This report contains forward-looking statements, which are subject to inherent uncertainties. These uncertainties include, but are not limited to, variations in weather, changes in the regulatory environment, customer preferences, general economic conditions, increased competition, the outcome of outstanding litigation, and future developments affecting environmental matters. All of these are difficult to predict, and many are beyond the ability of the Company to control.
Certain statements in this Quarterly Report on Form 10-Q that are not historical facts, but rather reflect the Company's current expectations concerning future results and events, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The words "believes", "expects", "intends", "plans", "anticipates", "hopes", "likely", "will", and similar expressions identify such forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of the Company, or industry results, to differ materially from future results, performance or achievements expressed or implied by such forward-looking statements.
Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's view only as of the date of this Form 10-Q. The Company undertakes no obligation to update the result of any revisions to these forward-looking statements which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, conditions or circumstances.
-25- OVERVIEW
The Company is a leading manufacturer of flexible metal hose, and is currently engaged in a number of different markets, including construction, manufacturing, transportation, petrochemical, pharmaceutical and other industries.
The Company's business is managed as a single operating segment that consists of
the manufacture and sale of flexible metal hose, fittings and accessories. The
Company's products are concentrated in residential and commercial construction,
and general industrial markets, with a comprehensive portfolio of intellectual
property and patents issued in various countries around the world. The Company's
primary product, flexible gas piping, is used for gas piping within residential
and commercial buildings. Through its flexibility and ease of use, the Company's
TracPipe® and TracPipe® CounterStrike® flexible gas piping, along with its
fittings distributed under the trademarks AutoSnap® and AutoFlare®, allows users
to substantially cut the time required to install gas piping, as compared to
traditional methods. The Company's newest product line MediTrac® corrugated
medical tubing is used for piping medical gases (oxygen, nitrogen, nitrous
oxide, carbon dioxide, and medical vacuum) in health care facilities. Building
on the recognized strengths and strategies employed in the flexible gas piping
market, MediTrac® can be used in place of rigid copper pipe, and due to its long
continuous lengths and flexibility, it can be installed approximately five times
faster than rigid copper pipe, saving on installation labor and construction
schedules. The Company's products are manufactured at its
CHANGES IN FINANCIAL CONDITION For the period endedMarch 31, 2021 vs.December 31, 2020
Accrued Compensation was
Taxes Payable were
-26- RESULTS OF OPERATIONS Three-months endedMarch 31, 2021 vs.March 31, 2020
The Company reported comparative results from operations for the three-month
periods ended
Three-months ended March 31, (in thousands) 2021 2021 2020 2020 ($000 ) % ($000 ) % Net Sales$ 30,863 100.0 %$ 25,266 100.0 % Gross Profit$ 19,559 63.4 %$ 15,769 62.4 % Operating Profit$ 8,319 27.0 %$ 5,845 23.1 %
Gross Profit. The Company's gross profit margins were 63.4% and 62.4% for the
three-months ended
Selling Expenses. Selling expenses consist primarily of employee salaries and
associated overhead costs, commissions, and the cost of marketing programs such
as advertising, trade shows and related communication costs, and freight.
Selling expense was
General and Administrative Expenses. General and administrative expenses consist
primarily of employee salaries, benefits for administrative, executive and
finance personnel, legal and accounting, and corporate general and
administrative services. General and administrative expenses were
-27-
Engineering Expense. Engineering expenses consist of development expenses
associated with the development of new products and enhancements to existing
products, and manufacturing engineering costs. Engineering expenses were
Operating Profits. Reflecting all of the factors mentioned above, operating
profits were
Interest Income (Expense)-Net. Interest income is recorded on cash investments,
and interest expense is recorded at times when the Company has debt amounts
outstanding on its line of credit. The Company recorded
Other Income (Expense)-Net. Other Income (Expense)-net primarily consists of
foreign currency exchange gains (losses) on transactions settled in currencies
other than the Company's local currency, typically related to the Company's
foreign
Income Tax Expense. Income Tax Expense was
CRITICAL ACCOUNTING POLICIES AND USE OF ESTIMATES
Financial Reporting Release No. 60, released by the
-28-
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities as of the dates of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Management develops, and changes periodically, these estimates and assumptions based on historical experience and on various other factors that are believed to be reasonable under the circumstances. Actual amounts could differ significantly from these estimates.
LIQUIDITY AND CAPITAL RESOURCES
Historically, the Company's primary cash needs have been related to working capital items, which the Company has largely funded through cash generated from operations.
As of
Operating Activities
Cash provided by operating activities is net income adjusted for certain non-cash items and changes in certain assets and liabilities, such as those included in working capital.
For the three months ended
As a general trend, the Company tends to deplete or generate lower amounts of cash early in the year, as significant payments are typically made for accrued promotional incentives, incentive compensation, and taxes. Cash has then historically shown a tendency to be restored and accumulated during the latter portion of the year.
Investing Activities
Cash used in investing activities during the three months ended
Financing Activities
A dividend was declared in both December of 2020 and 2019, amounting to
Liquidity
We believe our existing cash and cash equivalents, along with our borrowing capacity, will be sufficient to meet our anticipated cash needs for at least the next twelve months. Our future capital requirements will depend upon many factors including our rate of revenue growth, the timing and extent of any expansion efforts, the potential for investments in, or the acquisition of any complementary products, businesses or supplementary facilities for additional capacity, and the COVID-19 pandemic.
-29-
CONTINGENT LIABILITIES AND GUARANTEES
See Note 5 to the Company's condensed consolidated financial statements.
OFF-BALANCE SHEET ARRANGEMENTS
None
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