wire-20200217
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
February 17, 2020
ENCORE WIRE CORPORATION
(Exact name of registrant as specified in its charter)

Delaware
000-20278
75-2274963
(State or other jurisdiction
of incorporation)
(Commission
File Number)
(IRS Employer
Identification No.)
1329 Millwood Road
McKinney,Texas75069
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code: (972) 562-9473
 
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $.01 per shareWIREThe NASDAQ Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.



Item 2.02 Results of Operations and Financial C4ondition.
On February 18, 2020, Encore Wire Corporation, a Delaware corporation (the “Company”), issued an earnings release describing selected financial results of the Company for the fourth quarter of 2019 and the year ended December 31, 2019 (the “Earnings Release”). A copy of the Earnings Release is attached hereto as Exhibit 99.1 and incorporated herein by reference.
Limitation on Incorporation by Reference:
In accordance with general instruction B.2 of Form 8-K, the information in this report, including exhibits, is furnished pursuant to Item 2.02 and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On February 17, 2020, Donald E. Courtney, a director on the Board of Directors (the “Board”) of the Company, notified the Board that he will not stand for re-election at the 2020 annual meeting of stockholders of the Company. Mr. Courtney’s decision not to stand for re-election was not the result of any disagreement with the Company.
Item 7.01 Regulation FD Disclosure.
On February 18, 2020, the Company issued the Earnings Release. A copy of the Earnings Release is attached hereto as Exhibit 99.1 and incorporated herein by reference. On February 18, 2020, the Company issued a press release announcing the retirement of Donald E. Courtney from the Board. A copy of that press release is attached hereto as Exhibit 99.2.
Limitation on Incorporation by Reference:
In accordance with general instruction B.2 of Form 8-K, the information in this report, including exhibits, is furnished pursuant to Item 7.01 and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section.
Item 9.01 Financial Statements and Exhibits.
(i)Exhibits.
Exhibit NumberDescription
99.1  
99.2  
104  Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document.




SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
ENCORE WIRE CORPORATION
2/18/2020By: /s/ BRET J. ECKERT
 Bret J. Eckert, Vice President – Finance, Treasurer, Secretary and Chief Financial Officer


Document

Exhibit 99.1
 
PRESS RELEASEContact:Bret J. Eckert
972-562-9473February 18, 2020Vice President & CFO
ENCORE WIRE REPORTS FOURTH QUARTER, FULL YEAR 2019 RESULTS; PLANNED
CAPITAL EXPENDITURES FOR EXPANSION
McKinney, TX - Encore Wire Corporation (NASDAQ Global Select: WIRE) today announced results for the fourth quarter and full year ended December 31, 2019.
Net sales for the fourth quarter ended December 31, 2019 were $302.3 million compared to $319.7 million for the fourth quarter of 2018. Copper unit volume, measured in pounds of copper contained in the wire sold, decreased 1.6% in the fourth quarter of 2019 versus the fourth quarter of 2018. The average selling price of wire per copper pound sold decreased 5.8% in the fourth quarter of 2019 versus the fourth quarter of 2018. Net income for the fourth quarter of 2019 decreased to $10.5 million versus $25.0 million in the fourth quarter of 2018. Fully diluted net earnings per common share were $0.50 in the fourth quarter of 2019 versus $1.20 in the fourth quarter of 2018.
Net sales for the year ended December 31, 2019 were $1.275 billion compared to $1.289 billion for the year ended December 31, 2018. Copper unit volume, measured in pounds of copper contained in the wire sold, increased 4.1% in the year ended December 31, 2019 versus the year ended December 31, 2018. The average selling price of wire per copper pound sold decreased 5.8% in the year ended December 31, 2019 versus the year ended December 31, 2018, more than offsetting the unit volume impact on sales dollars. Net income for the year ended December 31, 2019 decreased to $58.1 million versus $78.2 million in the same period in 2018. Fully diluted net earnings per common share were $2.77 in the year ended December 31, 2019 versus $3.74 in the same period in 2018.
On a sequential quarter comparison, net sales for the fourth quarter of 2019 were $302.3 million versus $321.2 million during the third quarter of 2019. Sales dollars decreased due to an 8.1% unit volume decrease of copper building wire sold on a sequential quarter comparison. Copper wire sales prices increased 1.0%, while the price of copper purchased increased 1.4%. Net income for the fourth quarter of 2019 was $10.5 million versus $16.4 million in the third quarter of 2019. Fully diluted net income per common share was $0.50 in the fourth quarter of 2019 versus $0.78 in the third quarter of 2019.
We also have some news to share about our continued expansion plans, which we expect to proceed in two phases. Phase one will begin late in the first quarter of 2020 with the construction of a new 720,000 square foot facility located at the north end of our existing campus. This facility will act as a service center, modernizing our logistics to allow for increased throughput and provide the bandwidth necessary to capture incremental sales volumes. Phase one will allow us to compete at a higher level in the marketplace while further strengthening our industry-leading customer service and order fill rates. We expect to complete construction in the second quarter of 2021. Phase two of our expansion plans will commence following phase one and will focus on repurposing our existing distribution center to expand manufacturing capacity significantly and extend our market reach. Phase two completion is anticipated in 2022.
Commenting on the results and planned expansion, Daniel L. Jones, Chairman, President and Chief Executive Officer of Encore Wire Corporation, said, “This is an exciting time for Encore's employees, customers and stakeholders. We've been under construction since inception and we continue to grow today. Our two-phase expansion plans will extend our reach and increase manufacturing capacity to meet the growing needs of our customers. We anticipate total capital expenditures to range from $85 - $95 million in 2020, $70 - $90 million in 2021, and $60 - $80 million in 2022. Our strong balance sheet and ability to consistently generate high levels of operating cash flow should provide ample allowance to fund planned capital expenditures. Our business and the markets for our products remain strong as evidenced by a 4.1% increase in unit volumes in 2019 compared to 2018. The unit volume increase was achieved even though we continue to face vigorous competition in the market place. Despite the strong U.S. construction market and demand for building wire, margins were restrained by competitive pricing in the fourth quarter of 2019 versus the fourth quarter of 2018. Gross profit margins fell in concert with a drop in copper prices versus 2018's fourth quarter and full year basis, along with the competitive pressure noted above. 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 decreased 11.2% in the fourth quarter of 2019 versus the fourth quarter of 2018, while decreasing 4.9% in the full year comparison. The copper spread contracted 11.2% as the average price of copper purchased decreased 2.8% in the fourth quarter of 2019 versus the fourth quarter of 2018, while the average selling price of wire sold
1


decreased 5.8%. It should be noted that the spreads in the fourth quarter of 2018 were the highest in over a decade. However, we still believe that the currently strong end markets can support those margin levels.
In aluminum wire, which represented 8.1% of our net sales in 2019, we successfully enforced our rights under the U.S. trade remedy laws. As a result of the International Trade Commission’s final affirmative decision, U.S. importers of aluminum wire and cable from China will be required to pay antidumping duties at rates ranging from 47.83% to 52.79%, plus countervailing duties at rates ranging from 33.44% to 165.63%, depending upon the Chinese exporter/supplier.
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 remains very strong. We have no long-term debt, and our revolving line of credit is paid down to zero. In addition, we had $231.0 million in cash at the end of the year.
Our low-cost structure and strong balance sheet have enabled us to withstand challenges 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 stockholders for their continued support.”
The Company will host a conference call to discuss the fourth quarter and full year results on Wednesday, February 19, 2020, at 10:00 am Central time. Hosting the call will be Daniel Jones, Chairman, President and Chief Executive Officer, and Bret Eckert, Vice President and Chief Financial Officer. To participate in the call, the dial-in number is 800-993-8735, and the confirmation number is 49385927. In order to be put through to the call, you will be required to give the call screener your full name, your company name, your email address and your phone number. Please call in early to avoid being delayed by the information collection and missing the start of the call. A replay of this conference call will be accessible in the Investors section of our website, www.encorewire.com, for a limited time.
Encore Wire Corporation is a leading manufacturer of a broad range of electrical building wire for interior wiring in commercial and industrial buildings, homes, apartments, and manufactured housing. The Company is focused on maintaining a high level of customer service with low-cost production and the addition of new products that complement its current product line.
The matters discussed in this news release, other than the historical financial information, including statements about the copper and aluminum pricing environment, the extent of unfair import competition, profitability and stockholder value, may include forward-looking statements that involve risks and uncertainties, including payment of future dividends, future purchases of stock, fluctuations in the price of copper and other raw materials, the impact of competitive pricing and other risks detailed from time to time in the Company’s reports filed with the Securities and Exchange Commission. Actual results may vary materially from those anticipated.
Additional Disclosures:
The term EBITDA is used by the Company in presentations, quarterly conference calls and other instances as appropriate. EBITDA is defined as net income before interest, income taxes, depreciation and amortization. The Company presents EBITDA because it is a required component of financial ratios reported by the Company to the Company’s banks, and is also frequently used by securities analysts, investors and other interested parties, in addition to and not in lieu of Generally Accepted Accounting Principles (GAAP) results to compare to the performance of other companies who also publicize this information. Financial analysts frequently ask for EBITDA when it has not been presented. EBITDA is not a measurement of financial performance under GAAP and should not be considered an alternative to net income as an indicator of the Company’s operating performance or any other measure of performance derived in accordance with GAAP.
The Company has reconciled EBITDA with net income for previous fiscal years in Form 8-K filings with the Securities and Exchange Commission. EBITDA for each period pertinent to this press release is calculated and reconciled to net income as follows:
 Quarter Ended December 31,Year Ended December 31,
In Thousands2019201820192018
Net Income$10,535  $25,030  $58,129  $78,150  
Income Tax Expense3,292  7,424  17,599  23,534  
Interest Expense60  60  239  265  
Depreciation and Amortization4,453  4,192  17,707  16,513  
EBITDA$18,340  $36,706  $93,674  $118,462  

2


Encore Wire Corporation
Condensed Balance Sheets
(In Thousands)
 
December 31, 2019December 31, 2018
 (unaudited) 
ASSETS
Current Assets
Cash$230,965  $178,405  
Receivables, net223,098  235,353  
Inventories, net89,684  102,367  
Prepaid Expenses and Other5,491  3,112  
Total Current Assets549,238  519,237  
Property, Plant and Equipment, net333,179  298,658  
Other Assets737  165  
Total Assets$883,154  $818,060  
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts Payable$40,509  $36,706  
Accrued Liabilities and Other34,787  36,866  
Total Current Liabilities75,296  73,572  
Long-Term Liabilities
Deferred Income Taxes and Other28,762  24,032  
Total Long-Term Liabilities28,762  24,032  
Total Liabilities104,058  97,604  
Stockholders’ Equity
Common Stock269  269  
Additional Paid-in Capital63,009  60,822  
Treasury Stock(91,056) (91,056) 
Retained Earnings806,874  750,421  
Total Stockholders’ Equity779,096  720,456  
Total Liabilities and Stockholders’ Equity$883,154  $818,060  

3


Encore Wire Corporation
Condensed Statements of Income
(In Thousands, Except Per Share Data)
 
 Quarter Ended December 31,Year Ended December 31,
 2019201820192018
(unaudited)(unaudited)
Net sales$302,252  100.0 %$319,727  100.0 %$1,274,994  100.0 %$1,288,683  100.0 %
Cost of sales266,505  88.2 %266,501  83.4 %1,109,023  87.0 %1,098,961  85.3 %
Gross profit35,747  11.8 %53,226  16.6 %165,971  13.0 %189,722  14.7 %
Selling, general and administrative expenses22,927  7.6 %21,613  6.8 %94,442  7.4 %90,212  7.0 %
Operating income12,820  4.2 %31,613  9.8 %71,529  5.6 %99,510  7.7 %
Net interest & other income1,007  0.4 %841  0.3 %4,199  0.4 %2,174  0.2 %
Income before income taxes13,827  4.6 %32,454  10.1 %75,728  6.0 %101,684  7.9 %
Provision for income taxes3,292  1.1 %7,424  2.3 %17,599  1.4 %23,534  1.8 %
Net Income$10,535  3.5 %$25,030  7.8 %$58,129  4.6 %$78,150  6.1 %
Basic earnings per share$0.50  $1.20  $2.78  $3.75  
Diluted earnings per share$0.50  $1.20  $2.77  $3.74  
Weighted average number of common and common equivalent shares outstanding:
Basic20,912  20,878  20,904  20,845  
Diluted21,002  20,927  20,990  20,910  
Cash dividend declared per share$0.02  $0.02  $0.08  $0.08  

4
Document

Exhibit 99.2
 
PRESS RELEASEContact:Bret J. Eckert
972-562-9473February 18, 2020Vice President & CFO
ENCORE WIRE ANNOUNCES DIRECTOR TO RETIRE

McKinney, TX ‑ Encore Wire Corporation (NASDAQ Global Select: WIRE) (the “Company”) announced today that Donald E. Courtney, a director on the Company’s Board of Directors (the “Board”), will retire this year following 31 years on the Board. Mr. Courtney will serve the remainder of his current term on the Board and will not stand for re-election at the Company’s 2020 annual meeting of stockholders.
Daniel L. Jones, Chairman, President and Chief Executive Officer of Encore Wire Corporation, said, “Don Courtney has been a member of our board since inception in 1989, tirelessly serving on various committees of the Board during his tenure as a director. His experience and leadership helped shape us into the Company we are today. All of us at Encore Wire wish to express our sincere appreciation to Mr. Courtney for his exceptional contributions to the Company over the years.
We have identified an individual that will bring diversity to our board with more information forthcoming in our Proxy filing in March.”
Encore Wire Corporation is a leading manufacturer of a broad range of electrical building wire for interior wiring in commercial and industrial buildings, homes, apartments, and manufactured housing. The Company is focused on maintaining a high level of customer service with low-cost production and the addition of new products that complement its current product line.

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Feb. 17, 2020
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Document Period End Date Feb. 17, 2020
Entity Registrant Name ENCORE WIRE CORPORATION
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