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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July 22, 2009 |
1329 Millwood Road |
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McKinney, Texas 75069
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Contact: |
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 SECOND QUARTER RESULTS
MCKINNEY, TX — Encore Wire Corporation (NASDAQ Global Select: WIRE) today announced results for the
second quarter and six months ended June 30, 2009.
Net sales for the second quarter ended June 30, 2009 were $159.4 million compared to $322.8 million
during the second quarter of 2008. Lower prices for building wire sold in the quarter ended June
30, 2009 accounted for most of the decrease in net sales dollars, declining 38.1% per copper pound
sold versus the same period in 2008. Unit sales in the second quarter of 2009 decreased 20.2%
versus the second quarter of 2008. Sales prices fell primarily due to lower copper prices and
building wire industry competition. Net income for the second quarter of 2009 was $0.6 million
versus $1.3 million in the second quarter of 2008. Fully diluted net earnings per common share
were $0.03 in the second quarter of 2009 versus $0.06 in the second quarter of 2008.
Net sales for the six months ended June 30, 2009 were $303.8 million compared to $604.6 million
during the same period in 2008. Lower prices for building wire sold in the six months ended June
30, 2009 accounted for most of the decrease in net sales dollars, declining 42.6% versus the same
period in 2008. Unit volume in the six months ended June 30, 2009 decreased 12.4% versus the same
period in 2008. Net income for the six months ended June 30, 2009 was $5.2 million versus $15.0
million in the same period in 2008. Fully diluted net earnings per common share were $0.22 for the
six months ended June 30, 2009 versus $0.64 in the same period in 2008.
On a sequential quarter comparison, net sales for the second quarter of 2009 were $159.4 million
versus $144.5 million during the first quarter of 2009. Unit volume decreased 9.0% on a sequential
quarter comparison. Net income for the second quarter of 2009 was $0.6 million versus $4.6 million
in the first quarter of 2009. Fully diluted net income per common share was $0.03 in the second
quarter of 2009 versus $0.20 in the first quarter of 2009.
Commenting on the results, Daniel L. Jones, President and Chief Executive Officer of Encore Wire
Corporation, said, “The slowdown in construction activity in the United States continues to impact
our industry adversely as it has over the last three years. Our unit volume shipped in the second
quarter of 2009 decreased 9% versus the first quarter of 2009. It should be noted that this 9%
sequential unit decline compares to the first quarter of 2009, during which we had a 9% sequential
increase in units 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 second quarter of 2009, this spread fell by 9.4% versus
the second quarter of 2008 and it fell by 5.1% versus the first quarter of 2009. We attempted to
lead the industry with several price increases during the quarter, but met limited success, as the
average price of wire sold increased only 21% while copper costs increased 34% on a sequential
quarter basis. We believe our superior order fill
rates continue to enhance our competitive
position, 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.
Our balance sheet is very strong. The only long-term debt we have as of June 30, 2009, is $100
million in long-term notes due in 2011, with our revolving line of credit paid down to zero. In
addition, we have $232.3 million in cash as of June 30, 2009, greatly exceeding our long-term debt.
We also declared our eleventh consecutive quarterly cash dividend during the second quarter of
2009.
We understand that this is a cyclical industry and therefore we designed and manage our cost
structure and balance sheet accordingly. 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 than
most when market conditions improve. We thank our employees and associates for their tremendous
efforts and our shareholders 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 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 publicize 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 June 30, |
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6 Months Ended June 30, |
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2009 |
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2008 |
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2009 |
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2008 |
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Net Income |
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$ |
600 |
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$ |
1,331 |
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$ |
5,216 |
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$ |
14,950 |
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Income Tax Expense |
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54 |
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682 |
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2,377 |
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7,334 |
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Interest Expense |
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826 |
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1,055 |
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1,696 |
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2,422 |
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Depreciation and
Amortization |
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3,514 |
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3,496 |
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6,984 |
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6,978 |
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EBITDA |
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$ |
4,994 |
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$ |
6,564 |
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$ |
16,273 |
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$ |
31,684 |
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