Encore Wire Corporation (WIRE) has reported 58.53 percent jump in profit for the quarter ended Mar. 31, 2017. The company has earned $13.63 million, or $0.65 a share in the quarter, compared with $8.60 million, or $0.41 a share for the same period last year. Revenue during the quarter grew 23.87 percent to $279.39 million from $225.54 million in the previous year period. Gross margin for the quarter expanded 67 basis points over the previous year period to 14.03 percent. Total expenses were 92.67 percent of quarterly revenues, down from 94.31 percent for the same period last year. This has led to an improvement of 164 basis points in operating margin to 7.33 percent.
Operating income for the quarter was $20.47 million, compared with $12.83 million in the previous year period.
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 first quarter. There are some key items to note. Net sales dollars increased significantly, comparing the first quarter of 2017 to both the first and fourth quarters of 2016. The increased top line was driven primarily by both higher copper raw material prices as well as increased unit sales volumes. Unit volumes were up 8.1% in copper pounds shipped and 7.8% in aluminum pounds shipped versus the first quarter of last year. Units volumes were up 10.4% in copper pounds shipped and 0.4% in aluminum pounds shipped versus the fourth quarter of last year. Margins increased in copper wire sales but declined in aluminum wire sales. 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 7.0% in the first quarter of 2017 versus the first quarter of 2016 while remaining almost flat on a sequential quarter comparison. The copper spread expanded 7.0% as the average price of copper purchased increased 22.6% in the first quarter of 2017 versus the first quarter of 2016, and the average selling price of wire sold increased 16.9%. The percentage change on sales is on a higher nominal dollar amount than on purchases and, therefore, spreads change on a nominal dollar basis. Aluminum spreads were down 15.9% in the first quarter of 2017 versus the first quarter of 2016 and 7.6% sequentially.
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