McKINNEY, Texas — Encore Wire Corporation today announced results for the first quarter of 2020.
Net sales for the first quarter ended March 31, 2020 were $302.8 million compared to $314.7 million for the first quarter of 2019. Copper unit volume, measured in pounds of copper contained in the wire sold, increased 1.0% in the first quarter of 2020 versus the first quarter of 2019. The average selling price of wire per copper pound sold decreased 5.6% in the first quarter of 2020 versus the first quarter of 2019, while the average cost of copper per pound purchased decreased 8.2%. Net income for the first quarter of 2020 increased 38.7% to $18.6 million versus $13.4 million in the first quarter of 2019. Fully diluted net earnings per common share were $0.89 in the first quarter of 2020 versus $0.64 in the first quarter of 2019.
On a sequential quarter comparison, net sales for the first quarter of 2020 were $302.8 million versus $302.3 million during the fourth quarter of 2019. Sales dollars increased due to a 1.4% unit volume increase of copper building wire sold, offset slightly by a 0.7% decrease in the average selling price per pound of copper wire sold on a sequential quarter comparison. Copper wire sales prices decreased 0.7%, while the price of copper purchased decreased 4.2%. Net income for the first quarter of 2020 was $18.6 million versus $10.5 million in the fourth quarter of 2019. Fully diluted net income per common share was $0.89 in the first quarter of 2020 versus $0.50 in the fourth quarter of 2019.
Commenting on the results, Daniel L. Jones, Chairman, President and Chief Executive Officer of Encore Wire Corporation, said, “The strong earnings posted in the first quarter ended March 31, 2020 evidence the strength of our balance sheet and the resiliency of our business model to weather tough times. I’m very pleased by our first quarter results despite the unprecedented times we are facing in this country. There are some key items to note. Copper unit volumes increased 1.0% in the first quarter of 2020 versus the first quarter of 2019 and increased 1.4% on a sequential quarter basis. Gross profit margins increased despite a drop in Comex copper prices versus last year’s first quarter as well as versus the fourth quarter of 2019. 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. The copper spread increased 6.0% on a sequential quarter comparison. I’m particularly pleased with how we finished the first quarter. Despite a significant decrease in Comex copper daily prices in March, we were able to maintain average selling prices in the month which lifted gross profit margins for the quarter. This represented a slight shift to a seller’s market as some manufacturing and distribution constraints in the sector kept pricing strong. Finally, aluminum wire represented 8.6% of our net sales in the first quarter of 2020.
“Additionally, in March 2020 the World Health Organization declared the novel strain of coronavirus (“COVID-19”) a global pandemic and recommended containment and mitigation measures worldwide. The Company is monitoring this, and although operations were not materially affected by the COVID-19 outbreak during the first quarter ended March 31, 2020, we are unable to predict the impact that COVID-19 will have on our financial position and operating results in future periods due to numerous uncertainties. The duration and severity of the outbreak and its long-term impact on our business are uncertain at this time.
“The health and safety of our employees and their families remains our top priority, and we are following CDC guidelines to maintain safe working conditions. We are very proud that some of the products we manufacture are being utilized to power temporary buildings and pop-up medical facilities in the fight against COVID-19. Our distributors remain very thankful we continue to serve during this critical time.
“We believe Encore Wire is well positioned to weather the storm, continuing to serve the markets during this critical time. As we navigate the near-term challenges, we remain focused on the long-term opportunities for our business. We also believe our superior order fill rates, which have not faltered during this crisis, continue to enhance our competitive position. As orders come in from electrical contractors, the distributors can continue to count on our order fill rates to ensure quick deliveries from coast to coast. Our balance sheet remains very strong. We have no long-term debt, and our revolving line of credit is paid down to zero. In addition, we had $206.8 million in cash at the end of the quarter. During the quarter we repurchased 439,112 shares in the open market. We also declared a $0.02 cash dividend during the quarter. Our recently announced two-phase expansion plans continue as we’ve started initial grading and site development work on schedule this quarter. We reaffirm our previously announced capital expenditure ranges for fiscal years 2020 through 2022.
“Our low-cost structure and strong balance sheet have enabled us to withstand difficult periods in the past, 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.”
Tagged with Encore Wire, financial results