Encore Wire (WIRE) Tops Q4 EPS by 49c, Revenues Beat

February 16, 2021 5:11 PM EST
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Price: $68.96 +2.24%

EPS Growth %: +134.0%

Financial Fact:
Net sales: 237.17M

Today's EPS Names:
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Encore Wire (NASDAQ: WIRE) reported Q4 EPS of $1.17, $0.49 better than the analyst estimate of $0.68. Revenue for the quarter came in at $380.8 million versus the consensus estimate of $334.19 million.

Commenting on the results, Daniel L. Jones, Chairman, President and Chief Executive Officer of Encore Wire Corporation, said, “2020 will be remembered as a difficult and challenging year, but will also be remembered for the many successes we accomplished due to the hard work, commitment, and perseverance of each of our outstanding employees. We have remained fully operational, and I am proud that some of our products were used to support medical facilities in the fight against the current pandemic. We furthered our investments in onboarding, training, and safety, making significant strides forward in each endeavor, which enhances our low-cost structure. The strong earnings posted in both the fourth quarter and twelve months ended December 31, 2020 attest to the strength of our business model and management team to adapt and flourish in challenging times. Detailed below are some key items to note in the quarter.

Copper unit volumes increased 4.3% on a comparative quarter basis and 3.2% on a sequential quarter basis as the country returned to work and volumes normalized to historical levels. On a full-year basis, copper unit volumes declined 5.4% for the twelve-month period ended December 31, 2020 versus the twelve-month period in 2019 due to the economic impact from the pandemic during our second and third quarters of 2020. Comex copper prices experienced a steady rise since mid-March 2020, continuing throughout the fourth quarter which had a positive impact on spreads. Copper spreads increased 25.3% on a comparative quarter basis and 7.3% on a sequential quarter basis. Copper spreads increased 8.9% for the twelve-months ended December 31, 2020 compared to the twelve-month period in 2019.

The health and safety of our employees and their families remain our top priority, and we are following CDC guidelines to maintain safe working conditions. The Company is unable to predict the impact that COVID-19 will have on our financial position and operating results in future periods due to numerous continued uncertainties. The duration and severity of the outbreak and its long-term impact on our business remain uncertain.

We believe Encore Wire is well positioned to successfully navigate the current economic environment, continuing to serve the markets during this critical time. As we address the near-term challenges, we remain focused on the long-term opportunities for our business. We believe that our superior order fill rates continue to enhance our competitive position. As orders come in from electrical contractors, our distributors can continue to depend on us for quick deliveries coast to coast. Our balance sheet remains very strong. We have no long-term debt, and our revolving line of credit is paid down to zero. In addition, we had $183.1 million in cash at the end of the quarter. During 2020 we repurchased 441,250 shares of our common stock in the open market. We also declared a $0.02 cash dividend during the quarter.

Our two-phased expansion plans announced earlier this year continue in earnest and remain on schedule. The construction of the new service center is progressing well with a planned opening in the second quarter of 2021. Phase two of our expansion plans will focus on repurposing our existing distribution center to expand manufacturing capacity and extend our market reach. Spending on phase two has already commenced as we have accelerated the timing of orders with manufacturers due to increased lead times required for certain machinery and equipment in the current environment. Phase two completion is anticipated in early 2022. Total capital expenditures were $86 million in 2020. We expect total capital expenditures to range from $100 - $120 million in 2021, $50 - $70 million in 2022, and $40 - $60 million in 2023. Our strong balance sheet and ability to consistently generate high levels of operating cash flow should provide ample allowance to fund planned capital expenditures.

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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