Encore Wire Reports First Quarter Results
- Earnings per diluted share of $3.92 and net income of $63.3 million reported for the first quarter of 2024.
- Copper and aluminum unit volumes increased in the first quarter of 2024 compared to the previous year.
- Gross profit percentage decreased to 21.5% in the first quarter of 2024 due to lower average selling prices.
- Cash on hand increased to $614.1 million as of March 31, 2024.
- Total capital expenditures expected to range from $130 - $150 million in 2024 to expand capacity and efficiency.
- Net income decreased from $119.5 million in the first quarter of 2023 to $63.3 million in the first quarter of 2024.
- Fully diluted earnings per common share decreased from $6.50 in the first quarter of 2023 to $3.92 in the first quarter of 2024.
- Decrease in net sales dollars driven by lower average selling prices in the first quarter of 2024 compared to the first quarter of 2023.
- Gross profit margin decreased from 31.1% in the first quarter of 2023 to 21.5% in the first quarter of 2024.
Insights
The report from Encore Wire Corporation presents a mixed picture for investors, indicating a substantial increase in copper volume shipped (19.7%) as well as a robust cash position of $614.1 million, up from the previous quarter. However, these positives are tempered by a decrease in net income to $63.3 million from the previous year's $119.5 million and a drop in earnings per share from $6.50 to $3.92. Gross profit margin has also declined year-over-year from 31.1% to 21.5%, suggesting potential pricing pressures or increased costs. These figures may serve as indicators of the company's operational efficiency and market position. The planned capital expenditures ranging from $130 million to $150 million in the coming years reflect a focus on long-term growth through investment in manufacturing capacity and efficiency.
Encore Wire's strategic investments, particularly in a state-of-the-art residential wire and cable manufacturing facility, indicate a commitment to technological innovation and an attempt to improve order fill rates. The emphasis on vertical integration and sustainable practices may enhance Encore's long-term market competitiveness and appeal to a growing base of environmentally conscious consumers. Nonetheless, it is important for investors to note the current market conditions that have driven down average selling prices, affecting the company's gross profit margin. The reported consistency in copper wire and cable demand suggests resilience in the sector, which may be reassuring to stakeholders interested in the company's ability to capture and maintain market share.
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 $560.6 million -
Capital expenditures of
$34.2 million
Net sales for the first quarter ended March 31, 2024 were
Gross profit percentage for the first quarter of 2024 was
Net income for the first quarter of 2024 was
On a sequential quarter basis, net sales for the first quarter ended March 31, 2024 were
Gross profit percentage for the first quarter of 2024 was
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
Commenting on the results, Daniel L.
Our balance sheet remains very strong. We have no long-term debt, and our revolving line of credit remains untapped. We had
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
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
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,
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
Source: Encore Wire Corporation
FAQ
What were the first quarter earnings per diluted share for Encore Wire (WIRE)?
How much was the net income for Encore Wire (WIRE) in the first quarter of 2024?
What was the gross profit percentage for Encore Wire (WIRE) in the first quarter of 2024?
What was the cash on hand for Encore Wire (WIRE) as of March 31, 2024?
What are Encore Wire's (WIRE) expected total capital expenditures for 2024?
