Encore Wire(WIRE) - 2024 Q1 - Quarterly Report

Financial Performance - Net sales for the first quarter of 2024 were $632.7 million, down from $660.5 million in the first quarter of 2023, primarily due to a decrease in average selling prices[53] - Cost of goods sold was $496.7 million, representing 78.5% of net sales in Q1 2024, up from 68.9% in Q1 2023[54] - Gross profit decreased to $136.0 million, or 21.5% of net sales, in Q1 2024, down from $205.1 million, or 31.1% of net sales, in Q1 2023[54] - Net income for Q1 2024 was $63.3 million, compared to $119.5 million in Q1 2023, with fully diluted earnings per share at $3.92 versus $6.50[56] - Total raw material cost as a percentage of sales increased to 67.9% in Q1 2024 from 60.0% in Q1 2023[57] - Cash provided by operating activities was $86.1 million in Q1 2024, down from $126.9 million in Q1 2023[63] - The cash balance was $614.1 million at March 31, 2024, compared to $697.4 million at March 31, 2023[66] Operational Developments - Copper unit volume increased by 19.7% in the first quarter of 2024 compared to the same period in 2023, while aluminum unit volume also saw an increase[53] - Capital expenditures for 2024 are expected to focus on manufacturing equipment purchases and expansion plans, including a new residential wire and cable manufacturing facility[67] - Total capital expenditures were $164.5 million in 2023, with expectations of $130 - $150 million in 2024, $130 - $150 million in 2025, and $100 - $120 million in 2026[68] - The new residential manufacturing plant is expected to be substantially complete in early Q3 2024, enhancing order fill and capacity[68] - The company plans to fund capital investments through existing cash reserves and operating cash flows[68] - The investment in vertical integration aims to reduce costs and modernize manufacturing processes[68] - The company is committed to enhancing its position as a sustainable and environmentally responsible entity[68] Merger and Regulatory Considerations - The Company entered into a Merger Agreement with Prysmian S.p.A. on April 14, 2024, with each share of common stock to be converted into $290.00 in cash upon consummation[48][50] - The quarterly report includes forward-looking statements regarding the pending merger and associated risks[71] - The company anticipates that the merger may face regulatory approvals and other conditions that could delay or prevent its consummation[71] Risk Management - There have been no significant changes to the company's critical accounting policies since the last annual report[70] - Market risks remain unchanged from the previous annual report, with no material changes reported[72] - The company emphasizes the importance of not relying solely on forward-looking statements due to inherent uncertainties[71]