Encore Wire Corporation (
Q4 2010 Earnings Call
February 23, 2011 11:00 AM EST
Daniel Jones – President, CEO and Director
Frank Bilban – CFO, VP – Finance, Treasurer and Secretary
Liam Burke – Janney Capital Markets
Keith Johnson – Morgan Keegan
Kerry Rigdon – Mayberry Partners
Tom Brashear – Preston Capital Management
Good morning ladies and gentlemen and welcome to today’s fourth quarter Earnings Conference call. (Operator Instructions)
And, now to start off today’s conference, I would like to welcome and turn the call over to Mr. Daniel Jones, President and CEO. Go ahead sir.
Previous Statements by WIRE
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» Encore Wire Corp. Q4 2009 Earnings Call Transcript
Thank you Mona. Good morning ladies and gentlemen and welcome to the Encore Wire Corporation quarterly conference call. I am Daniel Jones, the President and Chief Executive Officer of Encore Wire, and with me this morning is Frank Bilban, our Chief Financial Officer.
We are pleased announced strong quarterly earnings in the midst of the severe recession currently taking place in the construction industry. As we’ve repeatedly noted the key matrix to our earnings is this 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 59.9% in the fourth quarter of 2010 versus the fourth quarter of 2009. While our unit volume shipped in the fourth quarter of 2010 increased 6% versus the fourth quarter of 2009. The spread increased 32.5% on a year-over-year basis well unit volume decreased 3.8% driving an increase earnings to spot a decreased unit volume. The results in a last three quarters are particularly encouraging following the losses we sustained in the fourth quarter of 2009 and the first quarter of 2010. After earning $0.5 per share in the five quarters ended March 31
2010, the company earned $0.77 per share in the last quarters of 2010.
We believe the exit of the former competitor in the first quarter of 2010 has contributed to the positive trend in the industry, crossing levels in margins over the last three quarters.
We continue to strive to support industry plus increases to maintain the momentum started during the past two quarters. We believe our superior order field rates continue to enhance our competitive position as our electrical distributor customers are holding lean inventories in the field. As our orders come in from electrical contractors, the distributors can count on our order field rates to ensure quick deliveries from coast-to-coast. We’ve been able to accomplish this despite holding on or historically lean inventory levels for us.
We believe our performance is impressive in this economy, we think 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 receive the copy 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 involves 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 fourth quarter ended December 31, 2010 increased 44.6% to $256.1 million compared to $177.1 million during the fourth quarter of 2009. Unit sales in the fourth quarter ended December, 31
2010 increased 6% versus the fourth quarter of 2009, while the average price for pound for building wire sold in the quarter increased by 36.3%. Sales prices rose primarily due to higher copper prices. Copper prices rose 30.8% in the same period comparison.
Net income for the fourth quarter of 2010 increased to 4.5 million versus a net loss of $1.9 million in the fourth quarter of 2009. Fully diluted net earnings per common share were positive $0.19 in the fourth quarter of 2010 versus a loss of $0.08 in the fourth quarter of 2009.
Net sales for the year ending December 31, 2010 increased 40.1% to $910.2 million compared to $649.6 million during the year end of December 31, 2009. The average price for copper pound building wire sold in the quarter increased by 45.8% driving an increase of net sales dollars.
Unit volume in the year ended December 31, 2010 decreased 3.8% versus the year of 2009. Net income for the year ended December 31, 2010 increased 320.6% to $15.3 million versus $3.6 million in 2009. Fully diluted net earnings per common share were $0.66 for the year ended December 31, 2010 versus $0.16 in 2009.