Encore Wire Corporation (NASDAQ Global Select: WIRE) today
announced results for the fourth quarter and full year ended
December 31, 2017.
Net sales for the fourth quarter of 2017 were $301.3 million
compared to $239.2 million during the fourth quarter of 2016. Unit
volume, measured in copper pounds contained in the wire sold,
increased 5.8%, and the average selling price per copper pound sold
increased 22.8% in the fourth quarter of 2017 versus the same
period in 2016. Sales prices increased primarily due to higher
copper prices, which increased 30.1% versus the fourth quarter of
2016. Net income for the fourth quarter of 2017 was $28.5 million
versus $11.4 million in the fourth quarter of 2016. Fully diluted
net earnings per common share were $1.36 in the fourth quarter of
2017 versus $0.55 in the fourth quarter of 2016. The $1.36 fully
diluted net earnings per common share in the fourth quarter of 2017
include $0.76 from core operations and $0.65 from the adjustment of
deferred tax liabilities, offset by $0.05 associated with a special
bonus of $1,000 paid to all employees of the Company except
corporate officers.
Net sales for the year ended December 31, 2017 were $1.164
billion versus $940.8 million during the same period in 2016.
Copper unit volume increased 5.6% in 2017 versus 2016, and was
coupled with a 19.8% increase in the average selling price per
copper pound sold in 2017 versus 2016. Sales prices increased
primarily due to higher copper prices, which increased 25.4% in
2017 versus 2016. Net income for the year ended December 31, 2017
was $67.0 million versus $33.8 million for the same period in 2016.
Fully diluted net earnings per common share were $3.21 for the year
ended December 31, 2017 versus $1.63 for the same period in 2016.
As delineated for the fourth quarter of 2017 above, the resulting
fully diluted net earnings per common share for the year from core
operations was $2.61 per share.
On a sequential quarter comparison, net sales for the fourth
quarter of 2017 were $301.3 million versus $292.0 million during
the third quarter of 2017. Copper unit volume decreased 1.7% 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 5.7% increase in the average selling price of
wire per copper pound sold. Net income for the fourth quarter of
2017 increased to $28.5 million versus $14.0 million in the third
quarter of 2017. Fully diluted net income per common share was
$1.36 in the fourth quarter of 2017 versus $0.67 in the third
quarter of 2017.
Commenting on the results, Daniel L. Jones, Chairman, President
and Chief Executive Officer, said, “We are pleased to report a
great fourth quarter and full year. Our unit sales were up in both
copper and aluminum building wire for the year. 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 increased 9.9% in 2017 versus 2016, as the
average price of copper purchased increased 25.4% in 2017 versus
2016, and the average selling price of wire sold increased 19.8%.
We are also encouraged by the fact spreads improved during the
fourth quarter of 2017 versus the third quarter of 2017. Copper
spreads increased on this sequential quarterly comparison, climbing
2.7%.
In addition, as a result of the December Federal Tax Legislation
changes, we recognized a $13.5 million decrease in our deferred tax
liability, offset by the special bonus of $1,000 we gave to all our
employees except corporate officers, resulting in a net one-time
gain of $0.60 per share. The $2.61 in net earnings per common share
from core operations is the second best year in our history and is
a 60% increase over last year. The overall construction and
building wire markets remain strong. Anecdotal information confirms
our belief that there are still large commercial and industrial
projects in the pipeline.
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 $123.4 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.”
The Company will host a conference call to discuss the fourth
quarter results on Wednesday, February 21, 2018, 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 800-774-6070, and the passcode is 8977327#. A
telephone replay of this conference call will be available at
888-843-7419, conference reference 8977327#, until March 23, 2018.
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 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 2016 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 2017 2016 2017
2016 Net Income $ 28,488 $ 11,402 $ 67,017 $ 33,839 Income
Tax Expense (5,762 ) 5,543 12,859 16,975 Interest Expense 60 59 237
235 Depreciation and Amortization 4,071 3,803
15,684 16,811 EBITDA $ 26,857 $ 20,807 $
95,797 $ 67,860
Encore Wire Corporation
Condensed Consolidated Balance Sheets
(In Thousands)
December 31, 2017
December 31, 2016 (unaudited) ASSETS Current Assets Cash $
123,362 $ 95,753 Receivables, net 228,885 184,876 Inventories
92,365 93,274 Prepaid Expenses and Other 2,372
2,479 Total Current Assets 446,984 376,382 Property, Plant
and Equipment, net 286,798 281,389 Other Assets 193
193 Total Assets $ 733,975 $ 657,964
LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities
Accounts Payable $ 36,330 $ 18,577 Accrued Liabilities and Other
35,301 32,305 Total Current Liabilities
71,631 50,882 Long Term Liabilities Non-Current Deferred Income
Taxes 20,999 33,973 Total Long Term
Liabilities 20,999 33,973 Total
Liabilities 92,630 84,855 Stockholders’ Equity Common Stock 269 268
Additional Paid in Capital 58,192 55,311 Treasury Stock (91,056 )
(91,056 ) Retained Earnings 673,940 608,586
Total Stockholders’ Equity 641,345
573,109 Total Liabilities and Stockholders’ Equity $ 733,975
$ 657,964
Encore Wire
Corporation Condensed Consolidated Statements of Income
(In Thousands, Except Per Share Data)
Quarter Ended December 31,
Year Ended December 31, 2017
2016 2017 2016
(unaudited) (unaudited)
Net sales $ 301,292 100.0
% $ 239,247 100.0 % $ 1,164,248 100.0 % $ 940,790 100.0 % Cost of
sales 259,281 86.1 % 205,721 86.0 %
1,008,073 86.6 % 820,673 87.2 % Gross profit 42,011 13.9 %
33,526 14.0 % 156,175 13.4 % 120,117 12.8 % Selling, general
and administrative expenses 19,528 6.5 %
16,595 6.9 % 76,726 6.6 % 69,351 7.4 % Operating
income 22,483 7.4 % 16,931 7.1 % 79,449 6.8 % 50,766 5.4 %
Net interest & other income 243 0.1 % 14 —
% 427 — % 48 — % Income before income taxes 22,726
7.5 % 16,945 7.1 % 79,876 6.8 % 50,814 5.4 % Provision for
income taxes (5,762 ) (1.9 )% 5,543 2.3 %
12,859 1.1 % 16,975 1.8 % Net Income $ 28,488 9.5 % $
11,402 4.8 % $ 67,017 5.8 % $ 33,839 3.6 % Basic earnings
per share $ 1.37 $ 0.55 $ 3.23 $ 1.63 Diluted earnings per
share $ 1.36 $ 0.55 $ 3.21 $ 1.63 Weighted average number of
common and common equivalent shares outstanding: Basic
20,814 20,728 20,767 20,704 Diluted
20,876 20,804 20,847 20,773 Cash
dividend declared per share $ 0.02 $ 0.02 $ 0.08 $ 0.08
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version on businesswire.com: http://www.businesswire.com/news/home/20180220006530/en/
Encore Wire CorporationFrank J. Bilban,
972-562-9473Vice President & CFO
Encore Wire (NASDAQ:WIRE)
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