Encore Wire Corporation (NASDAQ Global Select: WIRE) (“Encore
Wire” or the “Company”) today announced results for the first
quarter of 2024.
First Quarter Highlights
- First Quarter Earnings per diluted share of $3.92
- First Quarter Net Income of $63.3 million
- Gross Profit of 21.5% in the first quarter of 2024; 31.1% in
the first quarter of 2023
- Copper volume shipped in the first quarter of 2024 increased
19.7% over the first quarter of 2023
- Cash on hand of $614.1 million as of March 31, 2024; $560.6
million as of December 31, 2023
- Capital expenditures of $34.2 million in the first quarter of
2024
Net sales for the first quarter ended March 31, 2024 were $632.7
million compared to $660.5 million in the first quarter ended March
31, 2023. Copper unit volume, measured in pounds of copper
contained in the wire sold, increased 19.7% in the first quarter of
2024 versus the first quarter of 2023. Aluminum unit volume also
increased in the first quarter of 2024 versus the first quarter of
2023. The decrease in net sales dollars was driven by an
anticipated decrease in the average selling prices in the first
quarter of 2024 compared to the first quarter of 2023.
Gross profit percentage for the first quarter of 2024 was 21.5%
compared to 31.1% in the first quarter of 2023. The average selling
price of wire per copper pound sold decreased 16.2% in the first
quarter of 2024 versus the first quarter of 2023, while the average
cost of copper per pound purchased decreased 5.0%. The overall
increase in total volumes shipped, offset by an anticipated
decrease in the average selling price, resulted in the decreased
gross profit margin in the first quarter of 2024 compared to the
first quarter of 2023.
Net income for the first quarter of 2024 was $63.3 million
versus $119.5 million in the first quarter of 2023. Fully diluted
earnings per common share were $3.92 in the first quarter of 2024
versus $6.50 in the first quarter of 2023.
On a sequential quarter basis, net sales for the first quarter
ended March 31, 2024 were $632.7 million compared to $633.8 million
in the fourth quarter ended December 31, 2023. Copper unit volume,
measured in pounds of copper contained in the wire sold, decreased
4.1% in the first quarter of 2024 versus the fourth quarter of
2023. Aluminum unit volume increased in the first quarter of 2024
compared to the fourth quarter of 2023. The slight decrease in net
sales dollars was driven by a decrease in overall unit volume sold
in the first quarter of 2024 compared to the fourth quarter of
2023, partially offset by increased average selling prices in the
first quarter of 2024 compared to the fourth quarter of 2023.
Gross profit percentage for the first quarter of 2024 was 21.5%
compared to 21.5% in the fourth quarter of 2023. The average
selling price of wire per copper pound sold increased 3.2% in the
first quarter of 2024 versus the fourth quarter of 2023, while the
average cost of copper per pound purchased increased 3.6%. This
resulted in a small increase of copper spreads during the quarter,
partially offset by a decrease in the unit volume shipped, which
resulted in a gross profit margin in the first quarter of 2024
consistent with the fourth quarter of 2023.
We believe the overall gross margin levels we experienced in the
fourth quarter of 2023 and the first quarter of 2024 are
representative of both current market conditions as well as the
investments we have made and continue to make in improving our
service model.
Net income for the first quarter of 2024 was $63.3 million
versus $66.1 million in the fourth quarter of 2023. Fully diluted
earnings per common share were $3.92 in the first quarter of 2024
versus $4.10 in the fourth quarter of 2023.
Commenting on the results, Daniel L. Jones, Chairman, President
and Chief Executive Officer of Encore Wire Corporation, said, “We
have experienced consistent, increased copper wire and cable demand
from mid-2023, which continued through the first quarter of 2024.
Our ability to capitalize on this demand and deliver unmatched
speed and agility in serving our customers is a testament to our
single-site, build-to-ship model, an important competitive
advantage. Despite continued tightness in raw copper availability,
our key suppliers continue to perform well and our teams are
achieving high order fill rates. Coupled with our operational
excellence, we are favorably positioned to meet customer demand
going forward.
Our balance sheet remains very strong. We have no long-term
debt, and our revolving line of credit remains untapped. We had
$614.1 million in cash as of March 31, 2024. We also declared a
$0.02 cash dividend during the first quarter.
We remain committed to reinvesting in our business with current
and planned projects focused on increasing capacity, efficiency and
vertical integration across our campus, which will continue to
improve our service model. In 2023, we began construction of a
state-of-the-art residential wire and cable manufacturing facility
which will replace our original residential manufacturing plant,
leveraging automation and advanced manufacturing technology to
increase capacity, improve order fill and further modernize our
campus. This investment will strengthen our position in the
residential market segment while also supporting the production of
feed wire used across our campus. We anticipate this facility will
be substantially complete in early Q3 2024 and will help to further
elevate our ability to ship 100% complete orders quickly.
Capital spending in 2024 through 2026 will further expand
vertical integration in our manufacturing processes to reduce costs
as well as modernize select wire manufacturing facilities to
increase capacity and efficiency and improve our position as a
sustainable and environmentally responsible company. Total capital
expenditures were $164.5 million in 2023 and $34.2 million in the
first three months of 2024. We expect total capital expenditures to
range from $130 - $150 million in 2024, $130 - $150 million in
2025, and $100 - $120 million in 2026. We expect to continue to
fund these investments with existing cash reserves and operating
cash flows.
We continue to believe that our operational agility, speed to
market, and deep supplier relationships remain competitive
advantages in serving our customers’ evolving needs and capturing
market share in the current economic environment. As we continue to
address near-term challenges, we remain focused on the long-term
opportunities for our business. We thank our employees and
associates for their outstanding effort and our shareholders for
their continued support.”
Following the previously announced entry into the Agreement and
Plan of Merger with Prysmian S.p.A. on April 14, 2024 and the
pendency of the merger, which remains subject to stockholder
approval and the satisfaction of or (to the extent permitted by
law) waiver of other specified closing conditions, the Company will
not host an earnings conference call.
Encore Wire Corporation is a leading manufacturer of a broad
range of copper and aluminum electrical wire and cables, supplying
power generation and distribution solutions to meet our customers’
needs today and in the future. The Company focuses on maintaining a
low-cost of production while providing exceptional customer
service, quickly shipping complete orders coast-to-coast. Our
products are proudly made in America at our vertically-integrated,
single-site, Texas campus.
The matters discussed in this news release may include
“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, including statements
related to the expected timing of the closing of the pending merger
and expectations following the closing of the merger.
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, the possibility that we
may be unable to obtain the required stockholder approval,
antitrust or other regulatory approvals or that other conditions to
consummation of the merger may not be satisfied, such that the
merger may not be consummated or that the consummation may be
delayed, the reaction of distributors, vendors, other partners and
employees to the announcement or consummation of the merger,
general macro-economic conditions, including risks associated with
unforeseeable events such as pandemics, wars and other hostilities,
emergencies or other disasters, risks associated with certain
covenants in the Agreement and Plan of Merger that may limit or
disrupt our current plans and operations, the amount of the costs,
fees, expenses and charges related to the merger that may not be
recovered if the merger is not consummated for any reason, the
outcome of any legal proceedings that may be brought related to the
merger, the occurrence of any event, change or other circumstances
that could give rise to the termination of the Agreement and Plan
of Merger, other risks and uncertainties described in Item 1A. Risk
Factors, the pricing environment of copper, aluminum and other raw
materials, 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. Actual results may vary materially from those
anticipated. Any forward-looking statement made by us in this press
release 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.
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 measures of financial performance
calculated and presented in accordance with Generally Accepted
Accounting Principles (“GAAP”), to compare to the performance of
other companies who also publicize this information. EBITDA is not
a measurement of financial performance calculated and presented in
accordance with 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 financial performance calculated and
presented in accordance with GAAP.
The Company has reconciled EBITDA with net income for fiscal
years 1996 to 2023 on previous reports on Form 8-K filed with the
Securities and Exchange Commission. EBITDA for each period
pertinent to this press release is calculated and reconciled to net
income as follows:
Quarter Ended March 31,
In Thousands
2024
2023
Net Income
$
63,277
$
119,483
Income Tax Expense
18,954
36,072
Interest Expense
102
100
Depreciation and Amortization
8,526
7,692
EBITDA
$
90,859
$
163,347
Encore Wire
Corporation
Condensed Balance
Sheets
(In Thousands)
March 31, 2024
December 31, 2023
(Unaudited)
(Audited)
Assets
Current assets:
Cash and cash equivalents
$
614,088
$
560,635
Accounts receivable, net
471,246
475,291
Inventories, net
173,669
163,679
Income tax receivable
—
4,769
Prepaid expenses and other
3,151
6,201
Total current assets
1,262,154
1,210,575
Property, plant and equipment, net
779,017
756,863
Other assets
369
474
Total assets
$
2,041,540
$
1,967,912
Liabilities and Stockholders’ Equity
Current liabilities:
Trade accounts payable
$
84,355
$
80,548
Accrued liabilities
69,157
79,590
Income taxes payable
14,895
—
Total current liabilities
168,407
160,138
Long-term liabilities:
Deferred income taxes and other
60,176
60,197
Total long-term liabilities
60,176
60,197
Total liabilities
228,583
220,335
Commitments and contingencies
Stockholders’ equity:
Common stock
274
273
Additional paid-in capital
108,452
106,035
Treasury stock
(867,222
)
(867,222
)
Retained earnings
2,571,453
2,508,491
Total stockholders’ equity
1,812,957
1,747,577
Total liabilities and stockholders’
equity
$
2,041,540
$
1,967,912
Encore Wire
Corporation
Statements of Income
(In thousands, except per share
data)
Quarter Ended March
31,
2024
2023
(Unaudited)
Net sales
$
632,661
100.0
%
$
660,492
100.0
%
Cost of goods sold
496,672
78.5
%
455,407
68.9
%
Gross profit
135,989
21.5
%
205,085
31.1
%
Selling, general, and administrative
expenses
61,088
9.7
%
58,704
8.9
%
Operating income
74,901
11.8
%
146,381
22.2
%
Net interest and other income
7,330
1.2
%
9,174
1.4
%
Income before income taxes
82,231
13.0
%
155,555
23.6
%
Provision for income taxes
18,954
3.0
%
36,072
5.5
%
Net income
$
63,277
10.0
%
$
119,483
18.1
%
Earnings per common and common equivalent
share – basic
$
4.02
$
6.60
Earnings per common and common equivalent
share – diluted
$
3.92
$
6.50
Weighted average common and common
equivalent shares outstanding – basic
15,738
18,099
Weighted average common and common
equivalent shares outstanding – diluted
16,143
18,369
Cash Dividends Declared per Share
$
0.02
$
0.02
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240423453443/en/
Bret J. Eckert Executive Vice President & Chief
Financial Officer 972-562-9473
Encore Wire (NASDAQ:WIRE)
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