Encore Wire Corporation (NASDAQ Global Select: WIRE) today
announced results for the first quarter of 2022.
First Quarter 2022 Highlights
- First Quarter Earnings per diluted share of $7.96
- First Quarter Net income of $161.5 million
- Gross profit margin abatement remained gradual in the first
quarter of 2022
- Gross profit of 33.7% in first quarter of 2022; 34.2% in fourth
quarter of 2021
- Copper volume sold increased 8.6% over first quarter of 2021;
increased 2.8% over fourth quarter of 2021
- Cash on hand of $466.1 million as of March 31, 2022
- Company repurchased 500,917 shares during the quarter;
1,499,083 shares remain authorized to be repurchased
Net sales for the first quarter ended March 31, 2022 were $723.1
million compared to $444.1 million for the first quarter of 2021.
Copper unit volume, measured in pounds of copper contained in the
wire sold, increased 8.6% in the first quarter of 2022 versus the
first quarter of 2021.
Gross profit percentage for the first quarter of 2022 was 33.7%
compared to 19.0% in the first quarter of 2021. The average selling
price of wire per copper pound sold increased 43.3% in the first
quarter of 2022 versus the first quarter of 2021, while the average
cost of copper per pound purchased increased 19.3%.
Net income for the first quarter of 2022 was $161.5 million
versus $41.2 million in the first quarter of 2021. Fully diluted
net earnings per common share were $7.96 in the first quarter of
2022 versus $1.99 in the first quarter of 2021.
Aluminum wire represented 11.5% of our net sales in the quarter
ended March 31, 2022. Aluminum wire volumes increased for the
quarter ended March 31, 2022 compared to the comparative period in
the prior year.
Commenting on the results, Daniel L. Jones, Chairman, President
and Chief Executive Officer of Encore Wire Corporation, said, “The
strong results for the first quarter ended March 31, 2022 mark the
fourth consecutive quarter of elevated margins and spreads. Stable
demand, coupled with developing global uncertainties and persistent
tightness in the availability of certain raw materials, drove
copper, aluminum, and other key raw material prices higher in the
quarter. Because of this trend we were able to increase average
sales prices for our products, keeping spreads strong throughout
the first quarter of 2022. We still believe our one-campus model is
a strategic competitive advantage in the market today, giving us
unmatched flexibility to quickly pivot and adapt to ever-changing
market dynamics. By continuing to execute on our core values of
providing unbeatable customer service and high order fill rates, we
were able to increase both copper and aluminum volumes shipped on a
quarter basis over 2021 levels. Volumes shipped were also up over
fourth quarter 2021 levels. We believe existing market conditions
and the current outlook should support gross margin abatement
continuing at a gradual pace.
Copper unit volumes increased 8.6% on a comparative quarter
basis. Comex copper prices increased steadily throughout the first
quarter along with increases in other key raw material costs. This
upward volatility positively impacted and supported current market
spreads. Copper spreads increased 86.1% on a comparative quarter
basis.
We continue to believe Encore Wire remains well positioned to
capture market share and incremental growth in the current economic
environment. As we address the near-term challenges, we remain
focused on the long-term opportunities for our business including
improving our position as a sustainable and environmentally
responsible leader in our industry. We believe that our superior
order fill rates and deep vertical integration continue to enhance
our competitive position. As orders come in from electrical
contractors, our distributors can continue to depend on us for
quick deliveries coast to coast.
Our balance sheet remains very strong. We have no long-term
debt, and our revolving line of credit remains untapped. We had
$466.1 million in cash at the end of the quarter. During the first
quarter, we repurchased 500,917 shares of our common stock at an
average price of $116.55, for a total cash outlay of $58.4 million.
We also declared a $0.02 cash dividend during the quarter.
The new service center opened in mid-May 2021 and is fully
operational today. The repurposing of our vacated distribution
center to expand manufacturing capacity and extend our market reach
will be completed in the second quarter of 2022.
The incremental investments announced in July 2021 continue in
earnest, focused on broadening our position as a low-cost,
sustainable manufacturer in the sector and increasing manufacturing
capacity to drive growth. Capital spending in 2022 through 2024
will expand vertical integration in our manufacturing processes to
reduce costs as well as modernize select wire manufacturing
facilities to increase capacity and efficiency and improve our
position as a sustainable and environmentally responsible leader in
our industry. Total capital expenditures were $32 million in the
first quarter of 2022 and $118 million for the full year 2021. We
expect total capital expenditures to range from $150 - $170 million
in 2022, $150 - $170 million in 2023, and $80 - $100 million in
2024. We expect to continue to fund these investments with existing
cash reserves and operating cash flows.
Our low-cost structure and strong balance sheet have allowed us
the flexibility to adapt quickly to changing market conditions, 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 health and safety of our employees and their families remain
our top priority, and we are following CDC guidelines to maintain
safe working conditions. The Company is unable to predict the
impact that COVID-19, or any of the ongoing variants, may have on
our financial position and operating results in future periods. The
duration or re-emergence of the outbreak and its long-term impact
on our business remain uncertain.”
The Company will host a conference call to discuss the first
quarter results on Friday, April 29, 2022, at 10:00 am Central
time. Hosting the call will be Daniel Jones, Chairman, President
and Chief Executive Officer, and Bret Eckert, Chief Financial
Officer. To participate in the call, the dial-in number is
866-374-5140, and the confirmation number is 60158744#. In order to
be put through to the call, you will be asked to provide your full
name and your company name followed by the # key. Please call in
early to avoid being delayed by the information collection and
missing the start of the call. A replay of this conference call
will be accessible in the Investors section of our website,
www.encorewire.com, 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 may include
forward-looking statements. Forward-looking statements can be
identified by words such as: “anticipate”, “intend”, “plan”,
“goal”, “seek”, “believe”, “project”, “estimate”, “expect”,
“strategy”, “future”, “likely”, “may”, “should”, “will” and similar
references to future periods. Forward-looking statements are
neither historical facts nor assurances of future performance.
Instead, they are based only on our current beliefs, expectations
and assumptions regarding the future of our business, future plans
and strategies, projections, anticipated events and trends, the
economy and other future conditions. Because forward-looking
statements relate to the future, such statements are subject to
certain risks, uncertainties and assumptions. Should one or more of
these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially
from those anticipated, estimated or projected. Therefore, you
should not rely on any of these forward-looking statements.
Examples of such uncertainties and risks include, but are not
limited to, statements about the pricing environment of copper,
aluminum and other raw materials, the duration, magnitude and
impact of the ongoing COVID-19 global pandemic, our order fill
rates, profitability and stockholder value, payment of future
dividends, future purchases of stock, 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. Any
forward-looking statement made by us in this press release is based
only on information currently available to us and speaks only as of
the date on which it is made. We undertake no obligation to
publicly update any forward-looking statement, whether written or
oral, that may be made from time to time, whether as a result of
new information, future developments or otherwise.
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 measures of financial performance
calculated and presented in accordance with Generally Accepted
Accounting Principles (“GAAP”), to compare to the performance of
other companies who also publicize this information. EBITDA is not
a measurement of financial performance calculated and presented in
accordance with 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 financial performance calculated and
presented in accordance with GAAP.
The Company has reconciled EBITDA with net income for fiscal
years 1996 to 2021 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
2022
2021
Net Income
$
161,531
$
41,189
Income Tax Expense
46,119
12,188
Interest Expense
101
82
Depreciation and Amortization
6,210
5,300
EBITDA
$
213,961
$
58,759
Encore Wire
Corporation
Balance Sheets
(In Thousands)
March 31, 2022
December 31, 2021
(Unaudited)
(Audited)
Assets
Current assets:
Cash and cash equivalents
$
466,094
$
438,990
Accounts receivable, net of allowance of
$3,800 and $3,800
549,404
491,126
Inventories, net
116,331
100,816
Income tax receivable
—
951
Prepaid expenses and other
3,391
3,167
Total current assets
1,135,220
1,035,050
Property, plant and equipment, net
524,465
494,916
Other assets
539
570
Total assets
$
1,660,224
$
1,530,536
Liabilities and Stockholders’ Equity
Current liabilities:
Trade accounts payable
$
73,189
$
75,353
Accrued liabilities
61,525
78,747
Income taxes payable
48,393
—
Total current liabilities
183,107
154,100
Deferred income taxes and other
33,180
37,347
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $.01 par value:
Authorized shares – 2,000,000; none
issued
—
—
Common stock, $.01 par value:
Authorized shares – 40,000,000;
Issued shares – 27,127,850 and
27,083,100
271
271
Additional paid-in capital
74,847
72,753
Treasury stock, at cost – 7,445,179 and
6,944,262 shares
(213,397
)
(155,014
)
Retained earnings
1,582,216
1,421,079
Total stockholders’ equity
1,443,937
1,339,089
Total liabilities and stockholders’
equity
$
1,660,224
$
1,530,536
Encore Wire
Corporation
Statements of Income
(In thousands, except per share
data)
Quarter Ended March
31,
2022
2021
(Unaudited)
Net sales
$ 723,072
100.0 %
$ 444,140
100.0 %
Cost of goods sold
479,325
66.3 %
359,636
81.0 %
Gross profit
243,747
33.7 %
84,504
19.0 %
Selling, general, and administrative
expenses
36,212
5.0 %
31,152
7.0 %
Operating income
207,535
28.7 %
53,352
12.0 %
Net interest and other income
115
— %
25
— %
Income before income taxes
207,650
28.7 %
53,377
12.0 %
Provision for income taxes
46,119
6.4 %
12,188
2.7 %
Net income
$ 161,531
22.3 %
$ 41,189
9.3 %
Earnings per common and common equivalent
share – basic
$ 8.08
$ 2.00
Earnings per common and common equivalent
share – diluted
$ 7.96
$ 1.99
Weighted average common and common
equivalent shares outstanding – basic
20,003
20,568
Weighted average common and common
equivalent shares outstanding – diluted
20,302
20,719
Cash Dividends Declared per Share
$ 0.02
$ 0.02
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220428006303/en/
Bret J. Eckert Chief Financial Officer 972-562-9473
Encore Wire (NASDAQ:WIRE)
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