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Encore Wire Reports Second Quarter Results

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Encore Wire Corporation (NASDAQ Global Select: WIRE) today announced
results for the second quarter of 2018.

Net sales for the second quarter ended June 30, 2018 were $336.8 million
compared to $291.5 million during the second quarter of 2017. Copper
unit volume, measured in pounds of copper contained in the wire sold,
increased 0.1% in the second quarter of 2018 versus the second quarter
of 2017. The average selling price of wire per copper pound sold
increased 17.2% in the second quarter of 2018 versus the second quarter
of 2017. Copper wire sales prices increased primarily due to the higher
price of copper purchased, which increased 18.7% versus the second
quarter of 2017. Net income for the second quarter of 2018 was $18.1
million versus $10.9 million in the second quarter of 2017. Fully
diluted net earnings per common share increased 64.8% to $0.86 in the
second quarter of 2018 versus $0.52 in the second quarter of 2017.

Net sales for the six months ended June 30, 2018 were $628.2 million
compared to $570.9 million during the same period in 2017. Copper unit
volume, measured in pounds of copper contained in the wire sold,
decreased 3.8% in the six months ended June 30, 2018 versus the six
months ended June 30, 2017. The average selling price of wire per copper
pound sold increased 16.4% in the six months ended June 30, 2018 versus
the six months ended June 30, 2017, driving the 10.0% increase in net
sales dollars. Copper wire sales prices increased primarily due to the
higher price of copper purchased, which increased 18.5% in the six
months ended June 30, 2018 versus the same period in 2017. Net income
for the six months ended June 30, 2018 increased 19.9% to $29.4 million
versus $24.6 million in the same period in 2017. Fully diluted net
earnings per common share were $1.41 in the six months ended June 30,
2018 versus $1.18 in the same period in 2017.

On a sequential quarter comparison, net sales for the second quarter of
2018 were $336.8 million versus $291.4 million during the first quarter
of 2018. Sales dollars increased due to a 16.5% unit volume increase of
copper building wire sold, offset slightly by a 1.3% 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 1.4% in the price of copper purchased. Net income for the
second quarter of 2018 was $18.1 million versus $11.4 million in the
first quarter of 2018. Fully diluted net income per common share was
$0.86 in the second quarter of 2018 versus $0.54 in the first quarter of
2018.

Commenting on the results, Daniel L. Jones, Chairman, President and
Chief Executive Officer of Encore Wire Corporation, said, "We are
pleased with our improved results in the second 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 six month comparisons
of 2018 to 2017. The increased top line was driven primarily by higher
copper raw material prices. Unit volumes bounced back strongly in the
second quarter of 2018 versus the first quarter of 2018, rising 16.5% in
copper pounds shipped. Margins increased in both the quarterly and six
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 14.2% in the second quarter of 2018 versus the second quarter
of 2017, and increased 12.1% on the six month comparison while declining
1.1% on a sequential quarter comparison. The copper spread expanded
14.2% as the average price of copper purchased increased 18.7% in the
second quarter of 2018 versus the second quarter of 2017, while the
average selling price of wire sold increased 17.2%. The percentage
change on sales is on a higher nominal dollar amount than on purchases
and, therefore, spreads change on a nominal dollar basis. The $0.32
increase in sequential quarterly earnings was driven primarily by the
strong rebound in unit sales, including an $0.11 positive variance in
stock compensation expense in the second quarter of 2018 versus the
first quarter of 2018. In aluminum wire, which represented 7.3% of our
net sales in the second quarter of 2018, we continued to experience
pressure on margins due to import competition from China. We will
continue to monitor conditions regarding aluminum wire and will take
action to enforce our rights under the U.S. trade remedy laws if we
determine that further action is warranted.

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 $102.0 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."

The Company will host a conference call to discuss the second quarter
results on Wednesday, August 1, 2018, at 10:00 am Central time. Hosting
the call will be Daniel Jones, Chairman, President and Chief Executive
Officer, and Frank Bilban, Vice President and Chief Financial Officer.
To participate in the call, the dial-in number is 888-517-2464, and the
passcode is 6219252#. A telephone replay of this conference call will be
available at 888-843-7419, conference reference 6219252#, until August
31, 2018. A replay of this conference call will also be accessible in
the Investors section of our website 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 existence 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.
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 fiscal years 1996
to 2017 on previous reports on Form 8-K filed 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 June 30, Six Months Ended June 30,
In Thousands   2018     2017   2018     2017
Net Income $ 18,089   $ 10,933 $ 29,442   $ 24,565
Income Tax Expense 5,303 5,640 8,901 12,492
Interest Expense 85 59 144 117
Depreciation and Amortization   4,104     3,850   8,213     7,648
EBITDA $ 27,581   $ 20,482 $ 46,700   $ 44,822
   
Encore Wire Corporation
Consolidated Balance Sheets

(In Thousands)

 
June 30, 2018 December 31, 2017
(Unaudited)
ASSETS
Current Assets
Cash $ 102,020 $ 123,362
Receivables, net 258,414 228,885
Inventories 96,866 92,365
Prepaid Expenses and Other   3,885     2,372  
Total Current Assets 461,185 446,984
Property, Plant and Equipment, net 293,364 286,798
Other Assets   165     193  
Total Assets $ 754,714   $ 733,975  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable $ 34,684 $ 36,330
Accrued Liabilities and Other   26,941     35,301  
Total Current Liabilities 61,625 71,631
Long-Term Liabilities
Deferred Income Taxes   21,760     20,999  
Total Long-Term Liabilities   21,760     20,999  
Total Liabilities 83,385 92,630
Stockholders' Equity
Common Stock 269 269
Additional Paid-in Capital 59,568 58,192
Treasury Stock (91,056 ) (91,056 )
Retained Earnings   702,548     673,940  
Total Stockholders' Equity   671,329     641,345  
Total Liabilities and Stockholders' Equity $ 754,714   $ 733,975  
   
Encore Wire Corporation
Consolidated Statements of Income

(In thousands, except per share data)

 
Quarter Ended June 30, Six Months Ended June 30,
2018     2017   2018     2017  
(Unaudited)    
   
Net Sales $ 336,793 100.0 % $ 291,534 100.0 % $ 628,224 100.0 % $ 570,926 100.0 %
Cost of Goods Sold   292,296   86.8 %   255,662   87.7 %   546,232   86.9 %   495,849   86.8 %
Gross Profit 44,497 13.2 % 35,872 12.3 % 81,992 13.1 % 75,077 13.2 %
 
Selling, General and Administrative Expenses   21,498   6.4 %   19,319   6.6 %   44,385   7.1 %   38,056   6.7 %
Operating Income 22,999 6.8 % 16,553 5.7 % 37,607 6.0 % 37,021 6.5 %
 
Net Interest & Other Income   393   0.1 %   20   %   736   0.1 %   36   %
Income before Income Taxes 23,392 6.9 % 16,573 5.7 % 38,343 6.1 % 37,057 6.5 %
 
Provision for Income Taxes   5,303   1.6 %   5,640   1.9 %   8,901   1.4 %   12,492   2.2 %
Net Income $ 18,089   5.4 % $ 10,933   3.8 % $ 29,442   4.7 % $ 24,565   4.3 %
 
Basic Earnings Per Share $ 0.87 $ 0.53 $ 1.41 $ 1.18
Diluted Earnings Per Share $ 0.86 $ 0.52 $ 1.41 $ 1.18
Weighted Average Common and Common Equivalent Shares Outstanding:
Basic   20,847   20,751   20,838   20,745
Diluted   20,918   20,835   20,911   20,834
Cash Dividends Declared per Share $ 0.02 $ 0.02 $ 0.04 $ 0.04

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