Encore Wire Corporation (NASDAQ Global Select: WIRE) today
announced results for the fourth quarter and year ended December
31, 2022.
Fourth Quarter and Full Year 2022 Highlights
- Fourth Quarter Earnings per Diluted Share of $8.28; Full Year
2022 Earnings per Diluted Share of $36.91
- Fourth Quarter Net income of $154.0 million; Full Year 2022 Net
income of $717.8 million
- Fourth Quarter Gross profit of 35.8%; Full Year 2022 Gross
profit of 36.9%
- Copper volume sold increased 7.9% over fourth quarter of 2021;
Increased 7.9% over 2021 full year levels
- Cash on hand of $730.6 million as of December 31, 2022; up from
$439.0 million as of December 31, 2021
- Capital expenditures of $148.4 million in 2022
- Company repurchased 161,701 shares in the fourth quarter of
2022; repurchased 2,055,470 shares in full year 2022
- Total cash outlay for share repurchases of $22.4 million in the
fourth quarter; $247.6 million in full year 2022
Net sales for the year ended December 31, 2022 were $3.018
billion compared to $2.593 billion during the same period in 2021.
Copper unit volume, measured in pounds of copper contained in the
wire sold, increased 7.9% in the year ended December 31, 2022
versus the year ended December 31, 2021.
Gross profit percentage for the year ended December 31, 2022 was
36.9% compared to 33.5% during the same period in 2021. The average
selling price of wire per copper pound sold decreased 0.5% in the
year ended December 31, 2022 versus the year ended December 31,
2021, while the average cost of copper per pound purchased
decreased 2.7%. The overall increase in total volumes shipped,
along with an increase in aluminum spreads during 2022, resulted in
the increased gross profit margin for the full year of 2022 when
compared to 2021.
Net income for the year ended December 31, 2022 was $717.8
million versus $541.4 million in the same period in 2021. Fully
diluted net earnings per common share were $36.91 for the year
ended December 31, 2022 versus $26.22 in the same period in
2021.
Net sales for the fourth quarter ended December 31, 2022 were
$693.9 million compared to $687.9 million for the fourth quarter of
2021. Copper unit volume, measured in pounds of copper contained in
the wire sold, increased 7.9% in the fourth quarter of 2022 versus
the fourth quarter of 2021.
Gross profit percentage for the fourth quarter of 2022 was 35.8%
compared to 34.2% in the fourth quarter of 2021. The average
selling price of wire per copper pound sold decreased 14.1% in the
fourth quarter of 2022 versus the fourth quarter of 2021, while the
average cost of copper per pound purchased decreased 14.4%. The
gradual abatement of copper spreads in the quarter was more than
offset by increased aluminum spreads and an overall increase in
total volumes shipped resulting in the increased gross profit
margin in the fourth quarter of 2022 when compared to the fourth
quarter of 2021.
Net income for the fourth quarter of 2022 was $154.0 million
versus $141.6 million in the fourth quarter of 2021. Fully diluted
net earnings per common share were $8.28 in the fourth quarter of
2022 versus $6.91 in the fourth quarter of 2021.
Aluminum wire represented 17.8% and 15.4%, respectively, of our
net sales in the quarter and year ended December 31, 2022. Aluminum
unit volumes increased on both a comparative quarter and annual
basis over 2021 levels.
Commenting on the results, Daniel L. Jones, Chairman, President
and Chief Executive Officer of Encore Wire Corporation, said, “Our
results in 2022 mark another year of exceptional earnings, strong
cash flow and consistent volume growth. Our single-site, vertically
integrated business model affords us the flexibility and agility to
quickly adapt to changing market conditions while continuing to
serve our customers at a level consistent with our high standards.
Continued tightness in the availability of key raw materials and
the general inability of the sector to meet demand for the timely
delivery of finished goods kept spreads strong in the fourth
quarter of 2022. Our key suppliers continue to perform at a high
level which positions us favorably in meeting customer demand in a
timely manner. By continuing to execute on our core values of
providing unbeatable customer service and high order fill rates, we
were able to increase both copper and aluminum volumes shipped in
the fourth quarter and year-to-date periods in 2022 over 2021
levels. I continue to believe that our operational agility, speed
to market, and deep supplier relationships remain competitive
advantages in serving our customers’ evolving needs. We remain
committed to reinvesting in our business with current and planned
projects focused on increasing capacity, efficiency and vertical
integration across our campus.
Copper unit volumes increased 7.9% on both a comparative quarter
basis and on a year-to-date basis. Comex copper prices increased
gradually throughout the fourth quarter while other raw material
costs and inputs decreased slightly. Copper spreads decreased 13.7%
on a comparative quarter basis and increased 1.9% on a full year
basis. Aluminum spreads and volumes increased for both the quarter
and full year periods in 2022 compared to 2021.
We continue to believe Encore Wire remains well positioned to
capture market share and incremental volume growth in the current
economic environment. 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 and deep vertical
integration 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 remains untapped. We had
$730.6 million in cash at the end of the year. During 2022 we
repurchased 2,055,470 shares of our common stock at an average
price of $120.47, including 161,701 shares repurchased at an
average price of $138.53 in the fourth quarter. Since the first
quarter of 2020, we have repurchased 2,972,277 shares of our common
stock for a total cash outlay of $311.6 million. We also declared a
$0.02 cash dividend during the fourth quarter.
The repurposing of our vacated distribution center into Plant 7
to expand manufacturing capacity and extend our market reach was
substantially completed in the second half of 2022.
The incremental investments announced in July 2021 continue in
earnest, focused on broadening our position as a low-cost
manufacturer in the sector and increasing manufacturing capacity to
drive growth. In 2022 we began construction on a new, state of the
art, cross-link polyethylene (XLPE) compounding facility to deepen
vertical integration related to wire and cable insulation. XLPE
insulation today is used in many applications including Data
Centers, Oil and Gas, Transit, Waste-Water Treatment facilities,
Utilities and Wind and Solar applications. We anticipate the new
facility will be substantially completed by the end of the third
quarter of 2023. Capital spending in 2023 through 2025 will further
expand vertical integration in our manufacturing processes to
reduce costs as well as modernize select wire manufacturing
facilities to increase capacity and efficiency and improve our
position as a sustainable and environmentally responsible company.
Total capital expenditures were $148.4 million in 2022. We expect
total capital expenditures to range from $160 - $180 million in
2023, $150 - $170 million in 2024, and $80 - $100 million in 2025.
We expect to continue to fund these investments with existing cash
reserves and operating cash flows.
Our low-cost structure and strong balance sheet have allowed us
the flexibility to adapt quickly to changing market conditions, 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.
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, or any of the ongoing variants, may have on
our financial position and operating results in future periods. The
duration or re-emergence of the outbreak and its long-term impact
on our business remain uncertain.”
The Company will host a conference call to discuss the fourth
quarter and full year results on Wednesday, February 15, 2023, at
10:00 am Central time. Hosting the call will be Daniel Jones,
Chairman, President and Chief Executive Officer, and Bret Eckert,
Executive Vice President & Chief Financial Officer. Attendants
may register at https://registrations.events/direct/ECS61211 to
participate in the call. A confirmation email will be sent to all
registrants containing a dial-in number and a unique passcode,
which identifies you as the registered participant for this call
and should only be used by the individual who has registered.
Please plan to join this call at least five minutes prior to the
scheduled start time. After entering your dial-in number, you will
be prompted to enter your unique passcode, followed by the # key. A
replay of this conference call will be accessible in the Investors
section of our website, www.encorewire.com, for a limited time.
Encore Wire Corporation is a leading manufacturer of a broad
range of copper and aluminum electrical wire and cables, supplying
power generation and distribution solutions to meet our customers’
needs today and in the future. The Company focuses on maintaining a
low-cost of production while providing exceptional customer
service, quickly shipping complete orders coast-to-coast. Our
products are proudly made in America at our vertically-integrated,
single-site, Texas campus.
The matters discussed in this news release may include
forward-looking statements. Forward-looking statements can be
identified by words such as: “anticipate”, “intend”, “plan”,
“goal”, “seek”, “believe”, “project”, “estimate”, “expect”,
“strategy”, “future”, “likely”, “may”, “should”, “will” and similar
references to future periods. Forward-looking statements are
neither historical facts nor assurances of future performance.
Instead, they are based only on our current beliefs, expectations
and assumptions regarding the future of our business, future plans
and strategies, projections, anticipated events and trends, the
economy and other future conditions. Because forward-looking
statements relate to the future, such statements are subject to
certain risks, uncertainties and assumptions. Should one or more of
these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially
from those anticipated, estimated or projected. Therefore, you
should not rely on any of these forward-looking statements.
Examples of such uncertainties and risks include, but are not
limited to, statements about the pricing environment of copper,
aluminum and other raw materials, the duration, magnitude and
impact of the ongoing COVID-19 global pandemic, our order fill
rates, profitability and stockholder value, payment of future
dividends, future purchases of stock, 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. Any
forward-looking statement made by us in this press release is based
only on information currently available to us and speaks only as of
the date on which it is made. We undertake no obligation to
publicly update any forward-looking statement, whether written or
oral, that may be made from time to time, whether as a result of
new information, future developments or otherwise.
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 measures of financial performance
calculated and presented in accordance with Generally Accepted
Accounting Principles (“GAAP”), to compare to the performance of
other companies who also publicize this information. EBITDA is not
a measurement of financial performance calculated and presented in
accordance with 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 financial performance calculated and
presented in accordance with GAAP.
The Company has reconciled EBITDA with net income for fiscal
years 1996 to 2021 on previous reports on Form 8-K filed with the
Securities and Exchange Commission. EBITDA for each period
pertinent to this press release is calculated and reconciled to net
income as follows:
Quarter Ended December 31,
Year Ended December 31,
In Thousands
2022
2021
2022
2021
Net Income
$
153,998
$
141,642
$
717,841
$
541,422
Income Tax Expense
44,944
41,135
207,009
157,975
Interest Expense
102
104
408
391
Depreciation and Amortization
7,197
6,133
26,232
23,288
EBITDA
$
206,241
$
189,014
$
951,490
$
723,076
Encore Wire
Corporation
Condensed Balance
Sheets
(In Thousands)
December 31, 2022
December 31, 2021
(unaudited)
ASSETS
Current Assets
Cash
$
730,557
$
438,990
Receivables, net
498,762
491,126
Inventories, net
153,187
100,816
Prepaid Expenses and Other
19,135
4,118
Total Current Assets
1,401,641
1,035,050
Property, Plant and Equipment, net
616,601
494,916
Other Assets
490
570
Total Assets
$
2,018,732
$
1,530,536
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts Payable
$
62,780
$
75,353
Accrued Liabilities and Other
81,381
78,747
Total Current Liabilities
144,161
154,100
Long-Term Liabilities
Deferred Income Taxes and Other
55,905
37,347
Total Long-Term Liabilities
55,905
37,347
Total Liabilities
200,066
191,447
Stockholders’ Equity
Common Stock
271
271
Additional Paid-in Capital
83,622
72,753
Treasury Stock
(402,639
)
(155,014
)
Retained Earnings
2,137,412
1,421,079
Total Stockholders’ Equity
1,818,666
1,339,089
Total Liabilities and Stockholders’
Equity
$
2,018,732
$
1,530,536
Encore Wire
Corporation
Condensed Statements of
Income
(In Thousands, Except Per Share
Data)
Quarter Ended December
31,
Year Ended December
31,
2022
2021
2022
2021
(unaudited)
(unaudited)
Net sales
$
693,885
100.0
%
$
687,853
100.0
%
$
3,017,555
100.0
%
$
2,592,721
100.0
%
Cost of sales
445,430
64.2
%
452,719
65.8
%
1,905,134
63.1
%
1,724,975
66.5
%
Gross profit
248,455
35.8
%
235,134
34.2
%
1,112,421
36.9
%
867,746
33.5
%
Selling, general and administrative
expenses
55,510
8.0
%
52,435
7.6
%
197,418
6.5
%
168,543
6.5
%
Operating income
192,945
27.8
%
182,699
26.6
%
915,003
30.4
%
699,203
27.0
%
Net interest & other income
5,997
0.9
%
78
—
%
9,847
0.3
%
194
—
%
Income before income taxes
198,942
28.7
%
182,777
26.6
%
924,850
30.7
%
699,397
27.0
%
Provision for income taxes
44,944
6.5
%
41,135
6.0
%
207,009
6.9
%
157,975
6.0
%
Net Income
$
153,998
22.2
%
$
141,642
20.6
%
$
717,841
23.8
%
$
541,422
20.9
%
Basic earnings per share
$
8.43
$
7.02
$
37.47
$
26.49
Diluted earnings per share
$
8.28
$
6.91
$
36.91
$
26.22
Weighted average number of common and
common equivalent shares outstanding:
Basic
18,270
20,189
19,159
20,439
Diluted
18,595
20,491
19,446
20,649
Cash dividend declared per share
$
0.02
$
0.02
$
0.08
$
0.08
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230214005852/en/
Bret J. Eckert Executive Vice President & Chief
Financial Officer 972-562-9473
Encore Wire (NASDAQ:WIRE)
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