MCKINNEY, Texas — Encore Wire Corporation announced results for the third quarter of 2015.
Net sales for the third quarter ended September 30, 2015 were $262.8 million compared to $297.4 million during the third quarter of 2014. Copper unit volume, measured in pounds of copper contained in the wire sold, increased 3.0% in the third quarter of 2015 versus the third quarter of 2014. Aluminum building wire sales constituted 10.5% of net sales dollars for the third quarter of 2015 versus 9.4% in the third quarter of 2014. Aluminum unit volume was up 2.2% in the third quarter of 2015 versus the third quarter of 2014. The average selling price of wire per copper pound sold dropped 15.2% in the third quarter of 2015 versus the third quarter of 2014, driving the decrease in net sales dollars. Copper wire sales prices declined primarily due to lower copper prices, which declined 23.1% versus the third quarter of 2014. Net income for the third quarter of 2015 was $14.5 million versus $11.1 million in the third quarter of 2014. Fully diluted net earnings per common share were $0.70 in the third quarter of 2015 versus $0.53 in the third quarter of 2014.
Net sales for the nine months ended September 30, 2015 were $766.8 million compared to $881.6 million during the same period in 2014. The average selling price of wire per copper pound sold dropped 10.7%, while copper unit volume sold declined 3.7% in the nine months ended September 30, 2015 versus the nine months ended September 30, 2014. Copper wire sales prices followed the price of copper purchased, which declined 17.3%. Aluminum building wire sales constituted 9.8% of net sales dollars for the nine months ended September 30, 2015 versus 8.8% in the nine months ended September 30, 2014. Net income for the nine months ended September 30, 2015 was $36.7 million versus $32.1 million in the same period in 2014. Fully diluted net earnings per common share were $1.76 for the nine months ended September 30, 2015 versus $1.54 in the same period in 2014.
On a sequential quarter comparison, net sales for the third quarter of 2015 were $262.8 million versus $253.7 million during the second quarter of 2015. Sales dollars increased, due to a 10.1% unit volume increase of copper building wire sold, offset by a 7.1% decrease in the average selling price per pound of copper wire sold on a sequential quarter comparison. Copper wire sales prices followed the price of copper purchased, which declined 11.9%. Net income for the third quarter of 2015 increased to $14.5 million versus $11.4 million in the second quarter of 2015. Fully diluted net income per common share was $0.70 in the third quarter of 2015 versus $0.54 in the second quarter of 2015.
Commenting on the results, Daniel L. Jones, Chairman, President and Chief Executive Officer of Encore Wire Corporation, said, “We are pleased with the third quarter results. Unit volumes bounced back in the third quarter after the rough spring weather we endured in the second quarter. On a sequential quarterly comparison, copper units were up 10.1% and aluminum units were up 20.2%. Margins also improved in both copper and aluminum wire sales. We continue to execute our strategy of attempting to be an industry pricing leader, and believe this contributed to our improved margins during the quarter. 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. That spread increased 4.5% in the third quarter of 2015 versus the third quarter of 2014, and 3.3% on a sequential quarter comparison. The copper spread expanded 4.5% as the average price of copper purchased decreased 23.1% in the third quarter of 2015 versus the third quarter of 2014, but the average selling price of wire sold decreased only 15.2%, as a result of somewhat improved pricing discipline in the industry. The aluminum building wire products grew to 10.5% of net sales in the quarter versus 9.4% in the third quarter of 2014.
“We continue to strive to lead and support industry price increases in an effort to maintain and increase margins. 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 to ensure quick deliveries from coast to coast. We have been able to accomplish this despite holding what are historically lean inventories for us.
“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 $58.8 million in cash at the end of the quarter. We repurchased 92,804 shares of our common stock on the open market for approximately $2.9 million during 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 are continuing to prove valuable now. We thank our employees and associates for their outstanding effort and our shareholders for their continued support.”
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