McKINNEY, Texas — Encore Wire Corporation today announced results for the third quarter of 2018.
Net sales for the third quarter ended September 30, 2018 were $340.7 million compared to $292.0 million during the third quarter of 2017. Copper unit volume, measured in pounds of copper contained in the wire sold, increased 16.1% in the third quarter of 2018 versus the third quarter of 2017, driving the $48.7 million increase in net sales dollars. The average selling price of wire per copper pound sold increased 0.9% in the third quarter of 2018 versus the third quarter of 2017. Net income for the third quarter of 2018 was $23.7 million versus $14.0 million in the third quarter of 2017. Fully diluted net earnings per common share increased 68.7% to $1.13 in the third quarter of 2018 from $0.67 in the third quarter of 2017.
Net sales for the nine months ended September 30, 2018 were $969.0 million compared to $863.0 million during the same period in 2017. Copper unit volume, measured in pounds of copper contained in the wire sold, increased 2.6% in the nine months ended September 30, 2018 versus the nine months ended September 30, 2017. The average selling price of wire per copper pound sold increased 10.9% in the nine months ended September 30, 2018 versus the nine months ended September 30, 2017, driving the 12.3% increase in net sales dollars. Copper wire sales prices increased primarily due to the higher price of copper purchased, which increased 10.9% in the nine months ended September 30, 2018 versus the same period in 2017. Net income for the nine months ended September 30, 2018 increased 37.9% to $53.1 million from $38.5 million in the same period in 2017. Fully diluted net earnings per common share were $2.54 in the nine months ended September 30, 2018 versus $1.85 in the same period in 2017.
On a sequential quarter comparison, net sales for the third quarter of 2018 were $340.7 million versus $336.8 million during the second quarter of 2018. Sales dollars increased due to a 5.5% unit volume increase of copper building wire sold, offset by a 4.6% decrease in the average selling price per pound of copper wire sold on a sequential quarter comparison. Copper wire sales prices decreased primarily due to a decrease of 9.6% in the price of copper purchased. Net income for the third quarter of 2018 was $23.7 million versus $18.1 million in the second quarter of 2018. Fully diluted net income per common share was $1.13 in the third quarter of 2018 versus $0.86 in the second quarter of 2018.
Commenting on the results, Daniel L. Jones, Chairman, President and Chief Executive Officer of Encore Wire Corporation, said, “We are very pleased with our highly improved results in the third quarter and on a year to date comparison. There are some key items to note. Net sales dollars increased significantly, in both the quarterly and nine month comparisons of 2018 to 2017. The increased top line was driven primarily by higher unit volumes. Unit volumes increased 16.1% in the third quarter of 2018 versus the third quarter of 2017. Margins increased in both the quarterly and nine month comparisons of 2018 versus 2017. 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 7.3% in the third quarter of 2018 versus the third quarter of 2017, and increased 10.7% on the nine month comparison while increasing 6.2% on a sequential quarter comparison. The copper spread expanded 7.3% as the average price of copper purchased decreased 2.3% in the third quarter of 2018 versus the third quarter of 2017, while the average selling price of wire sold increased 0.9%. These improved copper spreads drove our earnings per share to the third best core operating quarterly results in the history of our Company. In aluminum wire, which represented 7.7% of our net sales in the third quarter of 2018, we continued to experience pressure on margins due to import competition from China. As announced previously, we have taken action to enforce our rights under the U.S. trade remedy laws. The results of that action are pending.
“The U.S. economy appears strong, as is construction activity. Based on discussions with our distributor customers and their contractor customers, we believe there is a good outlook for construction projects for the next year. We believe our superior order fill rates continue to enhance our competitive position. As orders come in from electrical contractors, the distributors can count on our order fill rates to ensure quick deliveries from coast to coast. 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 $134.5 million in cash at the end of 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 they 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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