Encore Wire Corp., McKinney, Texas, said net sales for the second quarter of 2004 increased 71 percent to $138.1 million compared to $80.6 million during the second quarter of 2003. Net income for the second quarter of 2004 increased 174 percent to $7.3 million versus $2.7 million in the second quarter of 2003.
Vincent A. Rego, chairman and chief executive officer of Encore Wire, said Encore saw significant volatility in the copper and wire markets in the second quarter of 2004.
“Copper prices began the second quarter at $1.37 per pound and then quickly declined to as low as $1.15 during the quarter,” he said. “Although logically our industry should have been able to maintain stable margins at what are historically high copper prices, price discounting and reduced margins prevailed during the quarter. Shipment volumes declined in the second quarter versus the first quarter due to several factors. Our customers appeared to be working off some inventory in the field during the quarter and were ordering cautiously as they anticipated further price cuts.”
Rego added that volumes were also adversely affected by a shortage of steel conduit required to pull wire through on commercial jobs and a national truck shortage, which made it difficult at times to get orders shipped on a timely basis and resulted in some canceled orders.
He said the company adjusted its inventory levels by lowering its production schedule in the second quarter of 2004. “We believe that these factors are short-term problems in what we believe is a long-term upward trend for the copper markets and the wire industry,” he said.
Littelfuse Inc., Des Plaines, Ill., reported sales for the second quarter of 2004 of $128.8 million, a 77 percent increase from sales of $72.8 million in the second quarter of 2003. The recent acquisitions of Teccor Electronics and Heinrich Industrie accounted for approximately $40 million of the increase from the prior year quarter. Excluding these acquisitions, sales for the second quarter of 2004 increased approximately 22 percent compared to the prior- year quarter.
Sales for the second quarter of 2004 were up 19 percent for electrical, compared to the prior-year period.
Electrical sales have begun to trend up, reflecting continued improvement in industrial activity and the beginnings of a recovery in nonresidential construction,” said Howard B. Witt, chairman, president and chief executive officer.
Thomas & Betts Corp., Memphis, Tenn., reported second quarter 2004 net earnings of $20 million, up significantly from the $6.8 million in net earnings reported in the second-quarter 2003.
Sales in the quarter were $369 million, up $46.3 million, or 14.4 percent, from the prior-year period. Earnings from operations were $35.6 million in the second-quarter 2004 or 9.7 percent of sales. This is more than twice the $14.9 million in operating earnings reported in the second-quarter 2003.
Dominic J. Pileggi, president and chief executive officer, said, “Each of our business segments contributed to our strong performance through their continued effort to effectively manage the volatility in raw material pricing and availability, their relentless focus on improving productivity and their strong discipline in controlling expenses.”
Pileggi continued, “We are especially pleased with the improvement in earnings from operations, as we came very close to achieving our goal of double-digit operating earnings as a percent of sales. We remain focused on meeting or exceeding this goal as our markets recover.”
Pileggi noted that the net impact from rising material costs, especially steel, was minimal in the quarter, as the company largely offset these costs through a combination of price increases and, to a lesser extent, productivity improvements.
During the second quarter, the company aggregated the reporting of its Communications segment into its Electrical segment and has adjusted prior-period results to reflect this change. Second-quarter sales in the company’s electrical segment were $311 million, up $35.1 million, or 12.7 percent, compared to $275.9 million in segment sales reported in the second quarter 2003. Segment earnings more than doubled to $32.5 million compared to $14.3 million last year.
“Activity in the second quarter suggests that, with the exception of nonresidential construction, our end markets are beginning to turn the corner and should continue to improve compared to 2003 in the third and fourth quarters,” said Pileggi.