Encore Wire Corporation (NASDAQ Global Select: WIRE) today
announced improved results for the third quarter of 2017 and the
nine months ending September 30, 2017.
Net sales for the third quarter ended September 30, 2017
were $292.0 million compared to $237.2 million during the third
quarter of 2016. Copper unit volume, measured in pounds of copper
contained in the wire sold, increased 0.7% in the third quarter of
2017 versus the third quarter of 2016. The average selling price of
wire per copper pound sold increased 25.7% in the third quarter of
2017 versus the third quarter of 2016, driving the 23.1% increase
in net sales dollars. Copper wire sales prices increased primarily
due to the higher price of copper purchased, which increased 30.1%
versus the third quarter of 2016. Net income for the third quarter
of 2017 increased 132.8% to $14.0 million versus $6.0 million in
the third quarter of 2016. Fully diluted net earnings per common
share were $0.67 in the third quarter of 2017 versus $0.29 in the
third quarter of 2016.
Net sales for the nine months ended September 30, 2017 were
$863.0 million compared to $701.5 million during the same period in
2016. Copper unit volume, measured in pounds of copper contained in
the wire sold, increased 5.6% in the nine months ended September
30, 2017 versus the nine months ended September 30, 2016. The
average selling price of wire per copper pound sold increased 18.8%
in the nine months ended September 30, 2017 versus the nine months
ended September 30, 2016, driving the 23.0% increase in net sales
dollars. Copper wire sales prices increased primarily due to the
higher price of copper purchased, which increased 23.8% versus the
nine months ended September 30, 2016. Net income for the nine
months ended September 30, 2017 increased 71.7% to $38.5 million
versus $22.4 million in the same period in 2016. Fully diluted net
earnings per common share were $1.85 in the nine months ended
September 30, 2017 versus $1.08 in the same period in 2016.
On a sequential quarter comparison, net sales for the third
quarter of 2017 were $292.0 million versus $291.5 million during
the second quarter of 2017. Sales dollars remained flat due to a
9.0% unit volume decrease of copper building wire sold, offset by a
10.9% 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 9.9% in the price
of copper purchased. Net income for the third quarter of 2017 was
$14.0 million versus $10.9 million in the second quarter of 2017.
Fully diluted net income per common share was $0.67 in the third
quarter of 2017 versus $0.52 in the second quarter of 2017.
Commenting on the results, Daniel L. Jones, Chairman, President
and Chief Executive Officer of Encore Wire Corporation, said, “We
are very pleased with our improved results in the third 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
nine 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 nine
months of 2017 were up 5.6% in copper pounds shipped versus the
first nine months of last year. Margins increased strongly in both
the quarterly and nine 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 17.8% in the third
quarter of 2017 versus the third quarter of 2016, and increased
9.8% on the nine month comparison while increasing 13.0% on a
sequential quarter comparison. The copper spread expanded 17.8% as
the average price of copper purchased increased 30.1% in the third
quarter of 2017 versus the third quarter of 2016, while the average
selling price of wire sold increased 25.7%. 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, along with the impact from the
hurricanes that hit portions of the U.S. in the quarter. We took
prices up somewhat above our competitors in mid-August, 2017, in an
attempt to lead an industry margin increase. Our volumes decreased
slightly as a result, but we held our ground until, coincidentally,
Hurricane Harvey hit the Gulf Coast. With the concentration of
petrochemical plants in that area, including many plastic plants on
which our industry relies, we held prices up to protect the supply
of wire for customers who need and appreciate timely delivery. We
chose this course in the face of the uncertainty of plastic
supplies in September. While this course of action impacted our
unit volumes, it culminated in very strong earnings, once again
highlighting the fact that our earnings are driven by spreads.
The U.S. economy appears strong, as is construction activity. We
believe that some of our financially stressed competitors have
struggled and acted erratically in what we consider a 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 $101.4 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 third
quarter results on Wednesday, November 1, 2017, at 10:00 am Central
time. 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 888-517-2513, and the passcode is 6929977#. A telephone
replay of this conference call will be available at 888-843-7419,
conference reference 6929977#, until December 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
September 30, Nine Months Ended September 30, In Thousands 2017
2016 2017 2016 Net Income $ 13,964
$ 5,999 $ 38,529 $ 22,437 Income Tax
Expense 6,129 3,107 18,621 11,431 Interest Expense 60 60 177 177
Depreciation and Amortization 3,965
4,078 11,613 13,008 EBITDA $ 24,118
$ 13,244 $ 68,940 $ 47,053
Encore Wire Corporation
Condensed Consolidated Balance Sheets
(In Thousands)
September 30, 2017 December 31, 2016
(Unaudited) ASSETS Current Assets Cash $ 101,367 $ 95,753
Receivables, net 222,951 184,876 Inventories 95,419 93,274 Prepaid
Expenses and Other 2,906 2,479 Total
Current Assets 422,643 376,382 Property, Plant and Equipment, net
285,529 281,389 Other Assets 193 193
Total Assets $ 708,365 $ 657,964 LIABILITIES
AND STOCKHOLDERS’ EQUITY Current Liabilities Accounts Payable $
32,158 $ 18,577 Accrued Liabilities and Other 29,801
32,305 Total Current Liabilities 61,959 50,882
Long-Term Liabilities Non-Current Deferred Income Taxes
33,763 33,973 Total Long-Term Liabilities
33,763 33,973 Total Liabilities 95,722
84,855 Stockholders’ Equity Common Stock 268 268 Additional Paid-in
Capital 57,563 55,311 Treasury Stock (91,056 ) (91,056 ) Retained
Earnings 645,868 608,586 Total
Stockholders’ Equity 612,643 573,109
Total Liabilities and Stockholders’ Equity $ 708,365 $
657,964
Encore
Wire Corporation Condensed Consolidated Statements of
Income (Unaudited)
(In Thousands, Except Per Share Data)
Quarter Ended September 30, Nine Months Ended
September 30, 2017 2016 2017
2016
Net Sales $ 292,030 100.0 % $ 237,168 100.0 % $
862,956 100.0 % $ 701,543 100.0 % Cost of Sales 252,943
86.6 % 209,350 88.3 %
748,792 86.8 % 614,951 87.7 %
Gross Profit 39,087 13.4 % 27,818 11.7 % 114,164 13.2 % 86,592 12.3
% Selling, General and Administrative Expenses 19,142
6.6 % 18,721 7.9 % 57,198
6.6 % 52,756 7.5 % Operating
Income 19,945 6.8 % 9,097 3.8 % 56,966 6.6 % 33,836 4.8 %
Net Interest & Other Expense 148 0.1 %
9 — % 184 — % 32
— % Income before Income Taxes 20,093 6.9 % 9,106 3.8
% 57,150 6.6 % 33,868 4.8 % Income Taxes 6,129
2.1 % 3,107 1.3 % 18,621
2.2 % 11,431 1.6 % Net Income $ 13,964
4.8 % $ 5,999 2.5 % $ 38,529
4.5 % $ 22,437 3.2 % Basic Earnings Per
Share $ 0.67 $ 0.29 $ 1.86 $ 1.08 Diluted Earnings Per Share $ 0.67
$ 0.29 $ 1.85 $ 1.08 Weighted Average Number of Common and Common
Equivalent Shares Outstanding: Basic 20,758 20,704
20,749 20,696 Diluted 20,837 20,775
20,835 20,763 Dividend Declared per Share $ 0.02 $
0.02 $ 0.06 $ 0.06
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version on businesswire.com: http://www.businesswire.com/news/home/20171031006440/en/
Encore Wire CorporationFrank J. Bilban,
972-562-9473Vice President & CFO
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