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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October 21, 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 |
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 and nine months ended September 30, 2009.
Net sales for the third quarter ended September 30, 2009 were $168.7 million compared to $296.3
million during the third quarter of 2008. Lower prices for building wire sold in the quarter ended
September 30, 2009 accounted for much of the decrease in net sales dollars, declining 25.1% per
copper pound sold versus the same period in 2008. Unit sales in the third quarter of 2009
decreased 24.0% versus the third quarter of 2008. Sales prices fell primarily due to lower copper
prices and building wire industry competition. Net income for the third quarter of 2009 was $0.3
million versus $8.1 million in the third quarter of 2008. Fully diluted net earnings per common
share were $0.01 in the third quarter of 2009 versus $0.34 in the third quarter of 2008.
Net sales for the nine months ended September 30, 2009 were $472.5 million compared to $900.9
million during the same period in 2008. Lower prices for building wire sold in the nine months
ended September 30, 2009 accounted for most of the decrease in net sales dollars, declining 37.4%
versus the same period in 2008. Unit volume in the nine months ended September 30, 2009 decreased
16.3% versus the same period in 2008. Net income for the nine months ended September 30, 2009 was
$5.5 million versus $23.0 million in the same period in 2008. Fully diluted net earnings per
common share were $0.24 for the nine months ended September 30, 2009 versus $0.98 in the same
period in 2008.
On a sequential quarter comparison, net sales for the third quarter of 2009 were $168.7 million
versus $159.4 million during the second quarter of 2009. Unit volume decreased 9.2% on a
sequential quarter comparison. Net income for the third quarter of 2009 was $0.3 million versus
$0.6 million in the second quarter of 2009. Fully diluted net income per common share was $0.01 in
the third quarter of 2009 versus $0.03 in the second 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. The current recession has slowed the
rate of construction activity throughout America. The housing sector has been trending down for
over three years, and commercial construction has been slowing since the beginning of 2008. Unit
volume decreases caused by the slowdown in construction have 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 third quarter of 2009,
this spread fell by 24.3% versus the third quarter of 2008 and it fell by 19.6% for the first nine
months of 2009 versus the first nine months of 2008. We attempted to lead the industry with
several price increases during the quarter, but met limited success, as the average spread remained
almost unchanged on a sequential quarter basis. We have managed to break even in this difficult
environment due to our low cost business model and aggressive cost cutting in all facets of our
operation. 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.
Our balance sheet is very strong. The only long-term debt we have as of September 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 $213.6 million in cash as of September 30, 2009, greatly exceeding our
long-term debt. We also declared our twelfth consecutive quarterly cash dividend during the third
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 September 30, |
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9 Months Ended September 30, |
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| $’s in 000’s |
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2009 |
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2008 |
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2009 |
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2008 |
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Net Income |
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325 |
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8,077 |
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$ |
5,540 |
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$ |
23,027 |
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Income Taxes |
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(215 |
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4,101 |
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2,162 |
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11,436 |
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Interest Expense |
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744 |
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1,051 |
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2,441 |
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3,472 |
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Depreciation
and Amortization |
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3,346 |
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3,320 |
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10,330 |
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10,298 |
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EBITDA |
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$ |
4,200 |
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$ |
16,549 |
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$ |
20,473 |
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$ |
48,233 |
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