Encore Wire Reports Fourth Quarter Results

  Encore Wire Reports Fourth Quarter Results

Business Wire

MCKINNEY, Texas -- February 20, 2013

Encore Wire Corporation (NASDAQ Global Select: WIRE) today announced results
for the fourth quarter and full year ended December 31, 2012.

Net sales for the fourth quarter ended December 31, 2012 were $258.0 million
compared to $248.3 million during the fourth quarter of 2011. Prices for
copper building wire sold in the quarter ended December 31, 2012 declined 1.8%
versus the fourth quarter of 2011. However, the average price of copper
purchased during the quarter rose 4.9% in the fourth quarter of 2012 versus
the fourth quarter of 2011. Copper unit volume, measured in pounds of copper
contained in the wire sold, increased 2.2% in the fourth quarter of 2012
versus the fourth quarter of 2011. Aluminum building wire sales constituted
5.1% of net sales dollars for the fourth quarter of 2012. Net income for the
fourth quarter of 2012 was $5.2 million versus $16.3 million in the fourth
quarter of 2011. Fully diluted net earnings per common share were $0.25 in the
fourth quarter of 2012 versus $0.69 in the fourth quarter of 2011.

Net sales for the year ended December 31, 2012 were $1.072 billion compared to
$1.180 billion during the same period in 2011. Lower prices for building wire
sold in the year ended December 31, 2012 accounted for most of the decrease in
net sales dollars, decreasing 10.4% per copper pound versus the same period in
2011. Copper unit volume in the year ended December 31, 2012 decreased 1.3%
versus the same period in 2011. The average price of copper purchased during
the year fell 10.7% in 2012 versus 2011, albeit on a lower absolute value than
building wire prices. Aluminum building wire sales constituted 3.6% of net
sales dollars for the year. Net income for the year ended December 31, 2012
was $19.8 million versus $50.1 million in the same period in 2011. Fully
diluted net earnings per common share were $0.91 for the year ended December
31, 2012 versus $2.14 in the same period in 2011.

On a sequential quarter comparison, net sales for the fourth quarter of 2012
were $258.0 million versus $269.2 million during the third quarter of 2012.
Copper unit volume decreased 9.4% on a sequential quarter comparison. Net
income for the fourth quarter of 2012 was $5.2 million versus $5.5 million in
the third quarter of 2012. Fully diluted net income per common share was $0.25
in the fourth quarter of 2012 versus $0.27 in the third quarter of 2012.

Commenting on the results, Daniel L. Jones, President and Chief Executive
Officer of Encore Wire Corporation, said, “The fourth quarter of this year was
another fairly steady volume quarter, considering the time of the year and the
current economic and construction industry environment. We believe our
expansion of product offerings over the last six years to our existing
customer base has been critical to maintaining and perhaps boosting our market
share. As we have previously noted, one of the key metrics to our earnings is
the ‘spread’ between the price of wire sold and cost of raw copper purchased
in any given period. That spread increased 6.4% in the fourth quarter of 2012
versus the third quarter of 2012, while our copper unit volume shipped in the
fourth quarter of 2012 decreased 9.4% versus the third quarter of 2012. This
spread increase helped us to produce similar earnings in both of the last two
quarters, despite the volume decrease. Volumes in the fourth quarter are
generally at their winter and holiday low point. Relatively small movements in
the spread can affect our earnings per share and were a positive influence on
a sequential quarterly comparison. Conversely, spreads were down 17.0% in the
fourth quarter of 2012 versus the fourth quarter of 2011 and down 9.4% on an
annual basis in 2012 versus 2011.

"Our new aluminum building wire plant began to produce wire in the fourth
quarter. The last of the equipment is being delivered and installed in the
first quarter of 2013. We are expanding our distribution of aluminum wire to
all of our sales reps and customers in the first quarter and expect to see
sales of these products gradually increase over the course of 2013.

"We continue to support industry price increases in an effort to maintain and
increase margins. 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. We have been able to accomplish this despite holding what
are historically lean inventories for us.

"Our balance sheet is very strong. We have no long term debt, and our
revolving line of credit is paid down to zero. In addition, we had $33.9
million in cash at the end of the quarter. We also declared another quarterly
cash dividend during the quarter.

"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
outstanding effort and our shareholders for their continued support during
these challenging times.”

Encore Wire Corporation is a leading manufacturer of a broad range of
electrical building wire for interior wiring in commercial and industrial
buildings, homes, apartments, and manufactured housing. The Company is focused
on maintaining a high level of customer service with low-cost production and
the addition of new products that complement its current product line. 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 2011 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,   12 Months Ended December
                                                      31,
$’s in 000’s            2012            2011         2012         2011
                                                                    
Net Income              $   5,220        $  16,295    $  19,811     $  50,131
Income Tax Expense          2,265           8,411        9,565         26,064
Interest Expense            75              79           313           322
Depreciation and           3,446          3,495       14,280       13,728
Amortization
                                                                    
EBITDA                  $   11,006       $  28,280    $  43,969     $  90,245

                                                         
                                                            
Encore Wire Corporation
Condensed Consolidated Balance Sheets
(In Thousands)
(Unaudited)
                                                            
                                             December 31,   December 31,
                                             2012           2011
ASSETS
                                                            
Current Assets
Cash                                         $  33,883      $  112,298
Receivables, net                                197,980        199,366
Inventories                                     63,656         63,491
Prepaid Expenses and Other                     11,331       1,899   
Total Current Assets                            306,850        377,054
                                                            
Property, Plant and Equipment, net              164,924        138,832
                                                            
Other Assets                                   693          260     
                                                            
Total Assets                                 $  472,467    $  516,146 
                                                            
LIABILITIES AND STOCKHOLDERS' EQUITY
                                                            
Current Liabilities
Accounts Payable                             $  20,112      $  14,676
Accrued Liabilities and Other                  25,245       27,894  
Total Current Liabilities                       45,357         42,570
                                                            
Long Term Liabilities
Non-Current Deferred Income Taxes              16,946       15,833  
Total Long Term Liabilities                    16,946       15,833  
                                                            
Total Liabilities                               62,303         58,403
                                                            
Stockholders' Equity
Common Stock                                    266            266
Additional Paid in Capital                      48,298         47,342
Treasury Stock                                  (88,134 )      (21,496 )
Retained Earnings                              449,734      431,631 
Total Stockholders' Equity                     410,164      457,743 
                                                            
Total Liabilities and Stockholders' Equity   $  472,467    $  516,146 

                                                                                              
                                                                                                       
Encore Wire Corporation
Condensed Consolidated Statements of Income
(In Thousands, Except Per Share Data)
(Unaudited)
                                                                                                       
                 Quarter Ended December 31,                    Year Ended December 31,
                 2012                  2011                    2012                      2011
                                                                                                       
Net Sales        $ 258,000   100.0 %   $ 248,297     100.0 %   $ 1,072,348     100.0 %   $ 1,180,474   100.0 %
Cost of Sales     235,661   91.3  %    209,670    84.4  %    982,021      91.6  %    1,039,619   88.1  %
                                                                                                       
Gross Profit       22,339    8.7   %     38,627      15.6  %     90,327        8.4   %     140,855     11.9  %
                                                                                                       
Selling,
General and
Administrative    14,852    5.8   %    13,922     5.6   %    60,981       5.7   %    64,577      5.5   %
Expenses
                                                                                                       
Operating          7,487     2.9   %     24,705      9.9   %     29,346        2.7   %     76,278      6.5   %
Income
                                                                                                       
Net Interest &    2         0.0   %    (1      )   0.0   %    (30       )   0.0   %    83          0.0   %
Other Expense
                                                                                                       
Income before      7,485     2.9   %     24,706      10.0  %     29,376        2.7   %     76,195      6.5   %
Income Taxes
                                                                                                       
Income Taxes      2,265     0.9   %    8,411      3.4   %    9,565        0.9   %    26,064      2.2   %
                                                                                                       
Net Income       $ 5,220     2.0   %   $ 16,295     6.6   %   $ 19,811       1.8   %   $ 50,131      4.2   %
(Loss)
                                                                                                       
                                                                                                       
Basic Earnings   $ 0.25                $ 0.70                 $ 0.91                   $ 2.15
Per Share
                                                                                                       
Diluted
Earnings Per     $ 0.25                $ 0.69                 $ 0.91                   $ 2.14
Share
                                                                                                       
Weighted
Average Number
of
Common and
Common
Equivalent
Shares
Outstanding:
-Basic            20,661               23,423                21,680                  23,300
                                                                                                       
-Diluted          20,723               23,457                21,732                  23,410
                                                                                                       
                                                                                                       
Dividends
Declared per     $ 0.02                $ 0.02                 $ 0.08                   $ 0.08
Share

Contact:

Encore Wire Corporation
Frank J. Bilban, 972-562-9473
Vice President & CFO
 
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