Encore Wire Corporation announced the company is building a 250,000 square-foot expansion to the existing aluminum manufacturing plant on its McKinney, Texas campus. The company projects expenditures for this project, including related upgrades to Encore’s McKinney complex, will be approximately $41 million to $46 million. These expenditures will be made in 2014 and 2015. The plant expansion is part of the Company’s capital expenditure plan for 2014 and 2015 that will also include the purchase of manufacturing equipment to produce aluminum wire and cable.
Commenting on the announcement, Daniel L. Jones, President and Chief Executive Officer of Encore Wire Corporation, said, “Encore Wire has experienced steady growth throughout its history. In order to plan for our future and continue the long term growth of the Company we have continued to increase our product offerings to our existing customer base in the building wire category. In 2006, we opened a new armored cable plant, and in 2008, we opened a plant dedicated to the production of large tray cable. In 2012 we opened a new plant dedicated to the production of aluminum building wire. The aluminum building wire sales have exceeded our expectations, with gross sales totaling over $100 million in the last four quarters. With the demand for these products clearly exceeding our capacity, we have decided to go forward and expand the plant to accommodate increased production. This expansion will add an estimated 128 new jobs over the next couple of years.
We also strongly believe that our ability to offer aluminum building wire has helped to increase our copper building wire sales over the last 2 years. Over the trailing four quarters, our copper unit sales are up 13% over the previous four quarters. We believe that is due in some part to the fact we now also offer aluminum wire. We continue to believe that copper will be the conductor of choice in most building wire applications, but we will offer aluminum to those customers who want it. We will continue to canvass our independent manufacturer’s representatives and our electrical distributor customers, to determine what products they are purchasing that may make sense for us to produce and sell.
Our strong balance sheet enables us to expand capacity when strategic opportunities arise. We have ready access to the capital required to fund this project and we will be poised to take even greater advantage of future up swings in business. We will continue to manage the Company for the long term and will make capital improvements to allow for sustained growth, while ensuring our balance sheet remains strong. We have no long term debt, and our revolving line of credit is paid down to zero. In addition, we have $19.1million in cash as of June 30, 2014.”
Encore Wire Corporation is a leading manufacturer of a broad range of electrical building wire for interior wiring in commercial and industrial buildings, homes, apartments, and manufactured housing. The company is focused on maintaining a high level of customer service with low-cost production and the addition of new products that complement its current product line. The matters discussed in this news release, other than the historical financial information, including statements about the copper pricing environment, profitability and stockholder value, may include forward-looking statements that involve risks and uncertainties, including payment of future dividends, future purchases of stock, fluctuations in the price of copper and other raw materials, the impact of competitive pricing and other risks detailed from time to time in the Company’s reports filed with the Securities and Exchange Commission. Actual results may vary materially from those anticipated.