Encore Wire Corporation (NASDAQ Global Select: WIRE) today
announced results for the third quarter of 2015.
Net sales for the third quarter ended September 30, 2015
were $262.8 million compared to $297.4 million during the third
quarter of 2014. Copper unit volume, measured in pounds of copper
contained in the wire sold, increased 3.0% in the third quarter of
2015 versus the third quarter of 2014. Aluminum building wire sales
constituted 10.5% of net sales dollars for the third quarter of
2015 versus 9.4% in the third quarter of 2014. Aluminum unit volume
was up 2.2% in the third quarter of 2015 versus the third quarter
of 2014. The average selling price of wire per copper pound sold
dropped 15.2% in the third quarter of 2015 versus the third quarter
of 2014, driving the decrease in net sales dollars. Copper wire
sales prices declined primarily due to lower copper prices, which
declined 23.1% versus the third quarter of 2014. Net income for the
third quarter of 2015 was $14.5 million versus $11.1 million in the
third quarter of 2014. Fully diluted net earnings per common share
were $0.70 in the third quarter of 2015 versus $0.53 in the third
quarter of 2014.
Net sales for the nine months ended September 30, 2015 were
$766.8 million compared to $881.6 million during the same period in
2014. The average selling price of wire per copper pound sold
dropped 10.7%, while copper unit volume sold declined 3.7% in the
nine months ended September 30, 2015 versus the nine months
ended September 30, 2014. Copper wire sales prices followed
the price of copper purchased, which declined 17.3%. Aluminum
building wire sales constituted 9.8% of net sales dollars for the
nine months ended September 30, 2015 versus 8.8% in the nine
months ended September 30, 2014. Net income for the nine
months ended September 30, 2015 was $36.7 million versus $32.1
million in the same period in 2014. Fully diluted net earnings per
common share were $1.76 for the nine months ended
September 30, 2015 versus $1.54 in the same period in
2014.
On a sequential quarter comparison, net sales for the third
quarter of 2015 were $262.8 million versus $253.7 million during
the second quarter of 2015. Sales dollars increased, due to a 10.1%
unit volume increase of copper building wire sold, offset by a 7.1%
decrease in the average selling price per pound of copper wire sold
on a sequential quarter comparison. Copper wire sales prices
followed the price of copper purchased, which declined 11.9%. Net
income for the third quarter of 2015 increased to $14.5 million
versus $11.4 million in the second quarter of 2015. Fully diluted
net income per common share was $0.70 in the third quarter of 2015
versus $0.54 in the second quarter of 2015.
Commenting on the results, Daniel L. Jones, Chairman, President
and Chief Executive Officer of Encore Wire Corporation, said, “We
are pleased with the third quarter results. Unit volumes bounced
back in the third quarter after the rough spring weather we endured
in the second quarter. On a sequential quarterly comparison, copper
units were up 10.1% and aluminum units were up 20.2%. Margins also
improved in both copper and aluminum wire sales. We continue to
execute our strategy of attempting to be an industry pricing
leader, and believe this contributed to our improved margins during
the quarter. 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 4.5% in the
third quarter of 2015 versus the third quarter of 2014, and 3.3% on
a sequential quarter comparison. The copper spread expanded 4.5% as
the average price of copper purchased decreased 23.1% in the third
quarter of 2015 versus the third quarter of 2014, but the average
selling price of wire sold decreased only 15.2%, as a result of
somewhat improved pricing discipline in the industry. The aluminum
building wire products grew to 10.5% of net sales in the quarter
versus 9.4% in the third 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 $58.8 million in cash at the end of the quarter. We repurchased
92,804 shares of our common stock on the open market for
approximately $2.9 million during 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:
Quarter Ended September
30, Nine Months Ended September 30, In Thousands 2015
2014 2015 2014 Net Income $ 14,511 $ 11,063 $ 36,652
$ 32,070 Income Tax Expense 7,779 5,581 19,200 16,593 Interest
Expense 63 77 187 223 Depreciation and Amortization 4,124
3,818 11,972 11,631 EBITDA $ 26,477 $ 20,539 $
68,011 $ 60,517
Encore
Wire Corporation Condensed Consolidated Balance Sheets
(In Thousands)
September 30, 2015 December 31, 2014
(Unaudited) ASSETS Current Assets Cash $ 58,817 $ 54,664
Receivables, net 192,005 206,908 Inventories 97,834 78,251 Prepaid
Expenses and Other 2,732 5,492 Total
Current Assets 351,388 345,315 Property, Plant and Equipment, net
251,473 226,506 Other Assets 454 930
Total Assets $ 603,315 $ 572,751 LIABILITIES
AND STOCKHOLDERS’ EQUITY Current Liabilities Accounts Payable $
26,051 $ 31,147 Accrued Liabilities and Other 30,667
28,191 Total Current Liabilities 56,718 59,338 Long
Term Liabilities Non-Current Deferred Income Taxes 19,849
20,226 Total Long Term Liabilities
19,849 20,226 Total Liabilities 76,567 79,564
Stockholders’ Equity Common Stock 267 267 Additional Paid in
Capital 51,672 50,598 Treasury Stock (91,056 ) (88,134 ) Retained
Earnings 565,865 530,456 Total
Stockholders’ Equity 526,748 493,187
Total Liabilities and Stockholders’ Equity $ 603,315 $
572,751
Encore
Wire Corporation Condensed Consolidated Statements of
Income (Unaudited)
(In Thousands, Except Per Share Data)
Quarter Ended September 30, Nine Months Ended
September 30, 2015 2014 2015
2014
Net Sales $ 262,756 100.0 % $ 297,351 100.0 % $
766,766 100.0 % $ 881,637 100.0 % Cost of Sales 224,421
85.4 % 263,278 88.5 % 663,095
86.5 % 781,877 88.7 % Gross Profit 38,335 14.6 %
34,073 11.5 % 103,671 13.5 % 99,760 11.3 % Selling, General
and Administrative Expenses 16,063 6.1 %
17,442 5.9 % 47,952 6.3 % 51,129
5.8 % Operating Income 22,272 8.5 % 16,631 5.6 % 55,719 7.3 %
48,631 5.5 % Net Interest & Other Expense (18 ) —
% (13 ) — % (133 ) — % (32 ) — % Income before
Income Taxes 22,290 8.5 % 16,644 5.6 % 55,852 7.3 % 48,663 5.5 %
Income Taxes 7,779 3.0 % 5,581
1.9 % 19,200 2.5 % 16,593 1.9 % Net
Income $ 14,511 5.5 % $ 11,063 3.7 % $ 36,652
4.8 % $ 32,070 3.6 % Basic Earnings Per Share $ 0.70
$ 0.53 $ 1.77 $ 1.55 Diluted Earnings
Per Share $ 0.70 $ 0.53 $ 1.76 $ 1.54
Weighted Average Number of Common and Common Equivalent Shares
Outstanding: Basic 20,716 20,718
20,726 20,712 Diluted 20,774
20,819 20,797 20,831
Dividend Declared per Share $ 0.02 $ 0.02 $ 0.06
$ 0.06
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version on businesswire.com: http://www.businesswire.com/news/home/20151022006558/en/
Encore Wire CorporationFrank J. Bilban,
972-562-9473Vice President & CFO
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