Encore Wire(WIRE) - 2020 Q3 - Quarterly Report

Financial Performance - Net sales for Q3 2020 were $339.7 million, a 5.0% increase from $321.2 million in Q3 2019, driven by a 12.0% increase in average selling price despite a 7.1% decrease in copper wire unit volume shipped [43]. - For the first nine months of 2020, net sales were $896.1 million, a 7.9% decrease from $972.7 million in the same period of 2019, primarily due to a 9.3% decrease in copper wire sales [48]. - Gross profit for the first nine months of 2020 increased to $135.7 million, or 15.1% of net sales, compared to $130.2 million, or 13.4% of net sales, in the first nine months of 2019 [49]. Cost Management - Cost of goods sold was $286.2 million, or 84.3% of net sales, in Q3 2020, down from $278.2 million, or 86.6% of net sales, in Q3 2019, resulting in a gross profit of $53.5 million, or 15.7% of net sales [44]. - The average cost per pound of raw copper purchased increased by 9.4% in Q3 2020 compared to Q3 2019, contributing to the rise in average sales price of copper wire [43]. - Total raw materials cost decreased to 72.2% of net sales in Q3 2020, down from 74.3% in Q3 2019, reflecting improved cost management [46]. Operating Expenses - Selling expenses for the first nine months of 2020 decreased to $48.0 million, or 5.4% of net sales, compared to $50.3 million, or 5.2% of net sales, in the same period of 2019 [53]. - Cash provided by operating activities was $54.5 million in the first nine months of 2020, down from $67.4 million in the same period of 2019, despite an increase in net income to $52.0 million [56]. Liquidity and Capital Expenditures - The Company's cash balance was $217.1 million at September 30, 2020, compared to $203.9 million at September 30, 2019, indicating improved liquidity [58]. - Capital expenditures are expected to range from $95 - $100 million in 2020, $100 - $120 million in 2021, and $30 - $50 million in 2022 [59]. - The strong balance sheet and high levels of operating cash flow will support planned capital expenditures [59]. - The company has accelerated the timing of orders for manufacturing equipment due to increased lead times in the current environment [59]. Pricing Dynamics - The average sales price per pound of copper sold increased by 12.0% while the per pound cost of raw copper purchased increased by 9.4%, resulting in a 17.2% increase in the spread between these prices in Q3 2020 [45].