EXHIBIT 99.1
(ENCORE WIRE LOGO)

Encore Wire Corporation
1410 Millwood Road
McKinney, Texas 75069
972-562-9473
PRESS RELEASE
     
 
  October 23, 2007
 
    
Contact:
  Frank J. Bilban
Vice President & CFO


For Immediate Release
ENCORE WIRE REPORTS THIRD QUARTER RESULTS
MCKINNEY, TX — Encore Wire Corporation (NASDAQ Global Select: WIRE) today announced results for the third quarter of 2007.
Net sales for the quarter ended September 30, 2007 were $308.5 million compared to $372.9 million during the third quarter of 2006. Net income for the third quarter of 2007 was $5.8 million versus $35.8 million in the third quarter of 2006. Fully diluted net earnings per common share were $0.24 in the third quarter of 2007 versus $1.51 in the third quarter of 2006.
Net sales for the first nine months of 2007 were $902.8 million compared to $987.0 million during the first nine months of 2006. Net income for the first nine months of 2007 was $31.9 million versus $109.0 million in the first nine months of 2006. Fully diluted net income per common share was $1.35 in the first nine months of 2007 versus $4.60 in the first nine months of 2006.
On a sequential quarter comparison, net sales for the third quarter of 2007 were $308.5 million versus $333.6 million during the second quarter of 2007. Net income for the third quarter of 2007 was $5.8 million versus $19.7 million in the second quarter of 2007. Fully diluted net income per common share was $0.24 in the third quarter of 2007 versus $0.83 in the second quarter of 2007.
Commenting on the results, Daniel L. Jones, President and Chief Executive Officer of Encore Wire Corporation, said, “We are pleased to announce a profitable quarter in the midst of the tough competitive environment we are experiencing in our industry. The building wire industry has endured low margins in the last four quarters, having abated only in the second quarter of 2007. Despite strong copper prices, margins in the building wire industry continue to be compressed. Certain competitors continue to respond to the slowdown in residential construction by cutting wire prices in an attempt to maintain market shares, compressing margins below our expectations at this level of copper prices. Our unit volume shipped on a year to date basis is holding up fairly well, despite the slowdown in residential construction. Residential wire unit sales are down 15.2% in the first three quarters of 2007 versus the same period in 2006, but commercial wire unit sales are up 0.4% and armored cable unit sales are up 843.2%. As a result, our total unit volume shipped, measured in pounds of copper contained in the wire, is down only 1.7% in the first three quarters of 2007 versus the first three quarters of 2006. Encore’s first armored cable shipments were made in the third quarter of 2006. We believe we have sacrificed some unit volume in 2007 as we try to sell in a disciplined manner as one of the leaders in the industry and avoid cutting prices to obtain volume.

 

 

We have other developments of note. The only long-term debt we have as of September 30, 2007, is $100 million in long-term notes due in 2011, with our $200 million revolving line of credit paid down to zero. In addition, we have $59.2 million in cash as of September 30, 2007. Our balance sheet has a conservative 27.9% debt to equity ratio. We also declared our fourth consecutive quarterly cash dividend during the third quarter of 2007.
We will continue to focus on our order fill rates and 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 tough periods in the past, and we believe we will emerge stronger if market conditions improve. 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.

 

 

Encore Wire Corporation
1329 Millwood Road
McKinney, Texas 75069
(972) 562-9473
Condensed Consolidated Balance Sheets
(In Thousands)
(Unaudited)
                 
    September 30,     December 31,  
    2007     2006  
ASSETS
                
 
                
Current Assets
                
Cash
   $ 59,243     $ 24,603  
Receivables, net
     246,502       214,963  
Inventories
     89,286       103,947  
Prepaid Expenses and Other
     12,423       27,537  
 
            
Total Current Assets
     407,454       371,050  
 
                
Property, Plant and Equipment, net
     114,479       102,987  
 
                
Other Assets
     120       120  
 
            
 
                
Total Assets
   $ 522,053     $ 474,157  
 
            
 
                
LIABILITIES AND STOCKHOLDERS’ EQUITY
                
 
                
Current Liabilities
                
Accounts Payable
   $ 24,951     $ 13,413  
Accrued Liabilities and Other
     29,546       23,772  
 
            
Total Current Liabilities
     54,497       37,185  
 
                
Long Term Liabilities
                
Note Payable
     99,676       98,974  
Other Long Term Liabilities
     324       1,026  
Non-Current Deferred Income Taxes
     9,031       9,851  
 
            
Total Long Term Liabilities
     109,031       109,851  
 
            
 
                
Total Liabilities
     163,528       147,036  
 
                
Stockholders’ Equity
                
Common Stock
     261       260  
Additional Paid in Capital
     41,749       40,849  
Treasury Stock
     (15,275 )     (15,275 )
Retained Earnings
     331,790       301,287  
 
            
Total Stockholders’ Equity
     358,525       327,121  
 
            
 
                
Total Liabilities and Stockholders’ Equity
   $ 522,053     $ 474,157  
 
            

 

 

Encore Wire Corporation
1329 Millwood Road
McKinney, Texas 75069
(972) 562-9473
Condensed Consolidated Statements of Income
(In Thousands)
(Unaudited)
                                                                 
    Quarter Ended September 30,     Nine Months Ended September 30,  
    2007     2006     2007     2006  
 
                                                                
Net Sales
   $ 308,481       100.0 %   $ 372,915       100.0 %   $ 902,845       100.0 %   $ 987,011       100.0 %
Cost of Sales
     282,962       91.7 %     298,649       80.1 %     805,020       89.2 %     766,520       77.7 %
 
                                                
 
                                                                
Gross Profit
     25,519       8.3 %     74,266       19.9 %     97,825       10.8 %     220,491       22.3 %
 
                                                                
Selling, General and Administrative Expenses
     15,324       5.0 %     16,589       4.4 %     45,739       5.1 %     46,760       4.7 %
 
                                                
 
                                                                
Operating Income
     10,195       3.3 %     57,677       15.5 %     52,086       5.8 %     173,731       17.6 %
 
                                                                
Net Interest & Other Expense
     922       0.3 %     2,530       0.7 %     3,227       0.4 %     5,608       0.6 %
 
                                                
 
                                                                
Income before Income Taxes
     9,273       3.0 %     55,147       14.8 %     48,859       5.4 %     168,123       17.0 %
 
                                                                
Income Taxes
     3,518       1.1 %     19,386       5.2 %     16,955       1.9 %     59,166       6.0 %
 
                                                
 
                                                                
Net Income
   $ 5,755       1.9 %   $ 35,761       9.6 %   $ 31,904       3.5 %   $ 108,957       11.0 %
 
                                                
 
                                                                
Basic Earnings Per Share
   $ 0.25             $ 1.54             $ 1.37             $ 4.69          
 
                                                        
 
                                                                
Diluted Earnings Per Share
   $ 0.24             $ 1.51             $ 1.35             $ 4.60          
 
                                                        
 
                                                                
Weighted Average Number of Common and Common Equivalent Shares Outstanding:
                                                                
-Basic
     23,362               23,267               23,344               23,248          
 
                                                        
 
                                                                
-Diluted
     23,708               23,680               23,706               23,666          
 
                                                        
 
                                                                
Dividend Paid per Share
   $ 0.02             $ —             $ 0.06             $ —