Encore Wire Corporation (NASDAQ Global Select: WIRE) today
announced results for the second quarter of 2016 and the six months
ended June 30, 2016.
Net sales for the second quarter ended June 30, 2016 were
$238.8 million compared to $253.7 million during the second quarter
of 2015. Copper unit volume, measured in pounds of copper contained
in the wire sold, increased 14.0% in the second quarter of 2016
versus the second quarter of 2015. Aluminum unit volume was up
14.3% in the second quarter of 2016 versus the second quarter of
2015. Aluminum building wire sales constituted 9.8% of net sales
dollars for the second quarter of 2016 versus 9.4% in the second
quarter of 2015. The average selling price of wire per copper pound
sold dropped 17.8% in the second quarter of 2016 versus the second
quarter of 2015, driving the decrease in net sales dollars. Copper
wire sales prices declined primarily due to the lower price of
copper purchased, which declined 22.1% versus the second quarter of
2015. Net income for the second quarter of 2016 was $7.8 million
versus $11.4 million in the second quarter of 2015. Fully diluted
net earnings per common share were $0.38 in the second quarter of
2016 versus $0.54 in the second quarter of 2015.
Net sales for the six months ended June 30, 2016 were
$464.4 million compared to $504.0 million during the same period in
2015. The average selling price of wire per copper pound sold
dropped 16.6%, while copper unit volume sold increased 9.6% in the
six months ended June 30, 2016 versus the six months ended
June 30, 2015. Copper wire sales prices followed the price of
copper purchased, which declined 21.4%. Aluminum building wire
sales constituted 10.1% of net sales dollars for the six months
ended June 30, 2016 versus 9.4% in the six months ended
June 30, 2015. Net income for the six months ended
June 30, 2016 was $16.4 million versus $22.1 million in the
same period in 2015. Fully diluted net earnings per common share
were $0.79 for the six months ended June 30, 2016 versus $1.06
in the same period in 2015.
On a sequential quarter comparison, net sales for the second
quarter of 2016 were $238.8 million versus $225.5 million during
the first quarter of 2016. Sales dollars increased due to a 7.3%
unit volume increase of copper building wire sold offset by a 0.5%
decrease in the average selling price per pound of copper wire sold
on a sequential quarter comparison. Copper wire sales prices
declined slightly, despite an increase of 1.1% in the price of
copper purchased. Net income for the second quarter of 2016
decreased to $7.8 million versus $8.6 million in the first quarter
of 2016. Fully diluted net income per common share was $0.38 in the
second quarter of 2016 versus $0.41 in the first quarter of
2016.
Commenting on the results, Daniel L. Jones, Chairman, President
and Chief Executive Officer of Encore Wire Corporation, said, “We
are generally pleased with the second quarter results. Unit volumes
were up over the second quarter of last year, as well as the first
quarter of this year. Margins, however, declined in both copper and
aluminum wire sales. One of the key metrics to our earnings is the
“spread” between the price of copper wire sold and the cost of raw
copper purchased in any given period. That copper spread decreased
8.5% in the second quarter of 2016 versus the second quarter of
2015, and 3.3% on a sequential quarter comparison. The copper
spread contracted 8.5% as the average price of copper purchased
decreased 22.1% in the second quarter of 2016 versus the second
quarter of 2015, and the average selling price of wire sold
decreased 17.8%. Aluminum spreads were down 14.2% and 8.9% versus
the same respective periods. The margin declines were due to the
competitive pricing environment in the industry as well as the
timing of at least two attempts by the industry to raise prices
that were announced just ahead of a week of soft copper commodity
prices. These price increase attempts had difficulty gaining
traction, and margins dropped. Our aluminum plant expansion is now
nearly fully operational and progressing well towards targeted
efficiency levels. Based on discussions with our distributor
customers and their contractor customers, we believe there is a
fairly good outlook for construction projects this year, although
we are steering through headwinds generated by concern about the
national political landscape and other factors.
We continue to strive to lead and support industry price
increases in an effort to maintain and increase margins. We believe
our superior order fill rates continue to enhance our competitive
position, as our electrical distributor customers are holding lean
inventories in the field. As orders come in from electrical
contractors, the distributors can count on our order fill rates to
ensure quick deliveries from coast to coast. We have been able to
accomplish this despite holding what are historically lean
inventories for us.
Our balance sheet is very strong. We have no long term debt, and
our revolving line of credit is paid down to zero. In addition, we
had $81.1 million in cash at the end of the quarter. We also
declared another cash dividend during the quarter.
Our low cost structure and strong balance sheet have enabled us
to withstand difficult periods in the past, and we believe they are
continuing to prove valuable now. We thank our employees and
associates for their outstanding effort and our shareholders for
their continued support.”
Encore Wire Corporation is a leading manufacturer of a broad
range of electrical building wire for interior wiring in commercial
and industrial buildings, homes, apartments, and manufactured
housing. The Company is focused on maintaining a high level of
customer service with low-cost production and the addition of new
products that complement its current product line. The matters
discussed in this news release, other than the historical financial
information, including statements about the copper pricing
environment, profitability and stockholder value, may include
forward-looking statements that involve risks and uncertainties,
including payment of future dividends, future purchases of stock,
fluctuations in the price of copper and other raw materials, the
impact of competitive pricing and other risks detailed from time to
time in the Company’s reports filed with the Securities and
Exchange Commission. Actual results may vary materially from those
anticipated.
Additional Disclosures:
The term “EBITDA” is used by the Company in presentations,
quarterly conference calls and other instances as appropriate.
EBITDA is defined as net income before interest, income taxes,
depreciation and amortization. The Company presents EBITDA because
it is a required component of financial ratios reported by the
Company to the Company’s banks, and is also frequently used by
securities analysts, investors and other interested parties, in
addition to and not in lieu of Generally Accepted Accounting
Principles (GAAP) results to compare to the performance of other
companies who also publicize this information. EBITDA is not a
measurement of financial performance under GAAP and should not be
considered an alternative to net income as an indicator of the
Company’s operating performance or any other measure of performance
derived in accordance with GAAP.
The Company has reconciled EBITDA with net income for fiscal
years 1996 to 2015 on previous current reports on Form 8-K filed
with the Securities and Exchange Commission. EBITDA for each period
pertinent to this press release is calculated and reconciled to net
income as follows:
Quarter Ended June
30, Six Months Ended June 30, In Thousands 2016 2015
2016 2015 Net Income $ 7,839 $ 11,353 $
16,438 $ 22,141 Income Tax Expense 4,087 5,711 8,325
11,421 Interest Expense 58 62 116 124 Depreciation and Amortization
4,084 3,951 8,930
7,848 EBITDA $ 16,068 $ 21,077 $ 33,809
$ 41,534
Encore Wire
Corporation Condensed Consolidated Balance Sheets
(In Thousands)
June 30, 2016 December 31, 2015 (Unaudited)
ASSETS Current Assets Cash $ 81,135 $ 79,152 Receivables, net
178,765 186,065 Inventories 95,585 95,254 Prepaid Expenses and
Other 5,796 9,684 Total Current Assets
361,281 370,155 Property, Plant and Equipment, net 268,624 254,768
Other Assets 6,192 3,193 Total Assets $
636,097 $ 628,116 LIABILITIES AND
STOCKHOLDERS’ EQUITY Current Liabilities Accounts Payable $ 25,090
$ 28,743 Accrued Liabilities and Other 29,289
33,972 Total Current Liabilities 54,379 62,715 Long Term
Liabilities Non-Current Deferred Income Taxes 26,768
26,762 Total Long Term Liabilities 26,768
26,762 Total Liabilities 81,147 89,477
Stockholders’ Equity Common Stock 267 267 Additional Paid in
Capital 53,725 53,024 Treasury Stock (91,056 ) (91,056 ) Retained
Earnings 592,014 576,404 Total
Stockholders’ Equity 554,950 538,639
Total Liabilities and Stockholders’ Equity $ 636,097 $
628,116
Encore
Wire Corporation Condensed Consolidated Statements of
Income
(Unaudited)
(In Thousands, Except Per Share Data)
Quarter Ended June 30, Six Months Ended June
30, 2016 2015 2016
2015 Net Sales $ 238,831
100.0 % $ 253,747 100.0 % $ 464,375 100.0 % $ 504,010 100.0 % Cost
of Sales 210,200 88.0 % 220,842
87.0 % 405,602 87.3 % 438,674
87.0 % Gross Profit 28,631 12.0 % 32,905 13.0 %
58,773 12.7 % 65,336 13.0 % Selling, General and
Administrative Expenses 16,726 7.0 %
15,857 6.2 % 34,034 7.3 %
31,889 6.3 % Operating Income 11,905 5.0 % 17,048 6.7
% 24,739 5.3 % 33,447 6.6 % Net Interest & Other Expense
(21 ) — % (16 ) — % (24 )
— % (115 ) — % Income before Income Taxes 11,926 5.0
% 17,064 6.7 % 24,763 5.3 % 33,562 6.7 % Income Taxes
4,087 1.7 % 5,711 2.3 %
8,325 1.8 % 11,421 2.3 % Net
Income $ 7,839 3.3 % $ 11,353 4.5 % $
16,438 3.5 % $ 22,141 4.4 %
Basic Earnings Per Share $ 0.38 $ 0.55 $ 0.79
$ 1.07 Diluted Earnings Per Share $ 0.38 $ 0.54
$ 0.79 $ 1.06 Weighted Average Number of
Common and Common Equivalent Shares Outstanding: Basic
20,694 20,737 20,691
20,731 Diluted 20,765 20,836
20,756 20,809 Dividend Declared per
Share $ 0.02 $ 0.02 $ 0.04 $ 0.04
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version on businesswire.com: http://www.businesswire.com/news/home/20160727006424/en/
Encore Wire CorporationFrank J. Bilban,
972-562-9473Vice President & CFO
Encore Wire (NASDAQ:WIRE)
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