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8-K - FORM 8-K - ENCORE WIRE CORPd678758d8k.htm

Exhibit 99.1

 

LOGO

 

Encore Wire Corporation    PRESS RELEASE    February 19, 2014
1329 Millwood Road         
McKinney, Texas 75069       Contact:    Frank J. Bilban
972-562-9473          Vice President & CFO
   For Immediate Release   

ENCORE WIRE REPORTS FOURTH QUARTER RESULTS

MCKINNEY, TX - Encore Wire Corporation (NASDAQ Global Select: WIRE) today announced results for the fourth quarter and full year ended December 31, 2013.

Net sales for the fourth quarter of 2013 increased to $293.5 million compared to $258.0 million during the fourth quarter of 2012. Unit volume, measured in copper pounds contained in the wire sold, increased 18.4% in the fourth quarter of 2013 versus the fourth quarter of 2012. The volume increase was offset somewhat by a 6.8% decrease in the average selling price per copper pound sold in the fourth quarter of 2013 versus the same period in 2012. Sales prices declined primarily due to lower copper prices, which declined 8.6% versus the fourth quarter of 2012. Aluminum building wire sales continued their growth pattern, constituting 8.0% of net sales dollars for the fourth quarter of 2013 versus 5.1% in the fourth quarter of 2012. Net income for the fourth quarter of 2013 increased to $11.2 million versus $5.2 million in the fourth quarter of 2012. Fully diluted net earnings per common share were $0.54 in the fourth quarter of 2013 versus $0.25 in the fourth quarter of 2012.

Net sales for the year ended December 31, 2013 increased to $1.158 billion compared to $1.072 billion during the same period in 2012. Unit volume, measured in copper pounds contained in the wire sold, increased 9.5% in 2013 versus 2012. The volume increase was offset somewhat by a 4.7% decrease in the average selling price per copper pound sold in 2013 versus 2012. Sales prices declined primarily due to lower copper prices, which declined 7.5% in 2013 versus 2012. Aluminum building wire sales continued to grow, constituting 6.9% of net sales dollars during 2013 versus 3.6% in 2012. Net income for the year ended December 31, 2013 was $46.9 million versus $19.8 million in 2012. Fully diluted net earnings per common share increased to $2.26 for the year ended December 31, 2013 versus $0.91 in 2012.

On a sequential quarter comparison, net sales for the fourth quarter of 2013 were $293.5 million versus $309.9 million during the third quarter of 2013. Copper unit volume decreased 6.7% on a sequential quarter comparison. The fourth quarter is generally a slower quarter in the construction and building wire industries. Net income for the fourth quarter of 2013 was $11.2 million versus $13.8 million in the third quarter of 2013. Fully diluted net income per common share was $0.54 in the fourth quarter of 2013 versus $0.66 in the third quarter of 2013.

Commenting on the results, Daniel L. Jones, President and Chief Executive Officer, said, “Continuing the positive trend we saw developing earlier this year, the fourth quarter was encouraging to us from both a volume and margin perspective. Unit volumes were up in all building wire products. We believe our expansion of product offerings to our existing customer base over the last several years has been critical to maintaining and perhaps boosting our market share, as our capital expenditures help to drive increased sales. As we have repeatedly noted, 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 3.7% in 2013 versus 2012, while our copper unit volume shipped in 2013 increased 9.5% versus 2012. Along with the continued success of our aluminum building wire launch, this increase in copper unit volumes and spreads helped drive earnings per share in 2013 to the second highest yearly total ever. Our new aluminum building wire plant finished its first full year of operations, during which we sold $79.8 million of aluminum building wire. We believe that our ability to sell aluminum wire has resulted in increased copper wire sales as customers prefer to “one-stop shop” and order enough pounds to get free freight.

 

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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 had $36.8 million in cash at the end of the quarter. We also declared another 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. 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 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. 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 2012 in 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 December 31,      12 Months Ended December 31,  
$’s in 000’s    2013      2012      2013      2012  

Net Income

   $ 11,212       $ 5,220       $ 46,910       $ 19,811   

Income Tax Expense

     5,557         2,265         23,773         9,565   

Interest Expense

     64         75         265         313   

Depreciation and Amortization

     3,841         3,446         14,788         14,280   
  

 

 

    

 

 

    

 

 

    

 

 

 

EBITDA

   $ 20,674       $ 11,006       $ 85,736       $ 43,969   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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Encore Wire Corporation

Condensed Consolidated Balance Sheets

(In Thousands)

(Unaudited)

 

     Deecember 31,     Deecember 31,  
     2013     2012  

ASSETS

    

Current Assets

    

Cash

   $ 36,778      $ 33,883   

Receivables, net

     215,739        197,980   

Inventories

     70,780        63,656   

Prepaid Expenses and Other

     6,769        11,331   
  

 

 

   

 

 

 

Total Current Assets

     330,066        306,850   

Property, Plant and Equipment, net

     194,254        164,924   

Other Assets

     1,506        693   
  

 

 

   

 

 

 

Total Assets

   $ 525,826      $ 472,467   
  

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

    

Current Liabilities

    

Accounts Payable

   $ 23,465      $ 20,112   

Accrued Liabilities and Other

     24,453        25,245   
  

 

 

   

 

 

 

Total Current Liabilities

     47,918        45,357   

Long Term Liabilities

    

Non-Current Deferred Income Taxes

     21,327        16,946   
  

 

 

   

 

 

 

Total Long Term Liabilities

     21,327        16,946   
  

 

 

   

 

 

 

Total Liabilities

     69,245        62,303   

Stockholders’ Equity

    

Common Stock

     266        266   

Additional Paid in Capital

     49,459        48,298   

Treasury Stock

     (88,134     (88,134

Retained Earnings

     494,990        449,734   
  

 

 

   

 

 

 

Total Stockholders’ Equity

     456,581        410,164   
  

 

 

   

 

 

 

Total Liabilities and Stockholders’ Equity

   $ 525,826      $ 472,467   
  

 

 

   

 

 

 

 

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Encore Wire Corporation

Condensed Consolidated Statements of Income

(In Thousands, Except Per Share Data)

(Unaudited)

 

     Quarter Ended December 31,     Year Ended December 31,  
     2013     2012     2013     2012  

Net Sales

   $ 293,514        100.0   $ 258,000         100.0   $ 1,158,252        100.0   $ 1,072,348        100.0

Cost of Sales

     260,798        88.9     235,661         91.3     1,023,180        88.3     982,021        91.6
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross Profit

     32,716        11.1     22,339         8.7     135,072        11.7     90,327        8.4

Selling, General and Administrative Expenses

     15,968        5.4     14,852         5.8     64,453        5.6     60,981        5.7
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating Income

     16,748        5.7     7,487         2.9     70,619        6.1     29,346        2.7

Net Interest & Other Expense

     (21     0.0     2         0.0     (64     0.0     (30     0.0
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before Income Taxes

     16,769        5.7     7,485         2.9     70,683        6.1     29,376        2.7

Income Taxes

     5,557        1.9     2,265         0.9     23,773        2.1     9,565        0.9
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net Income (Loss)

   $ 11,212        3.8   $ 5,220         2.0   $ 46,910        4.1   $ 19,811        1.8
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Basic Earnings Per Share

   $ 0.54        $ 0.25         $ 2.27        $ 0.91     
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

Diluted Earnings Per Share

   $ 0.54        $ 0.25         $ 2.26        $ 0.91     
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

Weighted Average Number of Common and Common Equivalent Shares Outstanding:

                 

-Basic

     20,692          20,661           20,676          21,680     
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

-Diluted

     20,818          20,723           20,764          21,732     
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

Dividends Declared per Share

   $ 0.02        $ 0.02         $ 0.08        $ 0.08     
  

 

 

   

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

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