EX-99.1 2 d68471exv99w1.htm EX-99.1 exv99w1
EXHIBIT 99.1
[Encore Wire Corporation Logo Omitted]
         
Encore Wire Corporation
  PRESS RELEASE   July 22, 2009
1329 Millwood Road
       
McKinney, Texas 75069
    Contact:  Frank J. Bilban
972-562-9473
      Vice President & CFO
 
  For Immediate Release    
ENCORE WIRE REPORTS SECOND QUARTER RESULTS
MCKINNEY, TX — Encore Wire Corporation (NASDAQ Global Select: WIRE) today announced results for the second quarter and six months ended June 30, 2009.
Net sales for the second quarter ended June 30, 2009 were $159.4 million compared to $322.8 million during the second quarter of 2008. Lower prices for building wire sold in the quarter ended June 30, 2009 accounted for most of the decrease in net sales dollars, declining 38.1% per copper pound sold versus the same period in 2008. Unit sales in the second quarter of 2009 decreased 20.2% versus the second quarter of 2008. Sales prices fell primarily due to lower copper prices and building wire industry competition. Net income for the second quarter of 2009 was $0.6 million versus $1.3 million in the second quarter of 2008. Fully diluted net earnings per common share were $0.03 in the second quarter of 2009 versus $0.06 in the second quarter of 2008.
Net sales for the six months ended June 30, 2009 were $303.8 million compared to $604.6 million during the same period in 2008. Lower prices for building wire sold in the six months ended June 30, 2009 accounted for most of the decrease in net sales dollars, declining 42.6% versus the same period in 2008. Unit volume in the six months ended June 30, 2009 decreased 12.4% versus the same period in 2008. Net income for the six months ended June 30, 2009 was $5.2 million versus $15.0 million in the same period in 2008. Fully diluted net earnings per common share were $0.22 for the six months ended June 30, 2009 versus $0.64 in the same period in 2008.
On a sequential quarter comparison, net sales for the second quarter of 2009 were $159.4 million versus $144.5 million during the first quarter of 2009. Unit volume decreased 9.0% on a sequential quarter comparison. Net income for the second quarter of 2009 was $0.6 million versus $4.6 million in the first quarter of 2009. Fully diluted net income per common share was $0.03 in the second quarter of 2009 versus $0.20 in the first quarter of 2009.
Commenting on the results, Daniel L. Jones, President and Chief Executive Officer of Encore Wire Corporation, said, “The slowdown in construction activity in the United States continues to impact our industry adversely as it has over the last three years. Our unit volume shipped in the second quarter of 2009 decreased 9% versus the first quarter of 2009. It should be noted that this 9% sequential unit decline compares to the first quarter of 2009, during which we had a 9% sequential increase in units versus the fourth quarter of 2008. The current financial crisis has raised uncertainty amongst builders and buyers of buildings across America. This uncertainty has also affected our competitors and created a volatile pricing environment in our industry that compressed the spread between what we paid for a pound of copper versus what we were able to charge for wire that contained a pound of copper. In the second quarter of 2009, this spread fell by 9.4% versus the second quarter of 2008 and it fell by 5.1% versus the first quarter of 2009. We attempted to lead the industry with several price increases during the quarter, but met limited success, as the average price of wire sold increased only 21% while copper costs increased 34% on a sequential quarter basis. 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.
Our balance sheet is very strong. The only long-term debt we have as of June 30, 2009, is $100 million in long-term notes due in 2011, with our revolving line of credit paid down to zero. In addition, we have $232.3 million in cash as of June 30, 2009, greatly exceeding our long-term debt. We also declared our eleventh consecutive quarterly cash dividend during the second quarter of 2009.
We understand that this is a cyclical industry and therefore we designed and manage our cost structure and balance sheet accordingly. Our low cost structure and strong balance sheet have enabled us to withstand difficult periods in the past, and we believe we will emerge stronger than most when market conditions improve. We thank our employees and associates for their tremendous efforts and our shareholders for their continued support during these challenging times.”
Encore Wire Corporation manufactures a broad range of copper electrical wire for interior wiring in homes, apartments, manufactured housing and commercial and industrial buildings.
The matters discussed in this news release, other than the historical financial information, including statements about the copper pricing environment, profitability and shareholder value, may include forward-looking statements that involve risks and uncertainties, including fluctuations in the price of copper and other raw materials, the impact of competitive pricing and other risks detailed from time to time in the Company’s reports filed with the Securities and Exchange Commission. Actual results may vary materially from those anticipated.
Additional Disclosures:
The term “EBITDA” is used by the Company in presentations, quarterly conference calls and other instances as appropriate. EBITDA is defined as net income before interest, income taxes, depreciation and amortization. The Company presents EBITDA because it is a required component of financial ratios reported by the Company to the Company’s banks, and is also frequently used by securities analysts, investors and other interested parties, in addition to and not in lieu of Generally Accepted Accounting Principles (GAAP) results to compare to the performance of other companies who also publicize this information. 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 2008 on previous Form 8-K filings with the Securities and Exchange Commission. EBITDA for each period pertinent to this press release is calculated and reconciled to net income as follows:
                                 
    3 Months Ended June 30,     6 Months Ended June 30,  
$’s in 000’s   2009     2008     2009     2008  
 
                               
Net Income
  $ 600     $ 1,331     $ 5,216     $ 14,950  
Income Tax Expense
    54       682       2,377       7,334  
Interest Expense
    826       1,055       1,696       2,422  
Depreciation and Amortization
    3,514       3,496       6,984       6,978  
 
                       
 
                               
EBITDA
  $ 4,994     $ 6,564     $ 16,273     $ 31,684  
 
                       

 


 

Encore Wire Corporation
1329 Millwood Road
McKinney, Texas 75069
(972) 562-9473
Condensed Consolidated Balance Sheets
(In Thousands)
(Unaudited)
                 
    June 30,     December 31,  
    2009     2008  
ASSETS
               
 
               
Current Assets
               
Cash
  $ 232,307     $ 217,666  
Receivables, net
    111,636       126,184  
Inventories
    61,045       65,533  
Prepaid Expenses and Other
    7,201       2,375  
 
           
Total Current Assets
    412,189       411,758  
 
               
Property, Plant and Equipment, net
    126,670       121,442  
 
               
Other Assets
    142       139  
 
           
 
               
Total Assets
  $ 539,001     $ 533,339  
 
           
 
               
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
 
               
Current Liabilities
               
Accounts Payable
  $ 10,691     $ 4,639  
Accrued Liabilities and Other
    23,047       29,086  
 
           
Total Current Liabilities
    33,738       33,725  
 
               
Long Term Liabilities
               
Note Payable
    100,554       100,675  
Other Long Term Liabilities
           
Non-Current Deferred Income Taxes
    10,451       9,320  
 
           
Total Long Term Liabilities
    111,005       109,995  
 
           
 
               
Total Liabilities
    144,743       143,720  
 
               
Stockholders’ Equity
               
Common Stock
    262       262  
Additional Paid in Capital
    42,830       42,486  
Treasury Stock
    (21,269 )     (21,269 )
Retained Earnings
    372,435       368,140  
 
           
Total Stockholders’ Equity
    394,258       389,619  
 
           
 
               
Total Liabilities and Stockholders’ Equity
  $ 539,001     $ 533,339  
 
           

 


 

Encore Wire Corporation
1329 Millwood Road
McKinney, Texas 75069
(972) 562-9473
Condensed Consolidated Statements of Income
(In Thousands, Except Per Share Data)
(Unaudited)
                                                                 
    Quarter Ended June 30,     Six Months Ended June 30,  
    2009     2008     2009     2008  
 
                                                               
Net Sales
  $ 159,351       100.0 %   $ 322,845       100.0 %   $ 303,836       100.0 %   $ 604,604       100.0 %
Cost of Sales
    147,491       92.6 %     303,322       94.0 %     274,141       90.2 %     549,610       90.9 %
 
                                               
 
                                                               
Gross Profit
    11,860       7.4 %     19,523       6.0 %     29,695       9.8 %     54,994       9.1 %
 
                                                               
Selling, General and Administrative Expenses
    10,730       6.7 %     16,923       5.2 %     21,338       7.0 %     31,390       5.2 %
 
                                               
 
                                                               
Operating Income
    1,130       0.7 %     2,600       0.8 %     8,357       2.8 %     23,604       3.9 %
 
                                                               
Net Interest & Other Expense
    476       0.3 %     587       0.2 %     764       0.3 %     1,320       0.2 %
 
                                               
 
                                                               
Income before Income Taxes
    654       0.4 %     2,013       0.6 %     7,593       2.5 %     22,284       3.7 %
 
                                                               
Income Taxes
    54       0.0 %     682       0.2 %     2,377       0.8 %     7,334       1.2 %
 
                                               
 
                                                               
Net Income
  $ 600       0.4 %   $ 1,331       0.4 %   $ 5,216       1.7 %   $ 14,950       2.5 %
 
                                               
 
                                                               
Basic Earnings Per Share
  $ 0.03             $ 0.06             $ 0.23             $ 0.65          
 
                                                       
 
                                                               
Diluted Earnings Per Share
  $ 0.03             $ 0.06             $ 0.22             $ 0.64          
 
                                                       
 
                                                               
Weighted Average Number of Common and Common Equivalent Shares Outstanding:
                                                               
-Basic
    22,999               23,120               22,998               23,138          
 
                                                       
-Diluted
    23,299               23,426               23,288               23,427          
 
                                                       
 
                                                               
Dividend Declared per Share
  $ 0.02             $ 0.02             $ 0.04             $ 0.04