Encore Wire Reports First Quarter Results

McKinney, TX - Encore Wire Corporation (NASDAQ Global Select: WIRE) today announced results for the first quarter of 2018. 

Net sales for the first quarter ended March 31, 2018, were $291.4 million compared to $279.4 million during the first quarter of 2017. Copper unit volume, measured in pounds of copper contained in the wire sold, decreased 7.9% in the first quarter of 2018 versus the first quarter of 2017. The average selling price of wire per copper pound sold increased 15.6% in the first quarter of 2018 versus the first quarter of 2017. Copper wire sales prices increased primarily due to the higher price of copper purchased, which increased 18.3% versus the first quarter of 2017. Net income for the first quarter of 2018 was $11.4 million versus $13.6 million in the first quarter of 2017. Fully diluted net earnings per common share were $0.54 in the first quarter of 2018 versus $0.65 in the first quarter of 2017. 

On a sequential-quarter comparison, net sales for the first quarter of 2018 were $291.4 million versus $301.3 million during the fourth quarter of 2017. Sales dollars decreased due to a 3.9% unit volume decrease of copper building wire sold, offset by a 1.3% increase in the average selling price per pound of copper wire sold on a sequential-quarter comparison. Copper wire sales prices increased primarily due to an increase of 2.2% in the price of copper purchased. Net income for the first quarter of 2018 was $11.4 million versus $28.5 million in the fourth quarter of 2017. Fully diluted net income per common share was $0.54 in the first quarter of 2018 versus $1.36 in the fourth quarter of 2017. 

Commenting on the results, Daniel L. Jones, Chairman, President and Chief Executive Officer of Encore Wire Corporation, said, “We are pleased with our results in the first quarter, with some key items to note. Net sales dollars increased in the quarter, driven primarily by higher copper raw material prices. Copper margins increased strongly in the quarterly comparison of 2018 versus2017. One of the key metrics to our earnings is the “spread” between the price of copper wire sold and the cost of raw copper purchased in any given period. The copper spread increased 10.1% in the first quarter of 2018 versus the first quarter of 2017. The copper spread expanded 10.1% as the average price of copper purchased increased 18.3% in the first quarter of 2018 versus the first quarter of 2017, while the average selling price of wire sold increased 15.6%. The percentage change in sales is on a higher nominal dollar amount than on purchases and, therefore, spreads change on a nominal dollar basis. Unit volumes in the first three months of 2018, decreased 7.9% in copper pounds shipped versus the first three months of last year. We believe volumes were impacted primarily by rough winter weather that slowed construction projects, particularly in January.

The U.S. economy appears strong, as is construction activity. We believe that some of our financially stressed competitors have struggled and acted erratically in what we consider a strong business environment when volumes are good and margins should also be strong. Based on discussions with our distributor customers and their contractor customers, we believe there is a good outlook for construction projects for the next year. We continue to strive to lead and 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 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. We have no long-term debt, and our revolving line of credit is paid down to zero. In addition, we had $107.8 million in cash at the end of the quarter. We also declared another cash dividend during the quarter.

Our low-cost structure and strong balance sheet have enabled us to withstand difficult periods in the past, and we believe they are continuing to prove valuable now. We thank our employees and associates for their outstanding effort and our shareholders for their continued support.”