10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549 

FORM 10-K

(Mark One)

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2020

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                  to                 

Commission File Number: 000-20278

ENCORE WIRE CORPORATION

(Exact name of registrant as specified in its charter)

Delaware		75-2274963
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
1329 Millwood Road
McKinney,	Texas	75069
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (972) 562-9473

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $.01 per share	WIRE	The NASDAQ Global Select Market

Securities registered pursuant to Section 12(g) of the Act: None 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    ¨  Yes    ý  No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    ¨  Yes    ý  No

Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Exchange Act from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.                ý  Yes    ¨  No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).                                ý  Yes    ¨  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.			o
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.			☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    ☐  Yes    ý  No

The aggregate market value of the Common Stock held by non-affiliates of the registrant computed by reference to the price at which the Common Stock was last sold as of the last business day of the registrant’s most recently completed second fiscal quarter was $840,792,735 (Note: The aggregate market value of Common Stock held by the Company’s directors, executive officers, immediate family members of such directors and executive officers, 10% or greater stockholders and other stockholders deemed to be affiliates was excluded from the computation of the foregoing amount. The characterization of such persons as “affiliates” should not be construed as an admission that any such person is an affiliate of the Registrant for any other purpose).

Number of shares of Common Stock outstanding as of February 18, 2021: 20,631,145

DOCUMENTS INCORPORATED BY REFERENCE

Listed below are documents, parts of which are incorporated herein by reference, and the part of this report into which the document is incorporated:

(1)Proxy statement for the 2021 annual meeting of stockholders – Part III

ENCORE WIRE CORPORATION

FORM 10-K

FOR THE YEAR ENDED DECEMBER 31, 2020

Table of Contents

PART I	PAGE
Item 1. Business	1
Item 1A. Risk Factors	5
Item 1B. Unresolved Staff Comments	8
Item 2. Properties	8
Item 3. Legal Proceedings	8
Item 4. Mine Safety Disclosures	9
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	10
Item 6. Selected Financial Data	12
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations	13
Item 7A. Quantitative and Qualitative Disclosures About Market Risk	20
Item 8. Financial Statements and Supplementary Data	22
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	36
Item 9A. Controls and Procedures	37
PART III
Item 10. Directors, Executive Officers and Corporate Governance	39
Item 11. Executive Compensation	39
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	39
Item 13. Certain Relationships and Related Transactions, and Director Independence	39
Item 14. Principal Accounting Fees and Services	39
PART IV
Item 15. Exhibits and Financial Statement Schedules	40
Item 16. Form 10-K Summary	41
SIGNATURES	43

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PART I

Item 1. Business.

General

Encore Wire Corporation is a Delaware corporation, incorporated in 1989, with its principal executive office and manufacturing plants located at 1329 Millwood Road, McKinney, Texas 75069. The Company’s telephone number is (972) 562-9473. As used in this annual report, unless otherwise required by the context, the terms “we,” “our,” “Company,” “Encore” and “Encore Wire” refer to Encore Wire Corporation.

Encore believes it is a low-cost manufacturer of electrical building wire and cable. The Company is a significant supplier of building wire for interior electrical wiring in commercial and industrial buildings, homes, apartments, manufactured housing, and data centers.

The principal customers for Encore’s wire are wholesale electrical distributors, who sell building wire and a variety of other products to electrical contractors. The Company sells its products primarily through independent manufacturers’ representatives located throughout the United States and, to a lesser extent, through its own direct in-house marketing efforts.

Strategy

Encore’s strategy is to further expand its share of the building wire market primarily by emphasizing a high level of customer service and the addition of new products that complement its current product line, while maintaining and enhancing its low-cost production capabilities. Encore’s low-cost production capability features an efficient plant design incorporating highly automated manufacturing equipment, an integrated production process and a highly-motivated work force. Encore's plants are all located on one large campus. This single-site campus enables and enhances low-cost manufacturing, distribution and administration, as well as helping to build and maintain a cohesive company culture.

Customer Service: Encore is highly focused on responding to customer needs, with an emphasis on building and maintaining strong customer relationships. Encore seeks to establish customer loyalty by achieving an industry-leading order fill rate and rapidly handling customer orders, shipments, inquiries and returns. The Company maintains product inventories sufficient to meet anticipated customer demand and believes that the speed and completeness with which it fills orders are key competitive advantages critical to marketing its products.

Product Innovation: Encore has been a leader in bringing new ideas to a commodity product. Encore pioneered the widespread use of color feeder sizes of commercial wire and colors in residential non-metallic cable. The colors have improved on-the-job safety, reduced installation times for contractors and enabled building inspectors to rapidly and accurately inspect construction projects. Encore Wire’s patented SmartColor ID® system for metal-clad and armor-clad cables allows for quick and accurate identification of gauge, number of conductors, wire and jacket type. Our spool-free PullPro® is a lightweight, durable case weighing less than thirty pounds that requires no additional tools for a tangle-free wire pull. We believe our Reel Payoff® is the industry's first self-spinning wooden reel, which allows pulling on or off the pallet with no additional tools. Additionally, Encore currently has multiple patents and patent-pending innovations that range from process improvements to packaging solutions.

Low-Cost Production: Encore’s low-cost production capability features an efficient plant design and an incentivized work force.

Efficient Plant Design: Encore’s highly automated wire manufacturing equipment is integrated in an efficient design that reduces material handling, labor and in-process inventory.

Incentivized Work Force: The Company has a stock option plan and a stock appreciation rights plan that enhance the motivation of its salaried manufacturing supervisors. The Company also has a comprehensive safety program creating a world-class culture by engaging employees, identifying and eliminating risk, and training employees to be successful. The Company provides a 401(k) retirement savings plan to all employees.

Products

Encore offers an electrical building wire product line that consists primarily of NM-B cable, UF-B cable, THHN/THWN-2, XHHW-2, USE-2, RHH/RHW-2 and other types of wire products, including SEU, SER, Photovoltaic, URD, tray cable, metal-clad and armored cable. All of these products are manufactured with copper or aluminum as the current-carrying component of the conductor. The principal bases for differentiation among stock-keeping units are product type, conductor type, diameter, insulation, length, color and packaging.

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Manufacturing

The efficiency of Encore’s highly automated manufacturing facility is a key element of its low-cost production capability. Encore’s wire manufacturing lines have been integrated so that the handling of product is substantially reduced throughout the production process. The manufacturing process for the Company’s various products involves multiple steps, including: casting, drawing, stranding, compounding, insulating, cabling, jacketing and armoring.

Encore manufactures and tests all of its products in accordance with the Underwriters Laboratories (UL) standards, a nationally recognized testing and standards agency. Additionally, UL representatives routinely visit and test products from each area of manufacturing.

Customers

Encore sells its wire to wholesale electrical distributors throughout the United States. Most distributors supply products to electrical contractors. Encore’s customers are numerous and diversified. Encore has three customers, each of whom slightly exceeds 10% of the Company's total sales. Encore has no customer, the loss of which would have a material adverse effect on the Company.

Encore believes that the speed and completeness with which it fills customers’ orders is crucial to its ability to expand the market share for its products. The Company also believes that, for a variety of reasons, many customers strive to maintain lean inventories. Because of this trend, the Company seeks to maintain sufficient inventories to satisfy customers’ prompt delivery requirements.

Marketing and Distribution

Encore markets its products throughout the United States primarily through independent manufacturers’ representatives and, to a lesser extent, through its own direct marketing efforts.

Encore maintains the majority of its finished product inventory at its plant in McKinney, Texas. In order to provide flexibility in handling customer requests for immediate delivery, additional product inventories are maintained at warehouses owned and operated by some of the Company's independent manufacturers’ representatives located strategically across the country.

Finished goods are typically delivered to customers by trucks operated by common carriers. The decision regarding the carrier to be used is based primarily on availability and cost.

The Company invoices its customers directly for products purchased and, if an order has been obtained through a manufacturer’s representative, pays the representative a commission based on pre-established rates. The Company determines customer credit limits. The Company recorded a $0.7 million estimate for credit losses in 2020, but recorded no estimates for credit losses in 2019 and 2018. The manufacturers’ representatives have no discretion to determine prices charged for the Company’s products, and all sales are subject to Company approval.

Human Capital

General

The Company fosters a culture for our employees based on the old-fashioned values of service, professionalism and stewardship. We encourage our employees to do the right thing under any circumstances and to live by the Golden Rule: treat others the way you want to be treated. These values are a key aspect of our human capital retention and they inform our employment and compensation philosophies.

Employees

Encore believes that its hourly employees are highly motivated and that their motivation contributes significantly to Encore’s efficient operation. The Company believes that competitive hourly compensation coupled with sound management practices focuses its employees on maintaining high production standards and product quality.

As of December 31, 2020, Encore had 1,289 employees, 1,057 of whom were paid hourly wages and were primarily engaged in the operation and maintenance of the Company’s manufacturing and warehouse facilities. The Company’s remaining employees were executive, supervisory, administrative, sales and clerical personnel. The Company considers its relations with its employees to be good. The Company has no collective bargaining agreements with any of its employees.

Compensation and Benefits

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The Company rewards employees with competitive compensation and benefits packages, including attractive medical plans, retirement plans, opportunities for annual bonuses and, for eligible employees, long-term incentives and an employee stock appreciation rights plan. The Company believes that long term equity-based compensation is a critical part of its compensation program and allows the Company to attract and retain talented employees.

Health and Safety

Employee health and safety is a top priority for the Company. The Company is committed to providing a safe and healthy work environment and to conducting its various businesses in a safe and environmentally protective manner. All employees and officers are expected to perform their duties consistent with site specific safety and environmental rules and regulations and site application of Company best practices. The Company understands how the health of its employees impacts not only their work, but their family life, too. The Company offers a Medcor On-Site Clinic with a nurse practitioner for employees and their immediate families. For many, the Medcor On-Site Clinic provides basic health screenings and treatment equal to those at a general practice facility which otherwise might not be possible. The Company also offers a wide range of health and wellness services to assist its employees and their families with making good lifestyle choices.

Additionally, during the COVID-19 pandemic, the Company’s primary focus has been on the wellbeing and safety of its employees and their families. We have taken numerous steps throughout our organization to ensure that our employees have a safe work environment.

The Company’s workforce worked remotely and successfully throughout most of 2020. For these remote employees, the Company provided supplies needed to work from home, supported information technology needs, and provided guidance for managers to ensure that employees remain connected and maintain physical, mental, and emotional wellbeing. For the Company’s essential employees who remain onsite in its facilities, the Company leveraged the advice and recommendations of medical experts, health organizations such as the CDC, and our onside medical partner, Medcor, to implement new protocols to ensure the safety of its onsite employees. These recommendations include face coverings, temperature checks, health certifications, cleaning and disinfection best practices, COVID-19 updates and education, social distancing and capacity limits. Further, the Company supported its employees through programs and benefits provided throughout the year, pivoting all of our people programs and practices to enable business continuity in the current environment.

Diversity and Inclusion

The Company is committed to and values hiring employees with varied personal and professional backgrounds, perspectives and experiences, promoting a culture of diversity and inclusion. The diversity of the Company’s employees is a tremendous asset, and the Company is firmly committed to providing equal opportunity in all aspects of employment and will not tolerate any illegal discrimination or harassment of any kind. The Company is committed to employing and advancing in employment all persons without regard to their race, color, sex, religion, national origin, citizenship, age, gender identity, sexual orientation, marital status, genetic information, veteran status, disability, or other protected categories.

Raw Materials

The principal raw materials used by Encore in manufacturing its products are copper cathode, copper scrap, PVC thermoplastic compounds, XLPE compounds, aluminum, steel, paper and nylon, all of which are readily available from a number of suppliers. Copper is the principal raw material used by the Company in manufacturing its products, constituting 78.9% of the dollar value of all raw materials used by the Company during 2020. Copper requirements are purchased primarily from miners and commodity brokers at prices determined each month primarily based on the average daily COMEX closing prices for copper for that month, plus a negotiated premium. The Company also purchases raw materials necessary to manufacture various PVC thermoplastic compounds. These raw materials include PVC resin, clay and plasticizer.

The Company produces copper rod from purchased copper cathode and copper scrap in its own rod fabrication facility. The Company reprocesses copper scrap generated by its operations as well as copper scrap purchased from others. In 2020, the Company’s copper rod fabrication facility manufactured virtually all of the Company’s copper rod requirements. The Company purchases aluminum rod from various suppliers for aluminum wire production.

The Company also compounds its own wire jacket and insulation compounds. The process involves the mixture of PVC raw material components to produce the PVC used to insulate the Company’s wire and cable products. The raw materials include PVC resin, clay and plasticizer. During the last year, the Company’s plastic compounding facility produced the vast majority of the Company’s PVC requirements.

Competition

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The electrical wire and cable industry is highly competitive. The Company competes with several companies who manufacture and sell wire and cable products beyond the building wire segment in which the Company competes. The Company’s primary competitors include Southwire Company, Cerro Wire LLC, General Cable (a company of the Prysmian Group) and AFC Cable Systems, Inc.

For all our products, the Company believes that it is competitive with respect to all relevant factors, including order fill rate, quality, pricing, and, in some instances, breadth of product line.

In 2019 we successfully enforced our rights under the U.S. trade remedy laws. As a result of the International Trade Commission’s final affirmative decision, U.S. importers of aluminum wire and cable from China will be required to pay antidumping duties at rates ranging from 47.83% to 52.79%, plus countervailing duties at rates ranging from 33.44% to 165.63%, depending upon the Chinese exporter/supplier.

Compliance with Governmental and Environmental Regulations

The Company is subject to federal, state and local laws covering a wide variety of subject matters, including environmental protection laws and regulations governing the Company’s operations and the use, handling, disposal and remediation of hazardous substances currently or formerly used by the Company. Management believes the Company is in compliance with all such rules including certain environmental permitting and reporting requirements. Historically, compliance with laws and regulations, including environmental regulations, has not had a material impact on the capital expenditures, earnings and competitive position of the Company.

Intellectual Property Matters

From time to time, the Company files patent applications with the United States Patent and Trademark Office. The Company currently owns several patents and pending patent applications. The Company also owns several registered trademarks and pending trademark applications with the U.S. Patent and Trademark Office. The current registrations for the marks will expire on various dates from 2021 to 2028, but each registration can be renewed indefinitely as long as the respective mark continues to be used in commerce and the requisite proof of continued use or renewal application, as applicable, is filed. These trademarks provide source identification for the goods manufactured and sold by the Company and allow the Company to achieve brand recognition within the industry.

Internet Address/SEC Filings

The Company’s Internet address is https://www.encorewire.com. Under the “Investors” section of our website, the Company provides a link to our electronic Securities and Exchange Commission (“SEC”) filings, including our annual report on Form 10-K, our quarterly reports on Form 10-Q, our current reports on Form 8-K, director and officer beneficial ownership reports filed pursuant to Section 16 of the Securities Exchange Act of 1934, as amended, and any amendments to these reports. All such reports are available free of charge and are available as soon as reasonably practicable after the Company files such material with, or furnishes it to, the SEC.

The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at https://www.sec.gov.

Information about our Executive Officers

Information regarding Encore’s executive officers including their respective ages as of February 22, 2021, is set forth below:

Name	Age	Position with Company
Daniel L. Jones	57	Chairman of the Board of Directors, President and Chief Executive Officer
Bret J. Eckert	54	Vice President – Finance, Treasurer, Secretary, and Chief Financial Officer

Mr. Jones has held the office of President and Chief Executive Officer of the Company since February 2006. He performed the duties of the Chief Executive Officer in an interim capacity from May 2005 to February 2006. From May 1998 until February 2005, Mr. Jones was President and Chief Operating Officer of the Company. He previously held the positions of Chief Operating Officer from October 1997 until May 1998, Executive Vice President from May 1997 to October 1997, Vice President-Sales and Marketing from 1992 to May 1997, after serving as Director of Sales since joining the Company in November 1989. He has also served as a member of the Board of Directors since May 1992, and was named Chairman of the Board in 2014.

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Mr. Eckert has served as Vice President-Finance, Treasurer, Secretary and Chief Financial Officer of Encore since January 2020. He joined the Company in August 2019 as Vice President-Finance. Prior to joining the Company, Bret served as Executive Managing Director for the Houston office of Riveron Consulting LLC, a business advisory firm, from June 2018 to August 2019. Previously he was Senior Vice President and Chief Financial Officer of Atmos Energy Corporation in Dallas for approximately five years. He spent the first twenty-two years of his career with Ernst & Young LLP where he was a partner for ten years.

All executive officers are elected annually by the Board of Directors to serve until the next annual meeting of the Board or until their respective successors are chosen and qualified.

Item 1A. Risk Factors.

The following are risk factors that could affect the Company’s business, financial results and results of operations. These risk factors should be considered in connection with evaluating the forward-looking statements contained in this Annual Report on Form 10-K because these factors could cause the actual results and conditions to differ materially from those projected in forward-looking statements. Before purchasing the Company’s stock, an investor should know that making such an investment involves some risks, including the risks described below. If any of the risks mentioned below or other unknown risks actually occur, the Company’s business, financial condition or results of operations could be negatively affected. In that case, the trading price of its stock could fluctuate significantly.

Risks Related to Our Business and Industry

Supply and Availability of Raw Materials

The success of our business depends on our ability to meet customer demand of a commodity product in a highly competitive market, and sourcing an adequate supply of raw materials, including copper, is vital to our business and operations. While the Company generally believes our supply of raw materials is adequate, the Company could experience instances of limited supply of certain raw materials, resulting in extended lead times and higher prices. Any shortages or interruptions (including due to labor or political disputes) in the supply of our raw materials could disrupt our operations, and our business and financial condition could be materially adversely affected by such disruptions. Limitations inherent within our supply chain of certain raw materials, including competitive, governmental, and legal limitations, natural disasters, and other events, could impact costs, and future increases in the costs of these items, including, for example, the adoption of new tariffs by the United States and other countries, and the worldwide COVID-19 pandemic could adversely affect our profitability and availability of raw materials. There can be no assurance that future price increases will be successfully passed through to customers or that we will be able to find alternative suppliers.

Product Pricing and Volatility of Copper Market

Price competition for copper electrical wire and cable is significant, and the Company sells its products in accordance with prevailing market prices. Wire prices can, and frequently do, change on a daily basis. This competitive pricing market for wire does not always mirror changes in copper prices, making margins highly volatile. Copper, a commodity product, is the principal raw material used in the Company’s manufacturing operations. The price of copper fluctuates depending on general economic conditions and in relation to supply and demand and other factors, including changes in regulatory, geopolitical, political, social, economic, tax or monetary policies and other factors resulting from the transition to the new administration, and it causes monthly variations in the cost of copper purchased by the Company. The SEC allows shares of physically backed copper exchange traded funds (“ETFs”) to be listed and publicly traded. Such funds and other copper ETFs like them hold copper cathode as collateral against their shares. The acquisition of copper cathode by copper ETFs may materially decrease or interrupt the availability of copper for immediate delivery in the United States, which could materially increase the Company’s cost of copper. In addition to rising copper prices and potential supply shortages, we believe that ETFs and similar copper-backed derivative products could lead to increased copper price volatility. The Company cannot predict future copper prices or the effect of fluctuations in the costs of copper on the Company’s future operating results. Consequently, fluctuations in copper prices caused by market forces can significantly affect the Company’s financial results.

Industry Conditions and Cyclicality

The residential, commercial and industrial construction industry, which is the end user of the Company’s products, is cyclical and is affected by a number of factors, including the general condition of the economy, market demand and changes in interest rates. Industry sales of electrical wire and cable products tend to parallel general construction activity, which includes remodeling. Data on remodeling is not readily available. However, remodeling activity historically trends up when new construction slows down. Construction activity is affected by the ability of our end users to finance projects, which may be severely reduced due to a widespread outbreak of contagious disease, including an epidemic or pandemic such as the current COVID-19 pandemic. Residential, commercial and industrial construction could decline if companies and consumers are

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unable to finance construction projects or if the economy precipitously declines or stalls, which could result in delays or cancellations of capital projects.

Deterioration in the financial condition of the Company’s customers due to industry and economic conditions may result in reduced sales, an inability to collect receivables and payment delays or losses due to a customer’s bankruptcy or insolvency. Although the Company’s bad debt experience has been low in recent years, the Company’s inability to collect receivables may increase the amounts the Company must expense against its bad debt reserve, decreasing the Company’s profitability. A downturn in the residential, commercial or industrial construction industries and general economic conditions may have a material adverse effect on the Company.

Competition

The electrical wire and cable industry is highly competitive. The Company competes with several manufacturers of wire and cable products that have substantially greater resources than the Company. Some of these competitors are owned and operated by large, diversified companies. The principal elements of competition in the wire and cable industry are, in the opinion of the Company, pricing, product availability and quality and, in some instances, breadth of product line. The Company believes that it is competitive with respect to all of these factors. While the number of firms producing wire and cable has declined in the past, there can be no assurance that new competitors will not emerge or that existing producers will not employ or improve upon the Company’s manufacturing and marketing strategy.

Risks Related to Our Operations

Operating Results May Fluctuate

Encore’s results of operations may fluctuate as a result of a number of factors, including fluctuation in the demand for and shipments of the Company’s products. Therefore, comparisons of results of operations have been and will be impacted by the volume of such orders and shipments. In addition, the Company's operating results could be adversely affected by the following factors, among others, such as variations in the mix of product sales, price changes in response to competitive factors, increases in raw material costs, freight costs, and other significant costs, the loss of key manufacturer’s representatives who sell the Company’s product line, increases in utility costs (particularly electricity and natural gas) and various types of insurance coverage and interruptions in plant operations resulting from the interruption of raw material supplies and other factors. Additionally, our results of operations could be impacted by macro-economic and geopolitical conditions as well as other outside factors, including changes in regulatory, geopolitical, political, social, economic, tax or monetary policies and other factors resulting from the transition to the new administration.

Reliance on Senior Management

Encore’s future operating results depend, in part, upon the continued service of its senior management, including, Mr. Daniel L. Jones, Chairman, President and Chief Executive Officer, and Mr. Bret J. Eckert, the Company’s Vice President and Chief Financial Officer (neither of whom is bound by an employment agreement). The Company’s future success will depend upon its continuing ability to attract and retain highly qualified managerial and technical personnel. Competition for such personnel is intense, and there can be no assurance that the Company will retain its key managerial and technical employees or that it will be successful in attracting, assimilating or retaining other highly qualified personnel in the future.

Patent and Intellectual Property Disputes

Disagreements about patents and intellectual property rights occur in the wire and cable industry. The unfavorable resolution of a patent or intellectual property dispute could preclude the Company from manufacturing and selling certain products or could require the Company to pay a royalty on the sale of certain products. Patent and intellectual property disputes could also result in substantial legal fees and other costs.

Cybersecurity Breaches and other Disruptions to our Information Technology Systems

The efficient operation of our business is dependent on our information technology systems to process, transmit and store sensitive electronic data, including employee, distributor and customer records, and to manage and support our business operations and manufacturing processes. The secure maintenance of this information is critical to our operations. Despite our security measures, our information technology system may be vulnerable to attacks by hackers or breaches due to errors or malfeasance by employees and others who have access to our system, or other disruptions during the process of upgrading or replacing computer software or hardware, power outages, computer viruses, telecommunication or utility failures or natural disasters. Any such event could compromise our information technology system, expose our customers, distributors and employees to risks of misuse of confidential information, impair our ability to effectively and timely operate our business and manufacturing processes, and cause other disruptions, which could result in legal claims or proceedings, disrupt our operations

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and the services we provide to customers, damage our reputation, and cause a loss of confidence in our products and services, any of which could adversely affect our results of operations and competitive position.

Climate Change

Future deterioration of the environment due to climate change or increased severe weather related events associated with climate change could affect both our operations and the operations of our suppliers and customers. The Company could experience increased operating costs due to new regulatory requirements and increased physical risks to our facilities due to volatile weather. The Company could experience disruptions or limitations to access of water. Our suppliers may face similar challenges, which could impact our supply chain. Demand for our products may be impacted regionally as local climates adapt to global environmental changes.

Risks Related to Ownership of Our Stock

Common Stock Price May Fluctuate

Future announcements concerning Encore or its competitors or customers, quarterly variations in operating results, announcements of technological innovations, the introduction of new products or changes in product pricing policies by the Company or its competitors, developments regarding proprietary rights, changes in earnings estimates by analysts or reports regarding the Company or its industry in the financial press or investment advisory publications, among other factors, could cause the market price of the common stock to fluctuate substantially. These fluctuations, as well as general economic, political and market conditions, such as recessions, world events, military conflicts or market or market-sector declines, may materially and adversely affect the market price of the common stock.

Beneficial Ownership of the Company’s Common Stock by a Small Number of Stockholders

A small number of significant stockholders beneficially own greater than 40% of the Company’s outstanding common stock. Depending on stockholder turnout for a stockholder vote, these stockholders, acting together, could be able to control the election of directors and certain matters requiring majority approval by the Company’s stockholders. The interests of this group of stockholders may not always coincide with the Company’s interests or the interests of other stockholders.

In the future, these stockholders could sell large amounts of common stock over relatively short periods of time. The Company cannot predict if, when or in what amounts stockholders may sell any of their shares. Sales of substantial amounts of the Company’s common stock in the public market by existing stockholders or the perception that these sales could occur, may adversely affect the market price of our common stock by creating a public perception of difficulties or problems with the Company’s business.

Future Sales of Common Stock Could Affect the Price of Common Stock

No prediction can be made as to the effect, if any, that future sales of shares or the availability of shares for sale will have on the market price of the common stock prevailing from time to time. Sales of substantial amounts of common stock, or the perception that such sales might occur, could adversely affect prevailing market prices of the common stock.

Risks Related to Laws and Regulations

Environmental Liabilities

The Company is subject to federal, state and local environmental protection laws and regulations governing the Company’s operations and the use, handling, disposal and remediation of hazardous substances currently or formerly used by the Company. A risk of environmental liability is inherent in the Company’s current manufacturing activities in the event of a release or discharge of a hazardous substance generated by the Company. Under certain environmental laws, the Company could be held jointly and severally responsible for the remediation of any hazardous substance contamination at the Company’s facilities and at third party waste disposal sites and could also be held liable for any consequences arising out of human exposure to such substances or other environmental damage. There can be no assurance that the costs of complying with environmental, health and safety laws and requirements in the Company’s current operations or the liabilities arising from past releases of, or exposure to, hazardous substances, will not result in future expenditures by the Company that could materially and adversely affect the Company’s financial results, cash flow or financial condition.

Regulations Related to Conflict-free Minerals May Force Us to Incur Additional Expenses

In August 2012, the SEC adopted disclosure requirements related to certain minerals sourced from the Democratic Republic of Congo or adjoining countries, as required by Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act

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(the “Dodd-Frank Act”). The SEC rules implementing Section 1502 of the Dodd-Frank Act require us to perform due diligence, and report whether “conflict minerals,” which are defined as tin, tantalum, tungsten and gold, necessary to the functionality of a product we purchase originated from the Democratic Republic of Congo or an adjoining country. Since 2014, we have been required to file with the SEC on an annual basis a specialized disclosure report on Form SD regarding such matters. As our supply chain is complex, we may incur significant costs to determine the source and custody of conflict minerals that are used in the manufacture of our products in order to comply with these regulatory requirements in the future. We may also face reputation challenges if we are unable to verify the origins for all conflict minerals used in our products, or if we are unable to conclude that our products are “conflict free.” Over time, conflict minerals reporting requirements may affect the sourcing, price and availability of our products, and may affect the availability and price of conflict minerals that are certified as conflict free. Accordingly, we may incur significant costs as a consequence of regulations related to conflict-free minerals, which may adversely affect our business, financial condition or results of operations.

The Company’s Effective Tax Rate Could be Volatile and Materially Change

A change in tax laws is one of many factors that impact the Company’s effective tax rate, and any such change could adversely impact our effective tax rate, financial condition and results of operations.

On December 22, 2017, President Trump signed into law H.R. 1, originally known as the “Tax Cuts and Jobs Act”, hereafter referred to as “U.S. Tax Reform”. Since the passing of U.S. Tax Reform, additional guidance in the form of notices and proposed regulations which interpret various aspects of U.S. Tax Reform have been issued. Changes could be made to the proposed regulations as they become finalized, future legislation could be enacted, more regulations and notices could be issued, all of which may impact our financial results. We will continue to monitor all of these changes and will reflect the impact as appropriate in future financial statements. Many state and local tax jurisdictions are still determining how they will interpret elements of U.S. Tax Reform. Final state and local governments’ conformity, legislation and guidance relating to U.S. Tax Reform may impact our financial results.

The 2020 election of President Biden and the change in administration could lead to changes in tax laws that could negatively impact the Company’s effective tax rate. Prior to the 2020 U.S. presidential election, President Biden proposed an increase in the U.S. corporate income tax rate from 21% to 28%, among other proposals. If any of these (or similar) proposals are ultimately enacted into law, in whole or in part, they could have a negative impact to the Company’s effective tax rate.

General Risk Factors

Outbreak of Contagious Disease

Our business and the businesses of our suppliers, distributors and customers could be adversely affected by the effects of a widespread outbreak of contagious diseases, including the recent ongoing outbreak of COVID-19. Any outbreak of contagious diseases, and other adverse public health developments, could cause a disruption in our supply chain, distribution and demand for our products. The duration of any such disruption and the related financial impact from COVID-19 and other epidemics and pandemics cannot be reasonably estimated at this time. The occurrence or continuation of any of these events could lead to decreased revenues and limit our ability to execute on our business plan, which could adversely affect our business, financial condition and results of operations.

Item 1B. Unresolved Staff Comments.

None.

Item 2. Properties.

Encore maintains its corporate office and manufacturing plants in McKinney, Texas, approximately 32 miles north of downtown Dallas. The Company’s facilities are located on a combined site of approximately 445 acres and consist of buildings containing approximately 2.1 million square feet of floor space. The corporate office, plants and equipment are owned by the Company and are not mortgaged to secure any of the Company’s existing indebtedness. Encore believes that its plants and equipment are suited to its present needs, comply with applicable federal, state and local laws and regulations, and are properly maintained and adequately insured.

Item 3. Legal Proceedings.

For information on the Company’s legal proceedings see Note 9 to the Company’s financial statements included in Item 8 to this report and incorporated herein by reference.

8

Item 4. Mine Safety Disclosures.

Not applicable.

9

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

The Company’s common stock is traded and quoted on the NASDAQ Stock Market’s Global Select Market under the symbol “WIRE.” As of February 18, 2021, there were 31 holders of record of the Company’s common stock.

Aside from periodic cash dividends, which the Company currently expects to continue to make consistent with its historical practice, management and the Board currently intend to retain the majority of future earnings for the operation and expansion of the Company’s business.

Issuer Purchases of Equity Securities

On November 10, 2006, the Board of Directors approved a stock repurchase program authorizing the Company to repurchase up to an authorized number of shares of its common stock on the open market or through privately negotiated transactions at prices determined by the President of the Company during the term of the program. The Company’s Board of Directors has authorized several increases and annual extensions of this stock repurchase program, and, as of December 31, 2020, 1,000,000 shares remained authorized for repurchase through March 31, 2021. Subsequently, the authorization for repurchase was extended through March 31, 2022. The Company repurchased 441,250 shares of its stock in 2020, and did not repurchase any shares of its stock in 2019 or 2018. The Company also has a broker agreement to repurchase stock in the open market at certain trigger points pursuant to a Rule 10b5-1 plan announced on November 28, 2007.

Equity Compensation Plan Information

The following table provides information about the Company’s equity compensation plans as of December 31, 2020.

	Number of securities to be issued upon exercise of outstanding options, warrants and rights	Weighted-average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
PLAN CATEGORY	(a)	(b)		(c)
Equity compensation plans approved by security holders (1)	314,500	$	41.82	994,500	(2)

(1) Pursuant to SEC rules and the reporting requirements for this table, we have not included in (a) above 75,000 shares of restricted stock that are issued and outstanding.

(2) Represents securities remaining available for issuance under our 2020 Long Term Incentive Plan as of December 31, 2020 that may be granted in the form of unrestricted common stock, restricted common stock, options to purchase shares of common stock, stock appreciation rights, restricted stock units, dividend equivalents, performance awards or other stock-based awards.

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Performance Graph

The following graph is not “soliciting material,” is not deemed filed with the SEC, and is not to be incorporated by reference into any of the Company’s filings under the Securities Act of 1933 or the Securities Exchange Act of 1934, as amended, respectively.

The graph below sets forth the cumulative total stockholder return, which assumes reinvestment of dividends, of a $100 investment in the Company’s common stock, the Russell 2000 Index, and the Company’s self-determined peer group (the “Peer Group”)for the five years ended December 31, 2020.

		As of December 31,
Symbol	Total Return For:	2015	2016	2017	2018	2019	2020
Û	Encore Wire Corporation	100.00	117.13	131.69	136.04	155.85	164.79
£	Russell 2000 Index	100.00	121.31	139.08	123.76	155.35	186.36
r	Peer Group	100.00	127.15	128.68	82.14	121.57	126.12

Notes

(1)Data presented in the performance graph is complete through December 31, 2020.

(2)The Peer Group is self-determined and consists of the following companies: Belden, Inc., Apogee Enterprises, Inc., Quanex Building Products Corporation, Atkore International Group, Inc., and Masonite

11

International Corporation. The performance graph presented in our Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on February 21, 2020, consisted of this peer group.

(3)The peer group index uses only the Peer Group’s performance and excludes the performance of the Company. The peer group index uses beginning of period market capitalization weighting.

(4)Each data line represents annual index levels derived from compounded daily returns that include all dividends.

(5)The index level for all data lines was set to $100.00 on December 31, 2015.

Item 6. Selected Financial Data.

The following financial data should be read in conjunction with Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and Item 8, “Financial Statements and Supplementary Data.” The table below presents, as of and for the dates indicated, selected historical financial information for the Company.

	Year Ended December 31,
	2020		2019		2018		2017		2016
	(in thousands, except per share data)
Statement of Income Data:
Net sales	$	1,276,948	$	1,274,994	$	1,288,683	$	1,164,248	$	940,790
Cost of goods sold	1,082,413		1,109,023		1,098,961		1,008,073		820,673
Gross profit	194,535		165,971		189,722		156,175		120,117
Selling, general and administrative expenses	97,008		94,442		90,212		76,726		69,351
Operating income	97,527		71,529		99,510		79,449		50,766
Net interest and other income	1,269		4,199		2,174		427		48
Income before income taxes	98,796		75,728		101,684		79,876		50,814
Provision for income taxes	22,729		17,599		23,534		12,859		16,975
Net income	$	76,067	$	58,129	$	78,150	$	67,017	$	33,839
Earnings per common and common equivalent shares – basic	$	3.69	$	2.78	$	3.75	$	3.23	$	1.63
Weighted average common and common equivalent shares – basic	20,599		20,904		20,845		20,767		20,704
Earnings per common and common equivalent shares – diluted	$	3.68	$	2.77	$	3.74	$	3.21	$	1.63
Weighted average common and common equivalent shares – diluted	20,653		20,990		20,910		20,847		20,773
Annual dividends declared per common share	$	0.08	$	0.08	$	0.08	$	0.08	$	0.08

	As of December 31,
	2020		2019		2018		2017		2016
	(in thousands)
Balance Sheet Data:
Working capital	$	461,541	$	473,942	$	445,665	$	375,353	$	325,500
Total assets	966,454		883,154		818,060		733,975		657,964
Long-term debt	—		—		—		—		—
Stockholders’ equity	837,729		779,096		720,456		641,345		573,109

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Introduction

The following management’s discussion and analysis is intended to provide a better understanding of key factors, drivers and risks regarding the Company and the building wire industry. The duration and severity of the COVID-19 pandemic outbreak and its long-term impact on our business are uncertain at this time. Developments surrounding the COVID-19 global pandemic are continuing to change daily, and we have limited visibility into the extent to which market demand for our products as well as sector manufacturing and distribution capacity will be impacted.

Executive Overview

Encore Wire sells a commodity product in a highly competitive market. Management believes that the historical strength of the Company’s growth and earnings is in large part attributable to the following main factors:

•industry-leading order fill rates and responsive customer service

•product innovations and product line expansions based on listening to and understanding customer needs and market trends

•low cost manufacturing operations, resulting from a state-of-the-art manufacturing complex

•low distribution and freight costs due in large part to the “one campus” business model

•a focused management team leading a skilled work force

•low general and administrative overhead costs, and

•a team of experienced independent manufacturers’ representatives with strong customer relationships across the United States.

These factors, and others, have allowed Encore Wire to grow from a startup in 1989 to what management believes is one of the largest electric building wire companies in the United States of America. Encore has built a loyal following of customers throughout the United States. These customers have developed a brand preference for Encore Wire in a commodity product line due to the reasons noted above, among others. The Company prides itself on striving to grow sales by expanding its product offerings where profit margins are acceptable. Senior management monitors gross margins daily, frequently extending down to the individual order level. Management strongly believes that this “hands-on” focused approach to the building wire business has been an important factor in the Company's success, and will lead to continued success.

The construction and remodeling industries drive demand for building wire. In 2020, unit sales were down 5.4% in copper wire versus 2019. In 2019, unit sales increased 4.1% in copper wire versus 2018. In 2018, unit sales of copper wire sold increased 4.5% versus 2017.

General

The Company’s operating results are driven by several key factors, including the volume of product produced and shipped, the cost of copper and other raw materials, the competitive pricing environment in the wire industry and the resulting influence on gross margins and the efficiency with which the Company’s plants operate during the period, among others. Price competition for electrical wire and cable is significant, and the Company sells its products in accordance with prevailing market prices. Copper, a commodity product, is the principal raw material used by the Company in manufacturing its products. The price of copper fluctuates, depending on general economic conditions and in relation to supply and demand and other factors, which causes monthly variations in the cost of copper purchased by the Company. Additionally, the SEC allows shares of physically backed copper exchange traded funds (“ETFs”) to be listed and publicly traded. Such funds and other copper ETFs like it hold copper cathode as collateral against their shares. The acquisition of copper cathode by Copper ETFs may materially decrease or interrupt the availability of copper for immediate delivery in the United States, which could materially increase the Company’s cost of copper. In addition to rising copper prices and potential supply shortages, we believe that ETFs and similar copper-backed derivative products could lead to increased price volatility for copper. The Company cannot predict copper prices in the future or the effect of fluctuations in the cost of copper on the Company’s future operating results. Wire prices can, and frequently do change on a daily basis. This competitive pricing market for wire does not always mirror changes in copper prices, making margins highly volatile. Historically, the cost of aluminum has been much lower and less volatile than copper. The tables below highlight the range of closing prices of copper on the Comex exchange for the periods shown.

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COMEX COPPER CLOSING PRICE 2020

	October 2020		November 2020		December 2020		Quarter Ended Dec. 31, 2020		Year Ended Dec. 31, 2020
High	$	3.19	$	3.42	$	3.63	$	3.63	$	3.63
Low	2.86		3.07		3.47		2.86		2.12
Average	3.06		3.20		3.53		3.27		2.80

COMEX COPPER CLOSING PRICE 2019

	October 2019		November 2019		December 2019		Quarter Ended Dec. 31, 2019		Year Ended Dec. 31, 2019
High	$	2.68	$	2.72	$	2.86	$	2.86	$	2.98
Low	2.55		2.62		2.61		2.55		2.51
Average	2.61		2.65		2.77		2.68		2.72

COMEX COPPER CLOSING PRICE 2018

	October 2018		November 2018		December 2018		Quarter Ended Dec. 31, 2018		Year Ended Dec. 31, 2018
High	$	2.82	$	2.80	$	2.80	$	2.82	$	3.29
Low	2.66		2.68		2.63		2.63		2.56
Average	2.76		2.75		2.72		2.75		2.92

COMEX COPPER CLOSING PRICE 2020 by Quarter

	Quarter Ended Mar. 31, 2020		Quarter Ended June 30, 2020		Quarter Ended Sept. 30, 2020		Quarter Ended Dec. 31, 2020	Year Ended Dec. 31, 2020
High	$	2.88	$	2.71	$	3.11	$3.63	$3.63
Low	2.12		2.19		2.72		2.86	2.12
Average	2.56		2.43		2.93		3.27	2.80

COMEX COPPER CLOSING PRICE 2019 by Quarter

	Quarter Ended Mar. 31, 2019		Quarter Ended June 30, 2019		Quarter Ended Sept. 30, 2019		Quarter Ended Dec. 31, 2019	Year Ended Dec. 31, 2019
High	$	2.96	$	2.98	$	2.74	$2.86	$2.98
Low	2.57		2.63		2.51		2.55	2.51
Average	2.81		2.78		2.62		2.68	2.72

14

Results of Operations

The following table presents certain items of income and expense as a percentage of net sales for the periods indicated.

	Year Ended December 31,
	2020		2019		2018
Net sales	100.0	%	100.0	%	100.0	%
Cost of goods sold:
Copper	57.3	%	60.8	%	62.3	%
Other raw materials	13.5	%	14.0	%	12.8	%
Depreciation	1.4	%	1.2	%	1.1	%
Labor and overhead	10.8	%	11.0	%	9.6	%
LIFO adjustment	1.8	%	—	%	(0.5)	%
	84.8	%	87.0	%	85.3	%
Gross profit	15.2	%	13.0	%	14.7	%
Selling, general and administrative expenses	7.6	%	7.4	%	7.0	%
Operating income	7.6	%	5.6	%	7.7	%
Net interest and other income	0.1	%	0.4	%	0.2	%
Income before income taxes	7.7	%	6.0	%	7.9	%
Provision for income taxes	1.8	%	1.4	%	1.8	%
Net income	5.9	%	4.6	%	6.1	%

The following discussion and analysis relate to factors that have affected the operating results of the Company for the years ended December 31, 2020, 2019 and 2018. Reference should also be made to the Financial Statements and the related notes included under “Item 8. Financial Statements and Supplementary Data” of this Annual Report. Additional information about results for year end 2018 and certain year-on-year comparisons between 2019 and 2018 can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

Net sales for the twelve months ended December 31, 2020 were $1.277 billion compared to $1.275 billion during the same period in 2019 and $1.289 billion during the same period in 2018. Copper unit volume, measured in pounds of copper contained in the wire sold, decreased 5.4% in the twelve months ended December 31, 2020 versus the twelve months ended December 31, 2019. The 1.1% decrease in net sales dollars in 2019 versus 2018 is primarily the result of a 2.0% decrease in copper wire sales. Sales dollars were driven lower primarily by a 5.8% decrease in average selling price of copper wire, partially offset by a 4.1% increase in copper wire pounds shipped. Average selling prices for wire sold were primarily driven lower by falling copper commodity prices.

Cost of goods sold was $1.082 billion in 2020 versus $1.109 billion in 2019 and $1.099 million in 2018. The decrease in 2020 compared to 2019 was mainly driven by a decrease in material costs, and to a lesser extent, a decrease in labor and overhead costs year-over year. The decrease in 2020 from 2019 reflects a 5.4% decrease in copper volume shipped, offset by a 2.6% increase in the cost of copper purchased. The increase in 2019 compared to 2018 was mainly driven by an increase in labor and overhead costs, and to a lesser extent, a decrease in material costs year-over year. The material cost increase in 2019 from 2018 reflects a 4.1% increase in copper volume shipped, offset by a 6.2% decrease in the cost of copper purchased.

Gross profit percentage for the twelve months ended December 31, 2020 was 15.2% compared to 13.0% during the same period in 2019 and 14.7% during the same period in 2018. The average selling price of wire per copper pound sold increased 4.7% in the twelve months ended December 31, 2020 versus the twelve months ended December 31, 2019, while the average cost of copper per pound purchased increased 2.6%. The average selling price of wire per copper pound sold decreased 5.8% in the twelve months ended December 31, 2019 versus the twelve months ended December 31, 2018, while the average cost of copper per pound purchased decreased 6.2%.

15

Net income for the twelve months ended December 31, 2020 was $76.1 million versus $58.1 million in the same period in 2019 and $78.2 million in the same period in 2018. Fully diluted net earnings per common share were $3.68 in the twelve months ended December 31, 2020 versus $2.77 in the same period in 2019 and $3.74 in the same period in 2018.

Inventories consist of the following at December 31 (in thousands):

	2020		2019		2018
Raw materials	$	40,842	$	25,882	$	28,455
Work-in-process	30,311		25,381		30,529
Finished goods	88,544		83,222		88,708
Total	159,697		134,485		147,692
Adjust to LIFO cost	(67,375)		(44,801)		(45,325)
Inventory	$	92,322	$	89,684	$	102,367

The quantity of total copper inventory on hand increased somewhat in 2020, compared to 2019. The other materials category, which includes a large number of raw materials, had quantity changes that included increases and decreases in various other materials. This resulted in a LIFO adjustment increasing cost of sales by $22.6 million in 2020.

The quantity of total copper inventory on hand decreased somewhat in 2019, compared to 2018. The other materials category, which includes a large number of raw materials, had quantity changes that included increases and decreases in various other materials. This resulted in a LIFO adjustment decreasing cost of sales by $0.5 million in 2019.

Based on the current copper and other raw material prices, there is no LCM adjustment necessary in the periods presented above. Future reductions in the price of copper and other raw materials could require the Company to record an LCM adjustment against the related inventory balance, which would result in a negative impact on net income.

Gross profit was $194.5 million, or 15.2% of net sales, in 2020 compared to $166.0 million, or 13.0% of net sales, in 2019 and $189.7 million, or 14.7% of net sales, in 2018. The changes in gross profit were due to the factors discussed above.

Selling expenses, which are made up of freight and sales commissions, were $66.8 million in 2020, $66.0 million in 2019 and $67.0 million in 2018. As a percentage of net sales, selling expenses were 5.2% in all three years. General and administrative expenses, as a percentage of net sales, were 2.3% in 2020 versus 2.2% in 2019 and 1.8% in 2018. Accounts receivable write-offs were $0.3 million in 2020, $0.2 million in 2019 and $0 in 2018. The Company increased the reserve for credit losses in 2020 by $0.7 million, and did not increase the reserve in either 2019 or 2018.

Net interest and other income was $1.3 million in 2020, $4.2 million in 2019 and $2.2 million in 2018. The decrease in 2020 reflects the economic impact of the pandemic and its effect on interest rates during the year and the resulting interest earned.

Our effective tax rate was 23.0% in 2020, 23.2% in 2019 and 23.1% in 2018. The differences between the provisions for income taxes and the income taxes computed using the federal income tax statutory rate are primarily due to changes in tax laws and state taxes.

As a result of the foregoing factors, the Company’s net income was $76.1 million in 2020, $58.1 million in 2019 and $78.2 million in 2018.

Off-Balance Sheet Arrangements

The Company does not currently have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

16

Liquidity and Capital Resources

The following table summarizes the Company’s cash flow activities (in thousands):

	Year Ended December 31,
	2020		2019		2018
Net cash provided by operating activities	$	57,462	$	106,121	$	81,590
Net cash used in investing activities	(85,991)		(52,456)		(26,065)
Net cash provided by (used in) financing activities	(19,313)		(1,105)		(482)
Net increase in cash and cash equivalents	$	(47,842)	$	52,560	$	55,043
Annual dividends paid	$	(1,650)	$	(1,673)	$	(1,668)

The Company maintains a substantial inventory of finished products to satisfy customers’ prompt delivery requirements. As is customary in the industry, the Company provides payment terms to most of its customers that exceed terms that it receives from its suppliers. In general, the Company’s standard payment terms result in the collection of a significant majority of net sales within approximately 75 days of the date of the invoice. Therefore, the Company’s liquidity needs have generally consisted of working capital necessary to finance receivables and inventory. Capital expenditures have historically been necessary to expand and update the production capacity of the Company’s manufacturing operations. The Company has historically satisfied its liquidity and capital expenditure needs with cash generated from operations, borrowings under its various debt arrangements and sales of its common stock. We believe that the Company has sufficient liquidity and do not believe COVID-19 will materially impact our liquidity, but we continue to assess the COVID-19 pandemic and its impact on our business, including on our customer base and suppliers.

At December 31, 2020 and 2019, the Company had no debt outstanding.

The Company is party to a Credit Agreement (as amended, the “Credit Agreement”) with two banks, Bank of America, N.A., as administrative agent and letter of credit issuer, and Wells Fargo Bank, National Association as syndication agent. The Credit Agreement extends through October 1, 2021, and provides for maximum borrowings of $150.0 million. In the third quarter of 2016, the Company signed a Third Amendment to the Credit Agreement, which, along with other minor changes, eliminated the restriction of maximum borrowings based on the amount of eligible accounts receivable plus the amount of eligible finished goods and raw materials, less any reserves established by the banks. Additionally, at our request and subject to certain conditions, the commitments under the Credit Agreement may be increased by a maximum of up to $100.0 million as long as existing or new lenders agree to provide such additional commitments. Borrowings under the line of credit bear interest, at the Company’s option, at either (1) LIBOR plus a margin that varies from 0.875% to 1.75% depending upon the Leverage Ratio (as defined in the Credit Agreement), or (2) the base rate (which is the highest of the federal funds rate plus 0.5%, the prime rate, or LIBOR plus 1.0%) plus 0% to 0.25% (depending upon the Leverage Ratio). A commitment fee ranging from 0.15% to 0.30% (depending upon the Leverage Ratio) is payable on the unused line of credit. At December 31, 2020, there were no borrowings outstanding under the Credit Agreement, and letters of credit outstanding in the amount of $0.6 million left $149.4 million of credit available under the Credit Agreement. Obligations under the Credit Agreement are the only contractual borrowing obligations or commercial borrowing commitments of the Company. Obligations under the Credit Agreement are unsecured and contain customary covenants and events of default. The Company was in compliance with the covenants as of December 31, 2020.

On February 9, 2021, the Company terminated the Credit Agreement and entered into a new agreement. The Company is now party to a Credit Agreement ( the “2021 Credit Agreement”) with two banks, Bank of America, N.A., as administrative agent and letter of credit issuer, and Wells Fargo Bank, National Association as syndication agent. The 2021 Credit Agreement extends through February 9, 2026, and provides for maximum borrowings of $200.0 million.

The Company paid interest totaling $0.2 million, $0.2 million and $0.3 million in 2020, 2019 and 2018, respectively, none of which was capitalized.

On November 10, 2006, the Board of Directors approved a stock repurchase program authorizing the Company to repurchase up to an authorized number of shares of its common stock on the open market or through privately negotiated transactions at prices determined by the President of the Company during the term of the program. The Company’s Board of Directors has authorized several increases and annual extensions of this stock repurchase program, and, as of December 31, 2020, 1,000,000 shares remained authorized for repurchase through March 31, 2021. Subsequently, the authorization for repurchase was extended through March 31, 2022. The Company repurchased 441,250 shares of its stock in 2020, and did not repurchase any shares of its stock in 2019 or 2018. The Company also has a broker agreement to repurchase stock in the open market at certain trigger points pursuant to a Rule 10b5-1 plan announced on November 28, 2007.

17

Net cash provided by operations decreased $48.6 million to $57.5 million in 2020 compared to $106.1 million in 2019 and $81.6 million in 2018. The decrease in cash provided by operations of $48.6 million in 2020 versus 2019 was due to several factors. Net income increased to $76.1 million in 2020 from $58.1 million in 2019. Accounts receivable increased in 2020, resulting in cash used of $53.4 million versus cash provided of $12.3 million in 2019, a decrease in operating cash flow of $65.7 million. Accounts receivable was impacted by the $78.5 million increase in net sales in the fourth quarter of 2020 versus the fourth quarter of 2019, brought on by a 21.1% increase in the average selling price per pound of copper wire sold, and a 4.3% increase in copper volume shipped. Changes in inventory resulted in cash used of $2.6 million in 2020 versus cash provided of $12.7 million in 2019, a $15.3 million decrease in cash provided. Changes in trade accounts payable and accrued liabilities resulted in cash provided of $7.6 million in 2020 versus cash provided of $2.0 million in 2019, a positive swing of $5.6 million. These changes in cash flow were the primary drivers of the $48.6 million decrease in net cash flow provided by operations in 2020 versus 2019.

Net cash provided by operations increased $24.5 million to $106.1 million in 2019 compared to $81.6 million in 2018. The increase in cash provided by operations of $24.5 million in 2019 versus 2018 was due to several factors. Net income decreased to $58.1 million in 2019 from $78.2 million in 2018. Accounts receivable decreased in 2019, resulting in cash provided of $12.3 million versus cash used of $6.5 million in 2018, an increase in operating cash flow of $18.8 million. Accounts receivable generally fluctuates in proportion to dollar sales and, to a lesser extent, are affected by the timing of when sales occur during a given quarter. Additionally, accounts receivable can fluctuate based upon the payment timing patterns of certain large customers, although increases in accounts receivable at the end of quarterly reporting periods for this reason have not historically raised collectability issues. Changes in inventory resulted in cash provided of $12.7 million in 2019 versus cash used of $10.0 million in 2018, a $22.7 million increase in cash provided. Changes in trade accounts payable and accrued liabilities resulted in cash provided of $2.0 million in 2019 versus cash provided of $0.2 million in 2018, a positive swing of $1.8 million. These changes in cash flow were the primary drivers of the $24.5 million increase in net cash flow provided by operations in 2019 versus 2018.

Net cash used in investing activities was $86.0 million in 2020 versus $52.5 million in 2019 and $26.1 million in 2018. In 2020, capital expenditures were used primarily for the construction of our new service center, the acceleration of spending for our repurposed distribution center, and the purchase and installation of machinery and equipment throughout the Company. In 2019 and 2018, capital expenditures were used primarily for the purchase and installation of machinery and equipment throughout the Company.

The net cash used by financing activities of $19.3 million in 2020 consisted primarily of $20.7 million used to purchase Company stock and dividend payments of $1.7 million, partially offset by $3.0 million proceeds from issuance of Company stock related to employees exercising stock options. The net cash used by financing activities of $1.1 million in 2019 consisted primarily of $1.7 million in dividend payments offset by $0.6 million proceeds from issuance of Company stock related to employees exercising stock options. The net cash used by financing activities of $0.5 million in 2018 consisted primarily of $1.7 million in dividend payments, offset by $1.2 million proceeds from issuance of Company stock related to employees exercising stock options.

Our two-phased expansion plans announced earlier this year continue in earnest and remain on schedule. The construction of the new service center is progressing well with a planned opening in the second quarter of 2021. Phase two of our expansion plans will focus on repurposing our existing distribution center to expand manufacturing capacity and extend our market reach. Spending on Phase two has already commenced as we have accelerated the timing of orders with manufacturers due to increased lead times required for certain machinery and equipment in the current environment. Phase two completion is anticipated in early 2022. Total capital expenditures were $86 million in 2020. We expect total capital expenditures to range from $100 - $120 million in 2021, $50 - $70 million in 2022, and $40 - $60 million in 2023. Our strong balance sheet and ability to consistently generate high levels of operating cash flow should provide ample allowance to fund planned capital expenditures.

Contractual Obligations

As shown below, the Company had the following contractual obligations as of December 31, 2020.

	Payments Due by Period ($ in Thousands)
Contractual Obligations	Total		Less Than 1 Year		1-3 Years	3-5 Years	More Than 5 Years
Purchase Obligations	$	144,479	$	144,479	—	—	—

Note:     Amounts listed as purchase obligations consist of open purchase orders for major raw material purchases and $60.2 million of capital equipment and construction purchase orders open as of December 31, 2020.

18

Critical Accounting Policies and Estimates

Management’s discussion and analysis of its financial condition and results of operations are based upon the Company’s financial statements, which have been prepared in accordance with accounting principles generally accepted in the U.S. The preparation of these financial statements requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. See Note 1 to the Financial Statements included under “Item 8. Financial Statements and Supplementary Data” of this annual report. Management believes the following critical accounting policies affect its more significant estimates and assumptions used in the preparation of its financial statements.

Inventories are stated at the lower of cost, using the last-in, first out (LIFO) method, or market. The Company maintains two inventory pools for LIFO purposes. As permitted by U.S. generally accepted accounting principles, the Company maintains its inventory costs and cost of goods sold on a first-in, first-out (FIFO) basis and makes a monthly adjustment to adjust total inventory and cost of goods sold from FIFO to LIFO. The Company applies the lower of cost or market (LCM) test by comparing the LIFO cost of its raw materials, work-in-process and finished goods inventories to estimated market values, which are based primarily upon the most recent quoted market price of copper and other raw materials and finished wire prices as of the end of each reporting period. The Company performs a lower of cost or market calculation quarterly. As of December 31, 2020, no LCM adjustment was required. However, decreases in copper and other material prices could necessitate establishing an LCM reserve in future periods. Additionally, future reductions in the quantity of inventory on hand could cause copper or other raw materials that are carried in inventory at costs different from the cost of copper and other raw materials in the period in which the reduction occurs to be included in costs of goods sold for that period at the different price.

Revenue from the sale of the Company’s products is recognized when goods are shipped to the customer, title and risk of loss are transferred, pricing is fixed or determinable and collection is reasonably assured. A provision for payment discounts and customer rebates is estimated based upon historical experience and other relevant factors and is recorded within the same period that the revenue is recognized.

The Company has provided an allowance for credit losses on customer receivables based upon estimates of those customers’ inability to make required payments. Such allowance is established and adjusted based upon the makeup of the current receivable portfolio, past bad debt experience and current market conditions. If the financial condition of our customers was to deteriorate and impair their ability to make payments to the Company, additional allowances for losses might be required in future periods.

Recent Accounting Pronouncements

The Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) is the sole source of authoritative U.S. GAAP other than Securities and Exchange Commission ("SEC") issued rules and regulations that apply only to SEC registrants. The FASB issues an Accounting Standard Update (“ASU”) to communicate changes to the codification. The Company considers the applicability and impact of all ASUs. The following are those ASUs that are relevant to the Company.

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326),” which makes significant changes to the accounting for credit losses on financial assets and disclosures about them. This ASU requires immediate recognition of management’s estimates of current expected credit losses. Under the prior model, losses were recognized only as they were incurred, which FASB has noted delayed recognition of expected losses that might not yet have met the threshold of being probable. The guidance affects all entities in all industries and applies to a wide variety of financial assets, including trade receivables. We adopted this new standard January 1, 2020 and applied a loss rate model to compute the expected credit loss allowance of our short-term trade receivable balances, which we concluded are representative of one collective pool. This method is based on relevant information from past events, including historical experiences, current conditions, and reasonable and supportable forecasts that affect collectability. Our evaluation of the new standard concluded that it had no material impact on our financial statements.

In December 2019, the FASB issued ASU 2019-12, “Simplifying the Accounting for Income Taxes,” which simplifies the accounting for income taxes, eliminates certain exceptions within ASC 740, Income Taxes, and clarifies certain aspects of the current guidance to promote consistency among reporting entities. This ASU is effective for annual reporting periods beginning after December 15, 2020, and interim periods within those reporting periods. Early adoption is permitted in any interim or annual period. We are evaluating the effect of adopting this new accounting guidance but do not expect adoption will have a material impact on the Company's financial statements or disclosures.

Information Regarding Forward-Looking Statements

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This report contains various forward-looking statements and information that are based on management’s belief as well as assumptions made by and information currently available to management. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Such statements are subject to certain risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those expected.

Among the key factors that may have a direct bearing on the Company’s operating results and stock price are:

•fluctuations in the global and national economy

•the impact of a global pandemic

•fluctuations in the level of activity in the construction industry, including remodeling

•demand for the Company’s products

•the impact of price competition on the Company’s margins

•fluctuations in the price of copper, aluminum and other key raw materials

•the loss of key manufacturers’ representatives who sell the Company’s product line

•fluctuations in utility costs, especially electricity and natural gas, and freight costs

•fluctuations in insurance costs and the availability of coverage of various types

•weather related disasters at the Company’s and/or key vendor’s operating facilities

•stock price fluctuations due to “stock market expectations” and other external variables

•unforeseen future legal issues and/or government regulatory changes

•changes in tax laws

•patent and intellectual property disputes, and

•fluctuations in the Company’s financial position or national banking issues that impede the Company’s ability to obtain reasonable and adequate financing.

This list highlights some of the major factors that could affect the Company’s operations or stock price, but cannot enumerate all the potential issues that management faces on a daily basis, many of which are totally out of management’s control. For further discussion of the factors described herein and their potential effects on the Company, see “Item 1. Business,” “Item 1A. Risk Factors,” “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Item 7A. Quantitative and Qualitative Disclosures About Market Risk.”

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

The Company does not engage in metal futures trading or hedging activities and does not enter into derivative financial instrument transactions for trading or other speculative purposes. However, the Company is generally exposed to commodity price and interest rate risks.

The Company purchases copper cathode primarily from miners and commodity brokers at prices determined each month based on the average daily COMEX closing prices for copper for that month, plus a negotiated premium. As a result, fluctuations in copper prices caused by market forces can significantly affect the Company’s financial results. Interest rate risk is attributable to the Company’s long-term debt. As of December 31, 2020, the Company was a party to the Credit Agreement. Amounts outstanding under the Credit Agreement, as amended, are payable on October 1, 2021, with interest payments due quarterly. At December 31, 2020, the balance outstanding under the Credit Agreement was zero.

There is inherent rollover risk for borrowings under the Credit Agreement as such borrowings mature and are renewed at current market rates. The extent of this risk is not quantifiable or predictable because of the variability of future interest rates and the Company’s future financing requirements.

20

For further information regarding market risk, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Item 1A. Risk Factors.”

21

Item 8. Financial Statements and Supplementary Data.

The financial statements of the Company and the notes thereto appear on the following pages.

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors of Encore Wire Corporation

Opinion on the Financial Statements

We have audited the accompanying balance sheets of Encore Wire Corporation (the Company) as of December 31, 2020 and 2019, the related statements of income, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 22, 2021 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosure to which it relates.

22

	Valuation of inventories
Description of the Matter	At December 31, 2020, the Company’s inventory balance was $92.3 million. As discussed in Notes 1 and 2 to the financial statements, inventories are stated at the lower of cost, using the last-in, first-out (LIFO) method, or market. The Company maintains two inventory pools for LIFO purposes. As permitted by U.S. generally accepted accounting principles, the Company maintains its inventory costs and cost of goods sold on a first-in, first-out (FIFO) basis and adjusts total inventory and cost of goods sold from FIFO to LIFO at each month end. Auditing management’s calculations to adjust the FIFO inventory balances to LIFO was challenging due to the complexities of the manual calculations.
How We Addressed the Matter in Our Audit	We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s calculations of the adjustments to convert FIFO inventory balances to LIFO, including controls over management’s review of the manual calculations described above. To test the LIFO inventory balance, we performed audit procedures that included, among others, assessing methodologies and testing the underlying data used in the Company’s calculations to adjust the FIFO inventory balances to LIFO. We also tested the mathematical accuracy of the Company’s calculations.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 1990.

Dallas, Texas

February 22, 2021

23

Encore Wire Corporation

Balance Sheets

As of December 31, 2020 and 2019

(In thousands, except share data)

	2020		2019
Assets
Current assets:
Cash and cash equivalents	$	183,123	$	230,965
Accounts receivable, net of allowance of $2,215 and $1,801	275,781		223,098
Inventories	92,322		89,684
Income taxes receivable	1,256		3,602
Prepaid expenses and other	2,651		1,889
Total current assets	555,133		549,238
Property, plant and equipment – at cost:
Land and land improvements	60,662		52,354
Construction-in-progress	91,688		49,847
Buildings and improvements	153,094		152,536
Machinery and equipment	373,902		334,204
Furniture and fixtures	15,345		10,926
Total property, plant and equipment	694,691		599,867
Accumulated depreciation	(283,923)		(266,688)
Property, plant and equipment – net	410,768		333,179
Other assets	553		737
Total assets	$	966,454	$	883,154
Liabilities and Stockholders’ Equity
Current liabilities:
Trade accounts payable	$	56,726	$	40,509
Accrued liabilities	36,866		34,787
Total current liabilities	93,592		75,296
Deferred income taxes and other	35,133		28,762
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $.01 par value:
Authorized shares – 2,000,000; none issued	—		—
Common stock, $.01 par value:
Authorized shares – 40,000,000;
Issued shares – 27,025,388 and 26,939,403	270		269
Additional paid-in capital	67,885		63,009
Treasury stock, at cost – 6,468,705 and 6,027,455 shares	(111,718)		(91,056)
Retained earnings	881,292		806,874
Total stockholders’ equity	837,729		779,096
Total liabilities and stockholders’ equity	$	966,454	$	883,154

See accompanying notes.

24

Encore Wire Corporation

Statements of Income

For the Years Ended December 31, 2020, 2019 and 2018

(In thousands, except per share data)

	2020		2019		2018
Net sales	$	1,276,948	$	1,274,994	$	1,288,683
Cost of goods sold	1,082,413		1,109,023		1,098,961
Gross profit	194,535		165,971		189,722
Selling, general and administrative expenses	97,008		94,442		90,212
Operating income	97,527		71,529		99,510
Net interest and other income	1,269		4,199		2,174
Income before income taxes	98,796		75,728		101,684
Provision for income taxes	22,729		17,599		23,534
Net income	$	76,067	$	58,129	$	78,150
Earnings per common and common equivalent share – basic	$	3.69	$	2.78	$	3.75
Earnings per common and common equivalent share – diluted	$	3.68	$	2.77	$	3.74
Weighted average common and common equivalent shares outstanding – basic	20,599		20,904		20,845
Weighted average common and common equivalent shares outstanding – diluted	20,653		20,990		20,910
Cash dividends declared per share	$	0.08	$	0.08	$	0.08

See accompanying notes.

25

Encore Wire Corporation

Statements of Stockholders' Equity

(In thousands, except per share data)

	Common Stock			Additional Paid-In Capital		Treasury Stock			Retained Earnings
	Shares	Amount				Shares	Amount				Total
Balance at January 1, 2018	26,859	$	269	$	58,192	(6,027)	$	(91,056)	$	673,940	$	641,345
Net income	—	—		—		—	—		78,150		78,150
Exercise of stock options	42	—		1,186		—	—		—		1,186
Stock-based compensation	5	—		1,444		—	—		—		1,444
Dividend declared—$0.08 per share	—	—		—		—	—		(1,669)		(1,669)
Balance at December 31, 2018	26,906	269		60,822		(6,027)	(91,056)		750,421		720,456
Net income	—	—		—		—	—		58,129		58,129
Exercise of stock options	22	—		568		—	—		—		568
Stock-based compensation	11	—		1,619		—	—		—		1,619
Dividend declared—$0.08 per share	—	—		—		—	—		(1,676)		(1,676)
Balance at December 31, 2019	26,939	269		63,009		(6,027)	(91,056)		806,874		779,096
Net income	—	—		—		—	—		76,067		76,067
Exercise of stock options	69	1		2,998		—	—		—		2,999
Stock-based compensation	17	—		1,878		—	—		—		1,878
Dividend declared—$0.08 per share	—	—		—		—	—		(1,649)		(1,649)
Purchase of treasury stock	—	—		—		(441)	(20,662)		—		(20,662)
Balance at December 31, 2020	27,025	$	270	$	67,885	(6,468)	$	(111,718)	$	881,292	$	837,729

See accompanying notes.

26

Encore Wire Corporation

Statements of Cash Flows

For the Years Ended December 31, 2020, 2019 and 2018

(In thousands)

	2020		2019		2018
Operating Activities
Net income	$	76,067	$	58,129	$	78,150
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	19,459		17,707		16,513
Deferred income taxes	6,429		3,376		3,033
Stock-based compensation attributable to equity awards	1,878		1,619		1,444
Other	470		754		(187)
Changes in operating assets and liabilities:
Accounts receivable	(53,383)		12,255		(6,468)
Inventories	(2,638)		12,683		(10,002)
Other assets	(746)		(229)		627
Trade accounts payable and accrued liabilities	7,580		2,040		165
Current income taxes receivable / payable	2,346		(2,213)		(1,685)
Net cash provided by operating activities	57,462		106,121		81,590
Investing Activities
Purchases of property, plant and equipment	(86,082)		(52,484)		(26,181)
Proceeds from sale of assets	91		28		116
Net cash used in investing activities	(85,991)		(52,456)		(26,065)
Financing Activities
Purchase of treasury stock	(20,662)		—		—
Borrowings from revolver	—		—		67,300
Repayments to revolver	—		—		(67,300)
Proceeds from issuance of common stock, net	2,999		568		1,186
Dividends paid	(1,650)		(1,673)		(1,668)
Net cash used in financing activities	(19,313)		(1,105)		(482)
Net increase (decrease) in cash and cash equivalents	(47,842)		52,560		55,043
Cash and cash equivalents at beginning of period	230,965		178,405		123,362
Cash and cash equivalents at end of period	$	183,123	$	230,965	$	178,405

See accompanying notes.

27

Encore Wire Corporation

Notes to Financial Statements

December 31, 2020

1. Significant Accounting Policies

Business

The Company conducts its business in one segment – the manufacture of electric building wire, principally NM-B cable, for use primarily as interior wiring in homes, apartments, and manufactured housing, and THHN/THWN-2 cable and metal-clad and armored cable for use primarily as wiring in commercial and industrial buildings. The Company sells its products primarily through manufacturers’ representatives located throughout the United States and, to a lesser extent, through its own direct marketing efforts. The principal customers for Encore’s building wire are wholesale electrical distributors.

Copper, a commodity product, is the principal raw material used in the Company’s manufacturing operations. The price of copper fluctuates, depending on general economic conditions and in relation to supply and demand and other factors, and has caused monthly variations in the cost of copper purchased by the Company. The Company cannot predict future copper prices or the effect of fluctuations in the cost of copper on the Company’s future operating results.

Basis of Presentation

The Company's financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). The financial statements include the accounts of the Company and its former wholly-owned subsidiary, which was dissolved in December 2018. For periods prior to the subsidiary's dissolution, all intercompany accounts and transactions were eliminated upon consolidation.

In March 2020, the World Health Organization declared COVID-19 a global pandemic and recommended containment and mitigation measures worldwide. To date, COVID-19 has surfaced in nearly all regions around the world and resulted in travel restrictions and business slowdowns or shutdowns in affected areas. Almost all U.S. states, and many local jurisdictions and countries around the world, have, at times during the pandemic, issued “shelter-in-place” orders, quarantines, executive orders and similar government orders, restrictions, and recommendations for their residents to control the spread of COVID-19. The Company is unable to predict the impact that the continued spread of COVID-19 will have on our financial position and operating results in future periods due to numerous uncertainties. The duration and severity of the outbreak and its long-term impact on our business remain uncertain.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Revenue Recognition

The majority of our revenue is derived by fulfilling customer orders for the purchase of our products, which include electrical building wire and cable. We recognize revenue at the point in time that control of the ordered products is transferred to the customer, which is typically upon shipment to the customer from our manufacturing facilities and based on agreed upon shipping terms on the related purchase order. Amounts billed and due from our customers are classified as accounts receivables on the balance sheet and require payment on a short-term basis through standard payment terms.

Revenue is measured as the amount of consideration we expect to receive in exchange for fulfilling product orders. The amount of consideration we expect to receive and revenue we recognize includes estimates for trade payment discounts and customer rebates which are estimated using historical experience and other relevant factors and is recorded within the same period that the revenue is recognized. We review and update these estimates regularly and the impact of any adjustments are recognized in the period the adjustments are identified. The adjustments resulting from updated estimates of trade payment discounts and customer rebates were not material.

Freight Expenses

The Company classifies shipping and handling costs as a component of selling, general and administrative expenses. Shipping and handling costs were approximately $35.2 million, $33.9 million and $35.1 million for the years ended December 31, 2020, 2019 and 2018, respectively.

Fair Value of Financial Instruments

28

Certain items are required to be measured at fair value on a recurring basis, primarily cash equivalents held in banks. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. A three-level hierarchy is followed for disclosure to show the extent and level of judgment used to estimate fair value measurements:

Level 1 – Inputs used to measure fair value are unadjusted quoted prices that are available in active markets for the identical assets or liabilities as of the reporting date.

Level 2 – Inputs used to measure fair value, other than quoted prices included in Level 1, are either directly or indirectly observable as of the reporting date through correlation with market data, including quoted prices for similar assets and liabilities in active markets and quoted prices in markets that are not active. Level 2 also includes assets and liabilities that are valued using models or other pricing methodologies that do not require significant judgment since the input assumptions used in the models, such as interest rates and volatility factors, are corroborated by readily observable data from actively quoted markets for substantially the full term of the financial instrument.

Level 3 – Inputs used to measure fair value are unobservable inputs that are supported by little or no market activity and reflect the use of significant management judgment. These values are generally determined using pricing models for which the assumptions utilize management’s estimates of market participant assumptions.

At December 31, 2020 and 2019, the carrying value of cash and cash equivalents, excluding certificates of deposit, approximated fair value, a Level 1 measurement. At December 31, 2020, the Company had no certificates of deposit. At December 31, 2019, the carrying value of the Company’s certificates of deposit totaled $161.3 million approximated fair value, a Level 2 measurement.

Concentrations of Credit Risk and Accounts Receivable

Financial instruments that potentially subject the Company to a concentration of credit risk consist principally of cash and cash equivalents and accounts receivable. The Company places its cash and cash equivalents with high credit quality financial institutions.

Accounts receivable represent amounts due from customers, primarily wholesale electrical distributors, related to the sale of the Company’s products. Such receivables are uncollateralized and are generally due from customers located throughout the United States. Encore has three customers, each of whom slightly exceeds 10% of the Company's total sales. The Company establishes an allowance for credit losses based upon the makeup of the current portfolio, past bad debt experience and current market conditions.

Allowance for Losses Progression (In Thousands)	2020		2019		2018
Beginning balance January 1	$	1,801	$	2,030	$	2,028
Write-offs of bad debts	(286)		(230)		—
Collection of previous write-offs	—		1		2
Adjustment to allowance for credit losses	700		—		—
Ending balance at December 31	$	2,215	$	1,801	$	2,030

Cash and Cash Equivalents

The Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents. At December 31, 2020, the Company’s cash equivalents consisted of investments in money market accounts with the Company’s banks. At December 31, 2019, the Company’s cash equivalents consisted of investments in money market accounts and certificates of deposit with the Company’s banks.

Inventories

Inventories are stated at the lower of cost, using the last-in, first-out (LIFO) method, or market. The Company evaluates the market value of its raw materials, work-in-process and finished goods inventory primarily based upon current raw material and finished goods prices at the end of each period.

Property, Plant, and Equipment

Depreciation of property, plant and equipment for financial reporting is provided on the straight-line method over the estimated useful lives of the respective assets as follows: buildings and improvements, 3 to 39 years; machinery and equipment, 2 to 20

29

years; and furniture and fixtures, 5 to 20 years. Accelerated cost recovery methods are used for tax purposes. Repairs and maintenance costs are expensed as incurred.

Stock-Based Compensation

Compensation cost for all equity-based compensation expected to vest is measured at fair value on the date of grant and recognized over the related service period. The fair value of stock awards is determined based on the number of shares granted and the quoted price of Encore’s common stock, and the fair value of stock options and stock appreciation rights is estimated on the date of grant using the Black-Scholes model. Such value is recognized as expense over the service period, net of estimated forfeitures, on a straight-line basis. To the extent actual forfeitures or updated estimates of forfeitures differ from management’s current estimates, such amounts are recorded as a cumulative adjustment in the period estimates are revised.

Earnings Per Share

Earnings per common and common equivalent share is computed using the weighted average number of shares of common stock and common stock equivalents outstanding during each period. The dilutive effects of stock awards, which are common stock equivalents, are calculated using the treasury stock method.

Income Taxes

Income taxes are provided for based on the liability method, resulting in deferred income tax assets and liabilities arising due to temporary differences. Temporary differences are differences between the tax basis of assets and liabilities and their reported amounts in the financial statements that will result in taxable or deductible amounts in future years. The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period the change in rate is enacted.

Comprehensive Income

Comprehensive income is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. There were no differences between comprehensive income and reported income in the periods presented.

Recent Accounting Pronouncements

The Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) is the sole source of authoritative U.S. GAAP other than Securities and Exchange Commission ("SEC") issued rules and regulations that apply only to SEC registrants. The FASB issues an Accounting Standard Update (“ASU”) to communicate changes to the codification. The Company considers the applicability and impact of all ASUs. The following are those ASUs that are relevant to the Company.

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326),” which makes significant changes to the accounting for credit losses on financial assets and disclosures about them. This ASU requires immediate recognition of management’s estimates of current expected credit losses. Under the prior model, losses were recognized only as they were incurred, which FASB has noted delayed recognition of expected losses that might not yet have met the threshold of being probable. The guidance affects all entities in all industries and applies to a wide variety of financial assets, including trade receivables. We adopted this new standard January 1, 2020 and applied a loss rate model to compute the expected credit loss allowance of our short-term trade receivable balances, which we concluded are representative of one collective pool. This method is based on relevant information from past events, including historical experiences, current conditions, and reasonable and supportable forecasts that affect collectability. Upon adoption, we recognized a $0.7 million increase to our allowance for credit losses and a corresponding cumulative adjustment to reduce retained earnings, net of income taxes, of $0.5 million. This transition adjustment reflects the development of our models to estimate expected credit losses over the life of our financial assets, which primarily consist of our accounts receivable. Pursuit to ASU 2016-13, we have evaluated our customers’ financial strength and liquidity based on aging of accounts receivable, payment history, and other relevant information, including ratings agency, credit ratings and alerts, and publicly available reports.

In December 2019, the FASB issued ASU 2019-12, “Simplifying the Accounting for Income Taxes,” which simplifies the accounting for income taxes, eliminates certain exceptions within ASC 740, Income Taxes, and clarifies certain aspects of the current guidance to promote consistency among reporting entities. This ASU is effective for annual reporting periods beginning after December 15, 2020, and interim periods within those reporting periods. Early adoption is permitted in any interim or annual period. We are evaluating the effect of adopting this new accounting guidance but do not expect adoption will have a material impact on the Company's financial statements or disclosures.

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2. Inventories

Inventories consist of the following as of December 31:

In Thousands	2020		2019
Raw materials	$	40,842	$	25,882
Work-in-process	30,311		25,381
Finished goods	88,544		83,222
Total	159,697		134,485
Adjust to LIFO cost	(67,375)		(44,801)
Inventory	$	92,322	$	89,684

There were no liquidations of inventories that had a material impact on the Company’s results of operations for any period presented.

3. Accrued Liabilities

Accrued liabilities consist of the following as of December 31:

In Thousands	2020		2019
Sales rebates payable	$	19,317	$	16,622
SAR Liability	5,343		3,087
Property taxes payable	4,427		4,011
Accrued salaries	4,096		7,924
Other accrued liabilities	3,683		3,143
Total accrued liabilities	$	36,866	$	34,787

4. Debt

At December 31, 2020 and 2019, the Company had no debt outstanding.

The Company is party to a Credit Agreement (as amended, the “Credit Agreement”) with two banks, Bank of America, N.A., as administrative agent and letter of credit issuer, and Wells Fargo Bank, National Association as syndication agent. The Credit Agreement extends through October 1, 2021, and provides for maximum borrowings of $150.0 million. In the third quarter of 2016, the Company signed a Third Amendment to the Credit Agreement, which, along with other minor changes, eliminated the restriction of maximum borrowings based on the amount of eligible accounts receivable plus the amount of eligible finished goods and raw materials, less any reserves established by the banks. Additionally, at our request and subject to certain conditions, the commitments under the Credit Agreement may be increased by a maximum of up to $100.0 million as long as existing or new lenders agree to provide such additional commitments. Borrowings under the line of credit bear interest, at the Company’s option, at either (1) LIBOR plus a margin that varies from 0.875% to 1.75% depending upon the Leverage Ratio (as defined in the Credit Agreement), or (2) the base rate (which is the highest of the federal funds rate plus 0.5%, the prime rate, or LIBOR plus 1.0%) plus —% to 0.25% (depending upon the Leverage Ratio). A commitment fee ranging from 0.15% to 0.30% (depending upon the Leverage Ratio) is payable on the unused line of credit. At December 31, 2020, there were no borrowings outstanding under the Credit Agreement, and letters of credit outstanding in the amount of $0.6 million left $149.4 million of credit available under the Credit Agreement. Obligations under the Credit Agreement are the only contractual borrowing obligations or commercial borrowing commitments of the Company. Obligations under the Credit Agreement are unsecured and contain customary covenants and events of default. The Company was in compliance with the covenants as of December 31, 2020.

On February 9, 2021, the Company terminated the Credit Agreement and entered into a new agreement. The Company is now party to a Credit Agreement ( the “2021 Credit Agreement”) with two banks, Bank of America, N.A., as administrative agent and letter of credit issuer, and Wells Fargo Bank, National Association as syndication agent. The 2021 Credit Agreement extends through February 9, 2026, and provides for maximum borrowings of $200.0 million.

The Company paid interest totaling $0.2 million, $0.2 million and $0.3 million in 2020, 2019 and 2018, respectively, none of which was capitalized.

5. Income Taxes

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On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) was signed into law. The CARES Act includes several provisions for corporations including payroll tax credits, deferment of employer social security tax payments, expanded net operating loss carryback periods, accelerated alternative minimum tax credit refunds, modifications to the net interest deduction limitations, and technical corrections to tax depreciation methods for qualified improvement property. The CARES Act did not have a material impact on the Company's income tax provision in the year ended December 31, 2020.

The provision for income tax expense are summarized as follows for the years ended December 31:

In Thousands	2020		2019		2018
Current:
Federal	$	14,277	$	12,675	$	18,523
State	2,024		1,549		1,978
Deferred:
Federal	6,285		3,260		2,603
State	143		115		430
Total income tax expense	$	22,729	$	17,599	$	23,534

The differences between the provision for income taxes and income taxes computed using the federal income tax rate are as follows for the years ended December 31:

In Thousands	2020		2019		2018
Amount computed using the statutory rate	$	20,747	$	15,903	$	21,354
State income taxes, net of federal tax benefit	1,732		1,314		1,903
Other	250		382		277
Total income tax expense	$	22,729	$	17,599	$	23,534

The tax effect of each type of temporary difference giving rise to the net deferred tax liability at December 31 is as follows:

In Thousands	2020		2019
Depreciation	$	(35,869)	$	(27,547)
Inventory	503		(1,970)
Allowance for credit losses	499		406
Uniform capitalization rules	276		265
Other	754		1,438
Net deferred income tax liability	$	(33,837)	$	(27,408)

The Company's inventory costing method for federal income tax purposes differs from the method allowed by GAAP. Both methods of inventory costing result in the same recovery of inventory. However, the timing of the recovery varies. As of December 31, 2020 the Company's tax inventory exceeds its book inventory, which created a deferred tax asset of $503k.

The Company made income tax payments of $14.1 million in 2020, $16.4 million in 2019 and $22.3 million in 2018.

The Company was audited by the IRS for the year 2015. The audit concluded with no adjustments. The Company’s federal income tax returns for the years subsequent to December 31, 2016 remain subject to examination. The Company’s income tax returns in major state income tax jurisdictions remain subject to examination for various periods subsequent to December 31, 2015. The Company has no reserves for uncertain tax positions as of December 31, 2020 and 2019. Interest and penalties resulting from audits by tax authorities have been immaterial and are included in the provision for income taxes in the statements of income.

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6. Stock-Based Compensation

Total stock-based compensation expense by type of award was as follows for the years ended December 31:

In Thousands	2020		2019		2018
Stock options	$	561	$	635	$	1,209
Stock appreciation rights (“SARs”)	3,377		2,906		894
Restricted Stock Awards	1,101		$	907	$	—
Stock grants	244		269		$	235
Total stock-based compensation expense	$	5,283	$	4,717	$	2,338

In 2020, the Board of Directors adopted a new stock option plan called the Encore Wire 2020 Long Term Incentive Plan (the “2020 LTIP”) which was approved by the Company’s stockholders at the 2020 Annual Meeting of Stockholders. The 2020 LTIP permits the granting of 1,000,000 securities in the form of options to purchase shares of common stock, stock appreciation rights, restricted common stock, restricted stock units, unrestricted common stock, dividend equivalents, cash awards, or performance awards to non-employee directors, officers and employees of the Company. The 2010 Stock Option Plan expired on February 20, 2020. As of December 31, 2020, 994,500 securities remained available for grant under the 2020 LTIP.

Stock Options:

No stock option awards were granted in 2020 or 2019. The Company granted stock option awards in 2018 with exercise prices equal to the fair market value of its stock on the date of grant of the options. These options vest ratably over a period of five years from the time the options were granted. The maximum term of any option previously granted under the 2010 Stock Option Plan or granted in the future under the 2020 LTIP is ten years. New shares are issued upon the exercise of options.

The following presents a summary of stock option activity for the year ended December 31, 2020:

	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value (In Thousands)
Outstanding at January 1, 2020	393,500	$	42.36
Exercised	(68,972)	49.80
Forfeited/Canceled	(10,028)	51.63
Outstanding at December 31, 2020	314,500	$	41.82	5.1 years	$	5,898
Vested and exercisable at December 31, 2020	226,000	$	40.03	4.5 years	$	4,642

The fair value of stock options granted in the year ended December 31, 2018, was estimated on the date of grant using a Black-Scholes option pricing model and the following weighted average assumptions:

	Year Ended December 31,
	2018
Risk-free interest rate	2.36	%
Expected dividend yield	0.16	%
Expected volatility	31.40	%
Expected lives	5.0 years

The Company bases expected volatilities on historical volatilities of Encore's common stock. The expected life represents the weighted average period of time that options granted are expected to be outstanding giving consideration to vesting periods and management’s consideration of historical exercise patterns. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding to the expected life of the option. The expected dividend yield is based on the annualized dividend payment paid on common shares.

During the year ended December 31, 2018, the weighted average grant date fair value of options granted was $15.95. During the years ended December 31, 2020, 2019 and 2018, the total intrinsic value of options exercised was $0.4 million, $0.7 million and $0.9 million, respectively. As of December 31, 2020, total unrecognized compensation cost related to non-vested stock options of $0.7 million was expected to be recognized over a weighted average period of 1.8 years.

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Stock Appreciation Rights:

In 2014, the Board of Directors adopted a new stock appreciation rights plan called the Encore Wire 2014 Stock Appreciation Rights Plan (the “2014 SARs Plan”). The 2014 SARs Plan permits the grant of SARs that may only be settled in cash to non-executive officers and employees of the Company. SARs granted to employees vest ratably over a period of five years from the time the SARs were granted. The maximum term of any SARs granted under the 2014 SARs Plan is ten years. These awards are classified as liability awards. The liability balances were $5.3 million and $3.1 million at December 31, 2020 and 2019, respectively, and are included in accrued liabilities. Compensation cost for these awards is determined using a fair value method and remeasured at each reporting date until the date of settlement. As of December 31, 2020, a total of 679,500 SARs were outstanding under the 2014 SARs Plan.

The following presents a summary of SARs activity for the year ended December 31, 2020:

	Cash-settled SARs	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value (In Thousands)
Outstanding at January 1, 2020	565,300	$	48.18
Granted	227,500	58.77
Exercised	(85,500)	57.52
Forfeited/Canceled	(27,800)	53.01
Outstanding at December 31, 2020	679,500	$	51.99	7.7 years	$	5,831
Vested and exercisable at December 31, 2020	113,900	$	47.31	6.6 years	$	1,511

The fair value of SARs granted during the years ended December 31, 2020, 2019 and 2018, was estimated on the date of grant using a Black-Scholes option pricing model and the following weighted average assumptions:

	Year Ended December 31,
	2020		2019		2018
Risk-free interest rate	0.18	%	1.62	%	2.53	%
Expected dividend yield	0.13	%	0.14	%	0.16	%
Expected volatility	35.51	%	28.46	%	30.83	%
Expected lives	2.8 years		3.0 years		3.0 years

The Company bases expected volatilities on historical volatilities of Encore's common stock. The expected life represents the weighted average period of time that options granted are expected to be outstanding giving consideration to vesting periods and management’s consideration of historical exercise patterns. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding to the expected life of the option. The expected dividend yield is based on the annualized dividend payment paid on common shares.

During the years ended December 31, 2020, 2019 and 2018, the weighted average grant date fair value of SARs granted was $17.94, $17.19 and $14.94, respectively, and the total intrinsic value of SARs exercised was $1.1 million, $2.1 million, and $1.1 million, respectively. As of December 31, 2020, total unrecognized compensation cost related to non-vested SARs of $6.6 million was expected to be recognized over a weighted average period of 3.1 years.

Restricted Stock Awards:

During the years ended December 31, 2020 and 2019, the Company granted 37,000 shares and 60,000 shares, respectively, of restricted stock to employees pursuant to the 2010 Stock Option Plan, with weighted grant date fair values of $58.90 and $54.49 per share, respectively. There were no restricted shares issued in 2018. As of December 31, 2020, there was $3.4 million of total unrecognized compensation cost related to unvested shares. That cost is expected to be recognized over a weighted-average period of 3.5 years. The total fair value of shares vested during the year ending December 31, 2020 was $0.7 million.

The following presents a summary of restricted stock activity for the year ended December 31, 2020:

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			Weighted Average
	Number of Shares		Grant Date Fair Value
Outstanding at January 1, 2020	50,000		$	55.00
Granted	37,000		58.90
Vested	(12,000)		55.94
Unvested at December 31, 2020	$	75,000	$	56.77

Stock Grants:

In May 2020, the Company granted 1,100 shares of stock to each of the 5 non-employee directors, with a grant date fair value of $44.31 per share. In June 2019, the Company granted 1,000 shares of stock to each of the 5 non-employee directors pursuant to the 2010 Stock Option Plan with a grant date fair value of $53.81 per share. In May 2018, the Company granted 1,000 shares of stock to each of the 5 non-employee directors, with a grant date fair value of $46.95 per share.

7. Earnings Per Share

The following table sets forth certain components of the computation of basic and diluted earnings per share for the years ended December 31:

In Thousands	2020		2019		2018
Numerator:
Net income	$	76,067	$	58,129	$	78,150
Denominator:
Denominator for basic earnings per share – weighted average shares	20,599		20,904		20,845
Effect of dilutive securities:
Employee stock awards	54		86		65
Denominator for diluted earnings per share – weighted average shares	20,653		20,990		20,910

Stock options to purchase common stock at exercise prices in excess of the average actual stock price for the period that were anti-dilutive and that were excluded from the determination of diluted earnings per share are as follows:

In Thousands, Except Per Share Data	2020		2019		2018
Weighted average anti-dilutive stock options	136		118		181
Weighted average exercise price per share	$	51.20	$	51.05	$	50.20

8. Stockholders’ Equity

On November 10, 2006, the Board of Directors approved a stock repurchase program authorizing the Company to repurchase up to an authorized number of shares of its common stock on the open market or through privately negotiated transactions at prices determined by the President of the Company during the term of the program. The Company’s Board of Directors has authorized several increases and annual extensions of this stock repurchase program, and, as of December 31, 2020, 1,000,000 shares remained authorized for repurchase through March 31, 2021. Subsequently, the authorization for repurchase was extended through March 31, 2022. The Company repurchased 441,250 shares of its stock in 2020, and did not repurchase any shares of its stock in 2019 or 2018. The Company also has a broker agreement to repurchase stock in the open market at certain trigger points pursuant to a Rule 10b5-1 plan announced on November 28, 2007. Repurchased shares are recorded as treasury shares.

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9. Contingencies

There are no material pending proceedings to which the Company is a party or to which any of its property is subject. However, the Company is from time to time involved in litigation, certain other claims and arbitration matters arising in the ordinary course of its business.

10. Encore Wire Corporation 401(k) Profit Sharing Plan

The Company sponsors a 401(k) profit sharing plan (the “Plan”) that permits eligible employees to make self-directed contributions of their compensation, a portion of which is matched by the Company, subject to applicable limitations. At the discretion of its Board of Directors, the Company may, but is not required to, make profit-sharing contributions to the Plan on behalf of its employees. The Company’s matching contributions were $2.5 million, $2.5 million and $2.1 million in 2020, 2019 and 2018, respectively.

11. Quarterly Financial Information (Unaudited)

The following is a summary of the unaudited quarterly financial information for the two years ended December 31, 2020 and 2019 (in thousands, except per share data):

	Three Months Ended
2020	March 31		June 30		September 30		December 31
Net sales	$	302,794	$	253,631	$	339,700	$	380,823
Gross profit	45,773		36,499		53,459		58,804
Net income	18,607		12,347		21,012		24,100
Earnings per common share – basic	0.89		0.60		1.02		1.17
Earnings per common share – diluted	0.89		0.60		1.02		1.17

	Three Months Ended
2019	March 31		June 30		September 30		December 31
Net sales	$	314,707	$	336,866	$	321,169	$	302,252
Gross profit	41,326		45,910		42,988		35,747
Net income	13,411		17,782		16,401		10,535
Earnings per common share – basic	0.64		0.85		0.78		0.50
Earnings per common share – diluted	0.64		0.85		0.78		0.50

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

Not applicable.

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Item 9A. Controls and Procedures.

Disclosure Controls and Procedures

The Company maintains controls and procedures designed to ensure that information required to be disclosed by it in the reports it files with or submits to the Securities and Exchange Commission (the “SEC”) is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and to ensure that information required to be disclosed by the Company in such reports is accumulated and communicated to the Company’s management, including the Chief Executive and Chief Financial Officers, as appropriate to allow timely decisions regarding required disclosure. Based on an evaluation of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report conducted by the Company’s management, with the participation of the Chief Executive and Chief Financial Officers, the Chief Executive and Chief Financial Officers concluded that the Company’s disclosure controls and procedures were effective to ensure that information required to be disclosed by the Company in the reports it files with or submits to the SEC is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and to ensure that information required to be disclosed by the Company in such reports is accumulated and communicated to the Company’s management, including the Chief Executive and Chief Financial Officers, as appropriate to allow timely decisions regarding required disclosure.

Management’s Report on Internal Control over Financial Reporting

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended) for the Company.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2020. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control —Integrated Framework (2013 Framework). Based on our assessment, we concluded that, as of December 31, 2020, the Company’s internal control over financial reporting is effective based on those criteria.

Ernst & Young LLP, the independent registered public accounting firm that audited the Company’s financial statements, has also audited the Company’s internal control over financial reporting as of December 31, 2020. Ernst & Young LLP’s attestation report on the Company’s internal control over financial reporting appears directly below.

There have been no changes in the Company’s internal control over financial reporting or in other factors that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting during the Company’s last fiscal quarter.

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Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors of Encore Wire Corporation

Opinion on Internal Control over Financial Reporting

We have audited Encore Wire Corporation’s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Encore Wire Corporation (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the balance sheets of the Company as of December 31, 2020 and 2019, the related statements of income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2020, and the related notes and our report dated February 22, 2021 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report of Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

Dallas, Texas

February 22, 2021

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PART III

Item 10. Directors, Executive Officers and Corporate Governance.

The sections entitled “Election of Directors”, “Corporate Governance and Other Board Matters” and, if applicable, “Delinquent Section 16(a) Reports” appearing in the Company’s proxy statement for the annual meeting of stockholders to be held on May 4, 2021 setting forth certain information with respect to the directors of the Company, Section 16(a) reporting obligations of directors and officers, the Company’s audit committee, the Company’s audit committee financial expert and the procedures by which security holders may recommend nominees to the Board of Directors are incorporated herein by reference. Certain information with respect to persons who are or may be deemed to be executive officers of the Company is set forth under the caption “Information about our Executive Officers” in Part I, Item 1 of this report.

In connection with Company’s long-standing commitment to conduct its business in compliance with applicable laws and regulations and in accordance with its ethical principles, the Board of Directors has adopted a Code of Business Conduct and Ethics applicable to all employees, officers, directors, and advisors of the Company. The Code of Business Conduct and Ethics of the Company is available under the “Investors” section of the Company’s website at http://www.encorewire.com, and is incorporated herein by reference. The Company intends to post amendments to or waivers of its Code of Business Conduct and Ethics (to the extent applicable to any officer or director of the Company) at such location on its website.

Item 11. Executive Compensation.

The section entitled “Executive Compensation” appearing in the Company’s proxy statement for the annual meeting of stockholders to be held on May 4, 2021, sets forth certain information with respect to the compensation of management of the Company and compensation committee interlocks and insider participation and is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The section entitled “Security Ownership of Certain Beneficial Owners, Directors and Executive Officers” appearing in the Company’s proxy statement for the annual meeting of stockholders to be held on May 4, 2021 sets forth certain information with respect to the ownership of the Company’s common stock, and is incorporated herein by reference. Certain information with respect to the Company’s equity compensation plans that is required to be set forth in this Item 12 is set forth under the caption “Equity Compensation Plan Information” contained in “Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities” of this Form 10-K and is incorporated herein by reference.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

The sections entitled “Executive Compensation — Certain Relationships and Related Transactions” and “Corporate Governance and Other Board Matters — Board Independence” appearing in the Company’s proxy statement for the annual meeting of stockholders to be held on May 4, 2021 set forth certain information with respect to certain relationships and related transactions, and director independence, and are incorporated herein by reference.

Item 14. Principal Accounting Fees and Services.

The Section entitled “Proposal Three — Ratification of Appointment of Independent Registered Public Accounting Firm” appearing in the Company’s proxy statement for the annual meeting of stockholders to be held on May 4, 2021, sets forth certain information with respect to certain fees paid to accountants, and is incorporated herein by reference.

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PART IV

Item 15. Exhibits and Financial Statement Schedules.

The following documents are filed as a part of this report:

(1)Financial Statements included in Item 8 of this Annual Report on Form 10-K; and

(2)Financial statement schedules have been omitted because they are not applicable or the information required therein is included in the financial statements or notes thereto in Item 8 of this Annual Report on Form 10-K.

(3)The exhibits required by Item 601 of Regulation S-K are set forth below:

Exhibit Number	Description
3.1	Certificate of Incorporation of Encore Wire Corporation and all amendments thereto (filed as Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2009 and incorporated herein by reference).
3.2	Third Amended and Restated Bylaws of Encore Wire Corporation, as amended through February 27, 2012 (filed as Exhibit 3.2 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2011 and incorporated herein by reference).
4.1	Form of certificate for Common Stock (filed as Exhibit 1 to the Company’s registration statement on Form 8-A, filed with the SEC on June 4, 1992 and incorporated herein by reference).
4.2	Description of Registrant's Securities (filed as Exhibit 4.2 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 and incorporated herein by reference).
10.1*	2010 Stock Option Plan as amended and restated effective February 20, 2017 (filed as Annex A to the Company’s Notice and Proxy Statement filed with on March 27, 2017 and incorporated herein by reference).
10.2*	2020 Long Term Incentive Plan (filed as Exhibit 10.1 to the Company's Current Report on Form 8-K, filed with the SEC on May 6, 2020, and incorporated herein by reference).
10.3*	Form of Indemnification Agreement (filed as Exhibit 10.11 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2009 and incorporated herein by reference).
10.4*	Form of Incentive Stock Option Agreement under the 2010 Stock Option Plan (filed as Exhibit 10.15 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 and incorporated herein by reference).
10.5*	Form of Non-Qualified Stock Option Agreement under the 2010 Stock Option Plan (filed as Exhibit 10.16 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 and incorporated here by reference).
10.6*	Form of Encore Wire 2010 Stock Option Plan Stock Award Agreement (filed as Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q filed with the SEC on August 2, 2017 and incorporated herein by reference).
10.7*	Form of Encore Wire Corporation Restricted Stock Award Agreement
10.8*	Form of Encore Wire Corporation Stock Award Agreement under the 2020 Long Term Incentive Plan (filed as Exhibit 10.2 to the Company's Current Report on Form 8-K, filed with the SEC on May 6, 2020, and incorporated herein by reference).
10.9*	Form of Encore Wire Corporation Time-Based Restricted Stock Unit Award Agreement under the 2020 Long Term Incentive Plan.
10.10	Credit Agreement dated September 27, 2012 by and among the Company, Bank of America, N.A., as administrative agent and letter of credit issuer, Wells Fargo Bank, National Association, as syndication agent and the other lender parties thereto (filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on November 2, 2012 and incorporated herein by reference).

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10.11	First Amendment to Credit Agreement, dated as of December 31, 2013, by and among the Company, Bank of America, N.A., as lender and administrative agent and Wells Fargo Bank, National Association, as lender (filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q filed with the SEC on May 5, 2014 and incorporated herein by reference).
10.12	Second Amendment to Credit Agreement, dated as of December 31, 2014, by and among the Company, Bank of America, N.A., as lender and administrative agent and Wells Fargo Bank, National Association, as lender (filed as Exhibit 10.10 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 and incorporated herein by reference).
10.13	Third Amendment to Credit Agreement, dated as of September 29, 2016, by and among Encore Wire Corporation, as borrower, Bank of America, N.A., as administrative agent and letter of credit issuer, Wells Fargo Bank, National Association, as syndication agent, the financial institutions a party thereto as lenders and EWC Aviation Corporation, as guarantor (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on October 5, 2016 and incorporated herein by reference).
10.14	Credit Agreement dated February 9, 2021 by and among the Company, Bank of America, N.A., as administrative agent, swingline lender and letter of credit issuer, Wells Fargo Bank, National Association, as syndication agent and the other lender parties thereto. (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on February 16, 2021 and incorporated herein by reference).
10.15*	Encore Wire Corporation 2014 Stock Appreciation Rights Plan (filed as Exhibit 10.11 to the Company's Annual Report on Form 10-K for the year ended December 31, 2014 and incorporated herein by reference).
23.1	Consent of Ernst & Young LLP
31.1	Certification by Daniel L. Jones, Chairman, President and Chief Executive Officer of the Company, dated February 22, 2021 and submitted pursuant to Rule 13a-14(a)/15d-14(a) and pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification by Bret J. Eckert, Vice President — Finance, Treasurer, Secretary and Chief Financial Officer of the Company, dated February 22, 2021 and submitted pursuant to Rule 13a-14(a)/15d-14(a) and pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification by Daniel L. Jones, Chairman, President and Chief Executive Officer of the Company, dated February 22, 2021 as required by 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification by Bret J. Eckert, Vice President — Finance, Treasurer, Secretary and Chief Financial Officer, dated February 22, 2021 as required by 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Document
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File - formatted as Inline XBRL and contained in Exhibit 101

*     Management contract or compensatory plan

Item 16. Form 10-K Summary.

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None.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: February 22, 2021	ENCORE WIRE CORPORATION
	By:	/s/ Daniel L. Jones
		Daniel L. Jones Chairman, President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ DANIEL L. JONES	Chairman, President and Chief Executive Officer (Principal Executive Officer)	February 22, 2021
Daniel L. Jones
/s/ BRET J. ECKERT	Vice President-Finance, Treasurer, Secretary and Chief Financial Officer (Principal Financial and Accounting Officer)	February 22, 2021
Bret J. Eckert
/s/ GREGORY J. FISHER	Director	February 22, 2021
Gregory J. Fisher
/s/ GINA A. NORRIS	Director	February 22, 2021
Gina A. Norris
/s/ WILLIAM R. THOMAS	Director	February 22, 2021
William R. Thomas
/s/ SCOTT D. WEAVER	Director	February 22, 2021
Scott D. Weaver
/s/ JOHN H. WILSON	Lead Independent Director	February 22, 2021
John H. Wilson

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EX-4.2

EXHIBIT 4.2

Description of the Registrant’s Securities

As of February 22, 2021, Encore Wire Corporation (the “Company”) has one class of capital stock registered under Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which is the Company’s common stock, par value $.01 per share (“Common Stock”).

The following description of our capital stock is a summary and does not purport to be complete and is subject to and qualified in its entirety by reference to our Certificate of Incorporation, as amended (“Certificate”), and our Third Amended and Restated Bylaws, as amended (“Bylaws”), each of which are incorporated by reference as an exhibit to the Annual Report on Form 10-K of which this Exhibit 4.2 is a part. We encourage you to read our Certificate, our Bylaws and the applicable provisions of Delaware General Corporation Law (“DGCL”), for additional information.

Authorized and Outstanding Capital Stock

Our authorized capital stock consists of 42,000,000 shares comprised of two classes: (i) 40,000,000 shares of Common Stock, of which 20,631,145 shares are issued and outstanding and (ii) 2,000,000 shares of preferred stock, par value $.01 per share (“Preferred Stock”), of which no shares are issued and outstanding.

Holders of Common Stock have no preemptive rights to purchase or subscribe for securities of the Company, and the Common Stock is not convertible or subject to redemption by the Company. In the event of the dissolution of the Company, holders of Common Stock are entitled to share ratably in all of the assets of the Company remaining, if any, after satisfaction of the debts and liabilities of the Company and any preferential rights of the holders of any outstanding Preferred Stock. The outstanding shares of Common Stock are validly issued, fully paid and non-assessable.

Holders of Common Stock are entitled to receive cash dividends when and as declared by the Board of Directors of the Company out of funds legally available therefor after payment of, or provision for, full dividends (on a cumulative basis, if applicable) on any outstanding shares of Preferred Stock, then outstanding. Future policy with respect to dividends on the Common Stock will be determined by the Board of Directors based upon conditions then existing, including the Company’s earnings and financial condition, capital requirements and other relevant facts.

Listing

Our Common Stock is listed on The NASDAQ Global Select Market under the trading symbol “WIRE.”

Preferred Stock

The Board of Directors, without further action by the stockholders, is authorized to issue up to 2,000,000 shares of Preferred Stock in one or more series and to fix and determine as to any series and all of the relative rights and preferences of shares in such series, including, without limitation preferences, limitations or relative rights with respect to redemption rights, conversion rights, voting rights, dividend rights and preferences on liquidation.

The issuances of Preferred Stock may have the effect of delaying, deferring or preventing a change in control of the Company, making removal of present management of the Company more difficult or

resulting in restrictions upon the payment of dividends and other distributions to the holders of Common Stock. The Company has no present intention to issue any Preferred Stock.

Voting

Holders of Common Stock are entitled to cast one vote for each share held on record on matters submitted to a vote of the stockholders of the Company. Shares of Common Stock do not have cumulative voting rights with respect to the election of directors. Directors are elected by a plurality of the shares of Common Stock represented at the meeting. Approval of any other matter that is submitted to the stockholders requires the affirmative vote of the holders of a majority of the shares of Common Stock represented at the meeting. The holders of a majority of the shares entitled to vote shall constitute a quorum at meetings of stockholders. The foregoing voting rights are subject to any voting rights of any series of Preferred Stock which may be issued in the future. Shares of Preferred Stock may be voting or non-voting and may be entitled to vote as a class or series with respect to certain matters as provided in the resolutions of the Board of Directors establishing such series or in the DGCL.

Anti-Takeover Provisions

The Company is subject to Section 203 of the DGCL which, subject to certain exceptions, prohibits a Delaware corporation from engaging in a business combination (as defined therein) with an “interested stockholder” (defined generally as any person who beneficially owns 15% or more of the outstanding voting stock of the Company or any affiliate or associate of such person) for a period of three years following the date that such stockholder became an interested stockholder, unless (i) prior to such date the board of directors of the corporation approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder, (ii) upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the number of shares outstanding those shares owned (x) by persons who are directors and also officers and (y) by employee stock plans in which the employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer, or (iii) on or subsequent to such date the business combination is approved by the board of directors and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 662/3% of the outstanding voting stock which is not owned by the interested stockholder.

EX-10.7

ENCORE WIRE CORPORATION

RESTRICTED STOCK AWARD AGREEMENT

THIS AGREEMENT, made as of this _____ day of ______________, by and between Encore Wire Corporation, a Delaware corporation (the “Company”), and ______________________ (“Employee”);

W I T N E S S E T H:

WHEREAS, the Board of Directors of the Company has determined that it is desirable to grant a restricted stock award under the Encore Wire Corporation 2010 Stock Option Plan (As Amended and Restated Effective February 20, 2017) (the “Plan”) to Employee, who is currently employed by the Company or an Affiliate of the Company; and

WHEREAS, the Board of Directors of the Company has selected Employee to participate in the Plan by the grant of restricted shares of the Company’s common stock, 0.01 par value per share (the “Common Stock”);

NOW, THEREFORE, the Company and Employee hereby agree as follows:

1.    Definitions. Capitalized terms used in this Agreement and not otherwise defined shall have the respective meanings assigned to such terms in the Plan, and the following terms shall have the following meanings, respectively:

(a)    “Affiliate” shall have the meaning set forth in Section 2(a) of the Plan and shall include any party now or hereafter coming within that definition.

(b)    “Change in Control” means a change in control of the Company after the date of this Agreement in any one of the following circumstances: (i) any person shall have become the beneficial owner of or shall have acquired, directly or indirectly, securities of the Company representing 50% or more (in addition to his current holdings) of the combined voting power of the Company’s then outstanding voting securities without prior approval of at least two-thirds of the members of the Board of Directors of the Company in office immediately prior to such person’s attaining such percentage interest; (ii) the Company is a party to a merger, consolidation, sale of assets, or other reorganization, or a proxy contest, as a consequence of which the members of the Board of Directors of the Company in office immediately prior to such transaction or event constitute less than a majority of the Board thereafter; or (iii) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors of the Company (including for this purpose any new director whose election or nomination for election by the Company’s shareholders was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of such period) cease for any reason to constitute at least a majority of the Board.

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(c)    “Committee” shall have the meaning set forth in Section 2(d) of the Plan.

(d)    “Fair Market Value” shall have the meaning set forth in Section 2(i) of the Plan.

2.    The Grant. Subject to the conditions set forth below, the Company hereby grants to Employee, effective as of the ___ day of _________, 20__ (the “Grant Date”), as a matter of separate inducement and not in lieu of any salary or other compensation for Employee’s services to the Company, a restricted stock award (the “Award”) of ________ shares of the Common Stock (the “Restricted Shares”) in accordance with the terms and conditions set forth herein and in the Plan.

3.    Escrow of Restricted Shares. The Company shall evidence the Restricted Shares in the manner that it deems appropriate. The Company may issue in Employee’s name a certificate or certificates representing the Restricted Shares and retain such certificate(s) until the restrictions on such Restricted Shares expire as described in Section 6 or 7 of this Agreement or the Restricted Shares are forfeited as described in Section 5 and 7 of this Agreement. If the Company certificates the Restricted Shares, Employee shall execute one or more stock powers in blank for those certificates and deliver those stock powers to the Company. The Company shall hold the Restricted Shares and the related stock powers pursuant to the terms of this Agreement, if applicable, until such time as (a) a certificate or certificates for the Restricted Shares are delivered to Employee, (b) the Restricted Shares are otherwise transferred to Employee free of restrictions, or (c) the Restricted Shares are canceled and forfeited pursuant to this Agreement. Notwithstanding the foregoing, at the option of the Company, the Restricted Shares issuable in the form of a stock certificate may instead be issued in book-entry form.

4.    Ownership of Restricted Shares. From and after the time the Restricted Shares are issued in Employee’s name, Employee will be entitled to all the rights of absolute ownership of the Restricted Shares, including the right to vote such shares and to receive dividends thereon if, as, and when declared by the Board, subject, however, to the terms, conditions and restrictions set forth in this Agreement; provided, however, that the Company will retain custody of all dividends and distributions, if any (“Retained Distributions”), made or declared on the Restricted Shares (and such Retained Distributions shall be subject to forfeiture and the same restrictions, terms, vesting and other conditions as are applicable to the Restricted Shares) until such time, if ever, as the Restricted Shares with respect to which such Retained Distributions shall have been made, paid or declared shall have become vested, and such Retained Distributions shall not bear interest or be segregated in a separate account. As soon as practicable, but no event later than sixty (60) days, following the lapse of the Forfeiture Restrictions (defined below) on such Restricted Shares, any Retained Distributions shall be delivered to Employee or to Employee’s legal guardian or representative, as applicable.

5.    Restrictions; Forfeiture. The Restricted Shares are restricted in that they may not be sold, transferred or otherwise alienated or hypothecated until these restrictions are removed or expire as described in Section 6 or 7 of this Agreement. The Restricted Shares are also restricted in that they may be forfeited to the Company as provided in Section 6 and 7 (the “Forfeiture Restrictions”). Employee hereby agrees that if the Restricted Shares are forfeited, as provided in Section 6 or 7, the Company shall have the right to deliver the Restricted Shares to the

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Company’s transfer agent for, at the Company’s election, cancellation or transfer to the Company.

6.    Expiration of Restrictions and Risk of Forfeiture. The restrictions on the Restricted Shares described in Section 5 of this Agreement will expire and the Restricted Shares will become transferable and nonforfeitable, provided that, subject to Section 7, Employee remains in the employ of the Company or its Affiliates until the applicable dates set forth in the following schedule and provided further, that if a vesting percentage set forth in the following schedule results in a number of Restricted Shares that includes a fraction, then the next lower whole number of Restricted Shares shall vest:

Number of Restricted Shares that Vest	Vesting Date
20% of the Restricted Shares	First Anniversary of Grant Date
20% of the Restricted Shares	Second Anniversary of Grant Date
20% of the Restricted Shares	Third Anniversary of Grant Date
20% of the Restricted Shares	Fourth Anniversary of Grant Date
The remaining Restricted Shares	Fifth Anniversary of Grant Date

7.    Change in Control, Retirement, Termination of Employment, and Forfeiture.

i.Change in Control. In the event of a Change in Control, then all Forfeiture Restrictions will lapse with respect to 100% of the Restricted Shares upon the date of such Change in Control, provided Employee remains employed with the Company or its Affiliates until such Change in Control.

ii.Retirement Eligibility. All Forfeiture Restrictions will lapse with respect to 100% of the Restricted Shares upon the date Employee has both (i) attained age 60 or greater and (ii) reached or surpassed the 10th anniversary of his or her most recent date of hire with the Company and its Affiliates, provided Employee remains employed with the Company or its Affiliates until such date.

iii.Forfeiture. If Employee’s employment with the Company and its Affiliates is terminated for any reason, then those Restricted Shares for which the restrictions have not lapsed as of the date of termination shall become null and void and those Restricted Shares shall be forfeited to the Company. Except as set forth in Section 7(d) below, the Restricted Shares for which the restrictions have lapsed as of the date of such termination shall not be forfeited to the Company.

iv.Termination for Cause. If Employee’s employment with the Company and its Affiliates is terminated on account of fraud, dishonesty or the performance of other acts detrimental to the Company, as determined by the Committee in its reasonable, good faith discretion, then all Restricted Shares, irrespective of whether the Forfeiture Restrictions have lapsed, shall become null and void and

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the Restricted Shares shall be forfeited to the Company as of the date of such termination for no consideration.

v.Transfer. A transfer of employment without interruption of service between or among the Company and any of its Affiliates shall not be considered a termination of employment for purposes of this Agreement.

8.    Delivery of Shares. Delivery of the certificates representing the Restricted Shares as to which restrictions have lapsed (i.e., shares of Common Stock) shall be made promptly following the expiration of the restrictions on the Restricted Shares pursuant to Section 6 or 7 of this Agreement and payment of the amount of any withholding taxes to the Company as may be due pursuant to Section 10, provided that the Company shall have such time as it reasonably deems necessary to qualify or register such shares under any law or governmental rule or regulation that it deems necessary or desirable. The value of such shares of Common Stock shall not bear any interest owing to the passage of time.

9.    Adjustments. In the event of any reclassification of the shares of Common Stock, or in the event of a liquidation or reorganization (including a merger, consolidation, spin-off or sale of assets) of the Company or an Affiliate, the Board of Directors of the Company shall make such adjustments, if any, as it may deem appropriate.

10.    Payment of Taxes.

i.The Company may require Employee to pay to the Company (or an Affiliate if Employee is an employee of an Affiliate), an amount the Company deems necessary to satisfy its (or its Affiliate’s) current or future obligation to withhold federal, state or local income or other taxes that Employee incurs as a result of the Award. With respect to any required tax withholding, Employee may (i) direct the Company to withhold from the shares of Common Stock to be issued to Employee under this Agreement the number of shares necessary to satisfy the Company’s obligation to withhold taxes, which determination will be based on the shares’ Fair Market Value at the time such determination is made; (ii) deliver to the Company shares of Common Stock sufficient to satisfy the Company’s tax withholding obligations, based on the shares’ Fair Market Value at the time such determination is made; (iii) deliver cash to the Company sufficient to satisfy its tax withholding obligations; or (iv) satisfy such tax withholding through any combination of (i), (ii) and (iii). If Employee desires to elect to use the stock withholding option described in clause (i), Employee must make the election at the time and in the manner the Company prescribes. If such tax obligations are satisfied under clause (i) or (ii), the maximum number of shares of Common Stock that may be so withheld or surrendered shall be the number of shares of Common Stock that have an aggregate Fair Market Value on the date of withholding or surrender equal to the aggregate amount of such tax liabilities determined based on the greatest withholding rates for federal, state, foreign and/or local tax purposes, including payroll taxes, that may be utilized without creating adverse accounting treatment with respect to the Award. The Company,

4

in its discretion, may deny Employee’s request to satisfy its tax withholding obligations using a method described under clause (i), (ii), or (iv). In the event the Company determines that the aggregate Fair Market Value of the shares of Common Stock withheld or surrendered as payment of any tax withholding obligation is insufficient to discharge that tax withholding obligation, then Employee must pay to the Company, in cash, the amount of that deficiency immediately upon the Company’s request.

ii.None of the Company, the Board or the Committee has made any warranty or representation to Employee with respect to the income tax consequences of the grant or vesting of the Award or the transactions contemplated by this Agreement, and Employee represents that Employee is in no manner relying on such entities or any of their respective managers, directors, officers, employees or authorized representatives (including attorneys, accountants, consultants, bankers, lenders, prospective lenders and financial representatives) for tax advice or an assessment of such tax consequences. Employee represents that Employee has consulted with, or has had the opportunity to consult with, any tax consultants that Employee deems advisable in connection with the grant of the Award. Employee may, at Employee’s discretion, make a tax election pursuant to Section 83(b) of the Code in connection with the grant of this Award (the “Section 83(b) Election”). Employee acknowledges that the filing of a Section 83(b) Election is extremely time sensitive and, if Employee decides to make such an election, such election must be filed with the Service Center of the Internal Revenue Service where Employee files Internal Revenue Service tax returns WITHIN 30 DAYS of the Grant Date. In the event that Employee makes a Section 83(b) Election, Employee shall promptly provide a copy of the Section 83(b) Election form to the Company. Employee further agrees to indemnify and hold the Company harmless for any damages, costs, expenses, taxes, judgments or other actions or amounts resulting from any of Employee’s actions or inactions with respect to the tax consequences of this Award.

11.    Compliance with Securities Law. Notwithstanding any provision of this Agreement to the contrary, the issuance of shares of Common Stock (including Restricted Shares) will be subject to compliance with all applicable requirements of U.S. federal, state, or foreign law with respect to such securities and with the requirements of any stock exchange or market system upon which the Common Stock may then be listed. No shares of Common Stock will be issued hereunder if such issuance would constitute a violation of any applicable U.S. federal, state, or foreign securities laws or other law or regulations or the requirements of any stock exchange or market system upon which the Common Stock may then be listed. In addition, shares of Common Stock will not be issued hereunder unless (a) a registration statement under the Securities Act of 1933, as amended (the “Act”), is at the time of issuance in effect with respect to the shares issued or (b) in the opinion of legal counsel to the Company, the shares issued may be issued in accordance with the terms of an applicable exemption from the registration requirements of the Act. The inability of the Company to obtain from any regulatory body having jurisdiction the authority, if any, deemed by the Company’s legal counsel to be

5

necessary to the lawful issuance and sale of any shares subject to the Award will relieve the Company of any liability in respect of the failure to issue such shares as to which such requisite authority has not been obtained. As a condition to any issuance hereunder, the Company may require Employee to satisfy any qualifications that may be necessary or appropriate to evidence compliance with any applicable law or regulation and to make any representation or warranty with respect to such compliance as may be requested by the Company. From time to time, the Board and appropriate officers of the Company are authorized to take the actions necessary and appropriate to file required documents with governmental authorities, stock exchanges, and other appropriate persons to make shares of Common Stock available for issuance.

12.    Legends. The Company may at any time place legends referencing any restrictions imposed on the shares pursuant to Sections 5 or 11 of this Agreement on all certificates representing shares issued with respect to this Award.

13.    Assignment. The Company may assign all or any portion of its rights and obligations under this Agreement. The Award, the Restricted Shares and the rights and obligations of Employee under this Agreement may not be sold, transferred, pledged, exchanged, hypothecated or otherwise disposed of by Employee.

14.    Binding Effect. This Agreement shall be binding upon and inure to the benefit of (a) the Company and its successors and assigns, and (b) Employee and his or her heirs, devisees, executors, administrators and personal representatives.

15.    Employment. As consideration for the Company’s grant of this Award, Employee agrees not to leave the employ of the Company or any Affiliate voluntarily for a period of one year after the date of this Agreement. Nothing in this Agreement, however, confers upon Employee any right to continue in the employ of the Company or any Affiliate, nor shall this Agreement interfere in any manner with the right of the Company or any Affiliate to terminate the employment of Employee with or without cause at any time.

16.    Furnish Information. Employee agrees to furnish to the Company all information requested by the Company to enable it to comply with any reporting or other requirements imposed upon the Company by or under any applicable statute or regulation.

17.    Award Subject to Plan. By execution of this Agreement, Employee agrees that the Award and the Restricted Shares shall be governed by and subject to all applicable provisions of the Plan.

18.    Construction. This Agreement is governed by, and shall be construed and enforced in accordance with, the laws of the State of Texas. The obligation of the Company to sell and deliver Common Stock hereunder is subject to applicable laws and to the approval of any governmental authority required in connection with the authorization, issuance, sale, or delivery of such shares of Common Stock. Words of any gender used in this Agreement shall be construed to include any other gender, unless the context requires otherwise. The headings of the various sections of this Agreement are intended for convenience of reference only and shall not be used in construing the terms hereof.

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19.    Severability. If any provision of this Agreement is held to be illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining provisions hereof, but such provision shall be fully severable and this Agreement shall be construed and enforced as if the illegal or invalid provision had never been included herein.

20.    Clawback. To the extent required by applicable law or any applicable securities exchange listing standards, or as otherwise determined by the Board (or a committee thereof), all shares of Common Stock granted under this Agreement shall be subject to the provisions of any applicable clawback policies or procedures adopted by the Company, which clawback policies or procedures may provide for forfeiture and/or recoupment of such shares of Common Stock. Notwithstanding any provision of this Agreement to the contrary, the Company reserves the right, without Employee’s consent, to adopt any such clawback policies and procedures, including such policies and procedures applicable to this Agreement with retroactive effect.

1.Section 409A. This Agreement is intended to comply with Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”), or an exemption thereunder and shall be construed and interpreted in a manner that is consistent with the requirements for avoiding additional taxes or penalties under Section 409A.

2.Counterparts. This Agreement may be executed in any number of counterparts, including by electronic mail or facsimile, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute one and the same instrument. Each counterpart may consist of a copy hereof containing multiple signature pages, each signed by one party, but together signed by both parties hereto.

[Signature Page Follows.]

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

COMPANY:

ENCORE WIRE CORPORATION

By:

Name: ______________________________

Title: ______________________________

EMPLOYEE:

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EX-10.9

ENCORE WIRE CORPORATION

2020 LONG TERM INCENTIVE PLAN

Time-Based Restricted Stock Unit Award Agreement

This Time-Based Restricted Stock Unit Award Agreement (this “Agreement”) is made by and between Encore Wire Corporation, a Delaware corporation (the “Company”), and [NAME] (the “Participant”), effective as of [DATE], 2021 (the “Grant Date”).

RECITALS

WHEREAS, the Company has adopted the Encore Wire Corporation 2020 Long Term Incentive Plan (as the same may be amended from time to time, the “Plan”), which Plan is incorporated herein by reference and made a part of this Agreement, and capitalized terms not otherwise defined in this Agreement shall have the meanings ascribed to those terms in the Plan; and

WHEREAS, the Committee has authorized and approved the grant of an Award of Restricted Stock Units to the Participant that will provide the Participant the opportunity to receive shares of the common stock of the Company (the “Common Stock”) upon the settlement of the Award on the terms and conditions set forth in the Plan and this Agreement.

NOW THEREFORE, in consideration of the premises and mutual covenants set forth in this Agreement, the parties agree as follows:

1.Grant of Restricted Stock Unit Award. The Company hereby grants to the Participant [NUMBER] Restricted Stock Units, on the terms and conditions set forth in the Plan and this Agreement, subject to adjustment as set forth in the Plan.

2.Vesting and Forfeiture of Restricted Stock Units. Subject to the terms and conditions set forth in the Plan and this Agreement, the Restricted Stock Units shall vest as follows:

(a)General. Except as otherwise provided in this Section 2, the Restricted Stock Units shall vest (in whole shares, rounded down) according to the following schedule, subject to the Participant’s continued employment with the Company or its Affiliate through each applicable vesting date:

Number of Restricted Stock Units Vesting	Vesting Date
1/3 of the Restricted Stock Units	First Anniversary of Grant Date
1/3 of the Restricted Stock Units	Second Anniversary of Grant Date
Remainder of the Restricted Stock Units	Third Anniversary of Grant Date

(b)Change in Control. All unvested Restricted Stock Units shall fully vest upon a Change in Control (as defined below), subject to the Participant’s continued employment with the Company or its Affiliate as of the date of consummation of

023944.008668 23470646.4

such Change in Control. For purposes of this Agreement and notwithstanding Section 2(g) of the Plan, “Change in Control” means the occurrence of any of the following events after the Grant Date: (i) a “change in the ownership” of the Company within the meaning of Treasury Regulation § 1.409A-3(i)(5)(v), whereby any one person, or more than one person acting as a “group” (as such term is defined in Treasury Regulation § 1.409A-3(i)(5)(v)(B)), acquires ownership of stock in the Company that, together with stock held by such person or group, constitutes more than 50% of the total fair market value or total voting power of the stock of the Company; (ii) a “change in the effective control” of the Company within the meaning of Treasury Regulation § 1.409A-3(i)(5)(vi)(A)(2), whereby a majority of the members of the Board are replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election; or (iii) a “change in the ownership of a substantial portion” of the Company’s assets within the meaning of Treasury Regulation § 1.409A-3(i)(5)(vii), whereby any one person, or more than one person acting as a “group” (as such term is defined in Treasury Regulation § 1.409A-3(i)(5)(vii)(C)), acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets of the Company that have a total gross fair market value equal to or more than 75% of the total gross fair market value of all the assets of the Company immediately prior to such acquisition or acquisitions.

(c)Retirement. Upon termination of the Participant’s employment with the Company and its Affiliates by the Participant after reaching age 60 and completing 10 years of continuous employment with the Company and its Affiliates (“Retirement”), all unvested Restricted Stock Units shall fully vest as of the date of such termination of employment.

(d)Forfeiture. Any unvested Restricted Stock Units shall be forfeited immediately, automatically and without consideration upon a termination of the Participant’s employment with the Company and its Affiliates for any reason other than Retirement.

(e)Termination for Cause. Notwithstanding the foregoing provisions of this Section 2, in the event the Participant’s employment with the Company and its Affiliates is terminated on account of fraud, dishonesty or the performance of other acts detrimental to the Company or its Affiliate, as determined by the Committee in its reasonable, good faith discretion, then all Restricted Stock Units outstanding as of the date of such termination of employment, whether vested or unvested, shall be forfeited as of such date.

3.Dividend Equivalents. The Participant shall be entitled to Dividend Equivalents with respect to the Restricted Stock Units granted pursuant to this Award. Each Restricted Stock Unit subject to this Award is hereby granted in tandem with a corresponding

2

023944.008668 23470646.4

Dividend Equivalent, which Dividend Equivalent shall remain outstanding from the Grant Date until the earlier of the settlement or forfeiture of the Restricted Stock Unit to which the Dividend Equivalent corresponds. Each Dividend Equivalent entitles the Participant to receive cash payments, subject to and in accordance with this Agreement, in an amount equal to any cash dividends paid by the Company in respect of the share of Common Stock underlying the Restricted Stock Unit to which such Dividend Equivalent relates. The Company shall establish, with respect to each Restricted Unit, a separate Dividend Equivalent bookkeeping account for such Restricted Stock Unit (a “DE Account”), which shall be credited (without interest) on the applicable dividend payment dates with an amount equal to any cash dividends paid during the period that such Restricted Unit remains outstanding with respect to the share of Common Stock underlying the Restricted Stock Unit to which such Dividend Equivalent relates. Upon the vesting of a Restricted Stock Unit, the Dividend Equivalent (and the DE Account) with respect to such vested Restricted Stock Unit shall also become vested. Similarly, upon the forfeiture of a Restricted Stock Unit, the Dividend Equivalent (and the DE Account) with respect to such forfeited Restricted Stock Unit shall also be forfeited. Dividend Equivalents shall not entitle the Participant to any payments relating to cash dividends paid after the earlier to occur of the date that the applicable Restricted Stock Unit is settled in accordance with Section 4 or the forfeiture of the Restricted Stock Unit underlying such Dividend Equivalent. Payments with respect to vested Dividend Equivalents shall be made in cash as soon as practicable, and not later than 60 days, after the date that such Dividend Equivalent vests. The Participant shall not be entitled to receive any interest with respect to the payment of Dividend Equivalents.

4.Payment. Promptly following each applicable vesting date or vesting event of the Restricted Stock Units (but no later than 60 days following such vesting date or event), the Company shall deliver to the Participant a number of shares of Common Stock equal to the aggregate number of Restricted Stock Units that vest as of such date or event. No fractional shares of Common Stock shall be delivered; the Company shall pay cash in respect of any fractional shares of Common Stock. The Company may deliver such shares either through book entry accounts held by, or in the name of, the Participant or cause to be issued a certificate or certificates representing the number of shares of Common Stock to be issued in respect of the Restricted Stock Units, registered in the name of the Participant.

5.Withholding Requirements. The Company shall be entitled to take any of the following actions in order to satisfy tax withholding obligations arising on account of amounts accrued or payable under this Agreement: (i) deduct from any amount accrued or payable under this Agreement, including withholding shares of Common Stock, the amount equal to the federal, state and local income taxes and other amounts as may be required by law to be withheld with respect thereto, (ii) require the Participant to pay to the Company such withholding taxes, or (iii) deduct from any other compensation payable to the Participant the amount of any withholding obligations with respect to amounts accrued or payable under this Agreement. The Committee shall determine in its discretion which of the above actions shall be taken in order to satisfy tax withholding

3

023944.008668 23470646.4

obligations arising on account of amounts accrued or payable under this Agreement, including but not limited to withholding from shares of Common Stock not otherwise issuable at such time by accelerating the issuance of such shares, as permitted under Treasury Regulation Section 1.409A-3(j)(4)(vi).

6.Adjustment of Shares of Common Stock. In the event of any change with respect to the outstanding shares of Common Stock contemplated by Section 8 of the Plan, the Restricted Stock Units may be adjusted in accordance with Section 8 of the Plan.

7.Miscellaneous Provisions.

(a)Securities Laws Requirements. No shares of Common Stock will be issued or transferred pursuant to this Agreement unless and until all then applicable requirements imposed by federal and state securities and other laws, rules and regulations and by any regulatory agencies having jurisdiction, and by any exchanges upon which the shares of Common Stock may be listed, have been fully met. As a condition precedent to the issuance of shares of Common Stock pursuant to this Agreement, the Company may require the Participant to take any reasonable action to meet those requirements. The Committee may impose such conditions on any shares of Common Stock issuable pursuant to this Agreement as it may deem advisable, including, without limitation, restrictions under the Securities Act, as amended, under the requirements of any exchange upon which shares of the same class are then listed and under any blue sky or other securities laws applicable to those shares of Common Stock.

(b)Rights of a Shareholder of the Company. Prior to settlement of the Restricted Stock Units in shares of Common Stock, the Participant will not have any rights as a shareholder of the Company with respect to any shares of Common Stock underlying the Restricted Stock Units.

(c)Transfer Restrictions. The shares of Common Stock delivered hereunder will be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the Plan or the rules, regulations and other requirements of the Securities and Exchange Commission, any stock exchange upon which such shares are listed, any applicable federal or state laws and any agreement with, or policy of, the Company or the Committee to which the Participant is a party or subject, and the Committee may cause orders or designations to be placed upon the books and records of the Company’s transfer agent to make appropriate reference to such restrictions.

(d)No Right to Continued Employment. Nothing in this Agreement or the Plan confers upon the Participant any right to continue in the employment of the Company or its Affiliates for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Company (or any Affiliate employing or retaining the Participant) or of the Participant, which rights are

4

023944.008668 23470646.4

hereby expressly reserved by each, to terminate his or her employment at any time and for any reason.

(e)Notification. Any notification required by the terms of this Agreement will be given by the Participant (i) in writing addressed to the Company at its principal executive office and will be deemed effective upon actual receipt when delivered by personal delivery or by registered or certified mail, with postage and fees prepaid, or (ii) by electronic transmission to the Company’s e-mail address of the Company’s Chief Financial Officer and will be deemed effective upon actual receipt. Any notification required by the terms of this Agreement will be given by the Company (x) in writing addressed to the address that the Participant most recently provided to the Company and will be deemed effective upon personal delivery or within three (3) days of deposit with the United States Postal Service, by registered or certified mail, with postage and fees prepaid, or (y) by facsimile or electronic transmission to the Participant’s primary work fax number or e-mail address (as applicable) and will be deemed effective upon confirmation of receipt by the sender of such transmission.

(f)Entire Agreement. This Agreement and the Plan constitute the entire agreement between the parties hereto with regard to the subject matter of this Agreement. This Agreement and the Plan supersede any other agreements, representations or understandings (whether oral or written and whether express or implied) that relate to the subject matter of this Agreement.

(g)Waiver. No waiver of any breach or condition of this Agreement will be deemed to be a waiver of any other or subsequent breach or condition whether of like or different nature.

(h)Successors and Assigns. The provisions of this Agreement will inure to the benefit of, and be binding upon, the Company and its successors and assigns and upon the Participant, the Participant’s executor, personal representative(s), distributees, administrator, permitted transferees, permitted assignees, beneficiaries, and legatee(s), as applicable, whether or not any such person will have become a party to this Agreement and have agreed in writing to be joined herein and be bound by the terms hereof.

(i)Severability. The provisions of this Agreement are severable, and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, then the remaining provisions will nevertheless be binding and enforceable.

(j)Amendment. Except as otherwise provided in the Plan, this Agreement will not be amended unless the amendment is agreed to in writing by both the Participant and the Company.

5

023944.008668 23470646.4

(k)Choice of Law; Jurisdiction. This Agreement and all claims, causes of action or proceedings (whether in contract, in tort, at law or otherwise) that may be based upon, arise out of or relate to this Agreement will be governed by the internal laws of the State of Delaware, excluding any conflicts or choice-of-law rule or principle that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction.

(l)Clawback. To the extent required by applicable law or any applicable securities exchange listing standards, or as otherwise determined by the Board (or a committee thereof), any shares of Common Stock granted and Dividend Equivalents paid under this Agreement shall be subject to the provisions of any applicable clawback policies or procedures adopted by the Company, which clawback policies or procedures may provide for forfeiture and/or recoupment of such shares of Common Stock and Dividend Equivalents. Notwithstanding any provision of this Agreement to the contrary, the Company reserves the right, without the Participant’s consent, to adopt any such clawback policies and procedures, including such policies and procedures applicable to this Agreement with retroactive effect.

(m)Unfunded Award. The Award represents an unfunded, unsecured right to receive shares of Common Stock and the associated Dividend Equivalents in accordance with the terms of this Agreement, and the Company shall not be required to segregate any assets with respect to any payments due in connection with this Agreement.

(n)Code Section 409A. This Agreement and the Restricted Stock Units and Dividend Equivalents granted hereunder are intended to comply with Section 409A of the Code in both form and operation so that the additional taxes imposed by Section 409A of the Code will not apply, and any ambiguities herein shall be interpreted, to the extent possible, in a manner consistent therewith. For purposes of Section 409A of the Code, each payment due with respect to the grant of Restricted Stock Units hereunder shall be considered a separate payment and the Participant’s entitlement to a series of payments with respect to the grant of Restricted Stock Units hereunder is to be treated as an entitlement to a series of separate payments. Any payments to be made under this Agreement as a result of the Participant’s termination of employment shall only be made if such termination of employment constitutes a “separation from service” within the meaning of Treasury Regulation Section 1.409A-1(h) (“Separation from Service”). Any provision of this Agreement to the contrary notwithstanding, if the Participant is a “specified employee” within the meaning of Treasury Regulation Section 1.409A-1(i) as of the date of his or her Separation from Service, any payment to be made under this Agreement upon such Separation from Service will not be paid until six months after the date of the Participant’s Separation from Service (or, if earlier, the date of the Participant’s death). In such case, any payment so delayed shall be paid in a single lump sum on the first

6

023944.008668 23470646.4

business day following the sixth-month anniversary of the Participant’s Separation from Service (or, if earlier, upon the Participant’s death). None of the Company or its Affiliates shall be liable to the Participant for any payment made under this Agreement or with respect to any Restricted Stock Unit, which is determined to result in an additional tax, penalty or interest under Section 409A of the Code, nor for reporting, in good faith, any payment made under this Agreement or with respect to any Restricted Stock Unit as an amount includible in gross income under Section 409A of the Code.

(o)Signature in Counterparts. This Agreement may be signed in counterparts, manually or electronically, each of which will be an original, with the same effect as if the signatures to each were upon the same instrument.

(p)Electronic Delivery. The Company may, in its sole discretion, decide to deliver any documents related to any Awards granted under the Plan by electronic means or to request the Participant’s consent to participate in the Plan by electronic means. The Participant hereby consents to receive such documents by electronic delivery and to agree to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company, if applicable. Such on-line or electronic system shall satisfy notification requirements discussed in Section 7(e).

(q)Acceptance. The Participant hereby acknowledges receipt of a copy of the Plan and this Agreement. The Participant has read and understands the terms and provisions of the Plan and this Agreement, and accepts the Restricted Stock Units subject to all of the terms and conditions of the Plan and this Agreement. In the event of a conflict between any term or provision contained in this Agreement and a term or provision of the Plan, the applicable term and provision of the Plan will govern and prevail.

[Signature page follows.]

7

023944.008668 23470646.4

    IN WITNESS WHEREOF, the Company and the Participant have executed this Restricted Stock Unit Award Agreement as of the dates set forth below.

PARTICIPANT                    ENCORE WIRE CORPORATION

Signature:         By:

Print Name:     Name:

Date:     Its:

        Date:

[Signature Page – Restricted Stock Unit Award Agreement]

EX-23.1

EXHIBIT 23.1

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the following Registration Statements:

1)	Registration Statement (Form S-8 No. 333-238025) pertaining to the Encore Wire Corporation 2020 Long Term Incentive Plan, and
2)	Registration Statement (Forms S-8 Nos. 333-175634 and 333-217798) pertaining to the Encore Wire Corporation 2010 Stock Option Plan;

of our reports dated February 22, 2021, with respect to the financial statements of Encore Wire Corporation and the effectiveness of internal control over financial reporting of Encore Wire Corporation included in this Annual Report (Form 10-K) for the year ended December 31, 2020.

/s/ Ernst & Young LLP

Dallas, Texas

February 22, 2021

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Daniel L. Jones, certify that:

1.    I have reviewed this annual report on Form 10-K of Encore Wire Corporation;

2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.     The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.     The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 22, 2021	By:	/s/ Daniel L. Jones
		Daniel L. Jones Chairman, President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Bret J. Eckert, certify that:

1.    I have reviewed this annual report on Form 10-K of Encore Wire Corporation;

2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.    The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.    The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: February 22, 2021	By:	/s/ Bret J. Eckert
		Bret J. Eckert Vice President – Finance, Treasurer, Secretary and Chief Financial Officer

EX-32.1

EXHIBIT 32.1

Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of

the Sarbanes-Oxley Act of 2002

In connection with the Annual Report of Encore Wire Corporation (the “Company”) on Form 10-K for the annual period ended December 31, 2020, as filed with the Securities Exchange Commission on the date hereof (the “Report”), I, Daniel L. Jones, Chairman, President and Chief Executive Officer of the Company, hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

1.    The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2.    The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: February 22, 2021	By:	/s/ Daniel L. Jones
		Daniel L. Jones Chairman, President and Chief Executive Officer

EX-32.2

EXHIBIT 32.2

Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of

the Sarbanes-Oxley Act of 2002

In connection with the Annual Report of Encore Wire Corporation (the “Company”) on Form 10-K for the annual period ended December 31, 2020, as filed with the Securities Exchange Commission on the date hereof (the “Report”), I, Bret J. Eckert, Vice President — Finance, Treasurer, Secretary and Chief Financial Officer of the Company, hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

1.     The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2.     The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: February 22, 2021	By:	/s/ Bret J. Eckert
		Bret J. Eckert Vice President – Finance, Treasurer, Secretary and Chief Financial Officer

XML

Cover Page - USD ($)

12 Months Ended

Dec. 31, 2020

Feb. 18, 2021

Jun. 30, 2020

Cover [Abstract]

Document Type

10-K

Document Annual Report

true

Document Period End Date

Dec. 31, 2020

Current Fiscal Year End Date

--12-31

Document Transition Report

false

Entity File Number

000-20278

Entity Registrant Name

ENCORE WIRE CORPORATION

Entity Incorporation, State or Country Code

DE

Entity Tax Identification Number

75-2274963

Entity Address, Address Line One

1329 Millwood Road

Entity Address, City or Town

McKinney,

Entity Address, State or Province

TX

Entity Address, Postal Zip Code

75069

City Area Code

972

Local Phone Number

562-9473

Title of 12(b) Security

Common Stock, par value $.01 per share

Trading Symbol

WIRE

Security Exchange Name

NASDAQ

Entity Well-known Seasoned Issuer

No

Entity Voluntary Filers

No

Entity Current Reporting Status

Yes

Entity Interactive Data Current

Yes

Entity Filer Category

Large Accelerated Filer

Entity Small Business

false

Entity Emerging Growth Company

false

ICFR Auditor Attestation Flag

true

Entity Shell Company

false

Entity Public Float

$ 840,792,735

Entity Common Stock, Shares Outstanding

20,631,145

Documents Incorporated by Reference

Listed below are documents, parts of which are incorporated herein by reference, and the part of this report into which the document is incorporated:

(1)Proxy statement for the 2021 annual meeting of stockholders – Part III

Entity Central Index Key

0000850460

Document Fiscal Year Focus

2020

Document Fiscal Period Focus

FY

Amendment Flag

false

XML

Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Current assets:
Cash and cash equivalents	$ 183,123	$ 230,965
Accounts receivable, net of allowance of $2,215 and $1,801	275,781	223,098
Inventories	92,322	89,684
Income taxes receivable	1,256	3,602
Prepaid expenses and other	2,651	1,889
Total current assets	555,133	549,238
Property, plant and equipment – at cost:
Land and land improvements	60,662	52,354
Construction-in-progress	91,688	49,847
Buildings and improvements	153,094	152,536
Machinery and equipment	373,902	334,204
Furniture and fixtures	15,345	10,926
Total property, plant and equipment	694,691	599,867
Accumulated depreciation	(283,923)	(266,688)
Property, plant and equipment – net	410,768	333,179
Other assets	553	737
Total assets	966,454	883,154
Current liabilities:
Trade accounts payable	56,726	40,509
Accrued liabilities	36,866	34,787
Total current liabilities	93,592	75,296
Deferred income taxes and other	35,133	28,762
Commitments and contingencies
Stockholders’ equity:
Preferred stock value	0	0
Common stock value	270	269
Additional paid-in capital	67,885	63,009
Treasury stock, at cost – 6,468,705 and 6,027,455 shares	(111,718)	(91,056)
Retained earnings	881,292	806,874
Total stockholders’ equity	837,729	779,096
Total liabilities and stockholders’ equity	$ 966,454	$ 883,154

XML

Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Statement of Financial Position [Abstract]
Allowance for bad debts	$ 2,215	$ 1,801
Preferred stock, par value (in usd per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	2,000,000	2,000,000
Preferred stock, shares issued (in shares)	0	0
Common stock, par value (in usd per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	40,000,000	40,000,000
Common stock, shares issued (in shares)	27,025,388	26,939,403
Treasury stock (in shares)	6,468,705	6,027,455

XML

Statements of Income - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Income Statement [Abstract]
Net sales	$ 1,276,948	$ 1,274,994	$ 1,288,683
Cost of goods sold	1,082,413	1,109,023	1,098,961
Gross profit	194,535	165,971	189,722
Selling, general and administrative expenses	97,008	94,442	90,212
Operating income	97,527	71,529	99,510
Net interest and other income	1,269	4,199	2,174
Income before income taxes	98,796	75,728	101,684
Provision for income taxes	22,729	17,599	23,534
Net income	$ 76,067	$ 58,129	$ 78,150
Earnings per common and common equivalent share - basic (in usd per share)	$ 3.69	$ 2.78	$ 3.75
Earnings per common and common equivalent share - diluted (in usd per share)	$ 3.68	$ 2.77	$ 3.74
Weighted average common and common equivalent shares outstanding – basic (in shares)	20,599	20,904	20,845
Weighted average common and common equivalent shares outstanding – diluted (in shares)	20,653	20,990	20,910
Cash dividends declared per share (in usd per share)	$ 0.08	$ 0.08	$ 0.08

XML

Statements of Stockholders' Equity - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-In Capital	Treasury Stock	Retained Earnings
Beginning balance (in shares) at Dec. 31, 2017		26,859,000		(6,027,000)
Beginning balance at Dec. 31, 2017	$ 641,345	$ 269	$ 58,192	$ (91,056)	$ 673,940
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	78,150				78,150
Exercise of stock options (in shares)		42,000
Exercise of stock options	1,186		1,186
Stock-based compensation (in shares)		5,000
Stock-based compensation	1,444		1,444
Dividend declared—$0.08 per share	$ (1,669)				(1,669)
Purchase of treasury stock (in shares)	0
Ending balance (in shares) at Dec. 31, 2018		26,906,000		(6,027,000)
Ending balance at Dec. 31, 2018	$ 720,456	$ 269	60,822	$ (91,056)	750,421
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	58,129				58,129
Exercise of stock options (in shares)		22,000
Exercise of stock options	568		568
Stock-based compensation (in shares)		11,000
Stock-based compensation	1,619		1,619
Dividend declared—$0.08 per share	$ (1,676)				(1,676)
Purchase of treasury stock (in shares)	0
Ending balance (in shares) at Dec. 31, 2019		26,939,000		(6,027,000)
Ending balance at Dec. 31, 2019	$ 779,096	$ 269	63,009	$ (91,056)	806,874
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	$ 76,067				76,067
Exercise of stock options (in shares)	68,972	69,000
Exercise of stock options	$ 2,999	$ 1	2,998
Stock-based compensation (in shares)		17,000
Stock-based compensation	1,878		1,878
Dividend declared—$0.08 per share	$ (1,649)				(1,649)
Purchase of treasury stock (in shares)	(441,250)			(441,000)
Purchase of treasury stock	$ (20,662)			$ (20,662)
Ending balance (in shares) at Dec. 31, 2020		27,025,000		(6,468,000)
Ending balance at Dec. 31, 2020	$ 837,729	$ 270	$ 67,885	$ (111,718)	$ 881,292

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Statements of Stockholders' Equity (Parenthetical) - $ / shares	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Statement of Stockholders' Equity [Abstract]
Cash dividends declared per share (in usd per share)	$ 0.08	$ 0.08	$ 0.08

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Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Operating Activities
Net income	$ 76,067	$ 58,129	$ 78,150
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	19,459	17,707	16,513
Deferred income taxes	6,429	3,376	3,033
Stock-based compensation attributable to equity awards	1,878	1,619	1,444
Other	470	754	(187)
Changes in operating assets and liabilities:
Accounts receivable	(53,383)	12,255	(6,468)
Inventories	(2,638)	12,683	(10,002)
Other assets	(746)	(229)	627
Trade accounts payable and accrued liabilities	7,580	2,040	165
Current income taxes receivable / payable	2,346	(2,213)	(1,685)
Net cash provided by operating activities	57,462	106,121	81,590
Investing Activities
Purchases of property, plant and equipment	(86,082)	(52,484)	(26,181)
Proceeds from sale of assets	91	28	116
Net cash used in investing activities	(85,991)	(52,456)	(26,065)
Financing Activities
Purchase of treasury stock	(20,662)	0	0
Borrowings from revolver	0	0	67,300
Repayments to revolver	0	0	(67,300)
Proceeds from issuance of common stock, net	2,999	568	1,186
Dividends paid	(1,650)	(1,673)	(1,668)
Net cash used in financing activities	(19,313)	(1,105)	(482)
Net increase (decrease) in cash and cash equivalents	(47,842)	52,560	55,043
Cash and cash equivalents at beginning of period	230,965	178,405	123,362
Cash and cash equivalents at end of period	$ 183,123	$ 230,965	$ 178,405

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Significant Accounting Policies

12 Months Ended

Dec. 31, 2020

Accounting Policies [Abstract]

Significant Accounting Policies

Significant Accounting Policies

Business

The Company conducts its business in one segment – the manufacture of electric building wire, principally NM-B cable, for use primarily as interior wiring in homes, apartments, and manufactured housing, and THHN/THWN-2 cable and metal-clad and armored cable for use primarily as wiring in commercial and industrial buildings. The Company sells its products primarily through manufacturers’ representatives located throughout the United States and, to a lesser extent, through its own direct marketing efforts. The principal customers for Encore’s building wire are wholesale electrical distributors.

Copper, a commodity product, is the principal raw material used in the Company’s manufacturing operations. The price of copper fluctuates, depending on general economic conditions and in relation to supply and demand and other factors, and has caused monthly variations in the cost of copper purchased by the Company. The Company cannot predict future copper prices or the effect of fluctuations in the cost of copper on the Company’s future operating results.

Basis of Presentation

The Company's financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). The financial statements include the accounts of the Company and its former wholly-owned subsidiary, which was dissolved in December 2018. For periods prior to the subsidiary's dissolution, all intercompany accounts and transactions were eliminated upon consolidation.

In March 2020, the World Health Organization declared COVID-19 a global pandemic and recommended containment and mitigation measures worldwide. To date, COVID-19 has surfaced in nearly all regions around the world and resulted in travel restrictions and business slowdowns or shutdowns in affected areas. Almost all U.S. states, and many local jurisdictions and countries around the world, have, at times during the pandemic, issued “shelter-in-place” orders, quarantines, executive orders and similar government orders, restrictions, and recommendations for their residents to control the spread of COVID-19. The Company is unable to predict the impact that the continued spread of COVID-19 will have on our financial position and operating results in future periods due to numerous uncertainties. The duration and severity of the outbreak and its long-term impact on our business remain uncertain.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Revenue Recognition

The majority of our revenue is derived by fulfilling customer orders for the purchase of our products, which include electrical building wire and cable. We recognize revenue at the point in time that control of the ordered products is transferred to the customer, which is typically upon shipment to the customer from our manufacturing facilities and based on agreed upon shipping terms on the related purchase order. Amounts billed and due from our customers are classified as accounts receivables on the balance sheet and require payment on a short-term basis through standard payment terms.

Revenue is measured as the amount of consideration we expect to receive in exchange for fulfilling product orders. The amount of consideration we expect to receive and revenue we recognize includes estimates for trade payment discounts and customer rebates which are estimated using historical experience and other relevant factors and is recorded within the same period that the revenue is recognized. We review and update these estimates regularly and the impact of any adjustments are recognized in the period the adjustments are identified. The adjustments resulting from updated estimates of trade payment discounts and customer rebates were not material.

Freight Expenses

The Company classifies shipping and handling costs as a component of selling, general and administrative expenses. Shipping and handling costs were approximately $35.2 million, $33.9 million and $35.1 million for the years ended December 31, 2020, 2019 and 2018, respectively.

Fair Value of Financial Instruments

Certain items are required to be measured at fair value on a recurring basis, primarily cash equivalents held in banks. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. A three-level hierarchy is followed for disclosure to show the extent and level of judgment used to estimate fair value measurements:

Level 1 – Inputs used to measure fair value are unadjusted quoted prices that are available in active markets for the identical assets or liabilities as of the reporting date.

Level 2 – Inputs used to measure fair value, other than quoted prices included in Level 1, are either directly or indirectly observable as of the reporting date through correlation with market data, including quoted prices for similar assets and liabilities in active markets and quoted prices in markets that are not active. Level 2 also includes assets and liabilities that are valued using models or other pricing methodologies that do not require significant judgment since the input assumptions used in the models, such as interest rates and volatility factors, are corroborated by readily observable data from actively quoted markets for substantially the full term of the financial instrument.

Level 3 – Inputs used to measure fair value are unobservable inputs that are supported by little or no market activity and reflect the use of significant management judgment. These values are generally determined using pricing models for which the assumptions utilize management’s estimates of market participant assumptions.

At December 31, 2020 and 2019, the carrying value of cash and cash equivalents, excluding certificates of deposit, approximated fair value, a Level 1 measurement. At December 31, 2020, the Company had no certificates of deposit. At December 31, 2019, the carrying value of the Company’s certificates of deposit totaled $161.3 million approximated fair value, a Level 2 measurement.

Concentrations of Credit Risk and Accounts Receivable

Financial instruments that potentially subject the Company to a concentration of credit risk consist principally of cash and cash equivalents and accounts receivable. The Company places its cash and cash equivalents with high credit quality financial institutions.

Accounts receivable represent amounts due from customers, primarily wholesale electrical distributors, related to the sale of the Company’s products. Such receivables are uncollateralized and are generally due from customers located throughout the United States. Encore has three customers, each of whom slightly exceeds 10% of the Company's total sales. The Company establishes an allowance for credit losses based upon the makeup of the current portfolio, past bad debt experience and current market conditions.

Allowance for Losses Progression (In Thousands)	2020		2019		2018
Beginning balance January 1	$	1,801	$	2,030	$	2,028
Write-offs of bad debts	(286)		(230)		—
Collection of previous write-offs	—		1		2
Adjustment to allowance for credit losses	700		—		—
Ending balance at December 31	$	2,215	$	1,801	$	2,030

Cash and Cash Equivalents

The Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents. At December 31, 2020, the Company’s cash equivalents consisted of investments in money market accounts with the Company’s banks. At December 31, 2019, the Company’s cash equivalents consisted of investments in money market accounts and certificates of deposit with the Company’s banks.

Inventories

Inventories are stated at the lower of cost, using the last-in, first-out (LIFO) method, or market. The Company evaluates the market value of its raw materials, work-in-process and finished goods inventory primarily based upon current raw material and finished goods prices at the end of each period.

Property, Plant, and Equipment

Depreciation of property, plant and equipment for financial reporting is provided on the straight-line method over the estimated useful lives of the respective assets as follows: buildings and improvements, 3 to 39 years; machinery and equipment, 2 to 20

years; and furniture and fixtures, 5 to 20 years. Accelerated cost recovery methods are used for tax purposes. Repairs and maintenance costs are expensed as incurred.

Stock-Based Compensation

Compensation cost for all equity-based compensation expected to vest is measured at fair value on the date of grant and recognized over the related service period. The fair value of stock awards is determined based on the number of shares granted and the quoted price of Encore’s common stock, and the fair value of stock options and stock appreciation rights is estimated on the date of grant using the Black-Scholes model. Such value is recognized as expense over the service period, net of estimated forfeitures, on a straight-line basis. To the extent actual forfeitures or updated estimates of forfeitures differ from management’s current estimates, such amounts are recorded as a cumulative adjustment in the period estimates are revised.

Earnings Per Share

Earnings per common and common equivalent share is computed using the weighted average number of shares of common stock and common stock equivalents outstanding during each period. The dilutive effects of stock awards, which are common stock equivalents, are calculated using the treasury stock method.

Income Taxes

Income taxes are provided for based on the liability method, resulting in deferred income tax assets and liabilities arising due to temporary differences. Temporary differences are differences between the tax basis of assets and liabilities and their reported amounts in the financial statements that will result in taxable or deductible amounts in future years. The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period the change in rate is enacted.

Comprehensive Income

Comprehensive income is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. There were no differences between comprehensive income and reported income in the periods presented.

Recent Accounting Pronouncements

The Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) is the sole source of authoritative U.S. GAAP other than Securities and Exchange Commission ("SEC") issued rules and regulations that apply only to SEC registrants. The FASB issues an Accounting Standard Update (“ASU”) to communicate changes to the codification. The Company considers the applicability and impact of all ASUs. The following are those ASUs that are relevant to the Company.

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326),” which makes significant changes to the accounting for credit losses on financial assets and disclosures about them. This ASU requires immediate recognition of management’s estimates of current expected credit losses. Under the prior model, losses were recognized only as they were incurred, which FASB has noted delayed recognition of expected losses that might not yet have met the threshold of being probable. The guidance affects all entities in all industries and applies to a wide variety of financial assets, including trade receivables. We adopted this new standard January 1, 2020 and applied a loss rate model to compute the expected credit loss allowance of our short-term trade receivable balances, which we concluded are representative of one collective pool. This method is based on relevant information from past events, including historical experiences, current conditions, and reasonable and supportable forecasts that affect collectability. Upon adoption, we recognized a $0.7 million increase to our allowance for credit losses and a corresponding cumulative adjustment to reduce retained earnings, net of income taxes, of $0.5 million. This transition adjustment reflects the development of our models to estimate expected credit losses over the life of our financial assets, which primarily consist of our accounts receivable. Pursuit to ASU 2016-13, we have evaluated our customers’ financial strength and liquidity based on aging of accounts receivable, payment history, and other relevant information, including ratings agency, credit ratings and alerts, and publicly available reports.

In December 2019, the FASB issued ASU 2019-12, “Simplifying the Accounting for Income Taxes,” which simplifies the accounting for income taxes, eliminates certain exceptions within ASC 740, Income Taxes, and clarifies certain aspects of the current guidance to promote consistency among reporting entities. This ASU is effective for annual reporting periods beginning after December 15, 2020, and interim periods within those reporting periods. Early adoption is permitted in any interim or annual period. We are evaluating the effect of adopting this new accounting guidance but do not expect adoption will have a material impact on the Company's financial statements or disclosures.

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Inventories

12 Months Ended

Dec. 31, 2020

Inventory Disclosure [Abstract]

Inventories

Inventories

Inventories consist of the following as of December 31:

In Thousands	2020		2019
Raw materials	$	40,842	$	25,882
Work-in-process	30,311		25,381
Finished goods	88,544		83,222
Total	159,697		134,485
Adjust to LIFO cost	(67,375)		(44,801)
Inventory	$	92,322	$	89,684

There were no liquidations of inventories that had a material impact on the Company’s results of operations for any period presented.

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Accrued Liabilities

12 Months Ended

Dec. 31, 2020

Accrued Liabilities, Current [Abstract]

Accrued Liabilities

Accrued Liabilities

Accrued liabilities consist of the following as of December 31:

In Thousands	2020		2019
Sales rebates payable	$	19,317	$	16,622
SAR Liability	5,343		3,087
Property taxes payable	4,427		4,011
Accrued salaries	4,096		7,924
Other accrued liabilities	3,683		3,143
Total accrued liabilities	$	36,866	$	34,787

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Debt

12 Months Ended

Dec. 31, 2020

Debt Disclosure [Abstract]

Debt

Debt

At December 31, 2020 and 2019, the Company had no debt outstanding.

The Company is party to a Credit Agreement (as amended, the “Credit Agreement”) with two banks, Bank of America, N.A., as administrative agent and letter of credit issuer, and Wells Fargo Bank, National Association as syndication agent. The Credit Agreement extends through October 1, 2021, and provides for maximum borrowings of $150.0 million. In the third quarter of 2016, the Company signed a Third Amendment to the Credit Agreement, which, along with other minor changes, eliminated the restriction of maximum borrowings based on the amount of eligible accounts receivable plus the amount of eligible finished goods and raw materials, less any reserves established by the banks. Additionally, at our request and subject to certain conditions, the commitments under the Credit Agreement may be increased by a maximum of up to $100.0 million as long as existing or new lenders agree to provide such additional commitments. Borrowings under the line of credit bear interest, at the Company’s option, at either (1) LIBOR plus a margin that varies from 0.875% to 1.75% depending upon the Leverage Ratio (as defined in the Credit Agreement), or (2) the base rate (which is the highest of the federal funds rate plus 0.5%, the prime rate, or LIBOR plus 1.0%) plus —% to 0.25% (depending upon the Leverage Ratio). A commitment fee ranging from 0.15% to 0.30% (depending upon the Leverage Ratio) is payable on the unused line of credit. At December 31, 2020, there were no borrowings outstanding under the Credit Agreement, and letters of credit outstanding in the amount of $0.6 million left $149.4 million of credit available under the Credit Agreement. Obligations under the Credit Agreement are the only contractual borrowing obligations or commercial borrowing commitments of the Company. Obligations under the Credit Agreement are unsecured and contain customary covenants and events of default. The Company was in compliance with the covenants as of December 31, 2020.

On February 9, 2021, the Company terminated the Credit Agreement and entered into a new agreement. The Company is now party to a Credit Agreement ( the “2021 Credit Agreement”) with two banks, Bank of America, N.A., as administrative agent and letter of credit issuer, and Wells Fargo Bank, National Association as syndication agent. The 2021 Credit Agreement extends through February 9, 2026, and provides for maximum borrowings of $200.0 million.

The Company paid interest totaling $0.2 million, $0.2 million and $0.3 million in 2020, 2019 and 2018, respectively, none of which was capitalized.

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Income Taxes

12 Months Ended

Dec. 31, 2020

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) was signed into law. The CARES Act includes several provisions for corporations including payroll tax credits, deferment of employer social security tax payments, expanded net operating loss carryback periods, accelerated alternative minimum tax credit refunds, modifications to the net interest deduction limitations, and technical corrections to tax depreciation methods for qualified improvement property. The CARES Act did not have a material impact on the Company's income tax provision in the year ended December 31, 2020.

The provision for income tax expense are summarized as follows for the years ended December 31:

In Thousands	2020		2019		2018
Current:
Federal	$	14,277	$	12,675	$	18,523
State	2,024		1,549		1,978
Deferred:
Federal	6,285		3,260		2,603
State	143		115		430
Total income tax expense	$	22,729	$	17,599	$	23,534

The differences between the provision for income taxes and income taxes computed using the federal income tax rate are as follows for the years ended December 31:

In Thousands	2020		2019		2018
Amount computed using the statutory rate	$	20,747	$	15,903	$	21,354
State income taxes, net of federal tax benefit	1,732		1,314		1,903
Other	250		382		277
Total income tax expense	$	22,729	$	17,599	$	23,534

The tax effect of each type of temporary difference giving rise to the net deferred tax liability at December 31 is as follows:

In Thousands	2020		2019
Depreciation	$	(35,869)	$	(27,547)
Inventory	503		(1,970)
Allowance for credit losses	499		406
Uniform capitalization rules	276		265
Other	754		1,438
Net deferred income tax liability	$	(33,837)	$	(27,408)

The Company's inventory costing method for federal income tax purposes differs from the method allowed by GAAP. Both methods of inventory costing result in the same recovery of inventory. However, the timing of the recovery varies. As of December 31, 2020 the Company's tax inventory exceeds its book inventory, which created a deferred tax asset of $503k.

The Company made income tax payments of $14.1 million in 2020, $16.4 million in 2019 and $22.3 million in 2018.

The Company was audited by the IRS for the year 2015. The audit concluded with no adjustments. The Company’s federal income tax returns for the years subsequent to December 31, 2016 remain subject to examination. The Company’s income tax returns in major state income tax jurisdictions remain subject to examination for various periods subsequent to December 31, 2015. The Company has no reserves for uncertain tax positions as of December 31, 2020 and 2019. Interest and penalties resulting from audits by tax authorities have been immaterial and are included in the provision for income taxes in the statements of income.

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Stock-Based Compensation

12 Months Ended

Dec. 31, 2020

Share-based Payment Arrangement [Abstract]

Stock-Based Compensation

Stock-Based Compensation

Total stock-based compensation expense by type of award was as follows for the years ended December 31:

In Thousands	2020		2019		2018
Stock options	$	561	$	635	$	1,209
Stock appreciation rights (“SARs”)	3,377		2,906		894
Restricted Stock Awards	1,101		$	907	$	—
Stock grants	244		269		$	235
Total stock-based compensation expense	$	5,283	$	4,717	$	2,338

In 2020, the Board of Directors adopted a new stock option plan called the Encore Wire 2020 Long Term Incentive Plan (the “2020 LTIP”) which was approved by the Company’s stockholders at the 2020 Annual Meeting of Stockholders. The 2020 LTIP permits the granting of 1,000,000 securities in the form of options to purchase shares of common stock, stock appreciation rights, restricted common stock, restricted stock units, unrestricted common stock, dividend equivalents, cash awards, or performance awards to non-employee directors, officers and employees of the Company. The 2010 Stock Option Plan expired on February 20, 2020. As of December 31, 2020, 994,500 securities remained available for grant under the 2020 LTIP.

Stock Options:

No stock option awards were granted in 2020 or 2019. The Company granted stock option awards in 2018 with exercise prices equal to the fair market value of its stock on the date of grant of the options. These options vest ratably over a period of five years from the time the options were granted. The maximum term of any option previously granted under the 2010 Stock Option Plan or granted in the future under the 2020 LTIP is ten years. New shares are issued upon the exercise of options.

The following presents a summary of stock option activity for the year ended December 31, 2020:

	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value (In Thousands)
Outstanding at January 1, 2020	393,500	$	42.36
Exercised	(68,972)	49.80
Forfeited/Canceled	(10,028)	51.63
Outstanding at December 31, 2020	314,500	$	41.82	5.1 years	$	5,898
Vested and exercisable at December 31, 2020	226,000	$	40.03	4.5 years	$	4,642

The fair value of stock options granted in the year ended December 31, 2018, was estimated on the date of grant using a Black-Scholes option pricing model and the following weighted average assumptions:

	Year Ended December 31,
	2018
Risk-free interest rate	2.36	%
Expected dividend yield	0.16	%
Expected volatility	31.40	%
Expected lives	5.0 years

The Company bases expected volatilities on historical volatilities of Encore's common stock. The expected life represents the weighted average period of time that options granted are expected to be outstanding giving consideration to vesting periods and management’s consideration of historical exercise patterns. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding to the expected life of the option. The expected dividend yield is based on the annualized dividend payment paid on common shares.

During the year ended December 31, 2018, the weighted average grant date fair value of options granted was $15.95. During the years ended December 31, 2020, 2019 and 2018, the total intrinsic value of options exercised was $0.4 million, $0.7 million and $0.9 million, respectively. As of December 31, 2020, total unrecognized compensation cost related to non-vested stock options of $0.7 million was expected to be recognized over a weighted average period of 1.8 years.

Stock Appreciation Rights:

In 2014, the Board of Directors adopted a new stock appreciation rights plan called the Encore Wire 2014 Stock Appreciation Rights Plan (the “2014 SARs Plan”). The 2014 SARs Plan permits the grant of SARs that may only be settled in cash to non-executive officers and employees of the Company. SARs granted to employees vest ratably over a period of five years from the time the SARs were granted. The maximum term of any SARs granted under the 2014 SARs Plan is ten years. These awards are classified as liability awards. The liability balances were $5.3 million and $3.1 million at December 31, 2020 and 2019, respectively, and are included in accrued liabilities. Compensation cost for these awards is determined using a fair value method and remeasured at each reporting date until the date of settlement. As of December 31, 2020, a total of 679,500 SARs were outstanding under the 2014 SARs Plan.

The following presents a summary of SARs activity for the year ended December 31, 2020:

	Cash-settled SARs	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value (In Thousands)
Outstanding at January 1, 2020	565,300	$	48.18
Granted	227,500	58.77
Exercised	(85,500)	57.52
Forfeited/Canceled	(27,800)	53.01
Outstanding at December 31, 2020	679,500	$	51.99	7.7 years	$	5,831
Vested and exercisable at December 31, 2020	113,900	$	47.31	6.6 years	$	1,511

The fair value of SARs granted during the years ended December 31, 2020, 2019 and 2018, was estimated on the date of grant using a Black-Scholes option pricing model and the following weighted average assumptions:

	Year Ended December 31,
	2020		2019		2018
Risk-free interest rate	0.18	%	1.62	%	2.53	%
Expected dividend yield	0.13	%	0.14	%	0.16	%
Expected volatility	35.51	%	28.46	%	30.83	%
Expected lives	2.8 years		3.0 years		3.0 years

The Company bases expected volatilities on historical volatilities of Encore's common stock. The expected life represents the weighted average period of time that options granted are expected to be outstanding giving consideration to vesting periods and management’s consideration of historical exercise patterns. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding to the expected life of the option. The expected dividend yield is based on the annualized dividend payment paid on common shares.

During the years ended December 31, 2020, 2019 and 2018, the weighted average grant date fair value of SARs granted was $17.94, $17.19 and $14.94, respectively, and the total intrinsic value of SARs exercised was $1.1 million, $2.1 million, and $1.1 million, respectively. As of December 31, 2020, total unrecognized compensation cost related to non-vested SARs of $6.6 million was expected to be recognized over a weighted average period of 3.1 years.

Restricted Stock Awards:

During the years ended December 31, 2020 and 2019, the Company granted 37,000 shares and 60,000 shares, respectively, of restricted stock to employees pursuant to the 2010 Stock Option Plan, with weighted grant date fair values of $58.90 and $54.49 per share, respectively. There were no restricted shares issued in 2018. As of December 31, 2020, there was $3.4 million of total unrecognized compensation cost related to unvested shares. That cost is expected to be recognized over a weighted-average period of 3.5 years. The total fair value of shares vested during the year ending December 31, 2020 was $0.7 million.

The following presents a summary of restricted stock activity for the year ended December 31, 2020:

			Weighted Average
	Number of Shares		Grant Date Fair Value
Outstanding at January 1, 2020	50,000		$	55.00
Granted	37,000		58.90
Vested	(12,000)		55.94
Unvested at December 31, 2020	$	75,000	$	56.77

Stock Grants:

In May 2020, the Company granted 1,100 shares of stock to each of the 5 non-employee directors, with a grant date fair value of $44.31 per share. In June 2019, the Company granted 1,000 shares of stock to each of the 5 non-employee directors pursuant to the 2010 Stock Option Plan with a grant date fair value of $53.81 per share. In May 2018, the Company granted 1,000 shares of stock to each of the 5 non-employee directors, with a grant date fair value of $46.95 per share.

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Earnings Per Share

12 Months Ended

Dec. 31, 2020

Earnings Per Share [Abstract]

Earnings Per Share

Earnings Per Share

The following table sets forth certain components of the computation of basic and diluted earnings per share for the years ended December 31:

In Thousands	2020		2019		2018
Numerator:
Net income	$	76,067	$	58,129	$	78,150
Denominator:
Denominator for basic earnings per share – weighted average shares	20,599		20,904		20,845
Effect of dilutive securities:
Employee stock awards	54		86		65
Denominator for diluted earnings per share – weighted average shares	20,653		20,990		20,910

Stock options to purchase common stock at exercise prices in excess of the average actual stock price for the period that were anti-dilutive and that were excluded from the determination of diluted earnings per share are as follows:

In Thousands, Except Per Share Data	2020		2019		2018
Weighted average anti-dilutive stock options	136		118		181
Weighted average exercise price per share	$	51.20	$	51.05	$	50.20

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Stockholders' Equity	12 Months Ended
	Dec. 31, 2020
Equity [Abstract]
Stockholders' Equity	Stockholders’ EquityOn November 10, 2006, the Board of Directors approved a stock repurchase program authorizing the Company to repurchase up to an authorized number of shares of its common stock on the open market or through privately negotiated transactions at prices determined by the President of the Company during the term of the program. The Company’s Board of Directors has authorized several increases and annual extensions of this stock repurchase program, and, as of December 31, 2020, 1,000,000 shares remained authorized for repurchase through March 31, 2021. Subsequently, the authorization for repurchase was extended through March 31, 2022. The Company repurchased 441,250 shares of its stock in 2020, and did not repurchase any shares of its stock in 2019 or 2018. The Company also has a broker agreement to repurchase stock in the open market at certain trigger points pursuant to a Rule 10b5-1 plan announced on November 28, 2007. Repurchased shares are recorded as treasury shares.

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Contingencies	12 Months Ended
	Dec. 31, 2020
Commitments and Contingencies Disclosure [Abstract]
Contingencies	ContingenciesThere are no material pending proceedings to which the Company is a party or to which any of its property is subject. However, the Company is from time to time involved in litigation, certain other claims and arbitration matters arising in the ordinary course of its business.

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Encore Wire Corporation 401(k) Profit Sharing Plan	12 Months Ended
	Dec. 31, 2020
Retirement Benefits [Abstract]
Encore Wire Corporation 401(k) Profit Sharing Plan	Encore Wire Corporation 401(k) Profit Sharing PlanThe Company sponsors a 401(k) profit sharing plan (the “Plan”) that permits eligible employees to make self-directed contributions of their compensation, a portion of which is matched by the Company, subject to applicable limitations. At the discretion of its Board of Directors, the Company may, but is not required to, make profit-sharing contributions to the Plan on behalf of its employees. The Company’s matching contributions were $2.5 million, $2.5 million and $2.1 million in 2020, 2019 and 2018, respectively.

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Quarterly Financial Information (Unaudited)

12 Months Ended

Dec. 31, 2020

Quarterly Financial Information Disclosure [Abstract]

Quarterly Financial Information (Unaudited)

Quarterly Financial Information (Unaudited)

The following is a summary of the unaudited quarterly financial information for the two years ended December 31, 2020 and 2019 (in thousands, except per share data):

	Three Months Ended
2020	March 31		June 30		September 30		December 31
Net sales	$	302,794	$	253,631	$	339,700	$	380,823
Gross profit	45,773		36,499		53,459		58,804
Net income	18,607		12,347		21,012		24,100
Earnings per common share – basic	0.89		0.60		1.02		1.17
Earnings per common share – diluted	0.89		0.60		1.02		1.17

	Three Months Ended
2019	March 31		June 30		September 30		December 31
Net sales	$	314,707	$	336,866	$	321,169	$	302,252
Gross profit	41,326		45,910		42,988		35,747
Net income	13,411		17,782		16,401		10,535
Earnings per common share – basic	0.64		0.85		0.78		0.50
Earnings per common share – diluted	0.64		0.85		0.78		0.50

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Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2020

Accounting Policies [Abstract]

Business

Business

The Company conducts its business in one segment – the manufacture of electric building wire, principally NM-B cable, for use primarily as interior wiring in homes, apartments, and manufactured housing, and THHN/THWN-2 cable and metal-clad and armored cable for use primarily as wiring in commercial and industrial buildings. The Company sells its products primarily through manufacturers’ representatives located throughout the United States and, to a lesser extent, through its own direct marketing efforts. The principal customers for Encore’s building wire are wholesale electrical distributors.

Principles of Consolidation

Basis of Presentation

The Company's financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). The financial statements include the accounts of the Company and its former wholly-owned subsidiary, which was dissolved in December 2018. For periods prior to the subsidiary's dissolution, all intercompany accounts and transactions were eliminated upon consolidation.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Revenue Recognition

Revenue Recognition

The majority of our revenue is derived by fulfilling customer orders for the purchase of our products, which include electrical building wire and cable. We recognize revenue at the point in time that control of the ordered products is transferred to the customer, which is typically upon shipment to the customer from our manufacturing facilities and based on agreed upon shipping terms on the related purchase order. Amounts billed and due from our customers are classified as accounts receivables on the balance sheet and require payment on a short-term basis through standard payment terms.

Revenue is measured as the amount of consideration we expect to receive in exchange for fulfilling product orders. The amount of consideration we expect to receive and revenue we recognize includes estimates for trade payment discounts and customer rebates which are estimated using historical experience and other relevant factors and is recorded within the same period that the revenue is recognized. We review and update these estimates regularly and the impact of any adjustments are recognized in the period the adjustments are identified. The adjustments resulting from updated estimates of trade payment discounts and customer rebates were not material.

Freight Expenses

Freight ExpensesThe Company classifies shipping and handling costs as a component of selling, general and administrative expenses.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

Certain items are required to be measured at fair value on a recurring basis, primarily cash equivalents held in banks. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. A three-level hierarchy is followed for disclosure to show the extent and level of judgment used to estimate fair value measurements:

Level 1 – Inputs used to measure fair value are unadjusted quoted prices that are available in active markets for the identical assets or liabilities as of the reporting date.

Level 2 – Inputs used to measure fair value, other than quoted prices included in Level 1, are either directly or indirectly observable as of the reporting date through correlation with market data, including quoted prices for similar assets and liabilities in active markets and quoted prices in markets that are not active. Level 2 also includes assets and liabilities that are valued using models or other pricing methodologies that do not require significant judgment since the input assumptions used in the models, such as interest rates and volatility factors, are corroborated by readily observable data from actively quoted markets for substantially the full term of the financial instrument.

Level 3 – Inputs used to measure fair value are unobservable inputs that are supported by little or no market activity and reflect the use of significant management judgment. These values are generally determined using pricing models for which the assumptions utilize management’s estimates of market participant assumptions.

Concentrations of Credit Risk and Accounts Receivable

Concentrations of Credit Risk and Accounts Receivable

Financial instruments that potentially subject the Company to a concentration of credit risk consist principally of cash and cash equivalents and accounts receivable. The Company places its cash and cash equivalents with high credit quality financial institutions.

Accounts receivable represent amounts due from customers, primarily wholesale electrical distributors, related to the sale of the Company’s products. Such receivables are uncollateralized and are generally due from customers located throughout the United States. Encore has three customers, each of whom slightly exceeds 10% of the Company's total sales. The Company establishes an allowance for credit losses based upon the makeup of the current portfolio, past bad debt experience and current market conditions.

Concentrations of Credit Risk and Accounts Receivable

Concentrations of Credit Risk and Accounts Receivable

Financial instruments that potentially subject the Company to a concentration of credit risk consist principally of cash and cash equivalents and accounts receivable. The Company places its cash and cash equivalents with high credit quality financial institutions.

Accounts receivable represent amounts due from customers, primarily wholesale electrical distributors, related to the sale of the Company’s products. Such receivables are uncollateralized and are generally due from customers located throughout the United States. Encore has three customers, each of whom slightly exceeds 10% of the Company's total sales. The Company establishes an allowance for credit losses based upon the makeup of the current portfolio, past bad debt experience and current market conditions.

Cash and Cash Equivalents

Cash and Cash EquivalentsThe Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents.

Inventories

Inventories

Inventories are stated at the lower of cost, using the last-in, first-out (LIFO) method, or market. The Company evaluates the market value of its raw materials, work-in-process and finished goods inventory primarily based upon current raw material and finished goods prices at the end of each period.

Property, Plant, and Equipment

Property, Plant, and Equipment

Depreciation of property, plant and equipment for financial reporting is provided on the straight-line method over the estimated useful lives of the respective assets as follows: buildings and improvements, 3 to 39 years; machinery and equipment, 2 to 20

years; and furniture and fixtures, 5 to 20 years. Accelerated cost recovery methods are used for tax purposes. Repairs and maintenance costs are expensed as incurred.

Stock-Based Compensation

Stock-Based CompensationCompensation cost for all equity-based compensation expected to vest is measured at fair value on the date of grant and recognized over the related service period. The fair value of stock awards is determined based on the number of shares granted and the quoted price of Encore’s common stock, and the fair value of stock options and stock appreciation rights is estimated on the date of grant using the Black-Scholes model. Such value is recognized as expense over the service period, net of estimated forfeitures, on a straight-line basis. To the extent actual forfeitures or updated estimates of forfeitures differ from management’s current estimates, such amounts are recorded as a cumulative adjustment in the period estimates are revised.

Earnings Per Share

Earnings Per Share

Earnings per common and common equivalent share is computed using the weighted average number of shares of common stock and common stock equivalents outstanding during each period. The dilutive effects of stock awards, which are common stock equivalents, are calculated using the treasury stock method.

Income Taxes

Income Taxes

Income taxes are provided for based on the liability method, resulting in deferred income tax assets and liabilities arising due to temporary differences. Temporary differences are differences between the tax basis of assets and liabilities and their reported amounts in the financial statements that will result in taxable or deductible amounts in future years. The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period the change in rate is enacted.

Comprehensive Income

Comprehensive IncomeComprehensive income is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

The Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) is the sole source of authoritative U.S. GAAP other than Securities and Exchange Commission ("SEC") issued rules and regulations that apply only to SEC registrants. The FASB issues an Accounting Standard Update (“ASU”) to communicate changes to the codification. The Company considers the applicability and impact of all ASUs. The following are those ASUs that are relevant to the Company.

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326),” which makes significant changes to the accounting for credit losses on financial assets and disclosures about them. This ASU requires immediate recognition of management’s estimates of current expected credit losses. Under the prior model, losses were recognized only as they were incurred, which FASB has noted delayed recognition of expected losses that might not yet have met the threshold of being probable. The guidance affects all entities in all industries and applies to a wide variety of financial assets, including trade receivables. We adopted this new standard January 1, 2020 and applied a loss rate model to compute the expected credit loss allowance of our short-term trade receivable balances, which we concluded are representative of one collective pool. This method is based on relevant information from past events, including historical experiences, current conditions, and reasonable and supportable forecasts that affect collectability. Upon adoption, we recognized a $0.7 million increase to our allowance for credit losses and a corresponding cumulative adjustment to reduce retained earnings, net of income taxes, of $0.5 million. This transition adjustment reflects the development of our models to estimate expected credit losses over the life of our financial assets, which primarily consist of our accounts receivable. Pursuit to ASU 2016-13, we have evaluated our customers’ financial strength and liquidity based on aging of accounts receivable, payment history, and other relevant information, including ratings agency, credit ratings and alerts, and publicly available reports.

In December 2019, the FASB issued ASU 2019-12, “Simplifying the Accounting for Income Taxes,” which simplifies the accounting for income taxes, eliminates certain exceptions within ASC 740, Income Taxes, and clarifies certain aspects of the current guidance to promote consistency among reporting entities. This ASU is effective for annual reporting periods beginning after December 15, 2020, and interim periods within those reporting periods. Early adoption is permitted in any interim or annual period. We are evaluating the effect of adopting this new accounting guidance but do not expect adoption will have a material impact on the Company's financial statements or disclosures.

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Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2020

Accounting Policies [Abstract]

Schedule of Allowance for Losses Progression

The Company establishes an allowance for credit losses based upon the makeup of the current portfolio, past bad debt experience and current market conditions.

Allowance for Losses Progression (In Thousands)	2020		2019		2018
Beginning balance January 1	$	1,801	$	2,030	$	2,028
Write-offs of bad debts	(286)		(230)		—
Collection of previous write-offs	—		1		2
Adjustment to allowance for credit losses	700		—		—
Ending balance at December 31	$	2,215	$	1,801	$	2,030

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Inventories (Tables)

12 Months Ended

Dec. 31, 2020

Inventory Disclosure [Abstract]

Schedule of Inventories

Inventories consist of the following as of December 31:

In Thousands	2020		2019
Raw materials	$	40,842	$	25,882
Work-in-process	30,311		25,381
Finished goods	88,544		83,222
Total	159,697		134,485
Adjust to LIFO cost	(67,375)		(44,801)
Inventory	$	92,322	$	89,684

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Accrued Liabilities (Tables)

12 Months Ended

Dec. 31, 2020

Accrued Liabilities, Current [Abstract]

Schedule of Accrued Liabilities

Accrued liabilities consist of the following as of December 31:

In Thousands	2020		2019
Sales rebates payable	$	19,317	$	16,622
SAR Liability	5,343		3,087
Property taxes payable	4,427		4,011
Accrued salaries	4,096		7,924
Other accrued liabilities	3,683		3,143
Total accrued liabilities	$	36,866	$	34,787

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2020

Income Tax Disclosure [Abstract]

Schedule of Income Tax Expenses

The provision for income tax expense are summarized as follows for the years ended December 31:

In Thousands	2020		2019		2018
Current:
Federal	$	14,277	$	12,675	$	18,523
State	2,024		1,549		1,978
Deferred:
Federal	6,285		3,260		2,603
State	143		115		430
Total income tax expense	$	22,729	$	17,599	$	23,534

Schedule of Differences Between Provision for Income Taxes and Income Taxes Computed Using Federal Income Tax Rate

The differences between the provision for income taxes and income taxes computed using the federal income tax rate are as follows for the years ended December 31:

In Thousands	2020		2019		2018
Amount computed using the statutory rate	$	20,747	$	15,903	$	21,354
State income taxes, net of federal tax benefit	1,732		1,314		1,903
Other	250		382		277
Total income tax expense	$	22,729	$	17,599	$	23,534

Schedule of Net Deferred Tax Liability

The tax effect of each type of temporary difference giving rise to the net deferred tax liability at December 31 is as follows:

In Thousands	2020		2019
Depreciation	$	(35,869)	$	(27,547)
Inventory	503		(1,970)
Allowance for credit losses	499		406
Uniform capitalization rules	276		265
Other	754		1,438
Net deferred income tax liability	$	(33,837)	$	(27,408)

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Stock-Based Compensation (Tables)

12 Months Ended

Dec. 31, 2020

Share-based Payment Arrangement [Abstract]

Schedule of Total Stock-Based Compensation Expense by Type of Award

Total stock-based compensation expense by type of award was as follows for the years ended December 31:

In Thousands	2020		2019		2018
Stock options	$	561	$	635	$	1,209
Stock appreciation rights (“SARs”)	3,377		2,906		894
Restricted Stock Awards	1,101		$	907	$	—
Stock grants	244		269		$	235
Total stock-based compensation expense	$	5,283	$	4,717	$	2,338

Schedule of Stock Option Activity

The following presents a summary of stock option activity for the year ended December 31, 2020:

	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value (In Thousands)
Outstanding at January 1, 2020	393,500	$	42.36
Exercised	(68,972)	49.80
Forfeited/Canceled	(10,028)	51.63
Outstanding at December 31, 2020	314,500	$	41.82	5.1 years	$	5,898
Vested and exercisable at December 31, 2020	226,000	$	40.03	4.5 years	$	4,642

Schedule of Stock Options Valuation Assumptions

The fair value of stock options granted in the year ended December 31, 2018, was estimated on the date of grant using a Black-Scholes option pricing model and the following weighted average assumptions:

	Year Ended December 31,
	2018
Risk-free interest rate	2.36	%
Expected dividend yield	0.16	%
Expected volatility	31.40	%
Expected lives	5.0 years

Schedule of Stock Appreciation Rights Activity

The following presents a summary of SARs activity for the year ended December 31, 2020:

	Cash-settled SARs	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value (In Thousands)
Outstanding at January 1, 2020	565,300	$	48.18
Granted	227,500	58.77
Exercised	(85,500)	57.52
Forfeited/Canceled	(27,800)	53.01
Outstanding at December 31, 2020	679,500	$	51.99	7.7 years	$	5,831
Vested and exercisable at December 31, 2020	113,900	$	47.31	6.6 years	$	1,511

Schedule of Stock Appreciation Rights Valuation Assumptions

The fair value of SARs granted during the years ended December 31, 2020, 2019 and 2018, was estimated on the date of grant using a Black-Scholes option pricing model and the following weighted average assumptions:

	Year Ended December 31,
	2020		2019		2018
Risk-free interest rate	0.18	%	1.62	%	2.53	%
Expected dividend yield	0.13	%	0.14	%	0.16	%
Expected volatility	35.51	%	28.46	%	30.83	%
Expected lives	2.8 years		3.0 years		3.0 years

Schedule of Restricted Stock Activity

The following presents a summary of restricted stock activity for the year ended December 31, 2020:

			Weighted Average
	Number of Shares		Grant Date Fair Value
Outstanding at January 1, 2020	50,000		$	55.00
Granted	37,000		58.90
Vested	(12,000)		55.94
Unvested at December 31, 2020	$	75,000	$	56.77

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Earnings Per Share (Tables)

12 Months Ended

Dec. 31, 2020

Earnings Per Share [Abstract]

Schedule of Computation of Basic and Diluted Earnings Per Share

The following table sets forth certain components of the computation of basic and diluted earnings per share for the years ended December 31:

In Thousands	2020		2019		2018
Numerator:
Net income	$	76,067	$	58,129	$	78,150
Denominator:
Denominator for basic earnings per share – weighted average shares	20,599		20,904		20,845
Effect of dilutive securities:
Employee stock awards	54		86		65
Denominator for diluted earnings per share – weighted average shares	20,653		20,990		20,910

Schedule of Anti-dilutive Excluded from Diluted Earnings Per Share

Stock options to purchase common stock at exercise prices in excess of the average actual stock price for the period that were anti-dilutive and that were excluded from the determination of diluted earnings per share are as follows:

In Thousands, Except Per Share Data	2020		2019		2018
Weighted average anti-dilutive stock options	136		118		181
Weighted average exercise price per share	$	51.20	$	51.05	$	50.20

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Quarterly Financial Information (Unaudited) (Tables)

12 Months Ended

Dec. 31, 2020

Quarterly Financial Information Disclosure [Abstract]

Schedule of Unaudited Quarterly Financial Information

The following is a summary of the unaudited quarterly financial information for the two years ended December 31, 2020 and 2019 (in thousands, except per share data):

	Three Months Ended
2020	March 31		June 30		September 30		December 31
Net sales	$	302,794	$	253,631	$	339,700	$	380,823
Gross profit	45,773		36,499		53,459		58,804
Net income	18,607		12,347		21,012		24,100
Earnings per common share – basic	0.89		0.60		1.02		1.17
Earnings per common share – diluted	0.89		0.60		1.02		1.17

	Three Months Ended
2019	March 31		June 30		September 30		December 31
Net sales	$	314,707	$	336,866	$	321,169	$	302,252
Gross profit	41,326		45,910		42,988		35,747
Net income	13,411		17,782		16,401		10,535
Earnings per common share – basic	0.64		0.85		0.78		0.50
Earnings per common share – diluted	0.64		0.85		0.78		0.50

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Significant Accounting Policies - Narrative (Details)		12 Months Ended
	Jan. 01, 2020 USD ($)	Dec. 31, 2020 USD ($) customer segment	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)
Significant Accounting Policies [Line Items]
Number of business segments | segment		1
Selling, general and administrative expenses		$ 97,008,000	$ 94,442,000	$ 90,212,000
Certificates of deposit		0	161,300,000
Retained earnings		$ (881,292,000)	(806,874,000)
Cumulative Effect, Period of Adoption, Adjustment | Accounting Standards Update 2016-13
Significant Accounting Policies [Line Items]
Allowance for credit losses, period increase (decrease)	$ 700,000
Retained earnings	$ 500,000
Buildings and Improvements | Minimum
Significant Accounting Policies [Line Items]
Estimated useful lives of property plant and equipment (in years)		3 years
Buildings and Improvements | Maximum
Significant Accounting Policies [Line Items]
Estimated useful lives of property plant and equipment (in years)		39 years
Machinery and Equipment | Minimum
Significant Accounting Policies [Line Items]
Estimated useful lives of property plant and equipment (in years)		2 years
Machinery and Equipment | Maximum
Significant Accounting Policies [Line Items]
Estimated useful lives of property plant and equipment (in years)		20 years
Furniture and Fixtures | Minimum
Significant Accounting Policies [Line Items]
Estimated useful lives of property plant and equipment (in years)		5 years
Furniture and Fixtures | Maximum
Significant Accounting Policies [Line Items]
Estimated useful lives of property plant and equipment (in years)		20 years
Customer Concentration Risk | Sales Revenue, Net
Significant Accounting Policies [Line Items]
Customer concentration risk, number of customers | customer		3
Shipping and Handling
Significant Accounting Policies [Line Items]
Selling, general and administrative expenses		$ 35,200,000	$ 33,900,000	$ 35,100,000

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Significant Accounting Policies - Summary of Allowance for Losses Progression (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Allowance for Doubtful Accounts Receivable [Roll Forward]
Beginning balance January 1	$ 1,801	$ 2,030	$ 2,028
Write-offs of bad debts	(286)	(230)	0
Collection of previous write-offs	0	1	2
Adjustment to allowance for credit losses	700	0	0
Ending balance at December 31	$ 2,215	$ 1,801	$ 2,030

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Inventories (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Inventory Disclosure [Abstract]
Raw materials	$ 40,842	$ 25,882
Work-in-process	30,311	25,381
Finished goods	88,544	83,222
Total	159,697	134,485
Adjust to LIFO cost	(67,375)	(44,801)
Inventory	$ 92,322	$ 89,684

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Accrued Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Accrued Liabilities, Current [Abstract]
Sales rebates payable	$ 19,317	$ 16,622
SAR Liability	5,343	3,087
Property taxes payable	4,427	4,011
Accrued salaries	4,096	7,924
Other accrued liabilities	3,683	3,143
Total accrued liabilities	$ 36,866	$ 34,787

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Debt (Details)		12 Months Ended
	Feb. 09, 2021 USD ($) bank	Dec. 31, 2020 USD ($) bank	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)
Line of Credit Facility [Line Items]
Debt outstanding		$ 0	$ 0
Number of banks to which the company is party to a credit agreement | bank		2
Outstanding borrowings		$ 0
Letters of credit outstanding		600,000
Remaining borrowing capacity		149,400,000
Total interest paid		200,000	200,000	$ 300,000
Total interest capitalized		0	$ 0	$ 0
Subsequent Event
Line of Credit Facility [Line Items]
Number of banks to which the company is party to a credit agreement | bank	2
Calculated maximum borrowings	$ 200,000,000.0
Credit Agreement
Line of Credit Facility [Line Items]
Calculated maximum borrowings		150,000,000.0
Available increase in borrowings under credit agreement		$ 100,000,000.0
Minimum | Credit Agreement
Line of Credit Facility [Line Items]
Percentage of commitment fee		0.15%
Maximum | Credit Agreement
Line of Credit Facility [Line Items]
Percentage of commitment fee		0.30%
Credit Agreement Interest Rate Option One | London Interbank Offered Rate (LIBOR) | Minimum | Credit Agreement
Line of Credit Facility [Line Items]
Debt instrument basis spread on variable rate		0.875%
Credit Agreement Interest Rate Option One | London Interbank Offered Rate (LIBOR) | Maximum | Credit Agreement
Line of Credit Facility [Line Items]
Debt instrument basis spread on variable rate		1.75%
Credit Agreement Interest Rate Option Two | London Interbank Offered Rate (LIBOR) | Credit Agreement
Line of Credit Facility [Line Items]
Debt instrument basis spread on variable rate		1.00%
Credit Agreement Interest Rate Option Two | Federal Funds Rate | Maximum | Credit Agreement
Line of Credit Facility [Line Items]
Debt instrument basis spread on variable rate		0.50%
Credit Agreement Interest Rate Option Two | Base Rate | Minimum | Credit Agreement
Line of Credit Facility [Line Items]
Debt instrument basis spread on variable rate		0.00%
Credit Agreement Interest Rate Option Two | Base Rate | Maximum | Credit Agreement
Line of Credit Facility [Line Items]
Debt instrument basis spread on variable rate		0.25%

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Income Taxes - Narrative (Details) - USD ($)	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Income Tax Disclosure [Abstract]
Inventory	$ 503,000
Income tax payments	14,100,000	$ 16,400,000	$ 22,300,000
Reserve for uncertain tax positions	$ 0	$ 0

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Income Taxes - Summary of Income Tax Expenses (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Current:
Federal	$ 14,277	$ 12,675	$ 18,523
State	2,024	1,549	1,978
Deferred:
Federal	6,285	3,260	2,603
State	143	115	430
Total income tax expense	$ 22,729	$ 17,599	$ 23,534

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Income Taxes - Summary of Differences Between Provision for Income Taxes and Income Taxes Computed Using Federal Income Tax Rate (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Income Tax Disclosure [Abstract]
Amount computed using the statutory rate	$ 20,747	$ 15,903	$ 21,354
State income taxes, net of federal tax benefit	1,732	1,314	1,903
Other	250	382	277
Total income tax expense	$ 22,729	$ 17,599	$ 23,534

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Income Taxes - Summary of Net Deferred Tax Liability (Details) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Income Tax Disclosure [Abstract]
Depreciation	$ (35,869)	$ (27,547)
Inventory	503
Inventory		(1,970)
Allowance for credit losses	499	406
Uniform capitalization rules	276	265
Other	754	1,438
Net deferred income tax liability	$ (33,837)	$ (27,408)

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Stock-Based Compensation - Stock-based Compensation Expense by Type of Award (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation expense	$ 5,283	$ 4,717	$ 2,338
Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation expense	561	635	1,209
Stock appreciation rights (“SARs”)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation expense	3,377	2,906	894
Restricted Stock Awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation expense	1,101	907	0
Stock grants
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation expense	$ 244	$ 269	$ 235

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Stock-Based Compensation - Narrative (Details) $ / shares in Units, $ in Millions	1 Months Ended				12 Months Ended
	May 31, 2020 $ / shares shares	Jun. 30, 2019 director $ / shares shares	May 31, 2018 director $ / shares shares	May 31, 2017 director	Dec. 31, 2020 USD ($) $ / shares shares	Dec. 31, 2019 USD ($) $ / shares shares	Dec. 31, 2018 USD ($) $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of securities authorized | shares					1,000,000
Options available to be granted (in shares) | shares					994,500,000,000
Stock options granted (in shares) | shares	1,100	1,000	1,000		0	0
Stock option expiration period					10 years
Weighted average grant date fair value of options (in usd per share) | $ / shares	$ 44.31	$ 53.81	$ 46.95				$ 15.95
Total intrinsic value of options exercised					$ 0.4	$ 0.7	$ 0.9
Total unrecognized compensation cost related to non-vested stock options					$ 0.7
Number of non-employee directors | director		5	5	5
Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock option vested period					5 years
Weighted average period of compensation cost					1 year 9 months 18 days
Stock appreciation rights (“SARs”)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock option vested period					5 years
Stock option expiration period					10 years
Weighted average period of compensation cost					3 years 1 month 6 days
Liability balance					$ 5.3	$ 3.1
Stock appreciation rights outstanding (in shares) | shares					679,500	565,300
Weighted average grant date fair value (in usd per share) | $ / shares					$ 17.94	$ 17.19	$ 14.94
Intrinsic value of SARs exercised					$ 1.1	$ 2.1	$ 1.1
Total unrecognized compensation cost related to non-vested SARs					$ 6.6
Restricted Stock Awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average period of compensation cost					3 years 6 months
Weighted average grant date fair value (in usd per share) | $ / shares					$ 58.90	$ 54.49
Total unrecognized compensation cost related to non-vested SARs					$ 3.4
Granted (in shares) | shares					37,000	60,000	0
Total fair value of shares vested during year					$ 0.7

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Stock-Based Compensation - Summary of Stock Option Activity (Details) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2020 USD ($) $ / shares shares
Number of Shares
Number of shares outstanding, beginning balance | shares	393,500
Number of shares exercised | shares	(68,972)
Number of shares forfeited/canceled | shares	(10,028)
Number of shares outstanding, ending balance | shares	314,500
Number of shares vested and exercisable | shares	226,000
Weighted Average Exercise Price
Weighted average exercise price outstanding, beginning balance (in usd per share) | $ / shares	$ 42.36
Weighted average exercise price, exercised (in usd per share) | $ / shares	49.80
Weighted average exercise price, forfeited/canceled (in usd per share) | $ / shares	51.63
Weighted average exercise price outstanding, ending balance (in usd per share) | $ / shares	41.82
Weighted average exercise price, vested and exercisable (in usd per share) | $ / shares	$ 40.03
Weighted average remaining contractual term, ending balance	5 years 1 month 6 days
Weighted average remaining contractual term, vested and exercisable	4 years 6 months
Aggregate intrinsic value ending balance | $	$ 5,898
Aggregate intrinsic value, vested and exercisable | $	$ 4,642

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Stock-Based Compensation - Summary of Stock Appreciation Rights Activity (Details) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2020 USD ($) $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward]
Vested and exercisable (in shares)	226,000
Stock appreciation rights (“SARs”)
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward]
Beginning balance (in shares)	565,300
Granted (in shares)	227,500
Exercised (in shares)	(85,500)
Forfeited/Canceled (in shares)	(27,800)
Ending balance (in shares)	679,500
Vested and exercisable (in shares)	113,900
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Additional Disclosures [Abstract]
Beginning balance (in usd per share) | $ / shares	$ 48.18
Granted (in usd per share) | $ / shares	58.77
Exercised (in usd per share) | $ / shares	57.52
Forfeited/Canceled (in usd per share) | $ / shares	53.01
Ending balance (in usd per share) | $ / shares	51.99
Vested and exercisable (in usd per share) | $ / shares	$ 47.31
Outstanding, weighted average contractual term (in years)	7 years 8 months 12 days
Vested and exercisable, weighted average contractual term (in years)	6 years 7 months 6 days
Outstanding, aggregate intrinsic value | $	$ 5,831
Vested and exercisable, aggregate intrinsic value | $	$ 1,511

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Stock-Based Compensation - Stock Options and Stock Appreciation Rights Valuation Assumptions (Details)	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free interest rate (as a percent)			2.36%
Expected dividend yield (as a percent)			0.16%
Expected volatility (as a percent)			31.40%
Expected lives (in years)			5 years
Stock appreciation rights (“SARs”)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free interest rate (as a percent)	0.18%	1.62%	2.53%
Expected dividend yield (as a percent)	0.13%	0.14%	0.16%
Expected volatility (as a percent)	35.51%	28.46%	30.83%
Expected lives (in years)	2 years 9 months 18 days	3 years	3 years

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Stock-Based Compensation - Summary of Restricted Stock Awards (Details) - Restricted Stock Awards - $ / shares	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Number of Shares
Outstanding at January 1, 2020 (in shares)	50,000
Granted (in shares)	37,000	60,000	0
Vested (in shares)	(12,000)
Unvested at December 31, 2020 (in shares)	75,000	50,000
Weighted Average Grant Date Fair Value
Outstanding at January 1, 2020 (in usd per share)	$ 55.00
Granted (in usd per share)	58.90	$ 54.49
Vested (in usd per share)	55.94
Unvested at December 31, 2020 (in usd per share)	$ 56.77	$ 55.00

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Earnings Per Share - Computation of Basic and Diluted Net Earnings (Loss) Per Share (Details) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2020	Sep. 30, 2020	Jun. 30, 2020	Mar. 31, 2020	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Numerator:
Net income	$ 24,100	$ 21,012	$ 12,347	$ 18,607	$ 10,535	$ 16,401	$ 17,782	$ 13,411	$ 76,067	$ 58,129	$ 78,150
Denominator:
Denominator for basic earnings per share – weighted average shares (in shares)									20,599	20,904	20,845
Effect of dilutive securities:
Employee stock options (in shares)									54	86	65
Denominator for diluted earnings per share – weighted average shares (in shares)									20,653	20,990	20,910

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Earnings Per Share - Anti-dilutive Excluded from Diluted Earnings Per Share (Details) - $ / shares shares in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Earnings Per Share [Abstract]
Weighted average anti-dilutive stock options (in shares)	136	118	181
Weighted average exercise price per share (in usd per share)	$ 51.20	$ 51.05	$ 50.20

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Stockholders' Equity (Details) - shares	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Equity [Abstract]
Repurchase of common stock authorized remaining (in shares)	1,000,000
Purchase of treasury stock (in shares)	441,250	0	0

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Encore Wire Corporation 401(k) Profit Sharing Plan (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Retirement Benefits [Abstract]
Matching contributions made	$ 2.5	$ 2.5	$ 2.1

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Quarterly Financial Information (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2020	Sep. 30, 2020	Jun. 30, 2020	Mar. 31, 2020	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Quarterly Financial Information Disclosure [Abstract]
Net sales	$ 380,823	$ 339,700	$ 253,631	$ 302,794	$ 302,252	$ 321,169	$ 336,866	$ 314,707	$ 1,276,948	$ 1,274,994	$ 1,288,683
Gross profit	58,804	53,459	36,499	45,773	35,747	42,988	45,910	41,326	194,535	165,971	189,722
Net income	$ 24,100	$ 21,012	$ 12,347	$ 18,607	$ 10,535	$ 16,401	$ 17,782	$ 13,411	$ 76,067	$ 58,129	$ 78,150
Earnings per common share - basic (in usd per share)	$ 1.17	$ 1.02	$ 0.60	$ 0.89	$ 0.50	$ 0.78	$ 0.85	$ 0.64	$ 3.69	$ 2.78	$ 3.75
Earnings per common share - diluted (in usd per share)	$ 1.17	$ 1.02	$ 0.60	$ 0.89	$ 0.50	$ 0.78	$ 0.85	$ 0.64	$ 3.68	$ 2.77	$ 3.74