EX-99.1 2 d43340exv99w1.htm EARNINGS RELEASE exv99w1
 

EXHIBIT 99.1
[Encore Wire Corporation Logo Omitted]
             
Encore Wire Corporation   PRESS RELEASE       February 6, 2007
1410 Millwood Road            
McKinney, Texas 75069       Contact:   Frank J. Bilban
972-562-9473   For Immediate Release       Vice President & CFO
ENCORE WIRE REPORTS 2006 RESULTS
MCKINNEY, TX — Encore Wire Corporation (NASDAQ Global Select: WIRE) announced today that 2006 fiscal year sales and earnings set new Company records.
Net sales for the year ended December 31, 2006 increased $491.2 million or 64.8% to a record $1.249 billion compared to $758.1 million during 2005. Higher prices for building wire sold in 2006, driven by higher copper costs, accounted for the increase in net sales dollars versus 2005. Net income for the year ended December 31, 2006 increased 129.9% to a record $115.1 million versus $50.1 million in 2005. Fully diluted net earnings per common share were a record $4.86 in fiscal year 2006 eclipsing the previous record of $2.13 set in 2005.
Net sales for the fourth quarter of the year ended December 31, 2006 were $262.3 million compared to $244.2 million during the fourth quarter of 2005. Net income for the fourth quarter of 2006 was $6.2 million versus $35.4 million in the fourth quarter of 2005. Fully diluted net earnings per common share were $0.26 in the fourth quarter of 2006 versus $1.50 in the fourth quarter of 2005.
Commenting on the results, Daniel L. Jones, President and Chief Executive Officer of Encore Wire Corporation, said, “We are pleased to announce new records for sales and earnings for the full year of 2006. We achieved numerous milestones in 2006 including $1.25 billion-dollars in sales and $115 million in net income. Our shareholders’ equity increased by $116.6 million in 2006 to $327.1 million. We also declared our first cash dividend. As commodity prices softened in the fourth quarter our working capital requirements were reduced enabling us to pay down our debt $85 million during the quarter and still have $24.6 million in cash at the end of the year. The only bank debt we have as of December 31, 2006, are long-term notes. Our balance sheet is solid with a conservative 31% debt to equity ratio. It should be noted that our industry provides customers extended terms as a normal course of business. If we sold on thirty-day terms as many other industries do, Encore Wire could have zero bank debt.
We are not pleased with the margin compression we experienced in the fourth quarter. Margins have been cut by competitive pricing pressure in our industry. Copper prices have been trending down since posting a COMEX high close of $4.07 on May 23, 2006 with a low close of $2.83 on December 22, 2006. In response to the declining copper prices and the much-publicized slowdown in residential construction our industry has cut wire prices faster than copper prices have fallen, resulting in compressed margins and net earnings. We have seen these conditions before and will focus on our industry leading order fill rates and our exceptional product offerings featuring commercial wire in true colors and our new armored cable line. Our low cost structure and strong balance sheet have enabled us to withstand these periods in the past, and we believe we will emerge stronger as conditions improve. For the year 2006, our total unit volume measured in copper pounds shipped was down 4.5% versus 2005. However, our commercial wire unit volume was up 2% in fiscal year 2006 versus fiscal year 2005, comparing favorably to industry data. Commercial wire unit sales for the industry were down 5.1% in fiscal year 2006 versus 2005 according to “NEMA” (the National Electrical Manufacturers

 

 

Association). Our residential wire unit volume was down 15.5% versus 2005. NEMA data is not available for residential unit volume. Our unit volume mix in 2006 consisted of 67% commercial and 33% residential wire.
Our new armored cable plant is operational and we are producing a broad range of types and sizes to allow us to maintain our historically high order fill rates as we roll this product line out nationally in 2007. We will continue to manage the Company to grow sales and earnings while maintaining our historically strong and conservative balance sheet. We also thank our employees and associates for their tremendous efforts and our stockholders for their 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.

 

 

Encore Wire Corporation
P.O. Box 1149
1410 Millwood Road
McKinney, Texas 75069
(972) 562-9473
Condensed Consolidated Balance Sheets
(In Thousands)
(Unaudited)
                 
    December 31,     December 31,  
    2006     2005  
ASSETS
                
 
                
Current Assets
                
Cash
   $ 24,603     $ 2,622  
Receivables, net
     214,963       164,930  
Inventories
     103,947       67,932  
Prepaid Expenses and Other
     27,537       19,749  
 
            
Total Current Assets
     371,050       255,233  
 
                
Property, Plant and Equipment, net
     102,987       93,137  
 
                
Other Assets
     120       106  
 
            
 
                
Total Assets
   $ 474,157     $ 348,476  
 
            
 
                
LIABILITIES AND STOCKHOLDERS’ EQUITY
                
 
                
Current Liabilities
                
Accounts Payable
   $ 13,413     $ 17,277  
Accrued Liabilities and Other
     23,772       38,844  
 
            
Total Current Liabilities
     37,185       56,121  
 
                
Long Term Liabilities
                
Note Payable
     98,974       70,438  
Other Long Term Liabilities
     1,026       762  
Non-Current Deferred Income Taxes
     9,851       10,620  
 
            
Total Long Term Liabilities
     109,851       81,820  
 
            
 
                
Total Liabilities
     147,036       137,941  
 
                
Stockholders’ Equity
                
Common Stock
     261       259  
Additional Paid in Capital
     40,849       38,932  
Treasury Stock
     (15,275 )     (15,275 )
Retained Earnings
     301,286       186,619  
 
            
Total Stockholders’ Equity
     327,121       210,535  
 
            
 
                
Total Liabilities and Stockholders’ Equity
   $ 474,157     $ 348,476  
 
            

 

 

Encore Wire Corporation
P.O. Box 1149
1410 Millwood Road
McKinney, Texas 75069
(972) 562-9473
Condensed Consolidated Statements of Income
(In Thousands)
(Unaudited)
                                                                 
    Quarter Ended December 31,     Year Ended December 31,  
    2006     2005     2006     2005  
Net Sales
   $ 262,319       100.0 %   $ 244,172       100.0 %   $ 1,249,330       100.0 %   $ 758,089       100.0 %
Cost of Sales
     238,517       90.9 %     176,039       72.1 %     1,005,037       80.4 %     632,842       83.5 %
 
                                                
 
                                                                
Gross Profit
     23,802       9.1 %     68,133       27.9 %     244,293       19.6 %     125,247       16.5 %
 
                                                                
Selling, General and Administrative Expenses
     13,033       5.0 %     13,081       5.4 %     59,793       4.8 %     46,335       6.1 %
 
                                                
 
                                                                
Operating Income
     10,769       4.1 %     55,052       22.5 %     184,500       14.8 %     78,912       10.4 %
 
                                                                
Net Interest & Other Expense
     2,152       0.8 %     1,260       0.5 %     7,760       0.6 %     3,935       0.5 %
 
                                                
 
                                                                
Income before Income Taxes
     8,617       3.3 %     53,792       22.0 %     176,740       14.1 %     74,977       9.9 %
 
                                                                
Income Taxes
     2,441       0.9 %     18,382       7.5 %     61,607       4.9 %     24,898       3.3 %
 
                                                
 
                                                                
Net Income
   $ 6,176       2.4 %   $ 35,410       14.5 %   $ 115,133       9.2 %   $ 50,079       6.6 %
 
                                                
 
                                                                
Basic Earnings Per Share
   $ 0.27             $ 1.53             $ 4.95             $ 2.17          
 
                                                        
 
                                                                
Diluted Earnings Per Share
   $ 0.26             $ 1.50             $ 4.86             $ 2.13          
 
                                                        
Weighted Average Number of Common and Common Equivalent Shares Outstanding:
                                                                
-Basic
     23,274               23,143               23,254               23,117          
 
                                                        
 
                                                                
-Diluted
     23,686               23,624               23,674               23,537