EXHIBIT 99.1
[ENCORE WIRE CORPORATION LOGO]
ENCORE WIRE CORPORATION PRESS RELEASE APRIL 28, 2005
1410 MILLWOOD ROAD
MCKINNEY, TEXAS 75069 CONTACT: FRANK J. BILBAN
972-562-9473 VICE PRESIDENT & CFO
FOR IMMEDIATE RELEASE
ENCORE WIRE ANNOUNCES FIRST QUARTER RESULTS
MCKINNEY, TX - Encore Wire Corporation (NASDAQ/NMS: WIRE) today reported
financial results for the quarter ended March 31, 2005.
Net sales for the first quarter of 2005 were $137.2 million compared to $158.9
million during the first quarter of 2004. The $158.9 million in net sales in the
first quarter of 2004 is the quarterly record for Encore. Net income for the
first quarter of 2005 was $1.0 million versus $13.3 million in the first quarter
of 2004. Fully diluted net income per common share was $0.04 in the first
quarter of 2005 compared to $0.56 per share in the first quarter of 2004.
Results for the first quarter of 2005 include an adjustment to reduce deferred
tax liabilities by approximately $0.8 million, which was finalized by the
Company in its tax provision review. This adjustment increased net income for
the quarter ended March 31, 2005 by $0.8 million or $0.03 per share. Sales
prices for wire rose 3% in the first quarter of 2005 versus the first quarter of
2004, but did not keep pace with the cost of raw copper, which increased 23% in
the year over year comparison, dramatically compressing gross margins. Unit
volume declined 16% in the first quarter of 2005 versus the strong first quarter
of 2004.
Commenting on the quarter ended March 31, 2005, Vincent A. Rego, Company
Chairman and CEO remarked, "The building wire industry and Encore Wire
experienced a difficult quarter to begin 2005. The comparisons to the record
first quarter of 2004 must be looked at in the context of current conditions.
The U.S. economy appears to have hit what Wall Street and the Federal Reserve
are calling a "soft patch" in the first quarter. The majority of the U.S. also
experienced extremely wet weather during the first quarter, delaying many
construction projects. More importantly for us, there has been a great deal of
pricing volatility in the wire markets. Our competitors demonstrated a
proclivity for cutting prices to obtain orders in this soft period. It is
unusual to see this type of action in the marketplace in the face of strong
copper prices, which have historically translated into strong margins in our
industry. In all my years in this industry, I cannot recall ever seeing such low
margins in an environment of such strong copper costs. Nevertheless, we believe
that the order shortfall and price volatility are temporary conditions. Our
plants continue to operate at efficient operating cost levels as we continue to
maintain and enhance stringent cost controls. Our debt rose $16.2 million in the
quarter, driven by a working capital increase of $17.3 million and capital
expenditures of $2.6 million. We will continue to ensure our balance sheet
remains strong. We continue to take a long-term focus as evidenced by the recent
announcement of our expansion into the armored cable market. This natural
extension of our product line has significant long-term potential to grow the
sales and earnings of Encore Wire. We thank our shareholders 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.
ENCORE WIRE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
(UNAUDITED)
<Table>
<Caption>
QUARTER ENDED MARCH 31,
205 2004
------------------ -------------------
Net Sales $ 137,193 100.0% $ 158,942 100.0%
Cost of Sales 126,446 92.2% 126,021 79.3%
--------- ------ --------- ------
Gross Profit 10,747 7.8% 32,921 20.7%
Selling, General and
Administrative Expenses 9,587 7.0% 11,218 7.1%
--------- ------ --------- ------
Operating Income 1,160 0.8% 21,703 13.7%
Net Interest & Other Expense 832 0.6% 633 0.4%
--------- ------ --------- ------
Income before Income Taxes 328 0.2% 21,070 13.3%
Income Taxes (709) -0.5% 7,805 4.9%
--------- ------ --------- ------
Net Income $ 1,037 0.8% $ 13,265 8.3%
========= ====== ========= ======
Basic Earnings Per Share $ 0.04 $ 0.58
========= ========
Diluted Earnings Per Share $ 0.04 $ 0.56
========= ========
Weighted Average Number of
Common and Common
Equivalent Shares Outstanding:
-Basic
23,106 22,812
========= ========
-Diluted
23,427 23,517
========= ========
</Table>
ENCORE WIRE CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<Table>
<Caption>
MARCH 31, DECEMBER 31,
2005 2004
--------- ------------
ASSETS
Current Assets
Cash $ 2,289 $ 2,640
Receivables, net 103,889 108,752
Inventories 48,014 39,111
Prepaid Expenses and Other 19,017 11,661
--------- ---------
Total Current Assets 173,209 162,164
Property, Plant and Equipment, net 87,866 88,679
Other Assets 123 672
--------- ---------
Total Assets $ 261,198 $ 251,515
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable $ 14,781 $ 15,090
Accrued Liabilities and Other 8,406 14,392
--------- ---------
Total Current Liabilities 23,187 29,482
Long Term Liabilities
Note Payable 66,000 49,836
Non-Current Deferred Income Taxes 11,412 12,653
--------- ---------
Total Long Term Liabilities 77,412 62,489
Total Liabilities 100,599 91,971
Stockholders' Equity
Common Stock 259 259
Additional Paid in Capital 38,038 38,020
Treasury Stock (15,275) (15,275)
Retained Earnings 137,577 136,540
--------- ---------
Total Stockholders' Equity 160,599 159,544
--------- ---------
Total Liabilities and Stockholders' Equity $ 261,198 $ 251,515
========= =========
</Table>