Encore Wire Corporation (NASDAQ Global Select: WIRE) today
announced results for the second quarter of 2017 and the six months
ending June 30, 2017.
Net sales for the second quarter ended June 30, 2017 were
$291.5 million compared to $238.8 million during the second quarter
of 2016. Copper unit volume, measured in pounds of copper contained
in the wire sold, increased 8.0% in the second quarter of 2017
versus the second quarter of 2016. The average selling price of
wire per copper pound sold increased 14.4% in the second quarter of
2017 versus the second quarter of 2016, driving the 22.1% increase
in net sales dollars. Copper wire sales prices increased primarily
due to the higher price of copper purchased, which increased 19.2%
versus the second quarter of 2016. Net income for the second
quarter of 2017 increased 39.5% to $10.9 million versus $7.8
million in the second quarter of 2016. Fully diluted net earnings
per common share were $0.52 in the second quarter of 2017 versus
$0.38 in the second quarter of 2016.
Net sales for the six months ended June 30, 2017 were $570.9
million compared to $464.4 million during the same period in 2016.
Copper unit volume, measured in pounds of copper contained in the
wire sold, increased 8.1% in the six months ended June 30, 2017
versus the six months ended June 30, 2016. The average selling
price of wire per copper pound sold increased 15.6% in the six
months ended June 30, 2017 versus the six months ended June 30,
2016, driving the 22.9% increase in net sales dollars. Copper wire
sales prices increased primarily due to the higher price of copper
purchased, which increased 20.8% versus the six months ended June
30, 2016. Net income for the six months ended June 30, 2017
increased 49.4% to $24.6 million versus $16.4 million in the same
period in 2016. Fully diluted net earnings per common share were
$1.18 in the six months ended June 30, 2017 versus $0.79 in the
same period in 2016.
On a sequential quarter comparison, net sales for the second
quarter of 2017 were $291.5 million versus $279.4 million during
the first quarter of 2017. Sales dollars increased due to a 7.2%
unit volume increase of copper building wire sold, offset somewhat
by a 2.7% decrease in the average selling price per pound of copper
wire sold on a sequential quarter comparison. Copper wire sales
prices decreased primarily due to a decrease of 1.7% in the price
of copper purchased. Net income for the second quarter of 2017 was
$10.9 million versus $13.6 million in the first quarter of 2017.
Fully diluted net income per common share was $0.52 in the second
quarter of 2017 versus $0.65 in the first quarter of 2017.
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 second quarter and on
a year to date comparison. There are some key items to note. Net
sales dollars increased significantly, in both the quarterly and
six month comparisons of 2017 to 2016. The increased top line was
driven primarily by both higher copper raw material prices as well
as increased unit sales volumes. Unit volumes in the first six
months of 2017 were up 8.1% in copper pounds shipped versus the
first six months of last year. Margins increased in both the
quarterly and six month comparisons of 2017 versus 2016. 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 5.5% in the second quarter of
2017 versus the second quarter of 2016, and increased 6.2% on the
six month comparison while declining 4.6% on a sequential quarter
comparison. The copper spread expanded 5.5% as the average price of
copper purchased increased 19.2% in the second quarter of 2017
versus the second quarter of 2016, while the average selling price
of wire sold increased 14.4%. The percentage change on sales is on
a higher nominal dollar amount than on purchases and, therefore,
spreads change on a nominal dollar basis.
The margin changes were due primarily to the competitive pricing
environment in the industry. Copper spreads improved in the fourth
quarter of 2016 and have held fairly well through the second
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. The
U.S. economy appears strong, as is construction activity. We see
building cranes across the country as we travel to various
meetings. It is interesting to see some financially stressed
competitors having trouble and acting erratically in this strong
business environment, when volumes are good and margins should also
be strong.
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 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 $85.9 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 second
quarter results on Wednesday, August 2, 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 7490227#. A telephone replay
of this conference call will be available at 888-843-7419,
conference reference 7490227#, until September 1, 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 June 30, Six Months Ended June
30, In Thousands 2017 2016 2017
2016 Net Income $ 10,933 $ 7,839 $ 24,565 $
16,438 Income Tax Expense 5,640 4,087 12,492 8,325 Interest Expense
59 58 117 116 Depreciation and Amortization 3,850
4,084 7,648 8,930 EBITDA $ 20,482
$ 16,068 $ 44,822 $ 33,809
Encore
Wire Corporation Condensed Consolidated Balance Sheets
(In Thousands)
June 30, 2017 December 31, 2016 (Unaudited)
ASSETS Current Assets Cash $ 85,858 $ 95,753 Receivables, net
220,553 184,876 Inventories 95,458 93,274 Prepaid Expenses and
Other 7,295 2,479 Total Current Assets
409,164 376,382 Property, Plant and Equipment, net 285,941 281,389
Other Assets 193 193 Total Assets $
695,298 $ 657,964 LIABILITIES AND
STOCKHOLDERS’ EQUITY Current Liabilities Accounts Payable $ 37,587
$ 18,577 Accrued Liabilities and Other 24,979
32,305 Total Current Liabilities 62,566 50,882 Long Term
Liabilities Non-Current Deferred Income Taxes 34,787
33,973 Total Long Term Liabilities 34,787
33,973 Total Liabilities 97,353 84,855
Stockholders’ Equity Common Stock 268 268 Additional Paid in
Capital 56,412 55,311 Treasury Stock (91,056 ) (91,056 ) Retained
Earnings 632,321 608,586 Total
Stockholders’ Equity 597,945 573,109
Total Liabilities and Stockholders’ Equity $ 695,298 $
657,964
Encore Wire Corporation
Condensed Consolidated Statements of Income
(Unaudited)
(In Thousands, Except Per Share Data)
Quarter Ended June 30, Six Months Ended June
30, 2017 2016 2017
2016 Net
Sales $ 291,534 100.0 % $ 238,831 100.0 % $ 570,926 100.0 % $
464,375 100.0 % Cost of Sales 255,662 87.7 %
210,200 88.0 % 495,849 86.8 % 405,602
87.3 % Gross Profit 35,872 12.3 % 28,631 12.0 % 75,077 13.2
% 58,773 12.7 % Selling, General and Administrative Expenses
19,319 6.6 % 16,726 7.0 % 38,056
6.7 % 34,034 7.3 % Operating Income 16,553 5.7
% 11,905 5.0 % 37,021 6.5 % 24,739 5.3 % Net Interest &
Other Expense 20 — % 21 — % 36
— % 24 — % Income before Income Taxes 16,573
5.7 % 11,926 5.0 % 37,057 6.5 % 24,763 5.3 % Income Taxes
5,640 1.9 % 4,087 1.7 % 12,492
2.2 % 8,325 1.8 % Net Income $ 10,933
3.8 % $ 7,839 3.3 % $ 24,565 4.3 % $ 16,438
3.5 % Basic Earnings Per Share $ 0.53 $ 0.38 $ 1.18 $ 0.79
Diluted Earnings Per Share $ 0.52 $ 0.38 $ 1.18 $ 0.79 Weighted
Average Number of Common and Common Equivalent Shares Outstanding:
Basic 20,751 20,694 20,745 20,691
Diluted 20,835 20,765 20,834 20,756
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/20170801006549/en/
Encore Wire CorporationFrank J. Bilban,
972-562-9473Vice President & CFO
Encore Wire (NASDAQ:WIRE)
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