Encore Wire Corporation (WIRE) has reported 4.11 percent rise in profit for the quarter ended Dec. 31, 2016. The company has earned $11.40 million, or $0.55 a share in the quarter, compared with $10.95 million, or $0.53 a share for the same period last year. Revenue during the quarter dropped 4.63 percent to $239.25 million from $250.86 million in the previous year period. Gross margin for the quarter expanded 84 basis points over the previous year period to 14.01 percent. Total expenses were 92.92 percent of quarterly revenues, down from 93.42 percent for the same period last year. This has led to an improvement of 50 basis points in operating margin to 7.08 percent.
Operating income for the quarter was $16.93 million, compared with $16.51 million in the previous year period.
Commenting on the results, Daniel L. Jones, Chairman, President and Chief Executive Officer, said, "We are pleased to report a good fourth quarter and full year. Our unit sales were up in both copper and aluminum building wire for the year despite two competitive issues we noted in our previous quarterly press release. First, our largest competitor announced the purchase of a smaller competitor in the third quarter. Historically, these consolidations generally lead to improved industry margin discipline in the long run, but, in the short run, they can lead to erratic pricing and volumes for us if the selling company pumps sales volumes into the market pre-sale and then dumps its remaining inventory into the market post-sale. We believe that this volume has moved through the pipe at this point, and, as a result, margins improved on a sequential quarter basis. In addition, a different, financially stressed competitor was acting erratically in the aluminum wire market. We hope to see some relief there in 2017. It is also noteworthy that three of our top competitors have had major changes to their executive teams in the last 18 months. This can also lead to some turmoil in the industry as the new teams find their footing in the market. Despite all this turmoil we believe we had a respectable year and believe the industry and our results can improve in 2017. The overall construction and building wire markets remained steady versus last year. Anecdotal information confirms our belief that there are still large commercial and industrial projects in the pipeline.
Working capital increases
Encore Wire Corporation has recorded an increase in the working capital over the last year. It stood at $325.50 million as at Dec. 31, 2016, up 5.87 percent or $18.06 million from $307.44 million on Dec. 31, 2015. Current ratio was at 7.40 as on Dec. 31, 2016, up from 5.90 on Dec. 31, 2015.
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