Encore Wire Corp. said
its net sales for its third quarter ending Sept. 30th dropped to
$269 million compared to $319.4 million from the comparable quarter in 2011.
The company said lower
prices for building wire sold in the quarter accounted for the decrease in net
sales dollars, decreasing 15% per copper pound sold versus the same period in
2011.Sales prices declined primarily due to copper prices, which declined 14.2%
versus the third quarter of 2011. Unit volume, measured in copper pounds
contained in the wire sold, decreased 2.7% in the third quarter compared to the
same period in 2011.
Net sales for the nine
months ended September 30, 2012 were $814.3 million compared to $932.2 million
during the same period in 2011. Lower prices for building wire sold in the nine
months ended September 30, 2012 accounted for most of the decrease in net sales
dollars, decreasing 12.7% per copper pound versus the same period in 2011.
Commenting on the
results, Daniel L. Jones, president and CEO of Encore Wire Corporation, said in
a press release, “The third quarter of this year was another fairly steady
volume quarter in the midst of this construction industry recession. There are
signs of bright spots around the country and talk of some major projects, but
for the most part we are still in the trough. Major projects are discussed but
then get delayed due to uncertainties surrounding the global economy and the
U.S. economy and political environment. The good news is that our volumes are
not trending downward. We believe our expansion of product offerings over the
last six years to our existing customer base has been critical to maintaining
and perhaps boosting our market share. As we have repeatedly noted, one of the
key metrics to our earnings is the ‘spread’ between the price of wire sold and
cost of raw copper purchased in any given period. That spread increased 7.8% in
the third quarter of 2012 versus the second quarter of 2012, while our copper
unit volume shipped in the third quarter of 2012 increased 1.6% versus the
second quarter of 2012.
“Comex prices for the
raw copper we buy were somewhat less volatile in the first two months of this
quarter than the previous quarter and then rose in September allowing us to
marginally enhance spreads. As illustrated, relatively small movements in the
spread can affect our earnings per share. and were a positive influence on a
sequential quarterly comparison. Conversely, spreads were down 17.3% in the
third quarter of 2012 versus the third quarter of 2011 and down 8.8% on a
year-to-date basis in 2012 versus 2011.
“We continue to
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.”
Encore Wire Corporation manufactures a broad range of
copper electrical wire for interior wiring in homes, apartments, manufactured
housing and commercial and industrial buildings.