ENCORE WIRE CORP (WIRE)·Q1 2024 Earnings Summary

Executive Summary

• Q1 2024 was operationally solid with revenue essentially flat sequentially ($632.7M vs $633.8M) and gross margin steady at 21.5%, but materially below prior-year as copper selling prices normalized; diluted EPS was $3.92 vs $4.10 in Q4 2023 and $6.50 in Q1 2023 .
• Volume strength continued: copper unit volume rose 19.7% YoY (despite raw copper tightness) but was down 4.1% sequentially; ASP per copper pound fell 16.2% YoY while copper purchase costs fell 5.0% YoY, keeping margins at normalized levels .
• Balance sheet remains a strategic asset (no long‑term debt; $614.1M cash), with capex focused on capacity/vertical integration and a new residential facility expected substantially complete in early Q3 2024; quarterly dividend maintained at $0.02 .
• Primary stock catalyst is the pending acquisition by Prysmian for $290.00/share in cash (plus time‑based additional consideration if closing occurs after 4/14/2025); WIRE did not host a Q1 earnings call due to the merger .

What Went Well and What Went Wrong

• What Went Well

  • Strong demand and execution: “consistent, increased copper wire and cable demand from mid‑2023” continued in Q1; Encore’s single‑site, build‑to‑ship model is driving high order fill rates despite copper tightness .
  • Volume growth: copper unit volume +19.7% YoY; aluminum volumes also increased YoY, supporting revenue resilience despite lower prices .
  • Financial strength and investment: no long‑term debt; $614.1M cash; advancing vertical integration and capacity—new residential wire facility targeted for substantial completion early Q3 2024 .

• What Went Wrong

  • Pricing normalization: average selling price per copper pound −16.2% YoY while copper cost −5.0% YoY compressed YoY margins (gross margin 21.5% vs 31.1% in Q1 2023) .
  • Sequential volume decline: copper unit volume −4.1% QoQ, modestly pressuring EPS ($3.92 vs $4.10 in Q4) despite slightly firmer spreads QoQ .
  • Limited investor communication: no Q1 call hosted due to pending Prysmian transaction, restricting real‑time guidance/clarifications .

Financial Results

Estimate comparison (S&P Global/Capital IQ):

• EPS (Q1 2024): Unavailable from S&P Global at time of analysis (consensus mapping not returned).
• Revenue (Q1 2024): Unavailable from S&P Global at time of analysis (consensus mapping not returned).
  Note: S&P Global consensus was not available for WIRE this quarter.

Additional KPIs and cash/capex

Guidance Changes

Additional corporate action

• Pending merger: Prysmian to acquire Encore Wire for $290.00 per share in cash, plus time‑based additional consideration of $0.0635 per share per day after 4/14/2025 until closing (if closing occurs after that date); closing subject to shareholder and regulatory approvals .

Earnings Call Themes & Trends

Note: No Q1 2024 earnings call was hosted due to the pending merger . Thematic evolution leverages Q4 commentary and Q1 press release.

Management Commentary

• “We have experienced consistent, increased copper wire and cable demand from mid‑2023, which continued through the first quarter of 2024…our single‑site, build‑to‑ship model…is an important competitive advantage…our teams are achieving high order fill rates.” – Daniel L. Jones, Chairman, President & CEO .
• “Our balance sheet remains very strong. We have no long‑term debt…We had $614.1 million in cash as of March 31, 2024.” .
• “We remain committed to reinvesting in our business…a state‑of‑the‑art residential wire and cable manufacturing facility…anticipated…substantially complete in early Q3 2024.” .
• Prior quarter context: “Our team shipped a record number of copper pounds in the fourth quarter…Despite continued tightness in raw copper availability…we are favorably positioned to meet customer demand…” – Daniel L. Jones .

Q&A Highlights

• No Q1 2024 earnings call or Q&A was held due to the pending Prysmian transaction .
• Prior quarter (context): Q4 call was hosted, but Q&A details are not applicable to Q1 recap .

Estimates Context

• Wall Street consensus (S&P Global/Capital IQ) for Q1 2024 EPS and revenue was unavailable for WIRE at the time of analysis; therefore, no comparison versus consensus can be provided. S&P Global analyst consensus data was not returned for this ticker during retrieval.

Key Takeaways for Investors

• Operating normalization: Margins have reset to ~21–22% gross range on normalized spreads; sequential gross margin was flat at 21.5% and remains well below 2023/2022 highs, driven by lower selling prices vs prior year .
• Volume resilience: Double‑digit YoY copper unit growth (+19.7%) is supporting revenue stability despite price normalization; near‑term volumes dipped sequentially (−4.1%) but demand backdrop remains constructive .
• Execution through constraints: Despite raw copper tightness, Encore maintained high order fill rates, leveraging its single‑site model and supplier relationships .
• Strong balance sheet and self‑funded growth: No long‑term debt, $614.1M cash, and capex funded from cash/operations; capacity/vertical integration roadmap (residential facility early Q3) underpins service and cost advantages .
• Corporate catalyst dominates: Pending $290 cash acquisition by Prysmian re‑anchors stock path to deal closure, with timing dependent on shareholder and regulatory approvals; absence of a Q1 call/guidance suggests limited standalone near‑term catalysts beyond deal updates .
• Dividend maintained: $0.02 regular dividend sustained alongside investment and M&A process .
• Risk lens: Pricing volatility in copper, raw material tightness, and macro demand mix remain key operational variables; regulatory timeline for the transaction is the primary stock driver near term .

Citations:

• Q1 2024 earnings press release and financials:
• Q4 2023 earnings press release and financials:
• Prysmian acquisition terms and approvals: