Encore Wire Corporation (NASDAQ Global Select: WIRE) today
announced results for the first quarter of 2016.
Net sales for the first quarter ended March 31, 2016 were
$225.5 million compared to $250.3 million during the first quarter
of 2015. Copper unit volume, measured in pounds of copper contained
in the wire sold, increased 5.2% in the first quarter of 2016
versus the first quarter of 2015. Aluminum unit volume was up 11.6%
in the first quarter of 2016 versus the first quarter of 2015.
Aluminum building wire sales constituted 10.5% of net sales dollars
for the first quarter of 2016 versus 9.4% in the first quarter of
2015. The average selling price of wire per copper pound sold
dropped 15.4% in the first quarter of 2016 versus the first quarter
of 2015, driving the decrease in net sales dollars. Copper wire
sales prices declined primarily due to the lower price of copper
purchased, which declined 20.7% versus the first quarter of 2015.
Net income for the first quarter of 2016 was $8.6 million versus
$10.8 million in the first quarter of 2015. Fully diluted net
earnings per common share were $0.41 in the first quarter of 2016
versus $0.52 in the first quarter of 2015.
On a sequential quarter comparison, net sales for the first
quarter of 2016 were $225.5 million versus $250.9 million during
the fourth quarter of 2015. Sales dollars decreased due to a 6.8%
unit volume decrease of copper building wire sold coupled with a
3.9% 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 5.3%. Net
income for the first quarter of 2016 decreased to $8.6 million
versus $10.9 million in the fourth quarter of 2015. Fully diluted
net income per common share was $0.41 in the first quarter of 2016
versus $0.53 in the fourth quarter of 2015.
Commenting on the results, Daniel L. Jones, Chairman, President
and Chief Executive Officer of Encore Wire Corporation, said, “We
are generally pleased with the first quarter results. Unit volumes
were up over the first quarter of last year. Margins, however,
declined slightly in both copper and aluminum wire sales. 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 copper spread decreased 4.2% in the first
quarter of 2016 versus the first quarter of 2015, and 1.2% on a
sequential quarter comparison. The copper spread contracted 4.2% as
the average price of copper purchased decreased 20.7% in the first
quarter of 2016 versus the first quarter of 2015, and the average
selling price of wire sold decreased 15.4%. Aluminum spreads were
down 0.3% and 4.0% versus the same respective periods. The margins
were off somewhat due to the timing of at least two attempts by the
industry to raise prices that were announced just ahead of a week
of soft copper commodity prices. These price increase attempts had
difficulty gaining traction, and margins dropped slightly. We do
not necessarily view this as poor industry discipline, but more a
case of unfortunate timing, which happens from time to time. Our
discussions with our distributor customers and their contractor
customers indicate there is a fairly good outlook for construction
projects this year, although we are steering through headwinds
generated by concern about the national political landscape and
other factors.
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 $78.6 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.”
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 2015 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, In
Thousands 2016 2015 Net Income $ 8,599 $ 10,789
Income Tax Expense 4,238 5,710 Interest Expense 58 62 Depreciation
and Amortization 4,846 3,897 EBITDA $ 17,741 $ 20,458
Encore Wire
Corporation Condensed Consolidated Balance Sheets
(In Thousands)
March 31, 2016 December 31, 2015 (Unaudited)
ASSETS Current Assets Cash $ 78,561 $ 79,152 Receivables, net
175,215 186,065 Inventories 98,472 95,254 Prepaid Expenses and
Other 4,153 9,684 Total Current Assets
356,401 370,155 Property, Plant and Equipment, net 260,251 254,768
Other Assets 3,192 3,193 Total Assets $
619,844 $ 628,116 LIABILITIES AND
STOCKHOLDERS’ EQUITY Current Liabilities Accounts Payable $ 21,579
$ 28,743 Accrued Liabilities and Other 24,624
33,972 Total Current Liabilities 46,203 62,715 Long Term
Liabilities Non-Current Deferred Income Taxes 26,347
26,762 Total Long Term Liabilities 26,347
26,762 Total Liabilities 72,550 89,477
Stockholders’ Equity Common Stock 267 267 Additional Paid in
Capital 53,494 53,024 Treasury Stock (91,056 ) (91,056 ) Retained
Earnings 584,589 576,404 Total
Stockholders’ Equity 547,294 538,639
Total Liabilities and Stockholders’ Equity $ 619,844 $
628,116
Encore Wire
Corporation Condensed Consolidated Statements of Income
(Unaudited)
(In Thousands, Except Per Share Data)
Three Months Ended March 31, 2016
2015 Net Sales $ 225,544
100.0 % $ 250,262 100.0 % Cost of Sales 195,401 86.6
% 217,832 87.0 % Gross Profit 30,143 13.4 % 32,430
13.0 % Selling, General and Administrative Expenses
17,309 7.7 % 16,031 6.4 % Operating Income
12,834 5.7 % 16,399 6.6 % Net Interest & Other Expense
(3 ) — % (100 ) — % Income before Income Taxes 12,837
5.7 % 16,499 6.6 % Income Taxes 4,238 1.9 %
5,710 2.3 % Net Income $ 8,599 3.8 % $ 10,789
4.3 % Basic Earnings Per Share $ 0.42 $ 0.52
Diluted Earnings Per Share $ 0.41 $ 0.52
Weighted Average Number of Common and Common Equivalent Shares
Outstanding: Basic 20,688 20,725
Diluted 20,747 20,782 Dividend Declared
per Share $ 0.02 $ 0.02
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version on businesswire.com: http://www.businesswire.com/news/home/20160427006598/en/
Encore Wire CorporationFrank J. Bilban,
972-562-9473Vice President & CFO
Encore Wire (NASDAQ:WIRE)
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