Encore Wire Corporation (NASDAQ Global Select: WIRE) today
announced results for the second quarter of 2021.
Second Quarter and YTD 2021 Highlights
- Second Quarter Earnings per diluted share of $8.82; YTD
Earnings per diluted share of $10.81
- Second Quarter Net income of $183.1 million; YTD Net income of
$224.2 million
- Copper volumes sold increased 33.4% over second quarter of
2020
- Cash on hand of $157.9 million as of June 30, 2021
- Current Ratio of 4.62 as of June 30, 2021
- No long-term debt and revolving credit line paid down to
zero
Net sales for the second quarter ended June 30, 2021 were $744.4
million compared to $253.6 million for the second quarter of 2020.
Copper unit volume, measured in pounds of copper contained in the
wire sold, increased 33.4% in the second quarter of 2021 versus the
second quarter of 2020.
Gross profit percentage for the second quarter of 2021 was 37.3%
compared to 14.4% in the second quarter of 2020. The average
selling price of wire per copper pound sold increased 129.6% in the
second quarter of 2021 versus the second quarter of 2020, while the
average cost of copper per pound purchased increased 73.5%. Net
income for the second quarter of 2021 was $183.1 million versus
$12.3 million in the second quarter of 2020. Fully diluted net
earnings per common share were $8.82 in the second quarter of 2021
versus $0.60 in the second quarter of 2020.
Net sales for the six months ended June 30, 2021 were $1.189
billion compared to $556.4 million for the six months ended June
30, 2020. Copper unit volume, measured in pounds of copper
contained in the wire sold, increased 16.2% in the six months ended
June 30, 2021 versus the six months ended June 30, 2020
Gross profit percentage for the six months ended June 30, 2021
was 30.4% compared to 14.8% for the six months ended June 30, 2020.
The average selling price of wire per copper pound sold increased
89.2% in the six months ended June 30, 2021 versus the six months
ended June 30, 2020, while the average cost of copper per pound
purchased increased 60.5% for the same period comparison. Net
income for the six months ended June 30, 2021 was $224.2 million
versus $31.0 million in the six months ended June 30, 2020. Fully
diluted net earnings per common share were $10.81 in the six months
ended June 30, 2021 versus $1.50 in the six months ended June 30,
2020.
On a sequential quarter comparison, net sales for the second
quarter of 2021 were $744.4 million versus $444.1 million during
the first quarter of 2021. Sales dollars increased due to a 47.7%
increase in the average selling price per pound of copper wire
sold, combined with a 15.1% unit volume increase of copper building
wire sold on a sequential quarter comparison.
Gross profit percentage for the second quarter of 2021 was 37.3%
compared to 19.0% in the first quarter of 2021. Copper wire sales
prices increased 47.7%, while the price of copper purchased
increased 13.2% in the second quarter of 2021 compared to the first
quarter of 2021. Net income for the second quarter of 2021 was
$183.1 million versus $41.2 million in the first quarter of 2021.
Fully diluted net income per common share was $8.82 in the second
quarter of 2021 versus $1.99 in the first quarter of 2021.
Aluminum wire represented 6.1% and 6.6%, respectively, of our
net sales in the quarter and six months ended June 30, 2021.
Commenting on the results, Daniel L. Jones, Chairman, President
and Chief Executive Officer of Encore Wire Corporation, said, “The
unprecedented results in the second quarter ended June 30, 2021 are
grounded in the rich history and core values of the Company.
Unbeatable customer service, nimble operations and quick deliveries
coast to coast. Our one-location, vertically-integrated business
model, strong management team, and deep raw material supplier
relationships allowed us to remain fully operational, while
maintaining our high standard for fill rates to meet surging demand
in the current environment. By continuing to meet this value
premise to our customers, we were able to increase copper volumes
sold over the first quarter of 2021. We believe we can sustain this
volume growth, compared to prior period levels, for the remainder
of 2021.
Copper unit volumes increased 33.4% on a comparative quarter
basis and 15.1% on a sequential quarter basis. Comex copper prices
experienced upward volatility throughout the second quarter,
peaking in May before pulling back slightly to end the quarter.
This upward volatility had a positive impact on spreads. Copper
spreads increased 234.0% on a comparative quarter basis and 109.2%
on a sequential quarter basis.
We believe Encore Wire remains well positioned to capture
additional market share and incremental growth in the current
economic environment. As we address the near-term challenges, we
remain focused on the long-term opportunities for our business. We
believe that our superior order fill rates and deep vertical
integration continue to enhance our competitive position. As orders
come in from electrical contractors, our distributors can continue
to depend on us for quick deliveries coast to coast. Our balance
sheet remains very strong. We have no long-term debt, and our
revolving line of credit is paid down to zero. In addition, we had
$157.9 million in cash at the end of the quarter. We also declared
a $0.02 cash dividend during the quarter.
Our two-phased expansion plan announced last year remains on
schedule. The new service center opened seamlessly in mid-May and
is fully operational today. Phase two, which is focused on
repurposing our now vacated distribution center to expand
manufacturing capacity and extend our market reach, is on schedule
for an early 2022 opening.
We have been under construction since inception and we continue
to grow today. The outstanding financial results through June 30th
have fortified our already strong balance sheet and will continue
to bolster cash reserves. Current market conditions have afforded
us the opportunity to accelerate our capital expenditure plans and
incrementally invest across our campus. We believe these
investments will broaden our position as a low-cost manufacturer in
the sector and further increase manufacturing capacity to
accelerate growth. The incremental spending in 2021 through 2023
will expand vertical integration in our manufacturing processes to
reduce costs as well as modernize select wire manufacturing
facilities to increase capacity and efficiency. Capital
expenditures are now expected to range from $150 - $170 million in
2021, $140 - $160 million in 2022, and $60 - $80 million in 2023.
We expect to fund these investments with existing cash reserves and
operating cash flows.
Our low-cost structure and strong balance sheet have allowed us
the nimbleness to adapt quickly to changing market conditions, 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.”
The health and safety of our employees and their families remain
our top priority, and we are following CDC guidelines to maintain
safe working conditions. The Company is unable to predict the
impact that COVID-19 may have on our financial position and
operating results in future periods. The duration or re-emergence
of the outbreak and its long-term impact on our business remain
uncertain.
The Company will host a conference call to discuss the second
quarter results on Wednesday, July 28, 2021, at 10:00 am Central
time. Hosting the call will be Daniel Jones, Chairman, President
and Chief Executive Officer, and Bret Eckert, Vice President and
Chief Financial Officer. To participate in the call, the dial-in
number is 800-993-8735, and the confirmation number is 50192034. In
order to be put through to the call, you will be required to give
the call screener your full name and your company name. Please call
in early to avoid being delayed by the information collection and
missing the start of the call. A replay of this conference call
will be accessible in the Investors section of our website,
www.encorewire.com, for a limited time.
Encore Wire Corporation is a leading manufacturer of a broad
range of electrical building wire for interior wiring in commercial
and industrial buildings, homes, apartments, and manufactured
housing. The Company is focused on maintaining a high level of
customer service with low-cost production and the addition of new
products that complement its current product line.
The matters discussed in this news release may include
forward-looking statements. 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, statements about the pricing environment of copper,
aluminum and other raw materials, the duration, magnitude and
impact of the ongoing COVID-19 global pandemic, 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 2020 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 June 30,
Six Months Ended June 30,
In Thousands
2021
2020
2021
2020
Net Income
$
183,053
$
12,347
$
224,242
$
30,955
Income Tax Expense
53,187
3,664
65,376
9,424
Interest Expense
102
60
185
119
Depreciation and Amortization
5,677
4,750
10,977
9,321
EBITDA
$
242,019
$
20,821
$
300,780
$
49,819
Encore Wire
Corporation
Balance Sheets
(In Thousands)
June 30, 2021
December 31, 2020
(Unaudited)
(Audited)
ASSETS
Current Assets
Cash and Cash Equivalents
$
157,872
$
183,123
Accounts Receivables, net
574,191
275,781
Inventories, net
87,920
92,322
Prepaid Expenses and Other
3,342
3,907
Total Current Assets
823,325
555,133
Property, Plant and Equipment, net
450,943
410,768
Other Assets
636
553
Total Assets
$
1,274,904
$
966,454
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Trade Accounts Payable
$
77,458
$
56,726
Accrued Liabilities and Other
100,633
36,866
Total Current Liabilities
178,091
93,592
Long-Term Liabilities
Deferred Income Taxes and Other
33,188
35,133
Total Long-Term Liabilities
33,188
35,133
Total Liabilities
211,279
128,725
Stockholders’ Equity
Common Stock
271
270
Additional Paid-in Capital
70,366
67,885
Treasury Stock, at cost
(111,718
)
(111,718
)
Retained Earnings
1,104,706
881,292
Total Stockholders’ Equity
1,063,625
837,729
Total Liabilities and Stockholders’
Equity
$
1,274,904
$
966,454
Encore Wire
Corporation
Statements of Income
(In thousands, except per share
data)
Quarter Ended June 30,
Six Months Ended June
30,
2021
2020
2021
2020
(Unaudited)
(Unaudited)
Net Sales
$
744,408
100.0
%
$
253,631
100.0
%
$
1,188,548
100.0
%
$
556,425
100.0
%
Cost of Goods Sold
467,066
62.7
%
217,132
85.6
%
826,702
69.6
%
474,153
85.2
%
Gross Profit
277,342
37.3
%
36,499
14.4
%
361,846
30.4
%
82,272
14.8
%
Selling, General and Administrative
Expenses
41,140
5.5
%
20,755
8.2
%
72,292
6.1
%
43,044
7.7
%
Operating Income
236,202
31.7
%
15,744
6.2
%
289,554
24.4
%
39,228
7.1
%
Net Interest & Other Income
38
—
%
267
0.1
%
64
—
%
1,151
0.2
%
Income before Income Taxes
236,240
31.7
%
16,011
6.3
%
289,618
24.4
%
40,379
7.3
%
Provision for Income Taxes
53,187
7.1
%
3,664
1.4
%
65,376
5.5
%
9,424
1.7
%
Net Income
$
183,053
24.6
%
$
12,347
4.9
%
$
224,242
18.9
%
$
30,955
5.6
%
Basic Earnings Per Share
$
8.89
$
0.60
$
10.90
$
1.50
Diluted Earnings Per Share
$
8.82
$
0.60
$
10.81
$
1.50
Weighted Average Common and Common
Equivalent Shares Outstanding:
Basic
20,581
20,496
20,574
20,646
Diluted
20,763
20,537
20,741
20,696
Cash Dividends Declared per Share
$
0.02
$
0.02
$
0.04
$
0.04
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210727006141/en/
Bret J. Eckert Chief Financial Officer
972-562-9473
Encore Wire (NASDAQ:WIRE)
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