EX-99.1 2 d72581enexv99w1.htm EX-99.1 exv99w1
EXHIBIT 99.1
[Encore Wire Corporation Logo Omitted]
             
Encore Wire Corporation
  PRESS RELEASE       April 28, 2010
1329 Millwood Road
           
McKinney, Texas 75069
      Contact:   Frank J. Bilban
972-562-9473
          Vice President & CFO
 
  For Immediate Release        
ENCORE WIRE REPORTS FIRST QUARTER RESULTS
MCKINNEY, TX — Encore Wire Corporation (NASDAQ Global Select: WIRE) today announced results for the first quarter of 2010.
Net sales for the quarter ended March 31, 2010 were $175.2 million compared to $144.5 million during the first quarter of 2009. Net loss for the first quarter of 2010 was $2.5 million versus net income of $4.6 million in the first quarter of 2009. Fully diluted net loss per common share was $0.11 in the first quarter of 2010 versus earnings of $0.20 in the first quarter of 2009. Unit volumes, measured in pounds of copper contained in the wire sold during the period declined 30.6% in the first quarter of 2010 versus the first quarter of 2009. However, the spread between the cost of a pound of copper purchased and the price of a pound of copper sold increased by 12.3%. The 2010 first quarter results include a $2.6 million dollar pre-tax charge associated with the early retirement of long-term debt that the Company paid off in January.
On a sequential quarter comparison, net sales for the first quarter of 2010 were $175.2 million versus $177.1 million during the fourth quarter of 2009. Net loss for the first quarter of 2010 was $2.5 million versus a $1.9 million net loss in the fourth quarter of 2009. Fully diluted net loss per common share was $0.11 in the first quarter of 2010 versus a $0.08 net loss in the fourth quarter of 2009. Unit volumes declined 13.3% in the first quarter of 2010 versus the fourth quarter of 2009. However, the spread between the cost of a pound of copper purchased and the price of a pound of copper sold increased by 28.6%.
Commenting on the results, Daniel L. Jones, President and Chief Executive Officer of Encore Wire Corporation, said, “Unit volume decreases caused by the drop in construction activity continue to create turmoil in our industry. During the quarter, a competitor exited the market by selling out to another competitor. Despite the continued volume decreases, there were positive developments, including the increase in “spreads” during the past quarter. The spread between the price of wire sold and the cost of raw copper is a key metric in this industry and a key driver of the level of profitability. With our low cost structure, we have strong upside leverage when the spread expands. On a sequential quarter basis, the average cost of copper purchased increased by 10.7%, while the average price of wire sold increased by 14.1%, increasing the spread by 28.6%. Our pre-tax loss of $4.1 million ($2.5 million net of income taxes) includes a one-time pre-tax charge of $2.6 million ($1.7 million net of income taxes) associated with the debt retirement we executed in January. This positive change in sequential quarterly earnings occurred despite the 13.3% decrease in unit volume sold. We continue to strive to lead or follow industry price increases to achieve profit growth.
We produced these results in this difficult environment due to our low cost business model and aggressive cost cutting in all facets of our operation. We believe our superior order fill rates continue to enhance our competitive position, as our electrical distributor customers are holding lean inventories in the field.

 


 

We continue to maintain our strong balance sheet. We paid off our long-term debt and our $150 million revolving line of credit has a zero balance. In addition, we had $130.4 million in cash as of March 31, 2010. Our bank covenants were amended in the quarter to take current economic conditions into account. We also declared our fourteenth consecutive quarterly cash dividend during the first quarter of 2010.
With our exceptionally strong balance sheet, we have the capability to approach the future confidently. Our low cost structure and strong balance sheet have enabled us to withstand tough periods in the past, and we believe we will emerge stronger than most when market conditions improve. We thank our employees and associates for their tremendous efforts and our stockholders for their continued support.”
Encore Wire Corporation manufactures a broad range of copper electrical wire for interior wiring in homes, apartments, manufactured housing and commercial and industrial buildings.
The matters discussed in this news release, other than the historical financial information, including statements about the copper pricing environment, profitability and shareholder value, may include forward-looking statements that involve risks and uncertainties, including fluctuations in the price of copper and other raw materials, the impact of competitive pricing and other risks detailed from time to time in the Company’s reports filed with the Securities and Exchange Commission. Actual results may vary materially from those anticipated.
Additional Disclosures:
The term “EBITDA” is used by the Company in presentations, quarterly conference calls and other instances as appropriate. EBITDA is defined as net income before interest, income taxes, depreciation and amortization. The Company presents EBITDA because it is a required component of financial ratios reported by the Company to the Company’s banks, and is also frequently used by securities analysts, investors and other interested parties, in addition to and not in lieu of Generally Accepted Accounting Principles (GAAP) results to compare to the performance of other companies who also publish this information. Financial analysts frequently ask for EBITDA when it has not been presented. EBITDA is not a measurement of financial performance under GAAP and should not be considered an alternative to net income as an indicator of the Company’s operating performance or any other measure of performance derived in accordance with GAAP. The Company has reconciled EBITDA with net income for fiscal years 1996 to 2009 on previous Form 8-K filings with the Securities and Exchange Commission. EBITDA for each period pertinent to this press release is calculated and reconciled to net income as follows:
                 
    3 Months Ended March 31,  
$’s in 000’s   2010     2009  
Net Income
  $ (2,466 )   $ 4,616  
Income Tax Expense
    (1,620 )     2,323  
Interest Expense
    254       870  
Depreciation and Amortization
    3,472       3,470  
 
           
 
               
EBITDA
  $ (360 )   $ 11,279  
 
           

 


 

Encore Wire Corporation
1329 Millwood Road
McKinney, Texas 75069
(972) 562-9473
Condensed Consolidated Balance Sheets
(In Thousands)
(Unaudited)
                 
    March 31,     December 31,  
    2010     2009  
ASSETS
               
 
               
Current Assets
               
Cash
  $ 130,356     $ 226,769  
Receivables, net
    142,540       133,176  
Inventories
    32,530       42,563  
Prepaid Expenses and Other
    12,261       4,991  
 
           
Total Current Assets
    317,687       407,499  
 
               
Property, Plant and Equipment, net
    126,639       126,856  
 
               
Other Assets
    233       203  
 
           
Total Assets
  $ 444,559     $ 534,558  
 
           
 
               
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
 
               
Current Liabilities
               
Accounts Payable
  $ 30,778     $ 11,942  
Accrued Liabilities and Other
    12,862       18,245  
Current Portion of Long-Term Debt
          100,430  
 
           
Total Current Liabilities
    43,640       130,617  
 
               
Long Term Liabilities
               
Non-Current Deferred Income Taxes
    10,717       10,957  
 
           
Total Long Term Liabilities
    10,717       10,957  
 
           
 
               
Total Liabilities
    54,357       141,574  
 
               
Stockholders’ Equity
               
Common Stock
    263       263  
Additional Paid in Capital
    44,205       44,057  
Treasury Stock
    (21,269 )     (21,269 )
Retained Earnings
    367,003       369,933  
 
           
Total Stockholders’ Equity
    390,202       392,984  
 
           
 
               
Total Liabilities and Stockholders’ Equity
  $ 444,559     $ 534,558  
 
           

 


 

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 March 31,  
    2010     2009  
Net Sales
  $ 175,229       100.0 %   $ 144,485       100.0 %
Cost of Sales
    164,628       94.0 %     126,650       87.7 %
 
                       
 
                               
Gross Profit
    10,601       6.0 %     17,835       12.3 %
 
                               
Selling, General and Administrative Expenses
    11,984       6.8 %     10,608       7.3 %
 
                       
 
                               
Operating Income
    (1,383 )     -0.8 %     7,227       5.0 %
 
                               
Net Interest & Other Expense
    2,703       1.5 %     288       0.2 %
 
                       
 
                               
Income before Income Taxes
    (4,086 )     -2.3 %     6,939       4.8 %
 
                               
Income Taxes
    (1,620 )     -0.9 %     2,323       1.6 %
 
                       
 
                               
Net Income
  $ (2,466 )     -1.4 %   $ 4,616       3.2 %
 
                       
 
                               
Basic Earnings Per Share
  $ (0.11 )           $ 0.20          
 
                           
 
                               
Diluted Earnings Per Share
  $ (0.11 )           $ 0.20          
 
                           
 
                               
Weighted Average Number of Common and Common Equivalent Shares Outstanding:
                               
-Basic
    23,159               22,997          
 
                           
 
                               
-Diluted
    23,329               23,277          
 
                           
 
                               
Dividends Declared per Share
  $ 0.02             $ 0.02