Encore Wire Corp., McKinney, Texas, saw a 13.7 percent drop in net sales for the first quarter of 2005 to $137.2 million compared to $158.9 million during the first quarter of 2004. The $158.9 million in net sales in the first quarter of 2004 is the quarterly record for Encore. Net income for the first quarter of 2005 was $1 million versus $13.3 million in the first quarter of 2004.
Results for the first quarter of 2005 include an adjustment to reduce deferred tax liabilities by approximately $0.8 million, which was finalized by the company in its tax provision review. This adjustment increased net income for the quarter ended March 31, 2005 by $0.8 million or $0.03 per share.
Sales prices for wire rose 3 percent in the first quarter of 2005 versus the first quarter of 2004, but did not keep pace with the cost of raw copper, which increased 23 percent in the year-over-year comparison. Unit volume declined 16 percent in the first quarter of 2005 versus the strong first quarter of 2004.
Vincent A. Rego, company chairman and CEO said, “The building wire industry and Encore Wire experienced a difficult quarter to begin 2005. The comparisons to the record first quarter of 2004 must be looked at in the context of current conditions. The U.S. economy appears to have hit what Wall Street and the Federal Reserve are calling a “soft patch” in the first quarter. The majority of the U.S. also experienced extremely wet weather during the first quarter, delaying many construction projects.”
He said that Encore had experienced a great deal of pricing volatility in the wire markets. “Our competitors demonstrated a proclivity for cutting prices to obtain orders in this soft period. It is unusual to see this type of action in the marketplace in the face of strong copper prices, which have historically translated into strong margins in our industry. In all my years in this industry, I cannot recall ever seeing such low margins in an environment of such strong copper costs.”
Nevertheless, he believes that the order shortfall and price volatility are temporary conditions.
“We continue to take a long-term focus as evidenced by the recent announcement of our expansion into the armored cable market. This natural extension of our product line has significant long-term potential to grow the sales and earnings of Encore Wire.”
WESCO first-quarter earnings increase 17 percent
WESCO International Inc., Pittsburgh, said first-quarter earnings rose 17 percent. The company saw a similar increase in sales.
The company’s profit grew to $11.3 million from $9.7 million a year earlier. Excluding a charge from debt redemption, the company said it would have earned $17.8 million.
Revenue grew 17 percent to $990.9 million from $847.8 million. The company attributed the growth to strong industrial end-user demand and an improving commercial construction market.
Chairman and CEO Roy W. Haley said, “The current outlook for economic activity continues to suggest favorable results for WESCO in 2005. Strong industrial end-user demand coupled with expectations for an improving commercial construction market are the primary contributors to continued sales momentum.
“Over the last 12 months, WESCO’s marketing and sales initiatives have resulted in increased market share and organic sales growth of 16 percent. Based on current momentum, we expect continuation of double-digit sales growth in the second quarter.”
bulbs.com, a privately held e-commerce light bulb supplier, announced record revenues and profits for the first quarter. Driven by continued expansion of the sales force, revenues grew 60 percent while earnings closed ahead of projections.
“Several initiatives contributed to our Q1 growth, not the least of which was the opening of two additional distribution centers in 2004 and the tripling of our call center since last September,” said CEO Steven Rothschild. “As growth of our commercial customer base continues at a pace of over 1,100 new clients per month, we gain substantial additional leverage with our suppliers. Greater purchasing power combined with an effective and low-cost operation has enabled us to expand our target customer base to include recognized retail and hospitality chains, large commercial offices as well as a growing number of multi-location manufacturing and logistics companies.”
An aggressive campaign to hire additional inside sales and customer service representatives is in place. “One of our greatest challenges over the next several months will be to continue to attract and retain bright, aggressive and dedicated employees, said Wendy Rose, vice president of administration and operations. “In 2004, we improved our benefit offering and we continue to foster a work environment where employees are truly empowered to participate in the management of the business.”