Encore Wire Corporation | PRESS RELEASE | October 24, 2012 | |
1329 Millwood Road | |||
McKinney, Texas 75069 | Contact: | Frank J. Bilban | |
972-562-9473 | Vice President & CFO | ||
For Immediate Release |
MCKINNEY, TX - Encore Wire Corporation (NASDAQ Global Select:
WIRE) today announced results for the third quarter and nine
months ended September 30, 2012.
Net sales for the third quarter ended September 30, 2012 were
$269.2 million compared to $319.4 million during the third
quarter of 2011. Lower prices for building wire sold in the
quarter ended September 30,
2012 accounted for most of the decrease in net sales dollars,
decreasing 15.0% per copper pound sold versus the same period
in 2011. Sales prices declined primarily due to lower copper
prices, which
declined 14.2% versus the third quarter of 2011. Unit volume,
measured in copper pounds contained in the wire sold,
decreased 2.7% in the third quarter of 2012 versus the third
quarter of 2011. Net income
for the third quarter of 2012 was $5.5 million versus $13.7
million in the third quarter of 2011. Fully diluted net
earnings per common share were $0.27 in the third quarter of
2012 versus $0.59 in the third quarter of 2011.
Net sales for the nine months ended September 30, 2012 were
$814.3 million compared to $932.2 million during the same
period in 2011. Lower prices for building wire sold in the
nine months ended September
30, 2012 accounted for most of the decrease in net sales
dollars, decreasing 12.7% per copper pound versus the same
period in 2011. Unit volume in the nine months ended
September 30, 2012 decreased
2.4% versus the same period in 2011. Net income for the nine
months ended September 30, 2012 was
$14.6 million versus $33.8 million in the same period in
2011. Fully diluted net earnings per common share were $0.66
for the nine months ended September 30, 2012 versus $1.45 in
the same period in 2011.
On a sequential quarter comparison, net sales for the third
quarter of 2012 increased 1.7% to $269.2 million versus
$264.7 million during the second quarter of 2012. Unit volume
accounted for the increase, rising 1.6% on a sequential
quarter comparison. Net income for the third quarter of 2012
increased
133.2% to $5.5 million versus $2.4 million in the second
quarter of 2012. Fully diluted net income per common share
increased 148.1% to $0.27 in the third quarter of 2012 versus
$0.11 in the second quarter
of 2012.
Commenting on the results, Daniel L. Jones, President and
Chief Executive Officer of Encore Wire Corporation, said,
"The third quarter of this year was another fairly steady
volume quarter in the midst of this construction industry
recession. There are signs of bright spots around the country
and talk of some major projects, but for the most part we are
still in the trough. Major projects are discussed but then
get delayed due to uncertainties surrounding the global
economy and the U.S. economy and political environment. The
good news is that our volumes are not trending downward. We
believe our expansion of product offerings over the last six
years to our existing customer base has been critical to
maintaining and perhaps boosting our market share. As we have
repeatedly noted, one of the key metrics to our earnings is
the 'spread' between the price of wire sold and cost of raw
copper purchased in any given period. That spread increased
7.8% in the third quarter of 2012 versus the second quarter
of 2012, while our copper unit volume shipped in the third
quarter of 2012 increased 1.6% versus the second quarter
of
2012. Comex prices for the raw copper we buy were somewhat
less volatile in the first two months of this quarter than
the previous quarter and then rose in September allowing us
to marginally enhance spreads. As illustrated, relatively
small movements in the spread can affect our earnings per
share. and were a positive influence on a sequential
quarterly comparison. Conversely, spreads were down 17.3% in
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the third quarter of 2012 versus the third quarter of 2011
and down 8.8% on a year-to-date basis in 2012 versus
2011.
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 have $18.0 million in cash at the end of the
quarter. We also declared another quarterly 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. Our low cost structure and strong balance sheet
have enabled us to withstand difficult periods in the past,
and we believe we will emerge stronger than most when market
conditions improve. We thank our employees and associates for
their outstanding effort and our shareholders for their
continued support during these challenging times."
Encore Wire Corporation manufactures a broad range of copper
electrical wire for interior wiring in homes, apartments,
manufactured housing and commercial and industrial buildings.
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. 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 2011 on 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 Sept. 30, | 9 Months Ended Sept. 30, | ||||
$'s in 000's | 2012 2011 | 2012 2011 | |||
Net Income | $ 5,527 | $ 13,721 | $ 14,590 | $ 33,836 | |
Income Tax Expense | 2,887 | 7,607 | 7,300 | 17,653 | |
Interest Expense | 81 | 87 | 238 | 242 | |
Depreciation and Amortization | 3,598 | 3,366 | 10,834 | 10,233 |
EBITDA
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Encore Wire Corporation
1329 Millwood Road McKinney, Texas 75069 (972) 562-9473
Condensed Consolidated Bai ance Sheets
(In Thousands) (Unaudited)
September 30, 2012 | December 31, 2011 | ||
ASSETS | |||
Current Assets Cash | $ 17,988 | $ 112,298 | |
Receivables, net | 207,544 | 199,366 | |
Inventories | 67,049 | 63,491 | |
Prepaid Expenses and Other | 21,390 | 1,899 | |
Total Current Assets Property, Plant and Equipment, net | 313,971 161,103 | 377,054 138,832 | |
Other Assets | 798 | 260 | |
Total Assets | $ 475,872 | $ 516,146 | |
LIABILITIES AND STOCKHOLDERS' EQUITY | |||
Current Liabilities | |||
Accounts Payable | $ 28,165 | $ 14,676 | |
Accrued Liabilities and Other | 23,599 | 27,894 | |
Total Current Liabilities Long T erm Liabilities Non-Current Deferred Incarne T axes | 51,764 18,961 | 42,570 15,833 | |
Total Long T erm Liabilities | 18,961 | 15,833 | |
Total Liabilities | 70,725 | 58,403 | |
Stockholders' Equity Common Stock | 266 | 266 | |
Additional Paid in Capitai | 48,089 | 47,342 | |
T reasury Stock | (88,134) | (21,496) | |
Retained Eamings | 444,926 | 431,631 | |
Total Stockholders' Equity | 405,147 | 457,743 | |
Total Liabilities and Stockholders' Equity | $ 475,872 | $ 516,146 |
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Encore Wire Corporation
1329 Millwood Road McKinney, Texas 75069 (972) 562-9473
Condensed Consolidated Statements oflncome (In Thousands, Except Per Share Data) (Unaudited)
Quarter Ended September 30, Nine Months Ended September 30,
2012 2011 2012 2011
Net Sales $269,152 1000% $319,356 1000% $814,348 1000% $932,176 1000% Cast af Sales 245,016 910% 281,517 88.2% 746,360 91.7% 829,949 890%
Grass Profit 24,136 90% 37,839 11.8% 67,988 8.3% 102,227 110% Selling, Genera!and
Adrninistrative Expenses 15,726 5.8% 16,423 5.1% 46,130 5.7% 50,655 5.4%
Operating Incarne 8,410 3.1% 21,416 6.7% 21,858 2.7% 51,572 5.5% Net Interest & Other Expense (4) 0.0% 88 0.0% (32) 0.0% 83 0.0% Incarne before Incarne Taxes 8,414 3.1% 21,328 6.7% 21,890 2.7% 51,489 5.5% Incarne Taxes 2,887 1.1% 7,607 2.4% 7,300 0.9% 17,653 19% Netlncorne $ 5,527 2.1% $ 13,721 4.3% $ 14,590 1.8% $ 33,836 3.6%
Basic Earnings Per Share $ 0.27 $ 0.59 $ 0.66 $ 1.45
Diluted Eamings Per Share $ 0.27 $ 0.59 $ 0.66 $ 1.45
Weighted Average Number af Comm on and Comm on Equivalent Shares Outstanding:
-Basic 20,657 23,292 22,022 23,258
-Diluted 20,712 23,399 22,070 23,394
Dividend Declared per Share $ 0.02 $ 0.02 $ 0.06 $ 0.06
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