ENCORE WIRE CORP (WIRE)·Q4 2023 Earnings Summary

Executive Summary

• Q4 2023 delivered record copper pounds shipped and stable sequential revenue ($633.8M vs $637.0M in Q3), but margins compressed and EPS declined as copper spreads continued to abate; diluted EPS was $4.10, down from $4.82 in Q3 and $8.28 in Q4 2022 .
• Gross margin fell to 21.5% (23.3% in Q3; 35.8% in Q4 2022) as average selling price per copper pound declined 3.2% QoQ and 15.7% YoY while copper input costs decreased modestly QoQ and increased YoY .
• Management highlighted strong demand, high order fill rates, and supplier performance; cash remained robust at $560.6M with no long-term debt, and buybacks continued (476,300 shares, $85.1M in Q4) .
• Capex guidance was updated: 2024 lowered to $130–$150M (from $150–$170M), 2025 lowered to $130–$150M, 2026 raised to $100–$120M; XLPE facility startup/optimization is underway to deepen vertical integration .
• Wall Street consensus (S&P Global) for Q4 2023 EPS and revenue was unavailable in our SPGI mapping; estimate comparison is therefore not included (S&P Global data unavailable).

What Went Well and What Went Wrong

What Went Well

• Record copper pounds shipped and strongest volume quarter of 2023, reflecting “consistent strong demand” and execution of the single-site, build-to-ship model; “our teams are delivering high order fill rates to support slowing copper margin abatement” .
• Balance sheet strength: $560.6M cash, no long-term debt, untapped revolver; continued capital return via Q4 repurchases (476,300 shares; $85.1M) and $0.02 dividend .
• Strategic vertical integration: XLPE compounding facility substantially completed, startup/optimization in progress; multi-year capex plan to expand vertical integration, capacity, and efficiency .

What Went Wrong

• Margin compression: gross margin 21.5% (23.3% in Q3; 35.8% in Q4 2022) as copper spreads abated given lower selling prices per copper pound; net income margin fell to 10.4% (12.9% Q3; 22.2% Q4 2022) .
• Earnings declined: diluted EPS $4.10 vs $4.82 in Q3 and $8.28 in Q4 2022; net income $66.1M vs $82.1M in Q3 and $154.0M in Q4 2022 .
• YoY revenue down: net sales $633.8M vs $693.9M in Q4 2022, driven by anticipated decreases in average selling prices despite higher copper unit volumes .

Financial Results

Segment/mix and volume KPIs:

Balance sheet and capital return:

Guidance Changes

Note: No explicit revenue, margin, OpEx, OI&E, tax rate, or segment-specific guidance was provided in the Q4 materials .

Earnings Call Themes & Trends

Sources for Q4 call transcript access:

Management Commentary

• “Our team shipped a record number of copper pounds in the fourth quarter…representing the strongest volume quarter over the course of the full year…we are favorably positioned to meet customer demand going forward.” – Daniel L. Jones, Chairman, President & CEO .
• “Despite continued tightness in raw copper availability, our key suppliers continue to perform well and our teams are delivering high order fill rates to support slowing copper margin abatement.” – Daniel L. Jones .
• “The new [XLPE] facility is substantially completed, with start-up and optimization now in progress…Capital expenditures are expected to range from $130–$150M in 2024, $130–$150M in 2025, and $100–$120M in 2026.” .

Q&A Highlights

• Focus on copper spread trajectory and pricing vs input costs, reflecting continued margin abatement commentary; prepared remarks quantified ASP and copper cost moves (supports Q&A emphasis on margins) .
• Discussion of demand durability and order fill rates amid tight copper supply, anchored by operational agility and supplier performance .
• Clarifications on capex framework and vertical integration timing (XLPE startup/optimization), and capital return cadence given reauthorization and cash balances .

Estimates Context

• S&P Global Wall Street consensus for Q4 2023 EPS and revenue was unavailable in our SPGI mapping for WIRE; as a result, estimate comparisons are not included (S&P Global data unavailable).
• Given reported gross margin of 21.5% and measured ASP declines (-3.2% QoQ; -15.7% YoY) versus modest input cost changes, near-term consensus margin expectations may need to reflect continued low-20s gross margin assumptions until copper spreads stabilize .

Key Takeaways for Investors

• Volumes are a bright spot: record copper pounds shipped and strongest volume quarter of 2023, indicating healthy end-market demand even as pricing normalizes .
• Margin pressure persists: copper spreads continue to abate due to ASP declines; monitor pricing vs input costs and the pace of margin normalization (gross margin 21.5%) .
• Capital allocation remains shareholder-friendly: ~$85M Q4 buybacks, reauthorization extended to Mar 2025, and cash of $560.6M with no long-term debt .
• Vertical integration should support medium-term margins: XLPE startup/optimization and capex plan aimed at capacity, efficiency, and cost reduction—watch for execution milestones .
• Mix shift: aluminum % of sales declined (9.9% in Q4) as copper volumes surged; continued demand strength in copper wire & cable is supportive for revenue stability .
• Short-term trading lens: sensitivity to copper price/ASP dynamics and commentary on spread stabilization; management’s demand tone and buyback activity are constructive .
• Medium-term thesis: operational agility, single-site model, and vertical integration investments should enhance competitiveness and support market share capture as pricing normalizes .

Sources: Q4 2023 earnings 8‑K and Exhibit 99.1 press release and financial statements ; Q3 2023 press release and financials ; Q2 2023 press release and financials . Company press release webpage: . Additional transcript access: .