Encore Wire Corporation (NASDAQ Global Select: WIRE) today
announced results for the first quarter of 2018.
Net sales for the first quarter ended March 31, 2018 were
$291.4 million compared to $279.4 million during the first quarter
of 2017. Copper unit volume, measured in pounds of copper contained
in the wire sold, decreased 7.9% in the first quarter of 2018
versus the first quarter of 2017. The average selling price of wire
per copper pound sold increased 15.6% in the first quarter of 2018
versus the first quarter of 2017. Copper wire sales prices
increased primarily due to the higher price of copper purchased,
which increased 18.3% versus the first quarter of 2017. Net income
for the first quarter of 2018 was $11.4 million versus $13.6
million in the first quarter of 2017. Fully diluted net earnings
per common share were $0.54 in the first quarter of 2018 versus
$0.65 in the first quarter of 2017.
On a sequential quarter comparison, net sales for the first
quarter of 2018 were $291.4 million versus $301.3 million during
the fourth quarter of 2017. Sales dollars decreased due to a 3.9%
unit volume decrease of copper building wire sold, offset by a 1.3%
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 2.2% in the price of
copper purchased. Net income for the first quarter of 2018 was
$11.4 million versus $28.5 million in the fourth quarter of 2017.
Fully diluted net income per common share was $0.54 in the first
quarter of 2018 versus $1.36 in the fourth 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 results in the first quarter, with some key
items to note. Net sales dollars increased in the quarter, driven
primarily by higher copper raw material prices. Copper margins
increased strongly in the quarterly comparison of 2018 versus 2017.
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 10.1% in the first
quarter of 2018 versus the first quarter of 2017. The copper spread
expanded 10.1% as the average price of copper purchased increased
18.3% in the first quarter of 2018 versus the first quarter of
2017, while the average selling price of wire sold increased 15.6%.
The percentage change on sales is on a higher nominal dollar amount
than on purchases and, therefore, spreads change on a nominal
dollar basis. Unit volumes in the first three months of 2018,
decreased 7.9% in copper pounds shipped versus the first three
months of last year. We believe volumes were impacted primarily by
rough winter weather that slowed construction projects,
particularly in January.
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 $107.8 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 2, 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 866-352-2112, and the passcode is 6783418#. A telephone
replay of this conference call will be available at 888-843-7419,
conference reference 6783418#, until June 1, 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 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 2017 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 2018
2017 Net Income $ 11,353 $ 13,632 Income Tax
Expense 3,597 6,852 Interest Expense 59 58 Depreciation and
Amortization 4,109 3,798 EBITDA $ 19,118
$ 24,340
Encore Wire Corporation
Consolidated Balance Sheets (In Thousands)
March 31, 2018 December 31, 2017 (Unaudited) ASSETS
Current Assets Cash $ 107,827 $ 123,362 Receivables, net 248,466
228,885 Inventories 94,498 92,365 Prepaid Expenses and Other
1,751 2,372 Total Current Assets 452,542
446,984 Property, Plant and Equipment, net 290,112 286,798 Other
Assets 193 193 Total Assets $ 742,847
$ 733,975 LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities Accounts Payable $ 41,097 $ 36,330 Accrued
Liabilities and Other 27,826 35,301
Total Current Liabilities 68,923 71,631 Long-Term Liabilities
Deferred Income Taxes 20,688 20,999
Total Long-Term Liabilities 20,688 20,999
Total Liabilities 89,611 92,630 Stockholders’ Equity Common
Stock 269 269 Additional Paid-in Capital 59,147 58,192 Treasury
Stock (91,056 ) (91,056 ) Retained Earnings 684,876
673,940 Total Stockholders’ Equity 653,236
641,345 Total Liabilities and Stockholders’
Equity $ 742,847 $ 733,975
Encore Wire
Corporation Consolidated Statements of Income (In
thousands, except per share data) Quarter Ended March
31, 2018 2017 (Unaudited)
Net Sales $ 291,431 100.0 % $ 279,392 100.0 % Cost of
Goods Sold 253,937 87.1 % 240,187 86.0
% Gross Profit 37,494 12.9 % 39,205 14.0 % Selling, General
and Administrative Expenses 22,887 7.9 %
18,737 6.7 % Operating Income 14,607 5.0 % 20,468 7.3 %
Net Interest & Other Income 343 0.1 %
16 — % Income before Income Taxes 14,950 5.1 % 20,484
7.3 % Provision for Income Taxes 3,597 1.2 %
6,852 2.5 % Net Income $ 11,353 3.9 % $ 13,632
4.9 % Basic Earnings Per Share $ 0.54 $ 0.66 Diluted
Earnings Per Share $ 0.54 $ 0.65 Weighted Average Common and Common
Equivalent Shares Outstanding: Basic 20,835 20,738
Diluted 20,911 20,834 Cash Dividends Declared per
Share $ 0.02 $ 0.02
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version on businesswire.com: https://www.businesswire.com/news/home/20180501006693/en/
Encore Wire CorporationFrank J. Bilban,
972-562-9473Vice President & CFO
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