Encore Wire (WIRE) Tops Q3 EPS by 42c, Revenue Beat

Encore Wire (NASDAQ: WIRE) reported Q3 EPS of $1.13, $0.42 better than the analyst estimate of $0.71. Revenue for the quarter came in at $340.7 million versus the consensus estimate of $302.86 million.

Commenting on the results, Daniel L. Jones, Chairman, President and Chief Executive Officer of Encore Wire Corporation, said, “We are very pleased with our highly improved results in the third quarter and on a year to date comparison. There are some key items to note. Net sales dollars increased significantly, in both the quarterly and nine month comparisons of 2018 to 2017. The increased top line was driven primarily by higher unit volumes. Unit volumes increased 16.1% in the third quarter of 2018 versus the third quarter of 2017. Margins increased in both the quarterly and nine month comparisons of 2018 versus 2017. One of the key metrics to our earnings is the “spread” between the price of copper wire sold and the cost of raw copper purchased in any given period. The copper spread increased 7.3% in the third quarter of 2018 versus the third quarter of 2017, and increased 10.7% on the nine month comparison while increasing 6.2% on a sequential quarter comparison. The copper spread expanded 7.3% as the average price of copper purchased decreased 2.3% in the third quarter of 2018 versus the third quarter of 2017, while the average selling price of wire sold increased 0.9%. These improved copper spreads drove our earnings per share to the third best core operating quarterly results in the history of our Company. In aluminum wire, which represented 7.7% of our net sales in the third quarter of 2018, we continued to experience pressure on margins due to import competition from China. As announced previously, we have taken action to enforce our rights under the U.S. trade remedy laws. The results of that action are pending.

The U.S. economy appears strong, as is construction activity. Based on discussions with our distributor customers and their contractor customers, we believe there is a good outlook for construction projects for the next year. We believe our superior order fill rates continue to enhance our competitive position. 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. We have no long-term debt, and our revolving line of credit is paid down to zero. In addition, we had $134.5 million in cash at the end of the quarter. We also declared another cash dividend during the quarter.

Our low-cost structure and strong balance sheet have enabled us to withstand difficult periods in the past, and we believe they are continuing to prove valuable now. We thank our employees and associates for their outstanding effort and our shareholders for their continued support.”

For earnings history and earnings-related data on Encore Wire (WIRE) click here.

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