McKINNEY, Texas — Encore Wire Corporation announced results for the fourth quarter and year ended December 31, 2023.
Net sales for the year ended December 31, 2023 were $2.568 billion compared to $3.018 billion for the year ended December 31, 2022. Copper unit volume, measured in pounds of copper contained in the wire sold, increased 6.7% in the year ended December 31, 2023 versus the year ended December 31, 2022. Aluminum wire represented 12.9% of net sales for the year ended December 31, 2023 compared to 15.4% for the year ended December 31, 2022. The decrease in net sales dollars was driven by an anticipated decrease in the average selling prices in 2023 compared to 2022, offset by increased volumes in 2023.
Gross profit percentage for the year ended December 31, 2023 was 25.5% compared to 36.9% during the same period in 2022. The average selling price of wire per copper pound sold decreased 17.8% in the year ended December 31, 2023 versus the year ended December 31, 2022, while the average cost of copper per pound purchased decreased 3.7%. The overall increase in total volumes shipped, offset by an anticipated decrease in the average sales price during 2023, resulted in the decreased gross profit margin for the full year of 2023 when compared to 2022.
Net income for the year ended December 31, 2023 was $372.4 million versus $717.8 million in the same period in 2022. Fully diluted net earnings per common share were $21.62 for the year ended December 31, 2023 versus $36.91 in the same period in 2022.
Net sales for the fourth quarter ended December 31, 2023 were $633.8 million compared to $693.9 million for the fourth quarter of 2022. Copper unit volume, measured in pounds of copper contained in the wire sold, increased 18.8% in the fourth quarter of 2023 versus the fourth quarter of 2022. Aluminum wire represented 9.9% of net sales in the fourth quarter of 2023 compared to 17.8% in the fourth quarter of 2022. The decrease in net sales dollars was driven by an anticipated decrease in the average selling prices in the fourth quarter of 2023 compared to the fourth quarter of 2022.
Gross profit percentage for the fourth quarter of 2023 was 21.5% compared to 35.8% in the fourth quarter of 2022. The average selling price of wire per copper pound sold decreased 15.7% in the fourth quarter of 2023 versus the fourth quarter of 2022, while the average cost of copper per pound purchased increased 2.1%. This resulted in the continued gradual abatement of copper spreads during the quarter, primarily driven by the decrease in the average selling price of copper pounds sold noted above, which resulted in the decreased gross profit margin in the fourth quarter of 2023 when compared to the fourth quarter of 2022.
Net income for the fourth quarter of 2023 was $66.1 million versus $154.0 million in the fourth quarter of 2022. Fully diluted net earnings per common share were $4.10 in the fourth quarter of 2023 versus $8.28 in the fourth quarter of 2022.
On a sequential quarter basis, net sales for the fourth quarter ended December 31, 2023 were $633.8 million compared to $637.0 million in the third quarter ended September 30, 2023. Copper unit volume, measured in pounds of copper contained in the wire sold, increased 5.9% in the fourth quarter of 2023 versus the third quarter of 2023. Aluminum wire represented 9.9% of net sales in the fourth quarter of 2023 compared to 12.5% in the third quarter of 2023. The slight decrease in net sales dollars was driven by an increase in copper unit volume sold in the fourth quarter of 2023 compared to the third quarter of 2023, offset by decreased average selling prices in the fourth quarter of 2023.
Gross profit percentage for the fourth quarter of 2023 was 21.5% compared to 23.3% in the third quarter of 2023. The average selling price of wire per copper pound sold decreased 3.2% in the fourth quarter of 2023 versus the third quarter of 2023, while the average cost of copper per pound purchased decreased 1.2%. This resulted in the continued gradual, albeit slowing, abatement of copper spreads during the quarter, primarily driven by the decrease in the average selling price noted above, partially offset by a decrease in the average cost per pound of copper purchased, which resulted in the decreased gross profit margin in the fourth quarter of 2023 compared to the third quarter of 2023.
Net income for the fourth quarter of 2023 was $66.1 million versus $82.1 million in the third quarter of 2023. Fully diluted earnings per common share were $4.10 in the fourth quarter of 2023 versus $4.82 in the third quarter of 2023.
Commenting on the results, Daniel L. Jones, Chairman, President and Chief Executive Officer of Encore Wire Corporation, said, “Our team shipped a record number of copper pounds in the fourth quarter due to consistent strong demand for our copper wire and cable products, representing the strongest volume quarter over the course of the full year. Our ability to capitalize on this demand and deliver unmatched speed and agility in serving our customers is a testament to our single-site, build-to-ship model, an important competitive advantage. We experienced sustained, increased copper wire and cable demand from mid-2023, which continued through the fourth quarter. Despite continued tightness in raw copper availability, our key suppliers continue to perform well and our teams are delivering high order fill rates to support slowing copper margin abatement. Coupled with our operational excellence, we are favorably positioned to meet customer demand going forward.
Our balance sheet remains very strong, and we remain committed to returning capital to shareholders, as evidenced by our share repurchases in 2023. We have no long-term debt, and our revolving line of credit remains untapped. We had $560.6 million in cash as of December 31, 2023. During the quarter we repurchased 476,300 shares of our common stock for a total cash outlay of $85.1 million. Since the first quarter of 2020, we have repurchased 5,634,069 shares of our common stock, approximately 27% of outstanding shares, for a total cash outlay of $771.7 million. We also declared a $0.02 cash dividend during the fourth quarter.
We remain committed to reinvesting in our business with current and planned projects focused on increasing capacity, efficiency and vertical integration across our campus, which will continue to improve our service model. These types of organic investments have fueled our consistent growth since inception and position us well to continue to profitably capture market share in the coming years.
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 is used in many applications including Data Centers, Oil and Gas, Transit, Waste-Water Treatment facilities, Utilities and Wind and Solar applications. The new facility is substantially completed, with start-up and optimization now in progress. Capital spending in 2024 through 2026 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 and $164.5 million in 2023. Total capital expenditures are expected to range from $130 – $150 million in 2024, $130 – $150 million in 2025, and $100 – $120 million in 2026. These investments are expected to be funded with existing cash reserves and operating cash flows.
Our operational agility, speed to market, and deep supplier relationships remain competitive advantages in serving our customers’ evolving needs and capturing market share in the current economic environment. As we continue to address near-term challenges, we remain focused on the long-term opportunities for our business.”
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