x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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75-2274963
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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1329 Millwood Road
McKinney, Texas
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75069
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
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x
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Accelerated filer
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¨
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Non-accelerated filer
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¨
(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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Emerging growth company
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o
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
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o
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Page No.
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Index to Exhibits
|
|
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June 30, 2017
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December 31, 2016
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||||
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(Unaudited)
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|
(See Note)
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||||
Assets
|
|
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|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
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$
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85,858
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|
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$
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95,753
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|
Accounts receivable, net of allowance of $2,027 and $2,036
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220,553
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|
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184,876
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||
Inventories
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95,458
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|
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93,274
|
|
||
Income tax receivable
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4,125
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|
|
—
|
|
||
Prepaid expenses and other
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3,170
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|
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2,479
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||
Total current assets
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409,164
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376,382
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||
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||||
Property, plant and equipment - at cost:
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|
|
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||||
Land and land improvements
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50,548
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50,934
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||
Construction-in-progress
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36,750
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35,825
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||
Buildings and improvements
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122,379
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121,432
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Machinery and equipment
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298,947
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289,493
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||
Furniture and fixtures
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9,350
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9,204
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||
Total property, plant and equipment
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517,974
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506,888
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||
Accumulated depreciation
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(232,033
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)
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(225,499
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)
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Property, plant and equipment - net
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285,941
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|
|
281,389
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||
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|
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||||
Other assets
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193
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|
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193
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||
Total assets
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$
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695,298
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$
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657,964
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||||
Liabilities and Stockholders’ Equity
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||||
Current liabilities:
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|
|
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||||
Trade accounts payable
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$
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37,587
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|
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$
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18,577
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Accrued liabilities
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24,979
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|
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27,986
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||
Income taxes payable
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—
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4,319
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Total current liabilities
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62,566
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50,882
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||||
Deferred income taxes
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34,787
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33,973
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Commitments and contingencies
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|
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||||
Stockholders’ equity:
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||||
Preferred stock, $.01 par value:
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||||
Authorized shares – 2,000,000; none issued
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—
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—
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Common stock, $.01 par value:
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||||
Authorized shares – 40,000,000;
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||||
Issued shares – 26,784,486 and 26,762,703
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268
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268
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Additional paid-in capital
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56,412
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55,311
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Treasury stock, at cost – 6,027,455 and 6,027,455 shares
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(91,056
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)
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(91,056
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)
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Retained earnings
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632,321
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608,586
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Total stockholders’ equity
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597,945
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573,109
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Total liabilities and stockholders’ equity
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$
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695,298
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$
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657,964
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Quarter Ended June 30,
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Six Months Ended June 30,
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||||||||||||
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2017
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2016
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2017
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2016
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||||||||
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(Unaudited)
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||||||||||||||
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||||||||
Net sales
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$
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291,534
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$
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238,831
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$
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570,926
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$
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464,375
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Cost of goods sold
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255,662
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210,200
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495,849
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405,602
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||||
Gross profit
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35,872
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28,631
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75,077
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58,773
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||||||||
Selling, general, and administrative expenses
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19,319
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16,726
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38,056
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34,034
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||||
Operating income
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16,553
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11,905
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37,021
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24,739
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||||
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||||||||
Net interest and other income
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20
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21
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36
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24
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||||
Income before income taxes
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16,573
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11,926
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37,057
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24,763
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||||
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||||||||
Provision for income taxes
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5,640
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4,087
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12,492
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8,325
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||||
Net income
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$
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10,933
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$
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7,839
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$
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24,565
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$
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16,438
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Earnings per common and common equivalent share – basic
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$
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0.53
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$
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0.38
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$
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1.18
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$
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0.79
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Weighted average common and common equivalent shares outstanding – basic
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20,751
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20,694
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20,745
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20,691
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||||
Earnings per common and common equivalent share – diluted
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$
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0.52
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$
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0.38
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$
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1.18
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$
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0.79
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Weighted average common and common equivalent shares outstanding – diluted
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20,835
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20,765
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20,834
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20,756
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Cash dividends declared per share
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$
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0.02
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$
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0.02
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$
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0.04
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$
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0.04
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Six Months Ended June 30,
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||||||
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2017
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2016
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||||
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(Unaudited)
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||||||
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Operating Activities:
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Net income
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$
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24,565
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$
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16,438
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Adjustments to reconcile net income to net cash
provided by (used in) operating activities: |
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||||
Depreciation and amortization
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7,648
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8,930
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Deferred income taxes
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814
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605
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Excess tax benefits of options exercised
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—
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(32
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)
|
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Stock-based compensation attributable to equity awards
|
719
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|
504
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Other
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(512
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)
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26
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|
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Changes in operating assets and liabilities:
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|
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|
||||
Accounts receivable
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(35,698
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)
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7,300
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Inventories
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(2,184
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)
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(331
|
)
|
||
Other assets
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(715
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)
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(470
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)
|
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Trade accounts payable and accrued liabilities
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14,508
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(13,237
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)
|
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Current income taxes receivable / payable
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(8,444
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)
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4,368
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Net cash provided by operating activities
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701
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24,101
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|
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Investing Activities:
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|
||||
Purchases of property, plant and equipment
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(11,091
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)
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(21,491
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)
|
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Proceeds from sale of assets
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923
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|
4
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|
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Net cash used in investing activities
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(10,168
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)
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(21,487
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)
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|
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Financing Activities:
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|
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|
||||
Deferred financing fees
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(1
|
)
|
|
—
|
|
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Proceeds from issuance of common stock, net
|
403
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|
|
165
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|
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Dividends paid
|
(830
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)
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|
(828
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)
|
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Excess tax benefits of options exercised
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—
|
|
|
32
|
|
||
Net cash used in financing activities
|
(428
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)
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|
(631
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)
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||
|
|
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|
||||
Net increase (decrease) in cash and cash equivalents
|
(9,895
|
)
|
|
1,983
|
|
||
Cash and cash equivalents at beginning of period
|
95,753
|
|
|
79,152
|
|
||
Cash and cash equivalents at end of period
|
$
|
85,858
|
|
|
$
|
81,135
|
|
In Thousands
|
June 30, 2017
|
|
December 31, 2016
|
||||
|
|
|
|
||||
Raw materials
|
$
|
24,796
|
|
|
$
|
23,144
|
|
Work-in-process
|
22,006
|
|
|
20,889
|
|
||
Finished goods
|
85,179
|
|
|
81,764
|
|
||
Total Inventory at FIFO cost
|
131,981
|
|
|
125,797
|
|
||
Adjust to LIFO cost
|
(36,523
|
)
|
|
(32,523
|
)
|
||
Inventory, net
|
$
|
95,458
|
|
|
$
|
93,274
|
|
In Thousands
|
June 30, 2017
|
|
December 31, 2016
|
||||
|
|
|
|
||||
Sales rebates payable
|
$
|
13,474
|
|
|
$
|
13,590
|
|
Property taxes payable
|
2,005
|
|
|
3,932
|
|
||
Accrued salaries
|
4,715
|
|
|
6,198
|
|
||
Other accrued liabilities
|
4,785
|
|
|
4,266
|
|
||
Total accrued liabilities
|
$
|
24,979
|
|
|
$
|
27,986
|
|
|
|
Quarter Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
In Thousands
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
|
||||||||
Net income
|
|
$
|
10,933
|
|
|
$
|
7,839
|
|
|
$
|
24,565
|
|
|
$
|
16,438
|
|
|
|
|
|
|
|
|
|
|
||||||||
Denominator:
|
|
|
|
|
|
|
|
|
||||||||
Denominator for basic earnings per share – weighted average shares
|
|
20,751
|
|
|
20,694
|
|
|
20,745
|
|
|
20,691
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Effect of dilutive securities:
|
|
|
|
|
|
|
|
|
||||||||
Employee stock options
|
|
84
|
|
|
71
|
|
|
89
|
|
|
65
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Denominator for diluted earnings per share – weighted average shares
|
|
20,835
|
|
|
20,765
|
|
|
20,834
|
|
|
20,756
|
|
|
April 2017
|
|
May 2017
|
|
June 2017
|
|
Quarter Ended June 30, 2017
|
|
Six Months Ended June 30, 2017
|
||||||||||
High
|
$
|
2.68
|
|
|
$
|
2.65
|
|
|
$
|
2.70
|
|
|
$
|
2.70
|
|
|
$
|
2.78
|
|
Low
|
2.53
|
|
|
2.49
|
|
|
2.54
|
|
|
2.49
|
|
|
2.48
|
|
|||||
Average
|
2.59
|
|
|
2.55
|
|
|
2.60
|
|
|
2.58
|
|
|
2.61
|
|
|
April 2016
|
|
May 2016
|
|
June 2016
|
|
Quarter Ended June 30, 2016
|
|
Six Months Ended June 30, 2016
|
||||||||||
High
|
$
|
2.28
|
|
|
$
|
2.26
|
|
|
$
|
2.19
|
|
|
$
|
2.28
|
|
|
$
|
2.29
|
|
Low
|
2.07
|
|
|
2.06
|
|
|
2.03
|
|
|
2.03
|
|
|
1.94
|
|
|||||
Average
|
2.18
|
|
|
2.11
|
|
|
2.10
|
|
|
2.13
|
|
|
2.12
|
|
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ENCORE WIRE CORPORATION
|
|
(Registrant)
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|
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Dated: August 2, 2017
|
/s/ DANIEL L. JONES
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|
Daniel L. Jones
Chairman, President and Chief Executive Officer |
|
|
Dated: August 2, 2017
|
/s/ FRANK J. BILBAN
|
|
Frank J. Bilban
Vice President-Finance, Treasurer,
Secretary and Chief Financial Officer |
Exhibit
Number
|
Description
|
3.1
|
Certificate of Incorporation of Encore Wire Corporation and all amendments thereto (filed as Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2009, and incorporated herein by reference).
|
3.2
|
Third Amended and Restated Bylaws of Encore Wire Corporation, as amended through February 27, 2012 (filed as Exhibit 3.2 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2011, and incorporated herein by reference).
|
4.1
|
Form of certificate for Common Stock (filed as Exhibit 1 to the Company’s registration statement on Form 8-A, filed with the SEC on June 4, 1992, and incorporated herein by reference).
|
10.1
|
Third Amendment dated as of September 29, 2016 to Credit Agreement dated as of September 27, 2012 by and among Encore Wire Corporation, as borrower, Bank of America, N.A., as administrative agent and letter of credit issuer, Wells Fargo Bank, National Association, as syndication agent, the financial institutions a party thereto as lenders and EWC Aviation Corporation, as guarantor (filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on October 5, 2016, and incorporated herein by reference).
|
10.2
|
Encore Wire Corporation 2010 Stock Option Plan, as amended and restated effective February 20, 2017 (filed as Appendix A to the Company’s Notice and Proxy Statement filed March 27, 2017, and incorporated herein by reference).
|
10.3
|
Form of Encore Wire Corporation 2010 Stock Option Plan Stock Award Agreement.
|
31.1
|
Certification by Daniel L. Jones, Chairman, President and Chief Executive Officer of the Company, dated August 2, 2017 and submitted pursuant to Rule 13a-14(a)/15d-14(a) and pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
31.2
|
Certification by Frank J. Bilban, Vice President – Finance, Treasurer, Secretary and Chief Financial Officer of the Company, dated August 2, 2017 and submitted pursuant to Rule 13a-14(a)/15d-14(a) and pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
32.1
|
Certification by Daniel L. Jones, Chairman, President and Chief Executive Officer of the Company, dated August 2, 2017 as required by 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
32.2
|
Certification by Frank J. Bilban, Vice President – Finance, Treasurer, Secretary and Chief Financial Officer of the Company, dated August 2, 2017 as required by 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
101.INS
|
XBRL Instance Document
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Encore Wire Corporation;
|
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;
|
4.
|
The registrant’s other certifying officer(s) 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 control over financial reporting, or caused such internal control 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(s) 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.
|
|
/s/ DANIEL L. JONES
|
|
Daniel L. Jones
Chairman, President and Chief Executive Officer |
1.
|
I have reviewed this quarterly report on Form 10-Q of Encore Wire Corporation;
|
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.
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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;
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4.
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The registrant’s other certifying officer(s) 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:
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(a)
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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;
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(b)
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Designed such internal control over financial reporting, or caused such internal control 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;
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(c)
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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
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(d)
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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
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5.
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The registrant’s other certifying officer(s) 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):
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(a)
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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
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(b)
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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.
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/s/ FRANK J. BILBAN
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Frank J. Bilban
Vice President-Finance, Treasurer, Secretary and Chief Financial Officer |
1.
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
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2.
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/ DANIEL L. JONES
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Daniel L. Jones
Chairman, President and Chief Executive Officer |
1.
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
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2.
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/ FRANK J. BILBAN
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Frank J. Bilban
Vice President-Finance, Treasurer, Secretary and Chief Financial Officer |