Executive Summary

Q3 2023 delivered solid volumes but margin compression: net sales were $0.637B, diluted EPS $4.82, and gross margin 23.3% as copper spreads continued to abate; net sales were flat sequentially and down year-over-year, with EPS down both sequentially and YoY .
Management highlighted a quarterly record of copper and aluminum pounds shipped and strong supplier performance despite tight raw copper availability, supporting the build-to-ship model and high order fill rates .
Capital allocation remained aggressive: $121.2M buybacks (710,083 shares) in Q3; since Q1 2020, 5.16M shares repurchased (~25% of outstanding), with $581.8M cash and no long-term debt at quarter-end .
Capex guidance for 2023 narrowed to $160–$170M (from $160–$180M), with 2024 at $150–$170M and 2025 at $80–$100M; XLPE compounding facility is substantially complete, supporting vertical integration and cost position .
Wall Street consensus from S&P Global was unavailable due to missing mapping; therefore, beat/miss vs estimates cannot be assessed at this time [SpgiEstimatesError for WIRE].

What Went Well and What Went Wrong

What Went Well

“Quarterly record of copper and aluminum pounds shipped” with strong supplier performance enabling timely customer delivery despite tight raw copper availability .
Balance sheet strength: $581.8M cash, no long-term debt, untapped revolver; continued buybacks with $121.2M repurchased in Q3 and ~25% of shares repurchased since Q1 2020 at ~$133 average price .
Vertical integration progress: XLPE compounding facility substantially complete; targeted capex through 2025 to expand integration, capacity, efficiency, and sustainability positioning .

What Went Wrong

Gross margin compressed to 23.3% (vs 26.1% in Q2 and 39.3% YoY) as the average selling price per copper pound fell 4.3% sequentially and 16.8% YoY while copper cost per pound decreased 2.0% sequentially but increased 4.6% YoY .
EPS declined to $4.82 (vs $6.01 in Q2 and $9.97 YoY), reflecting ongoing margin abatement and lower pricing environment .
SG&A pressure YTD from SARs expense: $16.9M increase versus a breakeven SARs benefit in the prior year period; SARs charges tied to stock price increases .

Financial Results

Metric	Q3 2022	Q2 2023	Q3 2023
Net Sales ($USD Billions)	$0.762	$0.636	$0.637
Diluted EPS ($USD)	$9.97	$6.01	$4.82
Gross Margin (%)	39.3%	26.1%	23.3%
Operating Income ($USD Millions)	$244.2	$127.5	$98.0
Operating Margin (%)	32.0%	20.0%	15.4%
Net Income ($USD Millions)	$191.8	$104.7	$82.1
Net Income Margin (%)	25.1%	16.5%	12.9%
EBITDA ($USD Millions)	$253.9	$143.7	$114.8

Segment/product mix (proxy):

KPI	Q3 2022	Q2 2023	Q3 2023
Aluminum wire share of net sales (%)	17.4%	14.4%	12.5%
Copper unit volume growth (%)	+6.4% YoY	—	+6.8% Seq
Avg selling price per copper lb	-16.8% YoY	-12.4% Seq (Q2 vs Q1)	-4.3% Seq
Avg copper cost per lb	+4.6% YoY	-5.3% Seq (Q2 vs Q1)	-2.0% Seq

Balance sheet and capital allocation:

KPI	Q2 2023	Q3 2023
Cash & Cash Equivalents ($USD Millions)	$667.8	$581.8
Long-term Debt	$0	$0
Share Repurchases (shares)	772,931	710,083
Share Repurchases (cash outlay, $USD Millions)	$126.7	$121.2

Note: Wall Street consensus (S&P Global) for Q3 2023 EPS and revenue was unavailable due to missing CIQ mapping for WIRE; comparison vs estimates not possible at this time [SpgiEstimatesError for WIRE].

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Capital Expenditures	FY 2023	$160–$180M (Q1/Q2)	$160–$170M (Q3)	Narrowed/Lowered upper bound
Capital Expenditures	FY 2024	$150–$170M (Q1/Q2)	$150–$170M (Q3)	Maintained
Capital Expenditures	FY 2025	$80–$100M (Q1/Q2)	$80–$100M (Q3)	Maintained
XLPE Facility	N/A	Substantially complete by end Q3 2023 (Q2)	Substantially complete (Q3)	Achieved milestone
Dividend	Quarterly	$0.02 per share (Q1/Q2 actual)	$0.02 declared in Q3	Maintained
Share Repurchase Authorization	Through 3/31/2024	Reset to 2,000,000 shares (June)	1,289,917 shares remaining (Q3)	Utilized (program ongoing)

Earnings Call Themes & Trends

Transcript retrieval for the Q3 2023 earnings call was unavailable due to a document access error; themes below reflect press release commentary and prior quarters.

Topic	Previous Mentions (Q1 and Q2 2023)	Current Period (Q3 2023)	Trend
Supply chain/raw copper	Tight copper availability; suppliers performing well; margin abatement gradual (Q1/Q2)	Tight raw copper availability persists; suppliers performing well; record pounds shipped; gradual abatement continues	Stable demand; easing price; margin pressure ongoing
Pricing and spreads	Selling price declines vs YoY; copper cost down QoQ in Q2; abatement of spreads (Q1/Q2)	Selling price down 4.3% QoQ and 16.8% YoY; copper cost -2.0% QoQ, +4.6% YoY; spreads continue to abate	Continued margin normalization
Vertical integration/XLPE	XLPE facility expected substantially complete by end Q3; capex 2023–2025 plan (Q1/Q2)	XLPE substantially complete; capex guidance refined; focus on cost reduction, capacity, efficiency, sustainability	Milestone achieved; execution ongoing
Capital allocation	Significant buybacks; strong cash, no LT debt (Q1/Q2)	Continued buybacks; cash $581.8M; no LT debt; ~25% shares repurchased since 2020	Ongoing returns; balance sheet strong
End-markets/customer service	Build-to-ship model, high order fill rates supporting timely deliveries (Q1/Q2)	Same emphasis; record shipments and timely customer service	Consistent execution

Management Commentary

“Demand for our products has remained strong, and our build-to-ship model, combined with the increased throughput of our modern service center, allowed us to reach a quarterly record of copper and aluminum pounds shipped.” — Daniel L. Jones, Chairman, President & CEO .
“We have no long-term debt, and our revolving line of credit remains untapped. We had $581.8 million in cash as of September 30, 2023… Since the first quarter of 2020 we have repurchased 5,157,769 shares… approximately 25% of outstanding shares.” .
“Capital spending in 2023 through 2025 will further expand vertical integration… to reduce costs as well as modernize select wire manufacturing facilities to increase capacity and efficiency… The new [XLPE] facility is substantially complete.” .
“Ongoing margin abatement remained gradual in the third quarter of 2023” .

Q&A Highlights

Q3 2023 earnings call transcript could not be retrieved due to a document access error in the source system; Q&A details and any guidance clarifications are therefore unavailable for inclusion in this recap [Document ID 1 access error].

Estimates Context

Wall Street consensus EPS and revenue for Q3 2023 (S&P Global/Capital IQ) were unavailable due to missing CIQ mapping for WIRE; as a result, a beat/miss assessment vs consensus cannot be provided at this time [SpgiEstimatesError for WIRE].
Given reported margin compression vs prior periods, Street models that assumed slower margin normalization may need adjustment, but formal estimate revisions cannot be assessed without the consensus baseline .

Key Takeaways for Investors

Volume strength offsets pricing pressure: Net sales held flat sequentially on higher copper unit volumes (+6.8% QoQ), but EPS and margins declined as selling prices per copper pound fell; watch copper spreads for signs of stabilization .
Structural cost work continues: XLPE compounding is substantially complete, and 2023 capex guidance narrowed to $160–$170M, reinforcing vertical integration and long-term margin durability potential once pricing normalizes .
Capital returns remain robust: $121.2M buybacks in Q3, with ~$582M cash and no LT debt offer flexibility to continue repurchases and fund capex without leverage—supportive for share supply and downside protection .
Margin normalization in motion: Gross margin at 23.3% (vs 26.1% Q2) reflects ongoing spread abatement; monitor pricing dynamics and aluminum mix (now 12.5% of sales vs 14.4% Q2, 17.4% YoY) for margin path .
SG&A headwind from SARs: YTD SARs expense increased $16.9M YoY; consider sensitivity of reported SG&A to stock price moves in modeling .
Near-term trading lens: With consensus unavailable, focus on narrative drivers—record shipments vs margin pressure and buyback support; catalysts include signs of spread stabilization and any qualitative readout from the earnings call when accessible .
Medium-term thesis: Vertical integration plus single-site efficiency and strong supplier ties position WIRE to capture share and sustain higher-throughput economics; execution against 2024–2025 capex should enhance capacity, efficiency, and sustainability profile .

ENCORE WIRE CORP (WIRE)·Q3 2023 Earnings Summary