Encore Wire Corporation (
Q1 2011 Earnings Call
April 28, 2011 11:00 am ET
Daniel Jones – President and CEO
Frank Bilban – CFO, VP - Finance, Treasurer, and Secretary
Keith Johnson – Morgan Keegan
Kerry Rigdon – Mayberry Partners
Previous Statements by WIRE
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» Encore Wire Corporation Q1 2010 Earnings Call Transcript
Good morning, ladies and gentlemen, and welcome to today’s first quarter earnings review conference call. Please note that all your lines are on listen-only mode, and there will be time for a Q&A session towards the conclusion of this meeting. (Operator instructions) And now to start off our conference, I’d like to welcome and turn the call over to Mr. Daniel Jones, Chief Executive Officer, Encore Wire. Go ahead, sir.
Thanks, Mona. Good morning, ladies and gentlemen, and welcome to the Encore Wire Corporation quarterly conference call. I’m Daniel Jones, the President and Chief Executive Officer of Encore Wire. With me this morning is Frank Bilban, our Chief Financial Officer.
We are pleased to announce strong quarterly earnings in the midst of the severe recession currently taking place in the construction industry. As we have repeatedly noted, the key metric to our earnings is the spread between the average price of wire sold for copper pound in the company’s average cost of raw copper per pound in any given period.
The spread increased 42.2% in the first quarter of 2011 versus the first quarter of 2010 while our unit volume shipped in the first quarter of 2011 increased 28.9% versus the first quarter of 2010. The spread increased 14.3% on a sequential quarter basis while unit volume increased 5.3%, driving the increase in our earnings.
In the trailing 12 months ended March 31, 2011, we produced net sales of $1.038 billion and net income of $28.4 million or $1.22 per share versus net sales of $680.4 million and a net loss of $3.4 million or negative $0.15 per share in the 12 months ended March 31, 2010. The results in the last four quarters are particularly encouraging. We believe the exit of a former competitor in the first quarter of 2010 has contributed to the positive trend in our industry pricing levels and margins over the last four quarters. We continue to strive to lead or support industry price increases to achieve profit growth.
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 into ensure quick deliveries from coast to coast. We have been able to accomplish this despite holding on historically lean inventory levels for us. We believe our performance is impressive in this economy, and we thank our employees and associates for the tremendous efforts. We also thank our shareholders for their continued support.
Frank Bilban, our Chief Financial Officer, will now discuss our financial results. Frank?
Thank you, Daniel. In a minute, we will review Encore’s financial results for the quarter. After the financial review, we will take any questions you may have. Each of you should have already received the copies of Encore’s press release covering Encore’s financial results. This release is available on the Internet or you can call Tracy West at 800-962-9473 and we will get you a copy.
Before we review the financials, let me indicate that in our initial comments and in the question-and-answer period that follows, we may make certain statements that might be considered to be forward-looking. In order to comply with certain securities legislation and instead of attempting to identify each particular statement as forward-looking, we advise you that all such statements involve certain risks and uncertainties that could cause actual results to differ materially from those discussed today. I refer each of you to the company's SEC reports and news releases for a more detailed discussion of these risks and uncertainties.
Also, reconciliations of non-GAAP financial measures discussed during this conference call to the most directly comparable financial measures presented in accordance with GAAP, including EBITDA, which we believe to be useful supplemental information for investors, are posted on www.encorewire.com.
Moving on to the financial results, net sales for the quarter ended March 31, 2011 were $303.4 million compared to $175.2 million during the first quarter of 2010. Net income for the first quarter of 2011 was $10.7 million versus a net loss of $2.5 million in the first quarter of 2010. Fully diluted net income per common share was $0.46 in the first quarter of 2011 versus a net loss of $0.11 in the first quarter of 2010.
Unit volumes, measured in pounds of copper contained in the wire sold during the period increased 28.9% in the first quarter of 2011 versus the first quarter of 2010. The spread between the cost of a pound of copper purchased and the sale price of wire containing a pound of copper increased by 42.2%. The 2010 first quarter results included a $2.6 million pretax charge associated with the early retirement of long-term debt that the company paid off in January of 2010.
On a sequential quarter comparison, net sales for the first quarter of 2011 were $303.4 million versus $256.1 million during the fourth quarter of 2010. Net income for the first quarter of 2011 was $10.7 million versus $4.5 million in the fourth quarter of 2010. Fully diluted net income per common share was $0.46 in the first quarter of 2011 versus $0.19 in the fourth quarter of 2010. Unit volumes increased 5.3% in the first quarter of 2011 versus the fourth quarter of 2010. The spread between the cost of a pound of copper purchased and the sales price of wire containing a pound of copper increased by 14.3%.