.1 million less cash. Accounts receivable declined in the first quarter of 2009, providing $16.4 million in cash, while accounts receivable rose by $9.4 million in the first quarter of 2010, resulting in a use of cash and a $25.9 million negative swing in cash provided by operations. Other assets and liabilities decreased cash flow by $7.0 million in the first quarter of 2010 versus a $0.1 million contribution in the first quarter of 2009, primarily due to a $7.1 million increase in prepaid assets associated with prepaid copper inventory at March 31, 2010. These uses of cash in the first quarter of 2010 were offset by the following positive swings in cash flow from the first quarter of 2009 to the first quarter of 2010. The dollar value of inventories increased slightly in the first quarter of 2009, consuming $2.0 million in cash versus a source of cash of $10.0 million due to a decrease in inventory in the first quarter of 2010. Trade accounts payable and accrued liabilities had a $13.9 million increase in cash flow provided in the first quarter of 2010 versus the first quarter of 2009 due primarily to the increase in accounts payable, attributable to timing of inventory receipts at quarter end. These changes in cash flow were the primary drivers of the $18.5 million decrease in cash flow from operations in the first quarter of 2010 versus the first quarter of 2009.
Cash used in investing activities decreased to $3.1 million in the first quarter of 2010 from $12.2 million in the first quarter of 2009. In the first quarter of 2010, the funds were used primarily for equipment purchases, which were much lower. The $100.5 million of cash used in financing activities in the first quarter of 2010 was primarily the result of the Companys early retirement of long-term notes payable discussed above. In the first quarter of 2010, the Companys revolving line of credit remained at $0. The Companys cash balance was $130.4 million at March 31, 2010.
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