McKinney, TX - Encore Wire Corporation (NASDAQ Global Select: WIRE) today announced results for the fourth quarter and full year ended December 31, 2014.
Net sales for the fourth quarter of 2014 decreased to $285.3 million compared to $293.5 million during the fourth quarter of 2013. Unit volume, measured in copper pounds contained in the wire sold, increased 2.4% and was offset by a 6.3% decrease in the average selling price per copper pound sold in the fourth quarter of 2014 versus the same period in 2013. Sales prices declined primarily due to lower copper prices, which declined 7.9% versus the fourth quarter of 2013. Aluminum building wire sales continued their growth pattern, constituting 9.2% of net sales dollars for the fourth quarter of 2014 versus 8.0% in the fourth quarter of 2013. Net income for the fourth quarter of 2014 was $5.1 million versus $11.2 million in the fourth quarter of 2013. Fully diluted net earnings per common share were $0.24 in the fourth quarter of 2014 versus $0.54 in the fourth quarter of 2013.
Net sales for the year ended December 31, 2014, increased to $1.167 billion compared to $1.158 billion during the same period in 2013. Copper unit volume increased 3.6% in 2014 versus 2013. The volume increase was offset by a 4.8% decrease in the average selling price per copper pound sold in 2014 versus 2013. Sales prices declined primarily due to lower copper prices, which declined 5.7% in 2014 versus 2013. Aluminum building wire sales continued to grow, constituting 8.9% of net sales dollars during 2014 versus 6.9% in 2013. Net income for the year ended December 31, 2014, was $37.1 million versus $46.9 million in 2013. Fully diluted net earnings per common share were $1.78 for the year ended December 31, 2014, versus $2.26 in 2013.
On a sequential-quarter comparison, net sales for the fourth quarter of 2014 were $285.3 million versus $297.4 million during the third quarter of 2014. Copper unit volume increased 1.4% on a sequential-quarter comparison, despite the fact that the fourth quarter is generally a slower quarter in the construction and building wire industries. Net income for the fourth quarter of 2014 was $5.1 million versus $11.1million in the third quarter of 2014. Fully diluted net income per common share was $0.24 in the fourth quarter of 2014 versus $0.53 in the third quarter of 2014.
Commenting on the results, Daniel L. Jones, President and Chief Executive Officer, said, “The fourth quarter was good from a volume perspective. Aluminum unit volumes were up strongly in the fourth quarter and the full year as we continue to grow that portion of our business. Copper wire units were also up in 2014 versus 2013. The overall construction and building wire markets did not show any significant improvement over last year. Anecdotal information confirms our belief that we are outperforming the industry in volume growth. Our fourth-quarter copper wire unit volume is near the average of the first three quarters. As we have previously noted, 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 wire spread decreased 2.5% in 2014 versus 2013, while our copper unit volume shipped in 2014 increased 3.6% versus 2013. Copper spreads decreased 5.7% on a sequential-quarter comparison. The total year copper spread contracted 2.5%, as the average price of copper purchased decreased 5.7% in 2014 versus 2013, driving the average selling price of wire sold down 4.8%. Aluminum spreads were down 8.1% in 2014 versus 2013 as a financially weak competitor appears to be cutting prices to make up for poor delivery performance. The aluminum building wire products grew to 8.9% of net sales in 2014, driven by a unit sales increase of 34.4% in 2014 versus 2013. The decreased spreads accounted for 92% of the drop in pre-tax income in 2014 versus 2013. Our new aluminum plant expansion is proceeding on schedule and will begin producing wire in the second quarter and will ramp up through the end of the year. Copper and other commodity prices trended down in 2014 contributing to the margin deterioration we endured in 2014 versus 2013. However, margins can reverse course quickly in this industry, and bear in mind that the copper spread was down only 2.5% year over year. We have seen these price cycles before.
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.
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 $54.7 million in cash at the end of the quarter. We also declared another cash dividend during the quarter. We understand that this is a cyclical industry and therefore we designed and manage our cost structure and balance sheet accordingly. We thank our employees and associates for their outstanding effort and our shareholders for their continued support.”
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.