Encore Wire Corp (WIRE, Financial) released its Q3 2023 earnings report on October 24, 2023. Despite facing market challenges, the company has reported strong results, with a Q3 net income of $82.1 million and YTD net income of $306.3 million. The company's earnings per diluted share for Q3 stand at $4.82, with YTD earnings per diluted share of $17.40.
Financial Performance and Challenges
Encore Wire Corp (WIRE, Financial) reported net sales of $637.0 million for Q3 2023, compared to $762.4 million in Q3 2022. The decrease in net sales dollars was driven by an anticipated decrease in the average selling prices in Q3 2023 compared to Q3 2022. Despite this, the company's copper unit volume increased by 6.4% in Q3 2023 versus Q3 2022.
The company's gross profit percentage for Q3 2023 was 23.3%, compared to 39.3% in Q3 2022. This decrease in gross profit margin was primarily due to the decrease in the average selling price of copper pounds sold, which resulted in the continued gradual abatement of copper spreads during the quarter.
Share Repurchases and Capital Expenditures
Encore Wire Corp (WIRE, Financial) continued its share repurchase program during Q3 2023, repurchasing 710,083 shares during the quarter and 2,185,492 YTD in 2023. The total cash outlay for share repurchases was $121.2 million during the quarter and $375.0 million YTD in 2023.
The company's capital expenditures amounted to $118.6 million YTD in 2023. The company also reported cash on hand of $581.8 million as of September 30, 2023.
Company Commentary
Commenting on the results, Daniel L. Jones, Chairman, President and Chief Executive Officer of Encore Wire Corporation, said,
Demand for our products has remained strong, and our build-to-ship model, combined with the increased throughput of our modern service center, allowed us to reach a quarterly record of copper and aluminum pounds shipped. Despite continued tightness in raw copper availability, our key suppliers continue to perform at a high level which positioned us favorably to meet customer demand in a timely manner."
He further added,
Our balance sheet remains very strong, and we remain committed to returning capital to shareholders, as evidenced by our ongoing share repurchases. We have no long-term debt, and our revolving line of credit remains untapped. We had $581.8 million in cash as of September 30, 2023."
Looking Ahead
Encore Wire Corp (WIRE, Financial) remains committed to reinvesting in its business with current and planned projects focused on increasing capacity, efficiency, and vertical integration across its campus. The company expects total capital expenditures to range from $160 - $170 million in 2023, $150 - $170 million in 2024, and $80 - $100 million in 2025.
Despite the near-term challenges, the company remains focused on the long-term opportunities for its business and continues to believe in its operational agility, speed to market, and deep supplier relationships as competitive advantages in serving its customers' evolving needs and capturing market share in the current economic environment.
