Encore Wire Corporation (NASDAQ Global Select: WIRE) today
announced results for the first quarter of 2015.
Net sales for the first quarter ended March 31, 2015 were
$250.3 million compared to $277.2 million during the first quarter
of 2014. Copper unit volume, measured in pounds of copper contained
in the wire sold, increased 0.5% in the first quarter of 2015
versus the first quarter of 2014. Aluminum building wire sales
constituted 9.4% of net sales dollars for the first quarter of 2015
versus 7.9% in the first quarter of 2014. Aluminum unit volume was
up 11.8% in the first quarter of 2015 versus the first quarter of
2014. The average selling price of wire per copper pound sold
dropped 11.6% in the first quarter of 2015 versus the first quarter
of 2014, accounting for most of the decrease in net sales dollars.
Sales prices declined primarily due to lower copper prices, which
declined 17.2% versus the first quarter of 2014. Net income for the
first quarter of 2015 was $10.8 million versus $10.9 million in the
first quarter of 2014. Fully diluted net earnings per common share
were $0.52 in the first quarter of 2015 versus $0.52 in the first
quarter of 2014.
On a sequential quarter comparison, net sales for the first
quarter of 2015 were $250.3 million versus $285.3 million during
the fourth quarter of 2014. Sales dollars were down due to a 6.0%
decline in the average selling price per pound of copper wire sold
and a unit volume decrease of 6.8% of copper building wire sold on
a sequential quarter comparison. Net income for the first quarter
of 2015 increased to $10.8 million versus $5.1 million in the
fourth quarter of 2014. Fully diluted net income per common share
was $0.52 in the first quarter of 2015 versus $0.24 in the fourth
quarter of 2014.
Commenting on the results, Daniel L. Jones, Chairman, President
and Chief Executive Officer of Encore Wire Corporation, said, “The
first quarter was good from both a volume and margin perspective.
Aluminum unit volumes were up strongly in the first quarter of 2015
compared to the first quarter of 2014 as we continue to grow that
portion of our building wire business. Copper wire units were up
marginally, as the overall construction and building wire markets
appear to still be doing okay this quarter but not showing any
significant improvement over last year. We believe rough winter
weather contributed to the flat copper volumes during the quarter.
Anecdotal information confirms our belief that we are outperforming
the industry in market share. 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. That spread
increased 3.0% in the first quarter of 2015 versus the first
quarter of 2014, and 6.0% on a sequential quarter comparison. The
copper spread expanded 6.0% as the average price of copper
purchased declined 10.8% in the first quarter of 2015 versus the
fourth quarter of 2014, but the average selling price of wire sold
fell only 6.0%, as a result of somewhat improved pricing discipline
in the industry. The aluminum building wire products grew to 9.4%
of net sales in the quarter, driven by a unit sales increase of
11.8% in the first quarter of 2015 versus the first quarter of
2014.
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 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 $53.3 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 are
continuing to prove valuable now. 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 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 2014 on previous current 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:
Three Months Ended March 31, $’s in 000’s 2015
2014 Net Income $ 10,789 $ 10,854 Income Tax Expense 5,710
5,887 Interest Expense 62 63 Depreciation and Amortization
3,897 3,895 EBITDA $ 20,458 $ 20,699
Encore Wire Corporation
1329 Millwood Road McKinney, Texas 75069 (972) 562-9473
Condensed Consolidated Balance
Sheets
(In Thousands)
March 31, 2015 December
31, 2014 (Unaudited) ASSETS Current Assets Cash $ 53,269
$ 54,664 Receivables, net 195,571 206,908 Inventories 85,354 78,251
Prepaid Expenses and Other 2,853 5,492
Total Current Assets 337,047 345,315 Property, Plant and Equipment,
net 235,187 226,506 Other Assets 274 930
Total Assets $ 572,508 $ 572,751 LIABILITIES
AND STOCKHOLDERS’ EQUITY Current Liabilities Accounts Payable $
29,722 $ 31,147 Accrued Liabilities and Other 19,231
28,191 Total Current Liabilities 48,953 59,338 Long
Term Liabilities Non-Current Deferred Income Taxes 19,670
20,226 Total Long Term Liabilities
19,670 20,226 Total Liabilities 68,623 79,564
Stockholders’ Equity Common Stock 267 267 Additional Paid in
Capital 50,922 50,598 Treasury Stock (88,134 ) (88,134 ) Retained
Earnings 540,830 530,456 Total
Stockholders’ Equity 503,885 493,187
Total Liabilities and Stockholders’ Equity $ 572,508 $
572,751
Encore Wire Corporation
1329 Millwood Road McKinney, Texas 75069 (972) 562-9473
Condensed Consolidated Statements of
Income
(Unaudited)
(In Thousands, Except Per Share Data)
Three Months Ended
March 31, 2015 2014 Net
Sales $ 250,262 100.0 % $ 277,198 100.0
% Cost of Sales 217,832 87.0 % 245,022
88.4 % Gross Profit 32,430 13.0 % 32,176 11.6 % Selling,
General and Administrative Expenses 16,031 6.4 %
15,451 5.6 % Operating Income 16,399 6.6 % 16,725 6.0
% Net Interest & Other Expense (100 ) — %
(16 ) — % Income before Income Taxes 16,499 6.6 % 16,741 6.0 %
Income Taxes 5,710 2.3 % 5,887
2.1 % Net Income $ 10,789 4.3 % $ 10,854 3.9 % Basic
Earnings Per Share $ 0.52 $ 0.52 Diluted Earnings Per
Share $ 0.52 $ 0.52 Weighted Average Number of Common
and Common Equivalent Shares Outstanding: Basic 20,725
20,703 Diluted 20,782
20,839 Dividend Declared per Share $ 0.02 $ 0.02
Encore Wire CorporationFrank J. Bilban,
972-562-9473Vice President & CFO
Encore Wire (NASDAQ:WIRE)
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