Encore Wire Corporation

Encore Wire reported Q4 2023 EPS of $4.10 and full-year EPS of $21.62. Q4 net income was $66.1 million and full-year net income was $372.4 million. Gross profit was 21.5% in Q4 versus 23.3% in Q3, and full-year gross profit was 25.5%. Copper unit volumes rose 5.9% sequentially in Q4, 18.8% versus Q4 2022, and 6.7% for the full year. The company ended December 2023 with $560.6 million in cash, spent $164.5 million on capex in 2023, and repurchased 2,661,792 shares during the year for $460.2 million. For 2024-2026, capex is expected to be $130 million to $150 million, $130 million to $150 million, and $100 million to $120 million, respectively.

Daniel Jones emphasized that Encore’s investments in service, efficiency, capacity, and vertical integration are strengthening its competitive position and should support higher gross margins versus pre-COVID levels. He said the company’s single-site, build-to-ship model, fast fill rates, and ability to ship complete orders quickly are key differentiators, especially as demand remains strong in commercial, residential, industrial, data centers, and renewable energy-related end markets. His tone was confident and upbeat, while still acknowledging the business remains competitive and price-sensitive.

Bret Eckert laid out the quarter’s hard numbers and linked the margin decline to lower average selling prices. He said average selling price per copper pound sold fell 3.2% from Q3 while average copper cost per pound purchased fell 1.2%, and that the spread abatement is continuing but slowing. He also noted a $2 million LIFO pickup in Q4, $5 million in Q3, cash of $560.6 million at year-end, $164.5 million of 2023 capex, and $85.1 million of Q4 share repurchases; the board also reauthorized repurchases of up to 2 million shares through March 31, 2025. He expects capex of $130 million to $150 million in 2024 and 2025, and $100 million to $120 million in 2026, funded by cash and operating cash flow.

Analysts focused on what drove the volume surge, whether Encore was taking share, how far gross margins might normalize, and whether the company had excess capacity. Management said commercial work was especially strong, including hotels, government offices, and data centers, and said the service model, quick turns, and high fill rates are helping win incremental demand and support share gains. On capacity, Daniel Jones said the company has “quite a bit of space left” and can still ship at current levels. On the XLPE plant, Bret said benefits will build gradually over a 9- to 12-month startup and optimization period, with the fuller benefit likely showing in the second half of 2024.