EXHIBIT 99.1
[Encore Wire Corporation Logo Omitted]
Encore Wire Corporation | PRESS RELEASE | April 28, 2010 | ||||
1329 Millwood Road | ||||||
McKinney, Texas 75069 | Contact: | Frank J. Bilban | ||||
972-562-9473 | Vice President & CFO | |||||
For Immediate Release |
ENCORE WIRE REPORTS FIRST QUARTER RESULTS
MCKINNEY, TX — Encore Wire Corporation (NASDAQ Global Select: WIRE) today announced results for the first quarter of 2010.
Net sales for the quarter ended March 31, 2010 were $175.2 million compared to $144.5 million during the first quarter of 2009. Net loss for the first quarter of 2010 was $2.5 million versus net income of $4.6 million in the first quarter of 2009. Fully diluted net loss per common share was $0.11 in the first quarter of 2010 versus earnings of $0.20 in the first quarter of 2009. Unit volumes, measured in pounds of copper contained in the wire sold during the period declined 30.6% in the first quarter of 2010 versus the first quarter of 2009. However, the spread between the cost of a pound of copper purchased and the price of a pound of copper sold increased by 12.3%. The 2010 first quarter results include a $2.6 million dollar pre-tax charge associated with the early retirement of long-term debt that the Company paid off in January.
On a sequential quarter comparison, net sales for the first quarter of 2010 were $175.2 million versus $177.1 million during the fourth quarter of 2009. Net loss for the first quarter of 2010 was $2.5 million versus a $1.9 million net loss in the fourth quarter of 2009. Fully diluted net loss per common share was $0.11 in the first quarter of 2010 versus a $0.08 net loss in the fourth quarter of 2009. Unit volumes declined 13.3% in the first quarter of 2010 versus the fourth quarter of 2009. However, the spread between the cost of a pound of copper purchased and the price of a pound of copper sold increased by 28.6%.
Commenting on the results, Daniel L. Jones, President and Chief Executive Officer of Encore Wire Corporation, said, “Unit volume decreases caused by the drop in construction activity continue to create turmoil in our industry. During the quarter, a competitor exited the market by selling out to another competitor. Despite the continued volume decreases, there were positive developments, including the increase in “spreads” during the past quarter. The spread between the price of wire sold and the cost of raw copper is a key metric in this industry and a key driver of the level of profitability. With our low cost structure, we have strong upside leverage when the spread expands. On a sequential quarter basis, the average cost of copper purchased increased by 10.7%, while the average price of wire sold increased by 14.1%, increasing the spread by 28.6%. Our pre-tax loss of $4.1 million ($2.5 million net of income taxes) includes a one-time pre-tax charge of $2.6 million ($1.7 million net of income taxes) associated with the debt retirement we executed in January. This positive change in sequential quarterly earnings occurred despite the 13.3% decrease in unit volume sold. We continue to strive to lead or follow industry price increases to achieve profit growth.
We produced these results in this difficult environment due to our low cost business model and aggressive cost cutting in all facets of our operation. 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.
We continue to maintain our strong balance sheet. We paid off our long-term debt and our $150 million revolving line of credit has a zero balance. In addition, we had $130.4 million in cash as of March 31, 2010. Our bank covenants were amended in the quarter to take current economic conditions into account. We also declared our fourteenth consecutive quarterly cash dividend during the first quarter of 2010.
With our exceptionally strong balance sheet, we have the capability to approach the future confidently. Our low cost structure and strong balance sheet have enabled us to withstand tough 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 tremendous efforts and our stockholders for their continued 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.
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 Generally Accepted Accounting Principles (GAAP) results to compare to the performance of other companies who also publish 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 Company’s 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 2009 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:
3 Months Ended March 31, | ||||||||
$’s in 000’s | 2010 | 2009 | ||||||
Net Income | $ | (2,466 | ) | $ | 4,616 | |||
Income Tax Expense | (1,620 | ) | 2,323 | |||||
Interest Expense | 254 | 870 | ||||||
Depreciation and Amortization | 3,472 | 3,470 | ||||||
EBITDA | $ | (360 | ) | $ | 11,279 | |||
Encore Wire Corporation
1329 Millwood Road
McKinney, Texas 75069
(972) 562-9473
Condensed Consolidated Balance Sheets
(In Thousands)
(Unaudited)
1329 Millwood Road
McKinney, Texas 75069
(972) 562-9473
Condensed Consolidated Balance Sheets
(In Thousands)
(Unaudited)
March 31, | December 31, | |||||||
2010 | 2009 | |||||||
ASSETS | ||||||||
Current Assets | ||||||||
Cash | $ | 130,356 | $ | 226,769 | ||||
Receivables, net | 142,540 | 133,176 | ||||||
Inventories | 32,530 | 42,563 | ||||||
Prepaid Expenses and Other | 12,261 | 4,991 | ||||||
Total Current Assets | 317,687 | 407,499 | ||||||
Property, Plant and Equipment, net | 126,639 | 126,856 | ||||||
Other Assets | 233 | 203 | ||||||
Total Assets | $ | 444,559 | $ | 534,558 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current Liabilities | ||||||||
Accounts Payable | $ | 30,778 | $ | 11,942 | ||||
Accrued Liabilities and Other | 12,862 | 18,245 | ||||||
Current Portion of Long-Term Debt | — | 100,430 | ||||||
Total Current Liabilities | 43,640 | 130,617 | ||||||
Long Term Liabilities | ||||||||
Non-Current Deferred Income Taxes | 10,717 | 10,957 | ||||||
Total Long Term Liabilities | 10,717 | 10,957 | ||||||
Total Liabilities | 54,357 | 141,574 | ||||||
Stockholders’ Equity | ||||||||
Common Stock | 263 | 263 | ||||||
Additional Paid in Capital | 44,205 | 44,057 | ||||||
Treasury Stock | (21,269 | ) | (21,269 | ) | ||||
Retained Earnings | 367,003 | 369,933 | ||||||
Total Stockholders’ Equity | 390,202 | 392,984 | ||||||
Total Liabilities and Stockholders’ Equity | $ | 444,559 | $ | 534,558 | ||||
Encore Wire Corporation
1329 Millwood Road
McKinney, Texas 75069
(972) 562-9473
Condensed Consolidated Statements of Income
(In Thousands, Except per Share Data)
(Unaudited)
1329 Millwood Road
McKinney, Texas 75069
(972) 562-9473
Condensed Consolidated Statements of Income
(In Thousands, Except per Share Data)
(Unaudited)
Quarter Ended March 31, | ||||||||||||||||
2010 | 2009 | |||||||||||||||
Net Sales | $ | 175,229 | 100.0 | % | $ | 144,485 | 100.0 | % | ||||||||
Cost of Sales | 164,628 | 94.0 | % | 126,650 | 87.7 | % | ||||||||||
Gross Profit | 10,601 | 6.0 | % | 17,835 | 12.3 | % | ||||||||||
Selling, General and Administrative Expenses | 11,984 | 6.8 | % | 10,608 | 7.3 | % | ||||||||||
Operating Income | (1,383 | ) | -0.8 | % | 7,227 | 5.0 | % | |||||||||
Net Interest & Other Expense | 2,703 | 1.5 | % | 288 | 0.2 | % | ||||||||||
Income before Income Taxes | (4,086 | ) | -2.3 | % | 6,939 | 4.8 | % | |||||||||
Income Taxes | (1,620 | ) | -0.9 | % | 2,323 | 1.6 | % | |||||||||
Net Income | $ | (2,466 | ) | -1.4 | % | $ | 4,616 | 3.2 | % | |||||||
Basic Earnings Per Share | $ | (0.11 | ) | $ | 0.20 | |||||||||||
Diluted Earnings Per Share | $ | (0.11 | ) | $ | 0.20 | |||||||||||
Weighted Average Number of Common and Common Equivalent Shares Outstanding: | ||||||||||||||||
-Basic | 23,159 | 22,997 | ||||||||||||||
-Diluted | 23,329 | 23,277 | ||||||||||||||
Dividends Declared per Share | $ | 0.02 | $ | 0.02 | ||||||||||||