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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April 22, 2009 |
1329 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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Vice President & CFO |
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For Immediate Release |
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ENCORE WIRE REPORTS FIRST QUARTER RESULTS
MCKINNEY, TX — Encore Wire Corporation (NASDAQ Global Select: WIRE) today announced results for the
first quarter of 2009.
Net sales for the quarter ended March 31, 2009 were $144.5 million compared to $281.8 million
during the first quarter of 2008. Net income for the first quarter of 2009 was $4.6 million versus
$13.6 million in the first quarter of 2008. Fully diluted net earnings per common share were $0.20
in the first quarter of 2009 versus $0.58 in the first quarter of 2008.
On a sequential quarter comparison, net sales for the first quarter of 2009 were $144.5 million
versus $180.2 million during the fourth quarter of 2008. Net income for the first quarter of 2009
was $4.6 million versus $16.7 million in the fourth quarter of 2008. Fully diluted net earnings
per common share were $0.20 in the first quarter of 2009 versus $0.72 in the fourth quarter of
2008.
Commenting on the results, Daniel L. Jones, President and Chief Executive Officer of Encore Wire
Corporation, said, “We are pleased to announce these 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 industry unit
volumes as it has over the last two to three years. Despite the abundance of negative news in the
media, our unit volumes were down only 4.0% from the first quarter of 2008 to the first quarter of
2009, and increased 8.5% in the first quarter of 2009 versus the fourth quarter of 2008. The
current financial crisis has raised uncertainty amongst builders and buyers of buildings across
America. This uncertainty has also affected our competitors and created a volatile pricing
environment in our industry that compressed the spread between what we paid for a pound of copper
versus what we were able to charge for wire that contained a pound of copper. In the first quarter
of 2009, this spread fell by 23% versus the first quarter of 2008 and it fell by 41% versus the
fourth quarter of 2008. We attempted to lead the industry with several price increases during the
quarter, but met limited success, as the average price of wire sold dropped 26% while copper costs
declined only 16% on a sequential quarter basis. We believe our superior order fill rates are as
important as ever, as our electrical distributor customers are holding lean inventories in the
field. As orders come in from electrical contractors, the distributors can count on our order fill
rates to ensure quick deliveries from coast to coast.
We continue to maintain our strong balance sheet. The only long-term debt we have as of March 31,
2009, is $100 million in long-term notes due in 2011, with our $150 million revolving line of
credit at a zero balance. In addition, we had $230.7 million in cash as of March 31, 2009. We
also declared our tenth consecutive quarterly cash dividend during the first quarter of 2009.
With our exceptionally strong balance sheet, we have the capability to approach the future
confidently. 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 than most when market conditions
improve. We thank our employees and associates for their tremendous efforts and our stockholders
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.
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 2008 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:
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3 Months Ended March 31, |
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2009 |
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2008 |
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Net Income |
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4,616 |
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13,619 |
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Income Tax Expense |
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2,323 |
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6,652 |
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Interest Expense |
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870 |
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1,367 |
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Depreciation and Amortization |
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3,470 |
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3,482 |
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EBITDA |
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$ |
11,279 |
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$ |
25,120 |
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