EXHIBIT 99.1
[Encore Wire Corporation Logo Omitted]
| |
|
|
|
|
|
|
Encore Wire Corporation
|
|
PRESS RELEASE
|
|
|
|
February 9, 2009 |
1329 Millwood Road |
|
|
|
|
|
|
McKinney, Texas 75069
|
|
|
|
Contact:
|
|
Frank J. Bilban |
972-562-9473
|
|
|
|
|
|
Vice President & CFO |
|
|
For Immediate Release |
|
|
|
|
ENCORE WIRE REPORTS FOURTH QUARTER RESULTS
MCKINNEY, TX Encore Wire Corporation (NASDAQ Global Select: WIRE) announced results today for the
fourth quarter of 2008.
Net sales for the fourth quarter of the year ended December 31, 2008 were $180.2 million compared
to $281.9 million during the fourth quarter of 2007. Net income for the fourth quarter of 2008 was
$16.7 million versus a loss of $1.1 million in 2007. Fully diluted net earnings per common share
were $0.72 in the fourth quarter of 2008 versus a loss of $0.05 in the fourth quarter of 2007.
Gross margins increased 363% to 22.2% versus 4.8% in 2007. The 63.9% decline in dollar sales from
the fourth quarter of 2007 to fourth quarter of 2008 was due to the average selling price declining
21% coupled with a 19% decline in unit sales. It should be noted that the fourth quarter of 2007
was a strong quarter in terms of unit sales. Average selling prices of wire and corresponding net
sales fell due to declining copper prices in the fourth quarter. The average cost of copper
purchased fell 43% in the fourth quarter of 2008 versus the fourth quarter of 2007.
On a sequential quarter comparison, net sales for the fourth quarter of 2008 were $180.2 million
versus $296.3 million during the third quarter of 2008. Net income for the fourth quarter of 2008
increased 107% to $16.7 million versus $8.1 million in the third quarter of 2008. Fully diluted
net income per common share was $0.72 in the fourth quarter of 2008 versus $0.34 in the third
quarter of 2008.
Net sales for the year ended December 31, 2008 were $1.081 billion compared to $1.185 billion
during 2007. Net income for the year ended December 31, 2008 was $39.8 million versus $30.8
million in 2007. Fully diluted net earnings per common share increased 31% to $1.70 for the year
ended December 31, 2008 versus $1.30 in 2007.
Commenting on the results, Daniel L. Jones, President and Chief Executive Officer of Encore Wire
Corporation, said, “We are pleased to announce very strong earnings in the midst of the tough
competitive environment we are experiencing in our industry and the slump in the overall U.S.
economy. The slowdown in construction activity in the United States continues to adversely impact
unit volume in our industry as it has over the last two plus years. However, we were able to
increase our margins significantly despite declining unit volumes and copper prices. We are
pleased that our industry has exhibited some measure of pricing discipline in response to these two
trends. Copper prices were volatile during the second half of 2008, starting at a COMEX close
price of $3.92 per pound on July 1 and closing at $1.39 per pound on December 31. Volatility of
that magnitude and the uncertainty it generates tends to disrupt our customers’ normal buying
patterns and has historically contributed to competitive pricing pressure. We believe we
sacrificed unit volume in 2008, acting as an industry leader by exerting pricing discipline,
enabling us to grow profits in a down market.
“Our unit volume shipped in the fourth quarter of 2008 decreased over 19% versus the fourth quarter
of 2007. Our year to date unit volume is down 12%. The average selling price of wire containing a
pound of copper decreased by 20.9% while the average cost of a pound of copper purchased decreased
42.9% in the fourth quarter of 2008 versus the fourth quarter of 2007. This “spread” increased by
72.7% in the fourth quarter of 2008 compared to the fourth quarter of 2007 and increased by 33.3%
on a sequential quarter comparison and 19.3% on a total year over year basis. These increased
spreads drove our gross margin increase.
“Our balance sheet remains strong. The only long-term debt we have as of December 31, 2008, is
$100 million in long-term notes due in 2011, with our $150 million revolving line of credit paid
down to zero. In addition, our $217.7 million cash balance as of December 31, 2008 is more than
double our long-term debt. We also declared our ninth consecutive quarterly cash dividend during
the fourth quarter of 2008.
“Our low cost structure and strong balance sheet have enabled us to withstand difficult periods in
the past, and we believe we will emerge stronger when market conditions improve. We thank our
employees and associates for their tremendous efforts and our stockholders for their continued
support during these challenging times.”
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 stockholder 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 2007 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 December 31, |
|
|
Year Ended December 31, |
|
| $’s in 000’s |
|
2008 |
|
|
2007 |
|
|
2008 |
|
|
2007 |
|
Net Income |
|
$ |
16,743 |
|
|
$ |
(1,108 |
) |
|
$ |
39,771 |
|
|
$ |
30,796 |
|
Income Tax Expense |
|
|
8,690 |
|
|
|
(941 |
) |
|
|
20,126 |
|
|
|
16,014 |
|
Interest Expense |
|
|
1,232 |
|
|
|
1,376 |
|
|
|
4,704 |
|
|
|
5,834 |
|
Depreciation and
Amortization |
|
|
3,355 |
|
|
|
3,478 |
|
|
|
13,652 |
|
|
|
13,463 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA |
|
$ |
30,020 |
|
|
$ |
2,805 |
|
|
$ |
78,253 |
|
|
$ |
66,107 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|