Encore Wire Corporation (NASDAQ Global Select: WIRE) today
announced results for the fourth quarter and full year ended
December 31, 2016.
Net sales for the fourth quarter of 2016 were $239.2 million
compared to $250.9 million during the fourth quarter of 2015. Unit
volume, measured in copper pounds contained in the wire sold,
decreased 8.7%, offset somewhat by a 4.4% increase in the average
selling price per copper pound sold in the fourth quarter of 2016
versus the same period in 2015. Sales prices increased primarily
due to higher copper prices, which increased 3.3% versus the fourth
quarter of 2015. Aluminum building wire sales constituted 10.2% of
net sales dollars for the fourth quarter of 2016 versus 10.2% in
the fourth quarter of 2015. Net income for the fourth quarter of
2016 was $11.4 million versus $10.9 million in the fourth quarter
of 2015. Fully diluted net earnings per common share were $0.55 in
the fourth quarter of 2016 versus $0.53 in the fourth quarter of
2015.
Net sales for the year ended December 31, 2016 were $940.8
million versus $1.018 billion during the same period in 2015.
Copper unit volume increased 2.4% in 2016 versus 2015, offset by a
10.1% decrease in the average selling price per copper pound sold
in 2016 versus 2015. Sales prices declined primarily due to lower
copper prices, which declined 13.2% in 2016 versus 2015. Aluminum
building wire sales continued to grow, constituting 10.3% of net
sales dollars during 2016 versus 9.9% in 2015. Net income for the
year ended December 31, 2016 was $33.8 million versus $47.6 million
for the same period in 2015. Fully diluted net earnings per common
share were $1.63 for the year ended December 31, 2016 versus $2.29
for the same period in 2015.
On a sequential quarter comparison, net sales for the fourth
quarter of 2016 were $239.2 million versus $237.2 million during
the third quarter of 2016. Copper unit volume decreased 6.4% on a
sequential quarter comparison, in-line with the fact that the
fourth quarter is generally a slower quarter in the construction
and building wire industries. The unit volume decrease was more
than offset by the 8.2% increase in the average selling price of
wire per copper pound sold. Net income for the fourth quarter of
2016 increased to $11.4 million versus $6.0 million in the third
quarter of 2016. Fully diluted net income per common share was
$0.55 in the fourth quarter of 2016 versus $0.29 in the third
quarter of 2016.
Commenting on the results, Daniel L. Jones, Chairman, President
and Chief Executive Officer, said, "We are pleased to report a good
fourth quarter and full year. Our unit sales were up in both copper
and aluminum building wire for the year despite two competitive
issues we noted in our previous quarterly press release. First, our
largest competitor announced the purchase of a smaller competitor
in the third quarter. Historically, these consolidations generally
lead to improved industry margin discipline in the long run, but,
in the short run, they can lead to erratic pricing and volumes for
us if the selling company pumps sales volumes into the market
pre-sale and then dumps its remaining inventory into the market
post-sale. We believe that this volume has moved through the pipe
at this point, and, as a result, margins improved on a sequential
quarter basis. In addition, a different, financially stressed
competitor was acting erratically in the aluminum wire market. We
hope to see some relief there in 2017. It is also noteworthy that
three of our top competitors have had major changes to their
executive teams in the last 18 months. This can also lead to some
turmoil in the industry as the new teams find their footing in the
market. Despite all this turmoil we believe we had a respectable
year and believe the industry and our results can improve in 2017.
The overall construction and building wire markets remained steady
versus last year. Anecdotal information confirms our belief that
there are still large commercial and industrial projects in the
pipeline.
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. The copper wire spread decreased 4.1% in 2016
versus 2015, as the average price of copper purchased decreased
13.2% in 2016 versus 2015, while the average selling price of wire
sold decreased 10.1%. Similarly, aluminum spreads dropped 11.5% in
2016 versus 2015. We are, however, encouraged by the fact spreads
improved during the fourth quarter of 2016 versus the third quarter
of 2016. Spreads increased on this sequential quarterly comparison,
climbing 10.3% and 3.6% for copper and aluminum wire,
respectively.
We continue 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 $95.8 million in cash at the end of the quarter. We also
declared another cash dividend during the quarter. We understand
that this is a cyclical industry and therefore we designed and
manage our cost structure and balance sheet accordingly. 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 shareholder value, may include
forward-looking statements that involve risks and uncertainties,
including 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. Financial analysts
frequently ask for EBITDA when it has not been presented. 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 in
previous Form 8-K filings 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 December 31,
Year Ended December 31, In Thousands 2016 2015
2016 2015 Net Income $ 11,402 $ 10,952 $ 33,839 $
47,605 Income Tax Expense 5,543 5,579 16,975 24,779 Interest
Expense 59 63 235 250 Depreciation and Amortization 3,803
4,091 16,811 16,063 EBITDA $ 20,807 $ 20,685 $
67,860 $ 88,697
Encore Wire
Corporation Condensed Consolidated Balance Sheets
(In Thousands)
December 31, 2016 December 31, 2015
(unaudited) ASSETS Current Assets Cash $ 95,753 $ 79,152
Receivables, net 184,876 186,065 Inventories 93,274 95,254 Prepaid
Expenses and Other 2,479 9,684 Total
Current Assets 376,382 370,155 Property, Plant and Equipment, net
281,389 254,768 Other Assets 193 3,193
Total Assets $ 657,964 $ 628,116 LIABILITIES
AND STOCKHOLDERS’ EQUITY Current Liabilities Accounts Payable $
18,577 $ 28,743 Accrued Liabilities and Other 32,305
25,499 Total Current Liabilities 50,882 54,242 Long
Term Liabilities Non-Current Deferred Income Taxes 33,973
35,235 Total Long Term Liabilities
33,973 35,235 Total Liabilities 84,855 89,477
Stockholders’ Equity Common Stock 268 267 Additional Paid in
Capital 55,311 53,024 Treasury Stock (91,056 ) (91,056 ) Retained
Earnings 608,586 576,404 Total
Stockholders’ Equity 573,109 538,639
Total Liabilities and Stockholders’ Equity $ 657,964 $
628,116
Encore
Wire Corporation Condensed Consolidated Statements of
Income
(In Thousands, Except Per Share Data)
Quarter Ended December 31, Year Ended December
31, 2016 2015 2016
2015 (unaudited) (unaudited)
Net
Sales $ 239,247 100.0 % $ 250,857 100.0 % $ 940,790 100.0 % $
1,017,622 100.0 % Cost of Sales 205,721 86.0 %
217,805 86.8 % 820,673 87.2 % 880,900
86.6 % Gross Profit 33,526 14.0 % 33,052 13.2 % 120,117 12.8
% 136,722 13.4 % Selling, General and Administrative
Expenses 16,595 6.9 % 16,543 6.6 %
69,351 7.4 % 64,493 6.3 % Operating
Income 16,931 7.1 % 16,509 6.6 % 50,766 5.4 % 72,229 7.1 %
Net Interest & Other Expense (14 ) — % (22 ) — %
(48 ) — % (155 ) — % Income before Income Taxes
16,945 7.1 % 16,531 6.6 % 50,814 5.4 % 72,384 7.1 % Income
Taxes 5,543 2.3 % 5,579 2.2 %
16,975 1.8 % 24,779 2.4 % Net Income $ 11,402
4.8 % $ 10,952 4.4 % $ 33,839 3.6 % $ 47,605
4.7 % Basic Earnings Per Share $ 0.55 $ 0.53
$ 1.63 $ 2.30 Diluted Earnings Per Share $
0.55 $ 0.53 $ 1.63 $ 2.29 Weighted
Average Number of Common and Common Equivalent Shares Outstanding:
Basic 20,728 20,675 20,704
20,713 Diluted 20,804
20,757 20,773 20,787 Dividend
Declared per Share $ 0.02 $ 0.02 $ 0.08 $ 0.08
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170216006158/en/
Encore Wire CorporationFrank J. Bilban,
972-562-9473Vice President & CFO
Encore Wire (NASDAQ:WIRE)
Historical Stock Chart
From Mar 2024 to Apr 2024
Encore Wire (NASDAQ:WIRE)
Historical Stock Chart
From Apr 2023 to Apr 2024