Encore Wire Corporation (NASDAQ Global Select: WIRE) today
announced results for the first quarter of 2017.
Net sales for the first quarter ended March 31, 2017 were
$279.4 million compared to $225.5 million during the first quarter
of 2016. Copper unit volume, measured in pounds of copper contained
in the wire sold, increased 8.1% in the first quarter of 2017
versus the first quarter of 2016. Aluminum unit volume was up 7.8%
in the first quarter of 2017 versus the first quarter of 2016.
Aluminum building wire sales constituted 8.7% of net sales dollars
for the first quarter of 2017 versus 10.5% in the first quarter of
2016. The average selling price of wire per copper pound sold
increased 16.9% in the first quarter of 2017 versus the first
quarter of 2016, driving the 26.5% increase in net sales dollars.
Copper wire sales prices increased primarily due to the higher
price of copper purchased, which increased 22.6% versus the first
quarter of 2016. Net income for the first quarter of 2017 was $13.6
million versus $8.6 million in the first quarter of 2016. Fully
diluted net earnings per common share were $0.65 in the first
quarter of 2017 versus $0.41 in the first quarter of 2016.
On a sequential quarter comparison, net sales for the first
quarter of 2017 were $279.4 million versus $239.2 million during
the fourth quarter of 2016. Sales dollars increased due to a 10.4%
unit volume increase of copper building wire sold, combined with a
7.6% increase in the average selling price per pound of copper wire
sold on a sequential quarter comparison. Copper wire sales prices
increased primarily due to an increase of 12.4% in the price of
copper purchased. Net income for the first quarter of 2017
increased to $13.6 million versus $11.4 million in the fourth
quarter of 2016. Fully diluted net income per common share was
$0.65 in the first quarter of 2017 versus $0.55 in the fourth
quarter of 2016.
Commenting on the results, Daniel L. Jones, Chairman, President
and Chief Executive Officer of Encore Wire Corporation, said, “We
are pleased with our improved results in the first quarter. There
are some key items to note. Net sales dollars increased
significantly, comparing the first quarter of 2017 to both the
first and fourth quarters of 2016. The increased top line was
driven primarily by both higher copper raw material prices as well
as increased unit sales volumes. Unit volumes were up 8.1% in
copper pounds shipped and 7.8% in aluminum pounds shipped versus
the first quarter of last year. Units volumes were up 10.4% in
copper pounds shipped and 0.4% in aluminum pounds shipped versus
the fourth quarter of last year. Margins increased in copper wire
sales but declined in 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. The
copper spread increased 7.0% in the first quarter of 2017 versus
the first quarter of 2016 while remaining almost flat on a
sequential quarter comparison. The copper spread expanded 7.0% as
the average price of copper purchased increased 22.6% in the first
quarter of 2017 versus the first quarter of 2016, and the average
selling price of wire sold increased 16.9%. The percentage change
on sales is on a higher nominal dollar amount than on purchases
and, therefore, spreads change on a nominal dollar basis. Aluminum
spreads were down 15.9% in the first quarter of 2017 versus the
first quarter of 2016 and 7.6% sequentially.
The margin changes were due primarily to the competitive pricing
environment in the industry. Copper spreads improved in the fourth
quarter of 2016 and held through the first quarter of 2017. It
appears that the industry consolidation of a copper competitor that
took place last year and damaged margins in the second and third
quarters of 2016 may be resolving itself. On the aluminum side,
however, there are a couple of small competitors importing aluminum
wire and selling it at below market prices. We understand that the
government is looking into this import activity. We also have a
financially stressed competitor who appears to readily follow these
low-price competitors. We believe both of these factors have
contributed to the unsettled pricing environment and impacted our
spreads negatively.
Based on discussions with our distributor customers and their
contractor customers, we believe there is a good outlook for
construction projects for the next year. 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.
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 $86.5 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.”
The Company will host a conference call to discuss the first
quarter results on Wednesday, May 3, 2017, at 10:00 am CDT. Hosting
the call will be Daniel Jones, Chairman, President and Chief
Executive Officer, and Frank Bilban, Vice President and Chief
Financial Officer. To participate in the call, the dial-in number
is 800-774-6070, and the passcode is 6825014#. A telephone replay
of this conference call will be available at 888-843-7419,
conference reference 6825014#, until June 2, 2017. A replay of this
conference call will also be accessible in the investors section of
our website for a limited time.
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 2016 on previous 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 March 31, In Thousands
2017 2016 Net Income $ 13,632 $ 8,599
Income Tax Expense 6,852 4,238 Interest Expense 58 58 Depreciation
and Amortization 3,798 4,846 EBITDA $
24,340 $ 17,741
Encore Wire Corporation Condensed Consolidated
Balance Sheets
(In Thousands)
March 31, 2017 December 31, 2016 (Unaudited)
ASSETS Current Assets Cash $ 86,482 $ 95,753 Receivables, net
211,669 184,876 Inventories 95,638 93,274 Prepaid Expenses and
Other 2,021 2,479 Total Current Assets
395,810 376,382 Property, Plant and Equipment, net 283,125 281,389
Other Assets 193 193 Total Assets $
679,128 $ 657,964 LIABILITIES AND
STOCKHOLDERS’ EQUITY Current Liabilities Accounts Payable $ 35,642
$ 18,577 Accrued Liabilities and Other 23,295
32,305 Total Current Liabilities 58,937 50,882 Long Term
Liabilities Non-Current Deferred Income Taxes 33,194
33,973 Total Long Term Liabilities 33,194
33,973 Total Liabilities 92,131 84,855
Stockholders’ Equity Common Stock 268 268 Additional Paid in
Capital 55,982 55,311 Treasury Stock (91,056 ) (91,056 ) Retained
Earnings 621,803 608,586 Total
Stockholders’ Equity 586,997 573,109
Total Liabilities and Stockholders’ Equity $ 679,128 $
657,964
Encore Wire
Corporation Condensed Consolidated Statements of Income
(Unaudited)
(In Thousands, Except Per Share Data)
Quarter Ended March 31, 2017
2016 Net Sales $ 279,392 100.0 %
$ 225,544 100.0 % Cost of Sales 240,187
86.0 % 195,401 86.6 % Gross Profit
39,205 14.0 % 30,143 13.4 % Selling, General and
Administrative Expenses 18,737 6.7 %
17,309 7.7 % Operating Income 20,468
7.3 % 12,834 5.7 % Net Interest & Other Expense
(16 ) — % (3 ) — % Income before
Income Taxes 20,484 7.3 % 12,837 5.7 % Income Taxes
6,852 2.5 % 4,238
1.9 % Net Income $ 13,632 4.9 % $ 8,599
3.8 % Basic Earnings Per Share $ 0.66 $
0.42 Diluted Earnings Per Share $ 0.65 $ 0.41
Weighted Average Number of Common and Common Equivalent
Shares Outstanding: Basic 20,738 20,688
Diluted 20,834 20,747 Dividend Declared
per Share $ 0.02 $ 0.02
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version on businesswire.com: http://www.businesswire.com/news/home/20170502006747/en/
Encore Wire CorporationFrank J. Bilban,
972-562-9473Vice President & CFO
Encore Wire (NASDAQ:WIRE)
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