Attached files
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| 8-K - FORM 8-K - ENCORE WIRE CORP | d81715e8vk.htm |
EXHIBIT 99.1
Encore Wire
Corporation
|
PRESS RELEASE | April 27, 2011 | ||||
1329 Millwood Road |
||||||
McKinney, Texas 75069
|
Contact: | Frank J. Bilban | ||||
972-562-9473
|
Vice President & CFO | |||||
| For Immediate Release |
ENCORE WIRE REPORTS IMPROVED FIRST QUARTER RESULTS
MCKINNEY, TX — Encore Wire Corporation (NASDAQ Global Select: WIRE) today announced results for the
first quarter of 2011.
Net sales for the quarter ended March 31, 2011 were $303.4 million compared to $175.2 million
during the first quarter of 2010. Net income for the first quarter of 2011 was $10.7 million
versus a net loss of $2.5 million in the first quarter of 2010. Fully diluted net income per
common share was $0.46 in the first quarter of 2011 versus a net loss of $0.11 in the first quarter
of 2010. Unit volumes, measured in pounds of copper contained in the wire sold during the period
increased 28.9% in the first quarter of 2011 versus the first quarter of 2010. The spread between
the cost of a pound of copper purchased and the sales price of wire containing a pound of copper
increased by 42.2%. The 2010 first quarter results included a $2.6 million dollar pre-tax charge
associated with the early retirement of long-term debt that the Company paid off in January of
2010.
On a sequential quarter comparison, net sales for the first quarter of 2011 were $303.4 million
versus $256.1 million during the fourth quarter of 2010. Net income for the first quarter of 2011
was $10.7 million versus $4.5 million in the fourth quarter of 2010. Fully diluted net income per
common share was $0.46 in the first quarter of 2011 versus $0.19 in the fourth quarter of 2010.
Unit volumes increased 5.3% in the first quarter of 2011 versus the fourth quarter of 2010. The
spread between the cost of a pound of copper purchased and the sales price of wire containing a
pound of copper increased by 14.3%.
Commenting on the results, Daniel L. Jones, President and Chief Executive Officer of Encore Wire
Corporation, said, “We are pleased to announce strong quarterly earnings in the midst of the severe
recession currently taking place in the construction industry. As we have repeatedly noted, the
key metric to our earnings is the “spread” between the average price of wire sold per copper pound
and the Company’s average cost of raw copper per pound in any given period. That spread increased
42.2% in the first quarter of 2011 versus the first quarter of 2010, while our unit volume shipped
in the first quarter of 2011 increased 28.9% versus the first quarter of 2010. The spread
increased 14.3% on a sequential quarter basis while unit volume increased 5.3%, driving the
increase in our earnings. In the trailing twelve months ended March 31, 2011, we produced net
sales of $1.038 billion and net income of $28.4 million or $1.22 per share, versus net sales of
$680.4 million and a net loss of $3.4 million or negative $0.15 per share in the twelve months
ended March 31, 2010. The results in the last four quarters are particularly encouraging. We
believe the exit of a former competitor in the first quarter of 2010 has contributed to the
positive trend in industry pricing levels and margins over the last four quarters. We continue to
strive to lead or follow industry price increases to achieve profit growth.
We produced these results in this difficult environment due to our low cost business model and
aggressive cost cutting in all facets of our operation. 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.
We continue to maintain our strong balance sheet. We have no long term debt, and our revolving
line of credit is paid down to zero. In addition, we have $75.2 million in cash as of March 31,
2011. We also declared another quarterly cash dividend during the past quarter.
With our exceptionally strong balance sheet, we have the capability to approach the future
confidently. Our low cost structure and strong balance sheet have enabled us to withstand tough
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 tremendous efforts and our stockholders
for their continued support.”
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 publish 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 2010 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 March 31, | ||||||||
| $’s in 000’s | 2011 | 2010 | ||||||
Net Income |
$ | 10,654 | $ | (2,466 | ) | |||
Income Tax Expense |
4,958 | (1,620 | ) | |||||
Interest Expense |
78 | 254 | ||||||
Depreciation and Amortization |
3,425 | 3,472 | ||||||
EBITDA |
$ | 19,115 | $ | (360 | ) | |||
Encore Wire Corporation
1329 Millwood Road
McKinney, Texas 75069
(972) 562-9473
Condensed Consolidated Balance Sheets
(In Thousands)
(Unaudited)
1329 Millwood Road
McKinney, Texas 75069
(972) 562-9473
Condensed Consolidated Balance Sheets
(In Thousands)
(Unaudited)
| March 31, | December 31, | |||||||
| 2011 | 2010 | |||||||
ASSETS |
||||||||
Current Assets |
||||||||
Cash |
$ | 75,233 | $ | 103,252 | ||||
Receivables, net |
234,851 | 190,364 | ||||||
Inventories |
47,974 | 42,104 | ||||||
Prepaid Expenses and Other |
9,493 | 6,377 | ||||||
Total Current Assets |
367,551 | 342,097 | ||||||
Property, Plant and Equipment, net |
133,826 | 134,985 | ||||||
Other Assets |
622 | 194 | ||||||
Total Assets |
$ | 501,999 | $ | 477,276 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
Current Liabilities |
||||||||
Accounts Payable |
$ | 46,975 | $ | 32,897 | ||||
Accrued Liabilities and Other |
25,515 | 25,256 | ||||||
Total Current Liabilities |
72,490 | 58,153 | ||||||
Long Term Liabilities |
||||||||
Non-Current Deferred Income Taxes |
11,766 | 11,746 | ||||||
Total Long Term Liabilities |
11,766 | 11,746 | ||||||
Total Liabilities |
84,256 | 69,899 | ||||||
Stockholders’ Equity |
||||||||
Common Stock |
264 | 264 | ||||||
Additional Paid in Capital |
45,217 | 45,040 | ||||||
Treasury Stock |
(21,294 | ) | (21,294 | ) | ||||
Retained Earnings |
393,556 | 383,367 | ||||||
Total Stockholders’ Equity |
417,743 | 407,377 | ||||||
Total Liabilities and Stockholders’ Equity |
$ | 501,999 | $ | 477,276 | ||||
Encore Wire Corporation
1329 Millwood Road
McKinney, Texas 75069
(972) 562-9473
Condensed Consolidated Statements of Income
(In Thousands, Except per Share Data)
(Unaudited)
1329 Millwood Road
McKinney, Texas 75069
(972) 562-9473
Condensed Consolidated Statements of Income
(In Thousands, Except per Share Data)
(Unaudited)
| Quarter Ended March 31, | ||||||||||||||||
| 2011 | 2010 | |||||||||||||||
Net Sales |
$ | 303,351 | 100.0 | % | $ | 175,229 | 100.0 | % | ||||||||
Cost of Sales |
269,596 | 88.9 | % | 164,628 | 94.0 | % | ||||||||||
Gross Profit |
33,755 | 11.1 | % | 10,601 | 6.0 | % | ||||||||||
Selling, General and Administrative Expenses |
18,149 | 6.0 | % | 11,984 | 6.8 | % | ||||||||||
Operating Income |
15,606 | 5.1 | % | (1,383 | ) | -0.8 | % | |||||||||
Net Interest & Other Expense |
(6 | ) | 0.0 | % | 2,703 | 1.5 | % | |||||||||
Income before Income Taxes |
15,612 | 5.1 | % | (4,086 | ) | -2.3 | % | |||||||||
Income Taxes |
4,958 | 1.6 | % | (1,620 | ) | -0.9 | % | |||||||||
Net Income |
$ | 10,654 | 3.5 | % | $ | (2,466 | ) | -1.4 | % | |||||||
Basic Earnings Per Share |
$ | 0.46 | $ | (0.11 | ) | |||||||||||
Diluted Earnings Per Share |
$ | 0.46 | $ | (0.11 | ) | |||||||||||
Weighted Average Number of
Common and Common |
||||||||||||||||
Equivalent Shares Outstanding: |
||||||||||||||||
—Basic |
23,217 | 23,159 | ||||||||||||||
—Diluted |
23,378 | 23,329 | ||||||||||||||
Dividends Declared per Share |
$ | 0.02 | $ | 0.02 | ||||||||||||