Encore Wire Corporation (NASDAQ Global Select: WIRE) today
announced results for the fourth quarter and full year ended
December 31, 2014.
Net sales for the fourth quarter of 2014 decreased to $285.3
million compared to $293.5 million during the fourth quarter of
2013. Unit volume, measured in copper pounds contained in the wire
sold, increased 2.4% and was offset by a 6.3% decrease in the
average selling price per copper pound sold in the fourth quarter
of 2014 versus the same period in 2013. Sales prices declined
primarily due to lower copper prices, which declined 7.9% versus
the fourth quarter of 2013. Aluminum building wire sales continued
their growth pattern, constituting 9.2% of net sales dollars for
the fourth quarter of 2014 versus 8.0% in the fourth quarter of
2013. Net income for the fourth quarter of 2014 was $5.1 million
versus $11.2 million in the fourth quarter of 2013. Fully diluted
net earnings per common share were $0.24 in the fourth quarter of
2014 versus $0.54 in the fourth quarter of 2013.
Net sales for the year ended December 31, 2014 increased to
$1.167 billion compared to $1.158 billion during the same period in
2013. Copper unit volume increased 3.6% in 2014 versus 2013. The
volume increase was offset by a 4.8% decrease in the average
selling price per copper pound sold in 2014 versus 2013. Sales
prices declined primarily due to lower copper prices, which
declined 5.7% in 2014 versus 2013. Aluminum building wire sales
continued to grow, constituting 8.9% of net sales dollars during
2014 versus 6.9% in 2013. Net income for the year ended December
31, 2014 was $37.1 million versus $46.9 million in 2013. Fully
diluted net earnings per common share were $1.78 for the year ended
December 31, 2014 versus $2.26 in 2013.
On a sequential quarter comparison, net sales for the fourth
quarter of 2014 were $285.3 million versus $297.4 million during
the third quarter of 2014. Copper unit volume increased 1.4% on a
sequential quarter comparison, despite the fact that the fourth
quarter is generally a slower quarter in the construction and
building wire industries. Net income for the fourth quarter of 2014
was $5.1 million versus $11.1 million in the third quarter of 2014.
Fully diluted net income per common share was $0.24 in the fourth
quarter of 2014 versus $0.53 in the third quarter of 2014.
Commenting on the results, Daniel L. Jones, President and Chief
Executive Officer, said, “The fourth quarter was good from a volume
perspective. Aluminum unit volumes were up strongly in the fourth
quarter and the full year as we continue to grow that portion of
our business. Copper wire units were also up in 2014 versus 2013.
The overall construction and building wire markets did not show any
significant improvement over last year. Anecdotal information
confirms our belief that we are outperforming the industry in
volume growth. Our fourth quarter copper wire unit volume is near
the average of the first three quarters. As we have previously
noted, 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 decreased
2.5% in 2014 versus 2013, while our copper unit volume shipped in
2014 increased 3.6% versus 2013. Copper spreads decreased 5.7% on a
sequential quarter comparison. The total year copper spread
contracted 2.5%, as the average price of copper purchased decreased
5.7% in 2014 versus 2013, driving the average selling price of wire
sold down 4.8%. Aluminum spreads were down 8.1% in 2014 versus 2013
as a financially weak competitor appears to be cutting prices to
make up for poor delivery performance. The aluminum building wire
products grew to 8.9% of net sales in 2014, driven by a unit sales
increase of 34.4% in 2014 versus 2013. The decreased spreads
accounted for 92% of the drop in pre-tax income in 2014 versus
2013. Our new aluminum plant expansion is proceeding on schedule
and will begin producing wire in the second quarter and will ramp
up through the end of the year. Copper and other commodity prices
trended down in 2014 contributing to the margin deterioration we
endured in 2014 versus 2013. However, margins can reverse course
quickly in this industry, and bear in mind that the copper spread
was down only 2.5% year over year. We have seen these price cycles
before.
We continue to 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 $54.7 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.”
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 2013 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:
3 Months Ended December 31, 12 Months
Ended December 31, $’s in 000’s 2014 2013 2014
2013 Net Income $ 5,053 $ 11,212 $ 37,123 $ 46,910
Income Tax Expense 2,441 5,557 19,034 23,773 Interest Expense 63 64
285 265 Depreciation and Amortization 3,821 3,841
15,453 14,788 EBITDA $ 11,378 $ 20,674 $
71,895 $ 85,736 Encore Wire Corporation Condensed
Consolidated Balance Sheets (In Thousands)
December 31, December 31,
2014 2013 (Unaudited) ASSETS
Current Assets Cash $ 54,664 $ 36,778 Receivables, net
206,908 215,739 Inventories 78,251 70,780 Prepaid Expenses and
Other 5,492 6,769 Total Current Assets
345,315 330,066 Property, Plant and Equipment, net 226,506
194,254 Other Assets 930 1,506
Total Assets $ 572,751 $ 525,826
LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities
Accounts Payable $ 31,147 $ 23,465 Accrued Liabilities and Other
28,191 24,453 Total Current Liabilities
59,338 47,918 Long Term Liabilities Non-Current Deferred
Income Taxes and Other 20,226 21,327
Total Long Term Liabilities 20,226 21,327
Total Liabilities 79,564 69,245 Stockholders'
Equity Common Stock 267 266 Additional Paid in Capital 50,598
49,459 Treasury Stock (88,134 ) (88,134 ) Retained Earnings
530,456 494,990 Total Stockholders' Equity
493,187 456,581 Total
Liabilities and Stockholders' Equity $ 572,751 $ 525,826
Encore Wire Corporation Condensed Consolidated
Statements of Income (In Thousands, Except Per Share Data)
Quarter Ended December 31,
Year Ended December 31, 2014
2013 2014 2013
(Unaudited) (Unaudited) (Unaudited)
Net Sales $
285,342 100.0 % $ 293,514 100.0 % $ 1,166,979 100.0 % $ 1,158,252
100.0 % Cost of Sales 260,125 91.2 % 260,798
88.9 % 1,042,002 89.3 % 1,023,180
88.3 % Gross Profit 25,217 8.8 % 32,716 11.1 %
124,977 10.7 % 135,072 11.7 % Selling, General and
Administrative Expenses 17,747 6.2 % 15,968
5.4 % 68,876 5.9 % 64,453 5.6 %
Operating Income 7,470 2.6 % 16,748 5.7 % 56,101 4.8 %
70,619 6.1 % Net Interest & Other Expense (24 )
0.0 % (21 ) 0.0 % (56 ) 0.0 % (64 ) 0.0 %
Income before Income Taxes 7,494 2.6 % 16,769 5.7 % 56,157
4.8 % 70,683 6.1 % Income Taxes 2,441 0.9 %
5,557 1.9 % 19,034 1.6 % 23,773
2.1 % Net Income (Loss) $ 5,053 1.8 % $ 11,212
3.8 % $ 37,123 3.2 % $ 46,910 4.1 %
Basic Earnings Per Share $ 0.24 $ 0.54 $ 1.79
$ 2.27 Diluted Earnings Per Share $ 0.24
$ 0.54 $ 1.78 $ 2.26 Weighted
Average Number of Common and Common Equivalent Shares Outstanding:
-Basic 20,721 20,692 20,714
20,676 -Diluted 20,792
20,818 20,821 20,764
Dividends Declared per Share $ 0.02 $ 0.02
$ 0.08 $ 0.08
Encore Wire CorporationFrank J. Bilban,
972-562-9473Vice President & CFO
Encore Wire (NASDAQ:WIRE)
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