EXHIBIT 99.1
[Encore Wire Corporation Logo Omitted]
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| Encore Wire Corporation
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PRESS RELEASE
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February 6, 2007 |
| 1410 Millwood Road |
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| McKinney, Texas 75069
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Contact:
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Frank J. Bilban |
| 972-562-9473
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For Immediate Release
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Vice President & CFO |
ENCORE WIRE REPORTS 2006 RESULTS
MCKINNEY, TX — Encore Wire Corporation (NASDAQ Global Select: WIRE) announced today that 2006
fiscal year sales and earnings set new Company records.
Net sales for the year ended December 31, 2006 increased $491.2 million or 64.8% to a record $1.249
billion compared to $758.1 million during 2005. Higher prices for building wire sold in 2006,
driven by higher copper costs, accounted for the increase in net sales dollars versus 2005. Net
income for the year ended December 31, 2006 increased 129.9% to a record $115.1 million versus
$50.1 million in 2005. Fully diluted net earnings per common share were a record $4.86 in fiscal
year 2006 eclipsing the previous record of $2.13 set in 2005.
Net sales for the fourth quarter of the year ended December 31, 2006 were $262.3 million compared
to $244.2 million during the fourth quarter of 2005. Net income for the fourth quarter of 2006 was
$6.2 million versus $35.4 million in the fourth quarter of 2005. Fully diluted net earnings per
common share were $0.26 in the fourth quarter of 2006 versus $1.50 in the fourth quarter of 2005.
Commenting on the results, Daniel L. Jones, President and Chief Executive Officer of Encore Wire
Corporation, said, “We are pleased to announce new records for sales and earnings for the full year
of 2006. We achieved numerous milestones in 2006 including $1.25 billion-dollars in sales and $115
million in net income. Our shareholders’ equity increased by $116.6 million in 2006 to $327.1
million. We also declared our first cash dividend. As commodity prices softened in the fourth
quarter our working capital requirements were reduced enabling us to pay down our debt $85 million
during the quarter and still have $24.6 million in cash at the end of the year. The only bank debt
we have as of December 31, 2006, are long-term notes. Our balance sheet is solid with a
conservative 31% debt to equity ratio. It should be noted that our industry provides customers
extended terms as a normal course of business. If we sold on thirty-day terms as many other
industries do, Encore Wire could have zero bank debt.
We are not pleased with the margin compression we experienced in the fourth quarter. Margins have
been cut by competitive pricing pressure in our industry. Copper prices have been trending down
since posting a COMEX high close of $4.07 on May 23, 2006 with a low close of $2.83 on December 22,
2006. In response to the declining copper prices and the much-publicized slowdown in residential
construction our industry has cut wire prices faster than copper prices have fallen, resulting in
compressed margins and net earnings. We have seen these conditions before and will focus on our
industry leading order fill rates and our exceptional product offerings featuring commercial wire
in true colors and our new armored cable line. Our low cost structure and strong balance sheet
have enabled us to withstand these periods in the past, and we believe we will emerge stronger as
conditions improve. For the year 2006, our total unit volume measured in copper pounds shipped was
down 4.5% versus 2005. However, our commercial wire unit volume was up 2% in fiscal year 2006
versus fiscal year 2005, comparing favorably to industry data. Commercial wire unit sales for the
industry were down 5.1% in fiscal year 2006 versus 2005 according to “NEMA” (the National
Electrical Manufacturers
Association). Our residential wire unit volume was down 15.5% versus 2005. NEMA data is not
available for residential unit volume. Our unit volume mix in 2006 consisted of 67% commercial and
33% residential wire.
Our new armored cable plant is operational and we are producing a broad range of types and sizes to
allow us to maintain our historically high order fill rates as we roll this product line out
nationally in 2007. We will continue to manage the Company to grow sales and earnings while
maintaining our historically strong and conservative balance sheet. We also thank our employees
and associates for their tremendous efforts and our stockholders for their 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.