10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

___________________________________________

FORM 10-Q

___________________________________________

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File Number: 000-20278

__________________________________________________________

ENCORE WIRE CORPORATION

(Exact name of registrant as specified in its charter)

__________________________________________________________

Delaware		75-2274963
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
1329 Millwood Road
McKinney	Texas	75069
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (972) 562-9473

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $.01 per share	WIRE	The NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).          Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated Filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.			☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).       Yes  ☐    No  ☒

Number of shares of Common Stock, par value $0.01, outstanding as of July 29, 2020: 20,631,683

ENCORE WIRE CORPORATION

FORM 10-Q

FOR THE QUARTER ENDED JUNE 30, 2020

Table of Contents

	Page No.
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets - June 30, 2020 (Unaudited) and December 31, 2019	1
Statements of Income - Quarter and Six Months Ended June 30, 2020 and 2019 (Unaudited)	2
Statements of Stockholders' Equity - Quarter and Six Months Ended June 30, 2020 and 2019 (Unaudited)	3
Statements of Cash Flow - Six Months Ended June 30, 2020 and 2019 (Unaudited)	4
Notes to Financial Statements	5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	8
Item 3. Quantitative and Qualitative Disclosures About Market Risk	11
Item 4. Controls and Procedures	11
PART II—OTHER INFORMATION
Item 1. Legal Proceedings	12
Item 1A. Risk Factors	12
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	13
Item 6. Exhibits	14
Signatures	15

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Encore Wire Corporation

Balance Sheets

(In thousands, except share and per share data)

	June 30, 2020		December 31, 2019
	(Unaudited)		(See Note)
Assets
Current assets:
Cash and cash equivalents	$	250,383	$	230,965
Accounts receivable, net of allowance of $2,501 and $1,801	192,067		223,098
Inventories, net	87,880		89,684
Income tax receivable	—		3,602
Prepaid expenses and other	3,552		1,889
Total current assets	533,882		549,238
Property, plant and equipment - at cost:
Land and land improvements	60,662		52,354
Construction-in-progress	45,226		49,847
Buildings and improvements	152,896		152,536
Machinery and equipment	353,300		334,204
Furniture and fixtures	12,249		10,926
Total property, plant and equipment	624,333		599,867
Accumulated depreciation	(274,804)		(266,688)
Property, plant and equipment - net	349,529		333,179
Other assets	634		737
Total assets	$	884,045	$	883,154
Liabilities and Stockholders’ Equity
Current liabilities:
Trade accounts payable	$	30,039	$	40,509
Accrued liabilities	27,338		34,787
Income taxes payable	2,499		—
Total current liabilities	59,876		75,296
Deferred income taxes and other	32,058		28,762
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $.01 par value:
Authorized shares – 2,000,000; none issued	—		—
Common stock, $.01 par value:
Authorized shares – 40,000,000;
Issued shares – 27,005,388 and 26,939,403	270		269
Additional paid-in capital	66,554		63,009
Treasury stock, at cost – 6,468,705 and 6,027,455 shares	(111,718)		(91,056)
Retained earnings	837,005		806,874
Total stockholders’ equity	792,111		779,096
Total liabilities and stockholders’ equity	$	884,045	$	883,154

Note: The balance sheet at December 31, 2019, as presented, is derived from the audited financial statements at that date.

See accompanying notes.

1

Encore Wire Corporation

Statements of Income

(In thousands, except per share data)

	Quarter Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
	(Unaudited)				(Unaudited)
Net sales	$	253,631	$	336,866	$	556,425	$	651,573
Cost of goods sold	217,132		290,956		474,153		564,337
Gross profit	36,499		45,910		82,272		87,236
Selling, general, and administrative expenses	20,755		23,846		43,044		48,844
Operating income	15,744		22,064		39,228		38,392
Net interest and other income	267		1,082		1,151		2,160
Income before income taxes	16,011		23,146		40,379		40,552
Provision for income taxes	3,664		5,364		9,424		9,359
Net income	$	12,347	$	17,782	$	30,955	$	31,193
Earnings per common and common equivalent share – basic	$	0.60	$	0.85	$	1.50	$	1.49
Earnings per common and common equivalent share – diluted	$	0.60	$	0.85	$	1.50	$	1.49
Weighted average common and common equivalent shares outstanding – basic	20,496		20,898		20,646		20,891
Weighted average common and common equivalent shares outstanding – diluted	20,537		20,988		20,696		20,985
Cash dividends declared per share	$	0.02	$	0.02	$	0.04	$	0.04

See accompanying notes.

2

Encore Wire Corporation

Statements of Stockholders' Equity

(In thousands, except per share data)

2020	Common Stock			Additional Paid-In Capital		Treasury Stock			Retained Earnings		Total Stockholders' Equity
(Unaudited)	Shares	Amount				Shares	Amount
Balance at December 31, 2019	26,939	$	269	$	63,009	6,027	$	(91,056)	$	806,874	$	779,096
Net income	—	—		—		—	—		18,607		18,607
Stock-based compensation	8	—		460		—	—		—		460
Dividend declared—$0.02 per share	—	—		—		—	—		(411)		(411)
Purchase of treasury stock	—	—		—		439	(20,580)		—		(20,580)
Balance at March 31, 2020	26,947	$	269	$	63,469	6,466	$	(111,636)	$	825,070	$	777,172
Net income	—	—		—		—	—		12,347		12,347
Exercise of stock options	53	1		2,454		—	—		—		2,455
Stock-based compensation	5	—		631		—	—		—		631
Dividend declared—$0.02 per share	—	—		—		—	—		(412)		(412)
Purchase of treasury stock	—	—		—		2	(82)		—		(82)
Balance at June 30, 2020	27,005	$	270	$	66,554	6,468	$	(111,718)	$	837,005	$	792,111

2019	Common Stock			Additional Paid-In Capital		Treasury Stock			Retained Earnings		Total Stockholders' Equity
(Unaudited)	Shares	Amount				Shares	Amount
Balance at December 31, 2018	26,907	$	269	$	60,822	6,027	$	(91,056)	$	750,421	$	720,456
Net income	—	—		—		—	—		13,411		13,411
Exercise of stock options	15	—		431		—	—		—		431
Stock-based compensation	—	—		760		—	—		—		760
Dividend declared—$0.02 per share	—	—		—		—	—		(418)		(418)
Balance at March 31, 2019	26,922	$	269	$	62,013	6,027	$	(91,056)	$	763,414	$	734,640
Net income	—	—		—		—	—		17,782		17,782
Exercise of stock options	6	—		137		—	—		—		137
Stock-based compensation	5	—		502		—	—		—		502
Dividend declared—$0.02 per share	—	—		—		—	—		(418)		(418)
Balance at June 30, 2019	26,933	$	269	$	62,652	6,027	$	(91,056)	$	780,778	$	752,643

See accompanying notes.

3

Encore Wire Corporation

Statements of Cash Flow

(In thousands)

	Six Months Ended June 30,
	2020		2019
	(Unaudited)
Operating Activities:
Net income	$	30,955	$	31,193
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	9,321		8,785
Deferred income taxes	3,327		816
Stock-based compensation attributable to equity awards	1,091		1,262
Other	520		(111)
Changes in operating assets and liabilities:
Accounts receivable	30,331		(20,615)
Inventories	1,804		6,328
Other assets	(1,652)		(200)
Trade accounts payable and accrued liabilities	(21,514)		2,266
Current income taxes receivable / payable	6,101		(1,873)
Net cash provided by operating activities	60,284		27,851
Investing Activities:
Purchases of property, plant and equipment	(21,921)		(21,210)
Proceeds from sale of assets	90		22
Net cash used in investing activities	(21,831)		(21,188)
Financing Activities:
Purchase of treasury stock	(20,662)		—
Proceeds from issuance of common stock, net	2,455		568
Dividends paid	(828)		(836)
Net cash used in financing activities	(19,035)		(268)
Net increase in cash and cash equivalents	19,418		6,395
Cash and cash equivalents at beginning of period	230,965		178,405
Cash and cash equivalents at end of period	$	250,383	$	184,800

See accompanying notes.

4

ENCORE WIRE CORPORATION

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

June 30, 2020

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The unaudited financial statements of Encore Wire Corporation (the “Company”) have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim information and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete annual financial statements. In the opinion of management, all adjustments, consisting only of normal recurring adjustments considered necessary for a fair presentation, have been included. Results of operations for interim periods presented do not necessarily indicate the results that may be expected for the entire year. These financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

In March 2020 the World Health Organization declared COVID-19 a global pandemic and recommended containment and mitigation measures worldwide. The Company is unable to predict the impact that COVID-19 will have on our financial position and operating results in future periods due to numerous uncertainties. The duration and severity of the outbreak and its long-term impact on our business remain uncertain.

Revenue Recognition

The majority of our revenue is derived by fulfilling customer orders for the purchase of our products, which include electrical building wire and cable. We recognize revenue at the point in time that control of the ordered products is transferred to the customer, which is typically upon shipment to the customer from our manufacturing facilities and based on agreed upon shipping terms on the related purchase order. Amounts billed and due from our customers are classified as accounts receivables on the balance sheet and require payment on a short-term basis through standard payment terms.

Revenue is measured as the amount of consideration we expect to receive in exchange for fulfilling product orders. The amount of consideration we expect to receive and revenue we recognize includes estimates for trade payment discounts and customer rebates which are estimated using historical experience and other relevant factors and is recorded within the same period that the revenue is recognized. We review and update these estimates regularly and the impact of any adjustments are recognized in the period the adjustments are identified. The adjustments resulting from updated estimates of trade payment discounts and customer rebates were not material.

Recent Accounting Pronouncements

The Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) is the sole source of authoritative U.S. GAAP other than Securities and Exchange Commission ("SEC") issued rules and regulations that apply only to SEC registrants. The FASB issues an Accounting Standard Update (“ASU”) to communicate changes to the codification. The Company considers the applicability and impact of all ASUs. The following are those ASUs that are relevant to the Company.

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326),” which makes significant changes to the accounting for credit losses on financial assets and disclosures about them. This ASU requires immediate recognition of management’s estimates of current expected credit losses. Under the prior model, losses were recognized only as they were incurred, which FASB has noted delayed recognition of expected losses that might not yet have met the threshold of being probable. The guidance affects all entities in all industries and applies to a wide variety of financial assets, including trade receivables. We adopted this new standard January 1, 2020 and applied a loss rate model to compute the expected credit loss allowance of our short-term trade receivable balances, which we concluded are representative of one collective pool. This method is based on relevant information from past events, including historical experiences, current conditions, and reasonable and supportable forecasts that affect collectability. Our evaluation of the new standard concluded that it had no material impact on our financial statements.

5

NOTE 2 – INVENTORIES

Inventories are stated at the lower of cost, determined by the last-in, first-out (LIFO) method, or market.

Inventories consist of the following:

In Thousands	June 30, 2020		December 31, 2019
Raw materials	$	22,084	$	25,882
Work-in-process	22,546		25,381
Finished goods	79,169		83,222
Total Inventory at FIFO cost	123,799		134,485
Adjust to LIFO cost	(35,919)		(44,801)
Inventory, net	$	87,880	$	89,684

Inventories are stated at the lower of cost, using the last-in, first out (“LIFO”) method, or market. The Company maintains two inventory pools for LIFO purposes. As permitted by U.S. generally accepted accounting principles, the Company maintains its inventory costs and cost of goods sold on a first-in, first-out (“FIFO”) basis and makes a monthly adjustment to adjust total inventory and cost of goods sold from FIFO to LIFO. The Company applies the lower of cost or market (“LCM”) test by comparing the LIFO cost of its raw materials, work-in-process and finished goods inventories to estimated market values, which are based primarily upon the most recent quoted market price of copper and other material prices as of the end of each reporting period. The Company performs a lower of cost or market calculation quarterly. As of June 30, 2020, no LCM adjustment was required. However, decreases in copper and other material prices could necessitate establishing an LCM reserve in future periods. Additionally, future reductions in the quantity of inventory on hand could cause copper or other raw materials that are carried in inventory at costs different from the cost of copper and other raw materials in the period in which the reduction occurs to be included in costs of goods sold for that period at the different price.

In the second quarter of 2020, LIFO adjustments were recorded, increasing cost of sales by $0.7 million, versus LIFO adjustments decreasing cost of sales by $3.3 million in the second quarter of 2019. In the first six months of 2020, LIFO adjustments were recorded, decreasing cost of sales by $8.9 million, versus LIFO adjustments increasing cost of sales by $0.5 million in the first six months of 2019.

NOTE 3 – ACCRUED LIABILITIES

Accrued liabilities consist of the following:

In Thousands	June 30, 2020		December 31, 2019
Sales rebates payable	$	12,280	$	16,622
Property taxes payable	2,039		4,011
Accrued salaries	6,446		7,924
SAR Liability	3,821		3,087
Other accrued liabilities	2,752		3,143
Total accrued liabilities	$	27,338	$	34,787

NOTE 4 – INCOME TAXES

Income taxes were accrued at an effective rate of 22.9% in the second quarter of 2020 versus 23.2% in the second quarter of 2019, consistent with the Company’s estimated liabilities. For the six months ended June 30, the Company’s tax rate was approximately 23.3% in 2020 and 23.1% in 2019. In all periods, the differences between the provisions for income taxes and the income taxes computed using the federal income tax statutory rate are due primarily to the incremental taxes accrued for state and local taxes.

NOTE 5 – EARNINGS PER SHARE

Earnings per common and common equivalent share are computed using the weighted average number of shares of common stock and common stock equivalents outstanding during each period. If dilutive, the effect of stock options, treated as common stock equivalents, is calculated using the treasury stock method.

6

The following table sets forth the computation of basic and diluted earnings per share:

	Quarter Ended June 30,				Six Months Ended June 30,
In Thousands	2020		2019		2020		2019
Numerator:
Net income	$	12,347	$	17,782	$	30,955	$	31,193
Denominator:
Denominator for basic earnings per share – weighted average shares	20,496		20,898		20,646		20,891
Effect of dilutive securities:
Employee stock awards	41		90		50		94
Denominator for diluted earnings per share – weighted average shares	20,537		20,988		20,696		20,985

The weighted average of employee stock options excluded from the determination of diluted earnings per common and common equivalent share for the second quarter was 238,433 in 2020 and 117,500 in 2019. The weighted average of employee stock options excluded from the determination of diluted earnings per common and common equivalent share for the six months ended June 30 was 239,609 in 2020 and 117,500 in 2019. Such options were anti-dilutive for their respective periods.

NOTE 6 – DEBT

The Company is party to a Credit Agreement (the “Credit Agreement”) with two banks, Bank of America, N.A., as administrative agent and letter of credit issuer, and Wells Fargo Bank, National Association, as syndication agent. The Credit Agreement, as amended, extends through October 1, 2021 and provides for maximum borrowings of $150.0 million. At our request, and subject to certain conditions, the commitments under the Credit Agreement may be increased by a maximum of up to $100.0 million as long as existing or new lenders agree to provide such additional commitments. Borrowings under the line of credit bear interest, at the Company’s option, at either (1) LIBOR plus a margin that varies from 0.875% to 1.75% depending upon the Leverage Ratio (as defined in the Credit Agreement), or (2) the base rate (which is the highest of the federal funds rate plus 0.5%, the prime rate, or LIBOR plus 1.0%) plus 0% to 0.25% (depending upon the Leverage Ratio). A commitment fee ranging from 0.15% to 0.30% (depending upon the Leverage Ratio) is payable on the unused line of credit. At June 30, 2020, there were no borrowings outstanding under the Credit Agreement, and letters of credit outstanding in the amount of $1.6 million left $148.4 million of credit available under the Credit Agreement. Obligations under the Credit Agreement are the only contractual borrowing obligations or commercial borrowing commitments of the Company.

Obligations under the Credit Agreement are unsecured and contain customary covenants and events of default. The Company was in compliance with the covenants as of June 30, 2020.

NOTE 7 – STOCKHOLDERS’ EQUITY

On November 10, 2006, the Board of Directors approved a stock repurchase program authorizing the Company to repurchase up to an authorized number of shares of its common stock on the open market or through privately negotiated transactions at prices determined by the President of the Company during the term of the program. The Company’s Board of Directors has authorized several increases and annual extensions of this stock repurchase program, and, as of June 30, 2020, 1,000,000 shares remained authorized for repurchase through March 31, 2021. The Company repurchased 441,250 shares of its stock in the six months ended June 30, 2020 versus no shares in the six months ended June 30, 2019.

NOTE 8 - CONTINGENCIES

There are no material pending proceedings to which the Company is a party or to which any of its property is subject. However, the Company is from time to time involved in litigation, certain other claims and arbitration matters arising in the ordinary course of its business.

7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Encore believes it is a low-cost manufacturer of electrical building wire and cable. The Company is a significant supplier of building wire for interior electrical wiring in commercial and industrial buildings, homes, apartments, and manufactured housing.

As discussed in Note 1, in the notes to the financial statements, the duration and severity of the outbreak and its long-term impact on our business are uncertain at this time. Developments surrounding the COVID-19 global pandemic are continuing to change daily, and we have limited visibility into the extent to which market demand for our products as well as sector manufacturing and distribution capacity will be impacted.

The Company’s operating results in any given period are driven by several key factors, including the volume of product produced and shipped, the cost of copper and other raw materials, the competitive pricing environment in the wire industry and the resulting influence on gross margin and the efficiency with which the Company’s plants operate during the period, among others. Price competition for electrical wire and cable is intense, and the Company sells its products in accordance with prevailing market prices. Copper, a commodity product, is the principal raw material used by the Company in manufacturing its products. Copper accounted for approximately 69.9%, 73.0%, and 69.7% of the Company’s cost of goods sold during fiscal 2019, 2018 and 2017, respectively. The price of copper fluctuates depending on general economic conditions and in relation to supply and demand and other factors, which causes monthly variations in the cost of the Company’s purchased copper. Additionally, the SEC allows shares of certain physically backed copper exchange-traded funds (“ETFs”) to be listed and publicly traded. Such funds and other copper ETFs like them hold copper cathode as collateral against their shares. The acquisition of copper cathode by copper ETFs may materially decrease or interrupt the availability of copper for immediate delivery in the United States, which could materially increase the Company’s cost of copper. In addition to raising copper prices and potential supply shortages, we believe that ETFs and similar copper-backed derivative products could lead to increased price volatility for copper. The Company cannot predict copper prices or the effect of fluctuations in the cost of copper on the Company’s future operating results. Wire prices can, and frequently do, change on a daily basis. This competitive pricing market for wire does not always mirror changes in copper prices, making margins highly volatile. With the volatility of both raw material prices and wire prices in the Company’s end market, hedging raw materials can be risky. Historically, the Company has not engaged in hedging strategies for raw material purchases. The tables below highlight the range of closing prices of copper on a per pound basis on the Comex exchange for the periods shown.

COMEX COPPER CLOSING PRICE 2020

	April 2020		May 2020		June 2020		Quarter Ended June 30, 2020		Six Months Ended June 30, 2020
High	$	2.38	$	2.47	$	2.71	$	2.71	$	2.88
Low	2.19		2.32		2.47		2.19		2.12
Average	2.31		2.39		2.60		2.43		2.50

COMEX COPPER CLOSING PRICE 2019

	April 2019		May 2019		June 2019		Quarter Ended June 30, 2019		Six Months Ended June 30, 2019
High	$	2.98	$	2.84	$	2.74	$	2.98	$	2.98
Low	2.88		2.65		2.63		2.63		2.57
Average	2.92		2.74		2.68		2.78		2.80

The following discussion and analysis relate to factors that have affected the operating results of the Company for the quarters and six months ended June 30, 2020 and 2019. Reference should also be made to the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

8

Results of Operations

Quarter Ended June 30, 2020 Compared to Quarter Ended June 30, 2019

Net sales were $253.6 million in the second quarter of 2020 compared to $336.9 million in the second quarter of 2019. The drop in net sales dollars is the result of an 18.6% decrease in copper wire unit volume shipped coupled with a 9.5% decrease in the average selling price of copper wire. Unit volume is measured in pounds of copper contained in the wire shipped during the period. The 18.6% decrease in unit volume shipped was primarily due to COVID-19-related economic strain as parts of the country shut down job sites or significantly curtailed construction activity in response to the pandemic, leaving some customers unable to receive deliveries of our products during the quarter. This, coupled with uncertainty in the market, resulted in reduced and sporadic customer buying patterns during April, May and part of June 2020. Beginning late in the second quarter of 2020, driven by the re-opening of many state and local economies, customer buying patterns began to return to more historical levels. Fluctuations in sales prices are primarily a result of changing copper and other raw material prices and product price competition. The average cost per pound of raw copper purchased decreased 11.4% in the second quarter of 2020 compared to the second quarter of 2019 and was a driver of the decreased average sales price of copper wire.

Cost of goods sold was $217.1 million, or 85.6% of net sales, in the second quarter of 2020, compared to $291.0 million, or 86.4% of net sales, in the second quarter of 2019. Gross profit decreased to $36.5 million, or 14.4% of net sales, in the second quarter of 2020 from $45.9 million, or 13.6% of net sales, in the second quarter of 2019.

Gross profit percentage for the second quarter of 2020 was 14.4% compared to 13.6% in the second quarter of 2019. The average selling price of wire per copper pound sold decreased 9.5% in the second quarter of 2020 versus the second quarter of 2019, while the average cost of copper per pound purchased decreased 11.4%. The percentage change on sales is on a higher nominal dollar amount than on purchases and, therefore, spreads change on a nominal dollar basis.

Total raw materials cost decreased to 72.2% of net sales in the second quarter of 2020, from 74.6% of net sales in the second quarter of 2019. Overhead costs increased to 13.5% of net sales in the second quarter of 2020, from 11.8% of net sales in the second quarter of 2019. Overheads contain some fixed and semi-fixed components which do not fluctuate as much as sales dollars fluctuate.

Selling expenses, consisting of commissions and freight, for the second quarter of 2020 were $13.5 million, or 5.3% of net sales, compared to $17.3 million, or 5.1% of net sales, in the second quarter of 2019. Commissions paid to independent manufacturers’ representatives are paid as a relatively stable percentage of sales dollars and, therefore, exhibited little change in percentage terms. Freight costs increased to 2.8% of net sales in the second quarter of 2020 from 2.6% of net sales in the second quarter of 2019. General and administrative (“G&A”) expenses for the second quarter of 2020 were $7.3 million, or 2.9% of net sales, compared to $6.5 million, or 1.9% of net sales, in the second quarter of 2019. The G&A increase was driven primarily by increased stock compensation expense, driven primarily by an increase in our stock price driving the mark to market accounting on stock appreciation rights. The net stock compensation expense increased $1.4 million in the second quarter of 2020 versus the second quarter of 2019.

Six Months Ended June 30, 2020 Compared to Six Months Ended June 30, 2019

Net sales for the first six months of 2020 were $556.4 million compared to net sales of $651.6 million for the first six months of 2019. This 14.6% decrease in net sales is primarily the result of a 15.9% decrease in copper wire sales, driven by a 9.2% decrease in copper wire unit volume shipped and a 7.4% decrease in the average selling price of copper wire. Unit volume is measured in pounds of copper contained in the wire shipped during the period. Fluctuations in sales prices are primarily a result of changing copper and other raw material prices and product price competition. The average cost per pound of raw copper purchased decreased 9.6% in the first six months of 2020 compared to the first six months of 2019 and was the principal driver of the decreased average sales price of copper wire.

Cost of goods sold decreased to $474.2 million in the first six months of 2020, compared to $564.3 million in the first six months of 2019. Gross profit decreased to $82.3 million, or 14.8% of net sales, in the first six months of 2020 versus $87.2 million, or 13.4% of net sales, in the first six months of 2019.

Gross profit percentage for the six months ended June 30, 2020 was 14.8% compared to 13.4% during the same period in 2019. The average selling price of wire per copper pound sold decreased 7.4% in the six months ended June 30, 2020 versus the six months ended June 30, 2019, while the average cost of copper per pound purchased decreased 9.6%. The percentage change on sales is on a higher nominal dollar amount than on purchases and, therefore, spreads change on a nominal dollar basis.

Due primarily to decreases in copper costs and a decrease in copper inventory quantities on hand, aided somewhat by price and volume movements of other materials in the first six months of 2020, LIFO adjustments were recorded, decreasing cost of sales by $8.9 million. During the same period in 2019, LIFO adjustments were recorded, increasing cost of sales by $0.5 million.

9

Based on current copper prices, there is no LCM adjustment necessary. Future reductions in the price of copper could require the Company to record an LCM adjustment against the related inventory balance, which would result in a negative impact on net income.

Selling expenses for the first six months of 2020 decreased to $28.8 million, or 5.2% of net sales, compared to $33.7 million, or 5.2% of net sales, in the same period of 2019. Commissions paid to independent manufacturers’ representatives are paid as a relatively stable percentage of sales dollars, and therefore, exhibited little change in percentage terms, decreasing $2.5 million in concert with the decreased sales dollars. Freight costs for the first six months of 2020 were 2.7% of net sales, consistent with 2.7% of net sales for the first six months of 2019. General and administrative expenses were $13.5 million, or 2.4% of net sales, in the first half of 2020 compared to $15.1 million, or 2.3% of net sales, in the first half of 2019. The G&A decrease was driven by decreased stock compensation expense driven by the mark to market accounting on stock appreciation rights. The net stock compensation expense decreased $2.0 million in the first six months of 2020 versus the first six months of 2019.

Liquidity and Capital Resources

The Company maintains a substantial inventory of finished products to satisfy customers’ delivery requirements promptly. As is customary in the building wire industry, the Company provides payment terms to most of its customers that exceed terms that it receives from its suppliers. Copper suppliers generally give very short payment terms (less than 15 days) while the Company and the building wire industry give customers much longer terms. In general, the Company’s standard payment terms result in the collection of a significant majority of net sales within approximately 75 days of the date of invoice. As a result of this timing difference, building wire companies must have sufficient cash and access to capital resources to finance their working capital needs, thereby creating a barrier to entry for companies who do not have sufficient liquidity and capital resources. The two largest components of working capital, receivables and inventory, and to a lesser extent, capital expenditures, are the primary drivers of the Company’s liquidity needs. Generally, these needs will cause the Company’s cash balance to rise and fall inversely to the receivables and inventory balances. The Company’s receivables and inventories will rise and fall in concert with several factors, most notably the price of copper and other raw materials and the level of unit sales. Capital expenditures have historically been necessary to expand and update the production capacity of the Company’s manufacturing operations. The Company has historically satisfied its liquidity and capital expenditure needs with cash generated from operations and borrowings under its various debt arrangements. The Company historically uses its revolving credit facility to manage day to day operating cash needs as required by daily fluctuations in working capital and has the facility in place should such a need arise in the future. We believe that the Company has sufficient liquidity and do not believe COVID-19 will materially impact our liquidity, but we continue to assess the COVID-19 pandemic and its impact on our business, including on our customer base and suppliers.

For more information on the Company’s revolving credit facility, see Note 6 to the Company’s financial statements included in Item 1 to this report, which is incorporated herein by reference.

Cash provided by operating activities was $60.3 million in the first six months of 2020 compared to $27.9 million in the first six months of 2019. The following changes in components of cash flow from operations were notable. The Company had net income of $31.0 million in the first six months of 2020 compared to net income of $31.2 million in the first six months of 2019. Accounts receivable decreased $30.3 million in the first six months of 2020 compared to increasing $20.6 million in the first six months of 2019, resulting in a positive change in cash flow of $50.9 million in the first six months of 2020 versus the first six months of 2019. Accounts receivable generally fluctuate in proportion to dollar sales and, to a lesser extent, are affected by the timing of when sales occur during a given quarter. With an average of 60 to 75 days of sales outstanding, quarters in which sales are more back-end loaded will have higher accounts receivable balances outstanding at quarter-end. Inventory value decreased $1.8 million in the first six months of 2020 compared to decreasing $6.3 million in the first six months of 2019 producing a negative swing in cash flow of $4.5 million in 2020 versus 2019. Trade accounts payable and accrued liabilities used cash of $21.5 million in the first six months of 2020 versus providing $2.3 million in the first six months of 2019. In the first six months of 2020, changes in current and deferred taxes provided cash of $9.4 million versus $1.1 million of cash used in the first six months of 2019. These changes in cash flow were the primary drivers of the $32.4 million increase in cash provided by operations in the first six months of 2020 compared to the first six months of 2019.

Cash used in investing activities increased to $21.8 million in the first six months of 2020 from $21.2 million in the first six months of 2019 due to higher capital expenditures on plant and equipment. Cash used in financing activities in the first six months of 2020 consisted of $0.8 million of cash dividends paid, $2.5 million of proceeds from exercised stock options, and $20.7 million of purchases of treasury stock. These activities in cash flow used $19.0 million cash in financing activities for the first six months of 2020 compared to $0.3 million used in the first six months of 2019. As of June 30, 2020, the balance on the Company’s revolving line of credit remained at zero. The Company’s cash balance was $250.4 million at June 30, 2020 versus $184.8 million at June 30, 2019.

10

During the remainder of 2020, the Company expects its capital expenditures will consist primarily of expenditures related to the purchases of manufacturing equipment throughout its facilities to update equipment and the previously-announced construction of a new 720,000 square foot facility located at the north end of our existing campus. This new facility will act as a service center, modernizing our logistics to allow for increased throughput and provide the bandwidth necessary to capture incremental sales volumes. This phase one of our two-phase expansion plan will allow us to compete at a higher level in the marketplace while further strengthening our industry-leading customer service and order fill rates. We expect to complete construction in the second quarter of 2021. The total capital expenditures for all of 2020 associated with these projects are currently estimated to be between $85 million and $95 million. Our strong balance sheet and ability to consistently generate high levels of operating cash flow should provide ample allowance to fund planned capital expenditures.

Information Regarding Forward-Looking Statements

This quarterly report on Form 10-Q contains various “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements can be identified by words such as: “anticipate”, “intend”, “plan”, “goal”, “seek”, “believe”, “project”, “estimate”, “expect”, “strategy”, “future”, “likely”, “may”, “should”, “will” and similar references to future periods. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, such statements are subject to certain risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. Therefore, you should not rely on any of these forward-looking statements. Examples of such uncertainties and risks include, but are not limited to, statements about the pricing environment of copper, aluminum and other raw materials, the duration, magnitude and impact of the ongoing COVID-19 global pandemic, our order fill rates, profitability and stockholder value, payment of future dividends, future purchases of stock, 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 (the “SEC”). Actual results may vary materially from those anticipated. Any forward-looking statement made by us in this report is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise. For more information regarding “forward-looking statements,” see “Information Regarding Forward-Looking Statements” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, which is hereby incorporated by reference.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

There have been no material changes from the information provided in Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

Item 4. Controls and Procedures.

The Company maintains controls and procedures designed to ensure that information required to be disclosed by it in the reports it files with or submits to the SEC is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and to ensure that information required to be disclosed by the Company in such reports is accumulated and communicated to the Company’s management, including the Chief Executive and Chief Financial Officers, as appropriate, to allow timely decisions regarding required disclosure. Based on an evaluation of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report conducted by the Company’s management, with the participation of the Chief Executive and Chief Financial Officers, the Chief Executive and Chief Financial Officers concluded that the Company’s disclosure controls and procedures were effective to ensure that information required to be disclosed by the Company in the reports it files with or submits to the SEC is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and to ensure that information required to be disclosed by the Company in such reports is accumulated and communicated to the Company’s management, including the Chief Executive and Chief Financial Officers, as appropriate, to allow timely decisions regarding required disclosure.

There have been no changes in the Company’s internal control over financial reporting or in other factors that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting during the period covered by this report.

11

PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

For information on the Company’s legal proceedings, see Note 8 to the Company’s financial statements included in Item 1 to this report and incorporated herein by reference.

Item 1A. Risk Factors.

This section supplements and updates certain risk factors disclosed in Item 1A of Part I of our annual report on Form 10-K for the year ended December 31, 2019 (the “Annual Report”). The following risk factors supersede the corresponding risks described in the Annual Report and should be read together with the other risk factors disclosed in the Annual Report. In addition to the other information in this Quarterly Report on Form 10-Q, all of these risk factors should be carefully considered in evaluating us and our common stock. Any of these risks, many of which are beyond our control, could materially and adversely affect our financial condition, results of operations or cash flows, or cause our actual results to differ materially from those projected in any forward-looking statements. We may also face other risks and uncertainties that are not presently known, are not currently believed to be material, or are not identified below because they are common to all businesses. Past financial performance may not be a reliable indicator of future performance, and historical trends should not be used to anticipate results or trends in future periods. For more information, see “Information Regarding Forward-Looking Statements” in Item 2 of Part I of this report.

Outbreak of Contagious Disease

Our business and the businesses of our suppliers, distributors and customers could be adversely affected by the effects of a widespread outbreak of contagious diseases, including the recent ongoing outbreak of COVID-19. Any outbreak of contagious diseases, and other adverse public health developments, could cause a disruption in our supply chain, distribution and demand for our products. The duration of any such disruption and the related financial impact from COVID-19 and other epidemics and pandemics cannot be reasonably estimated at this time. The occurrence or continuation of any of these events could lead to decreased revenues and limit our ability to execute on our business plan, which could adversely affect our business, financial condition and results of operations.

Industry Conditions and Cyclicality

The residential, commercial and industrial construction industry, which is the end user of the Company’s products, is cyclical and is affected by a number of factors, including the general condition of the economy, market demand and changes in interest rates. Industry sales of electrical wire and cable products tend to parallel general construction activity, which includes remodeling. Construction activity is affected by the ability of our end users to finance projects, which may be severely reduced due to a widespread outbreak of contagious disease, including an epidemic or pandemic such as the current COVID-19 pandemic. Residential, commercial and industrial construction could decline if companies and consumers are unable to finance construction projects or if the economy precipitously declines or stalls, which could result in delays or cancellations of capital projects.

Deterioration in the financial condition of the Company’s customers due to industry and economic conditions may result in reduced sales, an inability to collect receivables and payment delays or losses due to a customer’s bankruptcy or insolvency. Although the Company’s bad debt experience has been low in recent years, the Company’s inability to collect receivables may increase the amounts the Company must expense against its bad debt reserve, decreasing the Company’s profitability. A downturn in the residential, commercial or industrial construction industries and general economic conditions may have a material adverse effect on the Company.

12

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Note 7 to the Company’s financial statements included in Item 1 to this report is hereby incorporated herein by reference.

The following table provides information relating to our purchases of shares of our common stock during the three months ended June 30, 2020.

ISSUER PURCHASES OF EQUITY SECURITIES
	(a)	(b)		(c)	(d)
Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (1)
April 1, 2020 – April 30, 2020	2,138	38.13		2,138	691,696
May 1, 2020 – May 31, 2020	—				1,000,000
June 1, 2020 – June 30, 2020	—				1,000,000
	2,138	$	38.13	2,138

(1) On November 10, 2006, the Board of Directors approved a stock repurchase program authorizing the Company to repurchase up to an authorized number of shares of its common stock from time to time in open market or private transactions, at the Company’s discretion. This authorization originally expired on December 31, 2007, and the Company’s Board of Directors has authorized several increases and annual extensions of this stock repurchase program. As of June 30, 2020, 1,000,000 shares remained authorized for repurchase through March 31, 2021.

13

Item 6. Exhibits.

Exhibit Number	Description
3.1	Certificate of Incorporation of Encore Wire Corporation and all amendments thereto (filed as Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2009, and incorporated herein by reference).
3.2	Third Amended and Restated Bylaws of Encore Wire Corporation, as amended through February 27, 2012 (filed as Exhibit 3.2 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2011, and incorporated herein by reference).
4.1	Form of certificate for Common Stock (filed as Exhibit 1 to the Company’s registration statement on Form 8-A, filed with the SEC on June 4, 1992, and incorporated herein by reference).
10.1	2020 Long Term Incentive Plan (filed as Exhibit 10.1 to the Company's Current Report on Form 8-K, filed with the SEC on May 6, 2020, and incorporated herein by reference).
10.2	Form of Encore Wire Corporation Stock Award Agreement under the 2020 Long Term Incentive Plan (filed as Exhibit 10.2 to the Company's Current Report on Form 8-K, filed with the SEC on May 6, 2020, and incorporated herein by reference).
31.1	Certification by Daniel L. Jones, Chairman, President and Chief Executive Officer of the Company, dated July 30, 2020 and submitted pursuant to Rule 13a-14(a)/15d-14(a) and pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification by Bret J. Eckert, Vice President – Finance, Treasurer, Secretary and Chief Financial Officer of the Company, dated July 30, 2020 and submitted pursuant to Rule 13a-14(a)/15d-14(a) and pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification by Daniel L. Jones, Chairman, President and Chief Executive Officer of the Company, dated July 30, 2020 as required by 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification by Bret J. Eckert, Vice President – Finance, Treasurer, Secretary and Chief Financial Officer of the Company, dated July 30, 2020 as required by 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
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14

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	ENCORE WIRE CORPORATION
	(Registrant)
Dated: July 30, 2020	/s/ DANIEL L. JONES
	Daniel L. Jones Chairman, President and Chief Executive Officer
Dated: July 30, 2020	/s/ BRET J. ECKERT
	Bret J. Eckert Vice President-Finance, Treasurer, Secretary and Chief Financial Officer

15

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Daniel L. Jones, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Encore Wire Corporation;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 30, 2020

/s/ DANIEL L. JONES

Daniel L. Jones
Chairman, President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Bret J. Eckert, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Encore Wire Corporation;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 30, 2020

/s/ BRET J. ECKERT

Bret J. Eckert

Vice President-Finance, Treasurer,

Secretary and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION FURNISHED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

(18 U.S.C. SECTION 1350)

In connection with the Quarterly Report of Encore Wire Corporation (the “Company”) on Form 10-Q for the quarterly period ended June 30, 2020, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Daniel L. Jones, Chairman, President and Chief Executive Officer of the Company, certify pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: July 30, 2020

/s/ DANIEL L. JONES

Daniel L. Jones
Chairman, President and Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION FURNISHED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

(18 U.S.C. SECTION 1350)

In connection with the Quarterly Report of Encore Wire Corporation (the “Company”) on Form 10-Q for the quarterly period ended June 30, 2020, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Bret J. Eckert, Vice-President—Finance, Treasurer, Secretary and Chief Financial Officer of the Company, certify pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: July 30, 2020

/s/ BRET J. ECKERT

Bret J. Eckert

Vice President-Finance, Treasurer,

Secretary and Chief Financial Officer

XML

Cover - shares	6 Months Ended
	Jun. 30, 2020	Jul. 29, 2020
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2020
Document Transition Report	false
Entity File Number	000-20278
Entity Registrant Name	ENCORE WIRE CORP
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	75-2274963
Entity Address, Address Line One	1329 Millwood Road
Entity Address, City or Town	McKinney
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	75069
City Area Code	972
Local Phone Number	562-9473
Title of 12(b) Security	Common Stock, par value $.01 per share
Trading Symbol	WIRE
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		20,631,683
Entity Central Index Key	0000850460
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q2
Amendment Flag	false

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Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019	[1]
Current assets:
Cash and cash equivalents	$ 250,383	$ 230,965
Accounts receivable, net of allowance of $2,501 and $1,801	192,067	223,098
Inventories, net	87,880	89,684
Income tax receivable	0	3,602
Prepaid expenses and other	3,552	1,889
Total current assets	533,882	549,238
Property, plant and equipment - at cost:
Land and land improvements	60,662	52,354
Construction-in-progress	45,226	49,847
Buildings and improvements	152,896	152,536
Machinery and equipment	353,300	334,204
Furniture and fixtures	12,249	10,926
Total property, plant and equipment	624,333	599,867
Accumulated depreciation	(274,804)	(266,688)
Property, plant and equipment - net	349,529	333,179
Other assets	634	737
Total assets	884,045	883,154
Current liabilities:
Trade accounts payable	30,039	40,509
Accrued liabilities	27,338	34,787
Income taxes payable	2,499	0
Total current liabilities	59,876	75,296
Deferred income taxes and other	32,058	28,762
Commitments and contingencies
Stockholders’ equity:
Authorized shares – 2,000,000; none issued	0	0
Issued shares – 27,005,388 and 26,939,403	270	269
Additional paid-in capital	66,554	63,009
Treasury stock, at cost – 6,468,705 and 6,027,455 shares	(111,718)	(91,056)
Retained earnings	837,005	806,874
Total stockholders’ equity	792,111	779,096
Total liabilities and stockholders’ equity	$ 884,045	$ 883,154

[1] The balance sheet at December 31, 2019, as presented, is derived from the audited financial statements at that date.

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Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Statement of Financial Position [Abstract]
Allowance for accounts receivable	$ 2,501	$ 1,801
Preferred stock, par value (in usd per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	2,000,000	2,000,000
Preferred stock, shares issued (in shares)	0	0
Common stock, par value (in usd per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	40,000,000	40,000,000
Common stock, shares issued (in shares)	27,005,388	26,939,403
Treasury stock, shares (in shares)	6,468,705	6,027,455

XML

Statements of Income - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Income Statement [Abstract]
Net sales	$ 253,631	$ 336,866	$ 556,425	$ 651,573
Cost of goods sold	217,132	290,956	474,153	564,337
Gross profit	36,499	45,910	82,272	87,236
Selling, general, and administrative expenses	20,755	23,846	43,044	48,844
Operating income	15,744	22,064	39,228	38,392
Net interest and other income	267	1,082	1,151	2,160
Income before income taxes	16,011	23,146	40,379	40,552
Provision for income taxes	3,664	5,364	9,424	9,359
Net income	$ 12,347	$ 17,782	$ 30,955	$ 31,193
Earnings per common and common equivalent share - basic (in usd per share)	$ 0.60	$ 0.85	$ 1.50	$ 1.49
Earnings per common and common equivalent share - diluted (in usd per share)	$ 0.60	$ 0.85	$ 1.50	$ 1.49
Weighted average common and common equivalent shares outstanding - basic (in shares)	20,496	20,898	20,646	20,891
Weighted average common and common equivalent shares outstanding - diluted (in shares)	20,537	20,988	20,696	20,985
Cash dividends declared per share (in usd per share)	$ 0.02	$ 0.02	$ 0.04	$ 0.04

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Statement of Stockholders' Equity - USD ($) $ in Thousands	Total		Common Stock	Additional Paid-In Capital	Treasury Stock	Retained Earnings
Beginning balance (in shares) at Dec. 31, 2018			26,907,000		6,027,000
Beginning balance at Dec. 31, 2018	$ 720,456		$ 269	$ 60,822	$ (91,056)	$ 750,421
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	13,411					13,411
Stock-based compensation	760			760
Exercise of stock options (in shares)			15,000
Exercise of stock options	431			431
Dividends declared	(418)					(418)
Beginning balance (in shares) at Mar. 31, 2019			26,922,000		6,027,000
Beginning balance at Mar. 31, 2019	734,640		$ 269	62,013	$ (91,056)	763,414
Beginning balance (in shares) at Dec. 31, 2018			26,907,000		6,027,000
Beginning balance at Dec. 31, 2018	720,456		$ 269	60,822	$ (91,056)	750,421
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	$ 31,193
Purchase of treasury stock (in shares)	0
Beginning balance (in shares) at Jun. 30, 2019			26,933,000		6,027,000
Beginning balance at Jun. 30, 2019	$ 752,643		$ 269	62,652	$ (91,056)	780,778
Beginning balance (in shares) at Mar. 31, 2019			26,922,000		6,027,000
Beginning balance at Mar. 31, 2019	734,640		$ 269	62,013	$ (91,056)	763,414
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	17,782					17,782
Stock-based compensation (in shares)			5,000
Stock-based compensation	502			502
Exercise of stock options (in shares)			6,000
Exercise of stock options	137			137
Dividends declared	(418)					(418)
Beginning balance (in shares) at Jun. 30, 2019			26,933,000		6,027,000
Beginning balance at Jun. 30, 2019	752,643		$ 269	62,652	$ (91,056)	780,778
Beginning balance (in shares) at Dec. 31, 2019			26,939,000		6,027,000
Beginning balance at Dec. 31, 2019	779,096	[1]	$ 269	63,009	$ (91,056)	806,874
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	18,607					18,607
Stock-based compensation (in shares)			8,000
Stock-based compensation	460			460
Dividends declared	(411)					(411)
Purchase of treasury stock (in shares)					439,000
Purchase of treasury stock	(20,580)				$ (20,580)
Beginning balance (in shares) at Mar. 31, 2020			26,947,000		6,466,000
Beginning balance at Mar. 31, 2020	777,172		$ 269	63,469	$ (111,636)	825,070
Beginning balance (in shares) at Dec. 31, 2019			26,939,000		6,027,000
Beginning balance at Dec. 31, 2019	779,096	[1]	$ 269	63,009	$ (91,056)	806,874
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	$ 30,955
Purchase of treasury stock (in shares)	441,250
Beginning balance (in shares) at Jun. 30, 2020			27,005,000		6,468,000
Beginning balance at Jun. 30, 2020	$ 792,111		$ 270	66,554	$ (111,718)	837,005
Beginning balance (in shares) at Mar. 31, 2020			26,947,000		6,466,000
Beginning balance at Mar. 31, 2020	777,172		$ 269	63,469	$ (111,636)	825,070
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	12,347					12,347
Stock-based compensation (in shares)			5,000
Stock-based compensation	631			631
Exercise of stock options (in shares)			53,000
Exercise of stock options	2,455		$ 1	2,454
Dividends declared	(412)					(412)
Purchase of treasury stock (in shares)					2,000
Purchase of treasury stock	(82)				$ (82)
Beginning balance (in shares) at Jun. 30, 2020			27,005,000		6,468,000
Beginning balance at Jun. 30, 2020	$ 792,111		$ 270	$ 66,554	$ (111,718)	$ 837,005

[1] The balance sheet at December 31, 2019, as presented, is derived from the audited financial statements at that date.

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Statement of Stockholders' Equity (Parenthetical) - $ / shares	3 Months Ended				6 Months Ended
	Jun. 30, 2020	Mar. 31, 2020	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2020	Jun. 30, 2019
Statement of Stockholders' Equity [Abstract]
Cash dividends declared per share (in usd per share)	$ 0.02	$ 0.02	$ 0.02	$ 0.02	$ 0.04	$ 0.04

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Statements of Cash Flow - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Operating Activities:
Net income	$ 30,955	$ 31,193
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	9,321	8,785
Deferred income taxes	3,327	816
Stock-based compensation attributable to equity awards	1,091	1,262
Other	520	(111)
Changes in operating assets and liabilities:
Accounts receivable	30,331	(20,615)
Inventories	1,804	6,328
Other assets	(1,652)	(200)
Trade accounts payable and accrued liabilities	(21,514)	2,266
Current income taxes receivable / payable	6,101	(1,873)
Net cash provided by operating activities	60,284	27,851
Investing Activities:
Purchases of property, plant and equipment	(21,921)	(21,210)
Proceeds from sale of assets	90	22
Net cash used in investing activities	(21,831)	(21,188)
Financing Activities:
Purchase of treasury stock	(20,662)	0
Proceeds from issuance of common stock, net	2,455	568
Dividends paid	(828)	(836)
Net cash used in financing activities	(19,035)	(268)
Net increase in cash and cash equivalents	19,418	6,395
Cash and cash equivalents at beginning of period	230,965	178,405
Cash and cash equivalents at end of period	$ 250,383	$ 184,800

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Significant Accounting Policies

6 Months Ended

Jun. 30, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Significant Accounting Policies

SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The unaudited financial statements of Encore Wire Corporation (the “Company”) have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim information and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete annual financial statements. In the opinion of management, all adjustments, consisting only of normal recurring adjustments considered necessary for a fair presentation, have been included. Results of operations for interim periods presented do not necessarily indicate the results that may be expected for the entire year. These financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

In March 2020 the World Health Organization declared COVID-19 a global pandemic and recommended containment and mitigation measures worldwide. The Company is unable to predict the impact that COVID-19 will have on our financial position and operating results in future periods due to numerous uncertainties. The duration and severity of the outbreak and its long-term impact on our business remain uncertain.

Revenue Recognition

The majority of our revenue is derived by fulfilling customer orders for the purchase of our products, which include electrical building wire and cable. We recognize revenue at the point in time that control of the ordered products is transferred to the customer, which is typically upon shipment to the customer from our manufacturing facilities and based on agreed upon shipping terms on the related purchase order. Amounts billed and due from our customers are classified as accounts receivables on the balance sheet and require payment on a short-term basis through standard payment terms.

Revenue is measured as the amount of consideration we expect to receive in exchange for fulfilling product orders. The amount of consideration we expect to receive and revenue we recognize includes estimates for trade payment discounts and customer rebates which are estimated using historical experience and other relevant factors and is recorded within the same period that the revenue is recognized. We review and update these estimates regularly and the impact of any adjustments are recognized in the period the adjustments are identified. The adjustments resulting from updated estimates of trade payment discounts and customer rebates were not material.

Recent Accounting Pronouncements

The Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) is the sole source of authoritative U.S. GAAP other than Securities and Exchange Commission ("SEC") issued rules and regulations that apply only to SEC registrants. The FASB issues an Accounting Standard Update (“ASU”) to communicate changes to the codification. The Company considers the applicability and impact of all ASUs. The following are those ASUs that are relevant to the Company.

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326),” which makes significant changes to the accounting for credit losses on financial assets and disclosures about them. This ASU requires immediate recognition of management’s estimates of current expected credit losses. Under the prior model, losses were recognized only as they were incurred, which FASB has noted delayed recognition of expected losses that might not yet have met the threshold of being probable. The guidance affects all entities in all industries and applies to a wide variety of financial assets, including trade receivables. We adopted this new standard January 1, 2020 and applied a loss rate model to compute the expected credit loss allowance of our short-term trade receivable balances, which we concluded are representative of one collective pool. This method is based on relevant information from past events, including historical experiences, current conditions, and reasonable and supportable forecasts that affect collectability. Our evaluation of the new standard concluded that it had no material impact on our financial statements.

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Inventories

6 Months Ended

Jun. 30, 2020

Inventory Disclosure [Abstract]

Inventories

INVENTORIES

Inventories are stated at the lower of cost, determined by the last-in, first-out (LIFO) method, or market.

Inventories consist of the following:

In Thousands	June 30, 2020		December 31, 2019
Raw materials	$	22,084	$	25,882
Work-in-process	22,546		25,381
Finished goods	79,169		83,222
Total Inventory at FIFO cost	123,799		134,485
Adjust to LIFO cost	(35,919)		(44,801)
Inventory, net	$	87,880	$	89,684

Inventories are stated at the lower of cost, using the last-in, first out (“LIFO”) method, or market. The Company maintains two inventory pools for LIFO purposes. As permitted by U.S. generally accepted accounting principles, the Company maintains its inventory costs and cost of goods sold on a first-in, first-out (“FIFO”) basis and makes a monthly adjustment to adjust total inventory and cost of goods sold from FIFO to LIFO. The Company applies the lower of cost or market (“LCM”) test by comparing the LIFO cost of its raw materials, work-in-process and finished goods inventories to estimated market values, which are based primarily upon the most recent quoted market price of copper and other material prices as of the end of each reporting period. The Company performs a lower of cost or market calculation quarterly. As of June 30, 2020, no LCM adjustment was required. However, decreases in copper and other material prices could necessitate establishing an LCM reserve in future periods. Additionally, future reductions in the quantity of inventory on hand could cause copper or other raw materials that are carried in inventory at costs different from the cost of copper and other raw materials in the period in which the reduction occurs to be included in costs of goods sold for that period at the different price.

In the second quarter of 2020, LIFO adjustments were recorded, increasing cost of sales by $0.7 million, versus LIFO adjustments decreasing cost of sales by $3.3 million in the second quarter of 2019. In the first six months of 2020, LIFO adjustments were recorded, decreasing cost of sales by $8.9 million, versus LIFO adjustments increasing cost of sales by $0.5 million in the first six months of 2019.

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Accrued Liabilities

6 Months Ended

Jun. 30, 2020

Accrued Liabilities, Current [Abstract]

Accrued Liabilities

ACCRUED LIABILITIES

Accrued liabilities consist of the following:

In Thousands	June 30, 2020		December 31, 2019
Sales rebates payable	$	12,280	$	16,622
Property taxes payable	2,039		4,011
Accrued salaries	6,446		7,924
SAR Liability	3,821		3,087
Other accrued liabilities	2,752		3,143
Total accrued liabilities	$	27,338	$	34,787

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Income Taxes	6 Months Ended
	Jun. 30, 2020
Income Tax Disclosure [Abstract]
Income Taxes	INCOME TAXES Income taxes were accrued at an effective rate of 22.9% in the second quarter of 2020 versus 23.2% in the second quarter of 2019, consistent with the Company’s estimated liabilities. For the six months ended June 30, the Company’s tax rate was approximately 23.3% in 2020 and 23.1% in 2019. In all periods, the differences between the provisions for income taxes and the income taxes computed using the federal income tax statutory rate are due primarily to the incremental taxes accrued for state and local taxes.

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Earnings Per Share

6 Months Ended

Jun. 30, 2020

Earnings Per Share [Abstract]

Earnings Per Share

EARNINGS PER SHARE Earnings per common and common equivalent share are computed using the weighted average number of shares of common stock and common stock equivalents outstanding during each period. If dilutive, the effect of stock options, treated as common stock equivalents, is calculated using the treasury stock method.

The following table sets forth the computation of basic and diluted earnings per share:

	Quarter Ended June 30,				Six Months Ended June 30,
In Thousands	2020		2019		2020		2019
Numerator:
Net income	$	12,347	$	17,782	$	30,955	$	31,193
Denominator:
Denominator for basic earnings per share – weighted average shares	20,496		20,898		20,646		20,891
Effect of dilutive securities:
Employee stock awards	41		90		50		94
Denominator for diluted earnings per share – weighted average shares	20,537		20,988		20,696		20,985

The weighted average of employee stock options excluded from the determination of diluted earnings per common and common equivalent share for the second quarter was 238,433 in 2020 and 117,500 in 2019. The weighted average of employee stock options excluded from the determination of diluted earnings per common and common equivalent share for the six months ended June 30 was 239,609 in 2020 and 117,500 in 2019. Such options were anti-dilutive for their respective periods.

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Debt

6 Months Ended

Jun. 30, 2020

Debt Disclosure [Abstract]

Debt

DEBT

The Company is party to a Credit Agreement (the “Credit Agreement”) with two banks, Bank of America, N.A., as administrative agent and letter of credit issuer, and Wells Fargo Bank, National Association, as syndication agent. The Credit Agreement, as amended, extends through October 1, 2021 and provides for maximum borrowings of $150.0 million. At our request, and subject to certain conditions, the commitments under the Credit Agreement may be increased by a maximum of up to $100.0 million as long as existing or new lenders agree to provide such additional commitments. Borrowings under the line of credit bear interest, at the Company’s option, at either (1) LIBOR plus a margin that varies from 0.875% to 1.75% depending upon the Leverage Ratio (as defined in the Credit Agreement), or (2) the base rate (which is the highest of the federal funds rate plus 0.5%, the prime rate, or LIBOR plus 1.0%) plus 0% to 0.25% (depending upon the Leverage Ratio). A commitment fee ranging from 0.15% to 0.30% (depending upon the Leverage Ratio) is payable on the unused line of credit. At June 30, 2020, there were no borrowings outstanding under the Credit Agreement, and letters of credit outstanding in the amount of $1.6 million left $148.4 million of credit available under the Credit Agreement. Obligations under the Credit Agreement are the only contractual borrowing obligations or commercial borrowing commitments of the Company.

Obligations under the Credit Agreement are unsecured and contain customary covenants and events of default. The Company was in compliance with the covenants as of June 30, 2020.

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Stockholders' Equity	6 Months Ended
	Jun. 30, 2020
Equity [Abstract]
Stockholders' Equity	STOCKHOLDERS’ EQUITY On November 10, 2006, the Board of Directors approved a stock repurchase program authorizing the Company to repurchase up to an authorized number of shares of its common stock on the open market or through privately negotiated transactions at prices determined by the President of the Company during the term of the program. The Company’s Board of Directors has authorized several increases and annual extensions of this stock repurchase program, and, as of June 30, 2020, 1,000,000 shares remained authorized for repurchase through March 31, 2021. The Company repurchased 441,250 shares of its stock in the six months ended June 30, 2020 versus no shares in the six months ended June 30, 2019.

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Contingencies	6 Months Ended
	Jun. 30, 2020
Commitments and Contingencies Disclosure [Abstract]
Contingencies	CONTINGENCIESThere are no material pending proceedings to which the Company is a party or to which any of its property is subject. However, the Company is from time to time involved in litigation, certain other claims and arbitration matters arising in the ordinary course of its business.

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Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Revenue Recognition

Revenue Recognition

The majority of our revenue is derived by fulfilling customer orders for the purchase of our products, which include electrical building wire and cable. We recognize revenue at the point in time that control of the ordered products is transferred to the customer, which is typically upon shipment to the customer from our manufacturing facilities and based on agreed upon shipping terms on the related purchase order. Amounts billed and due from our customers are classified as accounts receivables on the balance sheet and require payment on a short-term basis through standard payment terms.

Revenue is measured as the amount of consideration we expect to receive in exchange for fulfilling product orders. The amount of consideration we expect to receive and revenue we recognize includes estimates for trade payment discounts and customer rebates which are estimated using historical experience and other relevant factors and is recorded within the same period that the revenue is recognized. We review and update these estimates regularly and the impact of any adjustments are recognized in the period the adjustments are identified.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

The Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) is the sole source of authoritative U.S. GAAP other than Securities and Exchange Commission ("SEC") issued rules and regulations that apply only to SEC registrants. The FASB issues an Accounting Standard Update (“ASU”) to communicate changes to the codification. The Company considers the applicability and impact of all ASUs. The following are those ASUs that are relevant to the Company.

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326),” which makes significant changes to the accounting for credit losses on financial assets and disclosures about them. This ASU requires immediate recognition of management’s estimates of current expected credit losses. Under the prior model, losses were recognized only as they were incurred, which FASB has noted delayed recognition of expected losses that might not yet have met the threshold of being probable. The guidance affects all entities in all industries and applies to a wide variety of financial assets, including trade receivables. We adopted this new standard January 1, 2020 and applied a loss rate model to compute the expected credit loss allowance of our short-term trade receivable balances, which we concluded are representative of one collective pool. This method is based on relevant information from past events, including historical experiences, current conditions, and reasonable and supportable forecasts that affect collectability.

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Inventories (Tables)

6 Months Ended

Jun. 30, 2020

Inventory Disclosure [Abstract]

Summary of Inventory

Inventories consist of the following:

In Thousands	June 30, 2020		December 31, 2019
Raw materials	$	22,084	$	25,882
Work-in-process	22,546		25,381
Finished goods	79,169		83,222
Total Inventory at FIFO cost	123,799		134,485
Adjust to LIFO cost	(35,919)		(44,801)
Inventory, net	$	87,880	$	89,684

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Accrued Liabilities (Tables)

6 Months Ended

Jun. 30, 2020

Accrued Liabilities, Current [Abstract]

Summary of Accrued Liabilities

Accrued liabilities consist of the following:

In Thousands	June 30, 2020		December 31, 2019
Sales rebates payable	$	12,280	$	16,622
Property taxes payable	2,039		4,011
Accrued salaries	6,446		7,924
SAR Liability	3,821		3,087
Other accrued liabilities	2,752		3,143
Total accrued liabilities	$	27,338	$	34,787

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Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2020

Earnings Per Share [Abstract]

Schedule of Computation of Basic and Diluted Net Earnings (Loss) Per Share

The following table sets forth the computation of basic and diluted earnings per share:

	Quarter Ended June 30,				Six Months Ended June 30,
In Thousands	2020		2019		2020		2019
Numerator:
Net income	$	12,347	$	17,782	$	30,955	$	31,193
Denominator:
Denominator for basic earnings per share – weighted average shares	20,496		20,898		20,646		20,891
Effect of dilutive securities:
Employee stock awards	41		90		50		94
Denominator for diluted earnings per share – weighted average shares	20,537		20,988		20,696		20,985

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Inventories - Schedule of Inventories (Detail) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Inventory Disclosure [Abstract]
Raw materials	$ 22,084	$ 25,882
Work-in-process	22,546	25,381
Finished goods	79,169	83,222
Total Inventory at FIFO cost	123,799	134,485
Adjust to LIFO cost	(35,919)	(44,801)
Inventory, net	$ 87,880	$ 89,684	[1]

[1] The balance sheet at December 31, 2019, as presented, is derived from the audited financial statements at that date.

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Inventories - Narrative (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Inventory Disclosure [Abstract]
Increase (decrease) in cost of sales from LIFO adjustment	$ 0.7	$ (3.3)	$ (8.9)	$ 0.5

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Accrued Liabilities (Detail) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Accrued Liabilities, Current [Abstract]
Sales rebates payable	$ 12,280	$ 16,622
Property taxes payable	2,039	4,011
Accrued salaries	6,446	7,924
SAR Liability	3,821	3,087
Other accrued liabilities	2,752	3,143
Total accrued liabilities	$ 27,338	$ 34,787	[1]

[1] The balance sheet at December 31, 2019, as presented, is derived from the audited financial statements at that date.

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Income Taxes (Detail)	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Income Tax Disclosure [Abstract]
Effective tax rate (as a percent)	22.90%	23.20%	23.30%	23.10%

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Earnings Per Share - Computation of Basic and Diluted Net Earnings (Loss) Per Share (Detail) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2020	Mar. 31, 2020	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2020	Jun. 30, 2019
Numerator:
Net income	$ 12,347	$ 18,607	$ 17,782	$ 13,411	$ 30,955	$ 31,193
Denominator:
Denominator for basic earnings per share – weighted average shares	20,496		20,898		20,646	20,891
Effect of dilutive securities:
Denominator for diluted earnings per share – weighted average shares	20,537		20,988		20,696	20,985
Employee stock awards
Effect of dilutive securities:
Employee stock options (in shares)	41		90		50	94

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Earnings Per Share - Additional Information (Detail) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Earnings Per Share [Abstract]
Weighted average employee stock options excluded from the determination of diluted net income per common and common equivalent share (in shares)	238,433	117,500	239,609	117,500

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Debt (Detail)	6 Months Ended
	Jun. 30, 2020 USD ($) bank
Line of Credit Facility [Line Items]
Number of banks to which Company is party to a Credit Agreement | bank	2
Outstanding borrowings	$ 0
Letters of credit outstanding	1,600,000
Calculated maximum borrowing amount available in current year	148,400,000
Credit Agreement
Line of Credit Facility [Line Items]
Calculated maximum borrowings	150,000,000.0
Available increase in borrowings under Credit Agreement	$ 100,000,000.0
Credit Agreement | Minimum
Line of Credit Facility [Line Items]
Commitment fee percentage	0.15%
Credit Agreement | Maximum
Line of Credit Facility [Line Items]
Commitment fee percentage	0.30%
Credit Agreement | Credit Agreement Interest Rate Option One | Minimum | London Interbank Offered Rate (LIBOR)
Line of Credit Facility [Line Items]
Debt instrument basis spread on variable rate (as a percent)	0.875%
Credit Agreement | Credit Agreement Interest Rate Option One | Maximum | London Interbank Offered Rate (LIBOR)
Line of Credit Facility [Line Items]
Debt instrument basis spread on variable rate (as a percent)	1.75%
Credit Agreement | Credit Agreement Interest Rate Option Two | London Interbank Offered Rate (LIBOR)
Line of Credit Facility [Line Items]
Debt instrument basis spread on variable rate (as a percent)	1.00%
Credit Agreement | Credit Agreement Interest Rate Option Two | Minimum | Base Rate
Line of Credit Facility [Line Items]
Debt instrument basis spread on variable rate (as a percent)	0.00%
Credit Agreement | Credit Agreement Interest Rate Option Two | Maximum | Federal Funds Rate
Line of Credit Facility [Line Items]
Debt instrument basis spread on variable rate (as a percent)	0.50%
Credit Agreement | Credit Agreement Interest Rate Option Two | Maximum | Base Rate
Line of Credit Facility [Line Items]
Debt instrument basis spread on variable rate (as a percent)	0.25%

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Stockholders' Equity (Detail) - shares	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Equity [Abstract]
Repurchase of common stock authorized remaining (in shares)	1,000,000,000
Repurchase of common stock (in shares)	441,250	0