EXHIBIT 99.1
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Encore Wire Corporation
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PRESS RELEASE
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July 27, 2011 |
1329 Millwood Road |
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McKinney, Texas 75069
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Contact:
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Frank J. Bilban |
972-562-9473
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Vice President & CFO |
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For Immediate Release |
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ENCORE WIRE REPORTS IMPROVED SECOND QUARTER RESULTS
MCKINNEY, TX Encore Wire Corporation (NASDAQ Global Select: WIRE) today announced improved
results for the second quarter and six months ended June 30, 2011.
Net sales for the second quarter ended June 30, 2011 were $309.5 million compared to $236.1 million
during the second quarter of 2010. Higher prices for building wire sold in the quarter ended June
30, 2011 accounted for most of the increase in net sales dollars, increasing 28.6% per copper pound
sold versus the same period in 2010. Sales prices rose primarily due to higher copper prices,
which rose 30.7%. Unit volume in the second quarter of 2011 increased 1.9% versus the second
quarter of 2010. Net income for the second quarter of 2011 increased 16.3% to $9.5 million versus
$8.1 million in the second quarter of 2010. Fully diluted net earnings per common share increased
16.0%, to $0.40 in the second quarter of 2011 versus $0.35 in the second quarter of 2010.
Net sales for the six months ended June 30, 2011 were $612.8 million compared to $411.3 million
during the same period in 2010. Higher prices for building wire sold in the six months ended June
30, 2011 accounted for most of the increase in net sales dollars, increasing 31.5% per copper pound
versus the same period in 2010. Unit volume in the six months ended June 30, 2011 also helped to
increase net sales dollars, increasing 13.4% versus the same period in 2010. Net income for the
six months ended June 30, 2011 was $20.1 million versus $5.7 million in the same period in 2010.
Fully diluted net earnings per common share increased 252.6%, to $0.86 for the six months ended
June 30, 2011 versus $0.24 in the same period in 2010.
On a sequential quarter comparison, net sales for the second quarter of 2011 were $309.5 million
versus $303.4 million during the first quarter of 2011. Unit volume increased 6.0% on a sequential
quarter comparison. Net income for the second quarter of 2011 was $9.5 million versus $10.7
million in the first quarter of 2011. Fully diluted net income per common share was $0.40 in the
second quarter of 2011 versus $0.46 in the first quarter of 2011.
Commenting on the results, Daniel L. Jones, President and Chief Executive Officer of Encore Wire
Corporation, said, We are pleased to announce strong quarterly earnings in the midst of the severe
recession currently taking place in the construction industry. As we have repeatedly noted, the
key metric to our earnings is the spread between the price of wire sold and cost of raw copper
purchased in any given period. That spread increased 22.2% in the second quarter of 2011 versus
the second quarter of 2010, while our unit volume shipped in the second quarter of 2011 increased
1.9% versus the second quarter of 2010. For the six months ended June 30, 2011, the spread
increased 30.4% versus the six months ended June 30, 2010, driving our increased earnings. We
believe the exit of a former competitor in the first quarter of 2010 has contributed to the
positive trend in industry pricing levels and margins over the last five quarters. In the past
five quarters since their exit, we have earned a cumulative $1.62 in fully diluted net earnings per
share, versus a cumulative $0.05 in fully diluted net earnings per share in the previous five
quarters ended March 31, 2010.
Despite producing strong earnings in the second quarter of 2011, earnings per share are down
slightly on a sequential quarter comparison. With the volatility of copper prices during the
quarter, industry attempts to introduce price increases were occasionally stymied by this
volatility. We attempted to lead or follow price increases during the quarter, some of which were
unsuccessful. We continue to support industry price increases in an effort to maintain and
increase margins. We believe our superior order fill rates continue to enhance our competitive
position, as our electrical distributor customers are holding lean inventories in the field. As
orders come in from electrical contractors, the distributors can count on our order fill rates to
ensure quick deliveries from coast to coast. We have been able to accomplish this despite holding
what are historically lean inventories for us.
Our balance sheet is very strong. We have no long term debt, and our revolving line of credit is
paid down to zero. In addition, we have $46.8 million in cash as of June 30, 2011. We also
declared another quarterly cash dividend during the second quarter of 2011.
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 outstanding
effort 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 Companys 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 Companys 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 Companys operating
performance or any other measure of performance derived in accordance with GAAP. The Company has
reconciled EBITDA with net income for fiscal years 1996 to 2010 on previous Form 8-K filings with
the Securities and Exchange Commission. EBITDA for each period pertinent to this press release is
calculated and reconciled to net income as follows:
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3 Months Ended June 30, |
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6 Months Ended June 30, |
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$s in 000s |
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2011 |
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2010 |
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2011 |
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2010 |
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Net Income |
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$ |
9,461 |
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$ |
8,135 |
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$ |
20,115 |
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$ |
5,669 |
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Income Tax Expense |
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5,087 |
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4,618 |
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10,046 |
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2,998 |
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Interest Expense |
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78 |
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109 |
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155 |
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363 |
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Depreciation and
Amortization |
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3,442 |
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3,389 |
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6,867 |
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6,861 |
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EBITDA |
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$ |
18,068 |
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$ |
16,251 |
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$ |
37,183 |
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$ |
15,891 |
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Encore Wire Corporation
1329 Millwood Road
McKinney, Texas 75069
(972) 562-9473
Condensed Consolidated Statements of Income
(In Thousands, Except Per Share Data)
(Unaudited)
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Quarter Ended June 30, |
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Six Months Ended June 30, |
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2011 |
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2010 |
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2011 |
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2010 |
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Net Sales |
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$ |
309,469 |
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100.0 |
% |
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$ |
236,094 |
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100.0 |
% |
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$ |
612,820 |
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100.0 |
% |
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$ |
411,323 |
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100.0 |
% |
Cost of Sales |
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278,837 |
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90.1 |
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209,179 |
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88.6 |
% |
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548,432 |
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89.5 |
% |
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373,807 |
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90.9 |
% |
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Gross Profit |
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30,632 |
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9.9 |
% |
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26,915 |
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11.4 |
% |
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64,388 |
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10.5 |
% |
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37,516 |
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9.1 |
% |
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Selling, General and
Administrative Expenses |
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16,083 |
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5.2 |
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14,068 |
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6.0 |
% |
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34,232 |
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5.6 |
% |
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26,052 |
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6.3 |
% |
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Operating Income |
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14,549 |
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4.7 |
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12,847 |
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5.4 |
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30,156 |
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4.9 |
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11,464 |
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2.8 |
% |
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Net Interest & Other Expense |
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0.0 |
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94 |
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0.0 |
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(5 |
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0.0 |
% |
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2,797 |
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0.7 |
% |
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Income before Income Taxes |
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14,549 |
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4.7 |
% |
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12,753 |
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5.4 |
% |
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30,161 |
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4.9 |
% |
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8,667 |
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2.1 |
% |
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Income Taxes |
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5,088 |
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1.6 |
% |
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4,618 |
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2.0 |
% |
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10,046 |
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1.6 |
% |
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2,998 |
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0.7 |
% |
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Net Income |
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$ |
9,461 |
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3.1 |
% |
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$ |
8,135 |
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3.4 |
% |
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$ |
20,115 |
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3.3 |
% |
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$ |
5,669 |
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1.4 |
% |
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Basic Earnings Per Share |
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$ |
0.41 |
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$ |
0.35 |
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$ |
0.87 |
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$ |
0.24 |
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Diluted Earnings Per Share |
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$ |
0.40 |
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$ |
0.35 |
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$ |
0.86 |
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$ |
0.24 |
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Weighted Average Number of
Common and Common
Equivalent Shares Outstanding: |
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-Basic |
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23,264 |
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23,171 |
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23,241 |
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23,165 |
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-Diluted |
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23,405 |
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23,334 |
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23,392 |
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23,246 |
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Dividend Declared per Share |
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$ |
0.02 |
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$ |
0.02 |
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$ |
0.04 |
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$ |
0.04 |
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