Encore Wire (WIRE) 6 May 182018 Q1 Earnings call transcript

At this time, I would like to welcome you to the Encore Wire first quarter earnings conference call. My name is Ellen and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions]. conference recorded. this that note is being Please I Jones, Chairman, turn the to Daniel call over President will now and CEO. Sir, you may begin.

I Board and Ellen. Chairman Chief Financial is you am President, our Jones, Thank CEO Frank of Bilban, the me of with Wire Officer. Encore this morning Daniel and

margins quarter material by sales strongly are in dollars XXXX. increased We first the with prices. the items comparison key quarter, versus results our some pleased primarily higher increased raw copper to Copper the driven quarterly XXXX the in with note. in Net to

increased next One Based quarter discussions of good we and contractor price in acted The on beyond. on spread and average The dollar economy winter copper period. by decreased in of customers the the strong nominal the than quarter appears particularly of XXXX purchases. Unit competitors of last that purchased of The primarily with We as have slowed three XXXX, the X.X% construction a XXXX key purchased year. sold metrics U.S. copper XXXX. dollar a versus impacted first our year change a raw outlook wire projects to financially Therefore, customers, nominal first the and first increased that on expanded quarter spread copper is our given copper distributor environment. of versus the first our any copper XXXX earnings consider basis. XX.X% rough months sales three strong, we believe volumes volumes construction versus the on in spread of stressed January. between for average amount construction shipped months is price is the there's and activity. the We of in change price the in business of on copper increased the what pounds for believe weather the believe erratically sold some first XX.X% in quarter cost wire while the higher of as projects, spreads first of percentage selling were of our in XX.X%. struggled

to continue fill in effort price our continue and competitive to increase an believe maintain to support and We increases lead industry margins. strive rates position. We to our enhance

As orders come quick the can ensure employees to their fill to deliveries environment. coast. thank our in distributors for We from this from coast on performance our electrical count and contractors, believe impressive associates rates in We efforts. is our

support. Frank? Officer, their Bilban, our will We financial Financial discuss also for our our Chief thank now Frank results. stockholders

Thank the is any quarter. you, on internet have already glad Daniel. get you In our a results This we the of financial well received Encore's minute, Campbell call results. and the you questions will review, you the financial take of release release Each you we available can have. will copy. covering copy as may review will Elizabeth be to a should a After (XXX)-XXX-XXXX or at press we for

www.encorewire.com. investors, useful posted supplemental non-GAAP the financial here information might could company's be instead advise SEC differ we such for are risks discussed with each to comparable looking, measures all refer call releases and review to as financial reconciliations to these to throughout indicate of statements uncertainties. risks on forward attempting you news identify discussion this more legislation detailed to with certain each we order that the considered accordance in measures during to that uncertainties involve and from statement and materially of particular you forward that certain actual to cause which results of and call, make that most we Also, believe we I reports those today a directly of presented conference Before comply may me statements be securities let GAAP, In looking. EBITDA, for this discussed including financials, certain be

Fully of to quarter versus purchased. $XX.X increased Now million the XXXX the measured in wire for The an price first compared in to copper the versus $XXX.X ended in sales pounds due a quarter first of first in versus Net of $XXX.X quarter million million first $X.XX offset versus per to was XX.X% volume, XXXX XXXX. million XXXX. the of earnings of XXXX. quarter quarter were Fully XX, XXXX decreased net fourth $XXX.X in quarter on quarter decreased $X.XX March XXXX. quarter dollars the sales due wire per during of XXXX. million of XXXX the copper $XX.X XXXX. of basis, to $X.XX first X.X% quarter of unit fourth quarterly X.X% wire the wire increased Net copper the increased sold, quarter of $XX.X share $X.XX copper of purchased, of the share sequential $XX.X due of the the of quarter XXXX. first of X.X% $XXX.X quarter versus for Copper XXXX. first the first quarter unit the financials. prices the average XXXX sales quarter during The On first quarter diluted XXXX primarily versus in the was of X.X% of the prices was the of quarter fourth quarter of first the sold volume a for were selling in quarter for sequential net XXXX selling increased per XXXX. copper in million common in net copper of were first by Copper increase first net price income higher income the primarily building sales of diluted basis. the Sales wire contained versus Copper in price decrease a first sold first wire per of million in income the common XX.X% increase pound XXXX pound average million of sold price the which versus in

strong. very sheet balance Our is

our to of paid have line is down and credit long-term revolving We zero. debts no

In have at the end addition, the $XXX.X quarter. in we million cash of

will to you, session. after this the remind conference declared of cash for this We conclusion also quarter. We call be the another dividend available want replay during

you our call can conference hear (XXX)-XXX-XXXX call the over Daniel? to Daniel tape where pound available. you the the Chairman, to website our visit please and and sign now enter ar XXXXXXX President reference If turn the wish replay, the will and CEO. call I is back Jones,

questions Frank. the you Thank we quarter. future. are highlighted, positioned We Encore Ellen, take as our in listeners. And for performed Frank well now well past we from will believe the And

[Operator Instructions].

from Brent is first from Our question Thielman D.A. Davidson.

Good Hi. morning guys.

Brent. morning Good

Brent. Hi

X% from here, of like bit this sounds of outlier just you the quarter? market a it for was that kind of trends as unit standpoint? of guess volume. for the talk question little Can more the I part a the volume. an And more Daniel, second kind about to Is January see competitive it? you it little representative a of the there maybe Or down is through

weak as January point QX, way as to of far Right. sticking went. it's is the representative the And clearly business not volume going. or was was

were were able Job sites. take had. the to all buttoned able that way It's I get It's we physically to sites and/or I think We up. ready it's the the can answer all job sold. jobs ship. the material product. We not had to it. were delivery best physically There to

that, pretty it It we bit of was when invoice ship. again, volume quite a we significant. was So

sales January the an the outlier. So clearly, way ran, was

was Daniel, areas Northeast And the the that other or country? of mostly

water, different area. too those Well, And there Texas, pockets into our too quite much that that deliveries is sites some out, to completely had wet. as in cleanup. be But of It really we when disrupted. not. even was were or the product seemed I some a mudslides. state enters pushing It be, were was reported There construction we geographic the there wasn't you. what around variety even to back specific There it country. the believe could some cycle, had one job have cycle mean,

So deliveries sites as March pushed into little a to and as those of out some backwards the March and of some that late were were job on had beyond scheduled early. things bit go

with you to for an the wire antidumping on sales the sense aluminum? quarter? status the percentage terms guess, a do as any in And there timeline have I then of And aluminum a any particularly duties Okay. announcement? Frank, of respect

Sure. quarter of sales. dollar X.X% Aluminum was for the

Okay.

the came then piece, that from and immediately attention are the industries was XXX, the the in with Brent, impacted, negatively out On became mind, that XXX fashion, up maybe amended tariff whatever. their and other followed in some

other that. are side We on the of

wire. include We for tariff the are building aluminum insulated all to

saw new. levels. talked not got through to two per aluminum ago, this that below specifically we calls that's in erode to from at We some well not companies with. about. China. are we past quarter of excited and pound price China the years the from the in continue on have issues to have raw had near about that in XX bring cost. We the product went breakeven something increase without that has the dealt material markets in That's them naming It's We had through we be an It the past. XX, something

And associations to good it's in some this that Association act probably cleared other from building. really to It's The not as are industry information addressed. outdoor that get so associations to members guys be participating There's to you good the think anyone. really aluminum of in specifically. I are roof the Aluminum the pretty But or there. the and or even correct necessary. represent factual direction. Once that thing versus a broad organizations typically favors there's in a clearly industry installation a is for under we not activity house of range not U.S. positive the weather seems Business right quick It providing know,

that things I the fashion, pretty question on will of lot the but themselves going a in tariff. I there's quick appreciate up there on clear So think

product and right we value our imported industry to daily a zero Chinese added basis. that's up Our this position with being on through into is need clean passed

One we quarter. Daniel. I should thinking than about that I Frank. color, was Is forward? the what for XX% Okay. about higher thinking The tax more, was going appreciate rate

brought XX% XX% to and were we year. various a in, of us last and deduction, X% to a tax user we with of We all was taxes XX%. local X% XX%, add-on add-on the we federal back we a X% the were Well for down compilation of all had about consistent the Creation got that Jobs us that where XX% jurisdictions state the which pay and to the rate is XX%, business big rate Act, to federal XX%, then which a but conduct

place. net-net, So that got sense? to the make have Does right you

XX% Yes. I mean, going are you forward? Sorry. thinking

I right. that's about think

Okay.

this As know as at far point, we yes.

on. it pass will you. I right. Thank All

Our from next Sidoti question & Company. is Romero from Julio

Dan Frank. morning Good and Hi.

Hi Julio.

in February volumes. that a March? you say just saw So positive on growth to and follow-up fair be Would shipment guys a it

Correct.

past impacts, That's in type does Okay. missed we seen the expect right volume that the Should to this just subsequent weather this that you helpful. to And have quarters recoup you volume quarters calendar? in of pushed when year? get

exactly That's occurs. what

Yes. out. XX That's exactly in to the Typically, first what occurs. XX days pushed it's

thing next the they It's can We again, it. Some don't invoice is to And ship days will unload it. we don't is, until thing. leak the the we product until ship XX but over type go, purchased. it ready it

scenario, So to XX pushed when gets is in XX typically too. days the out that volume

Got a in aluminum. you how if quarter? to the can price trended spreads directionally, it. And over on give least Maybe sense switching just At can? you volume us

market There's the If may on gets where the trends, some some story. is Yes. in breakeven a again point aluminum piece quote when a volume right. it's comes but pass it, the out. for us it the part big posturing to we below in Similar manner, of

to the an to the get lose the taking us science. the good business the flip pretty orders up not are marketplace, then and to then it got of art disciplined the I of we a in to there's couple is that in are unfortunately, And most are And And goes. standalone have feel first on but we as occasionally, some copper that There's in have copper may are quarter side disruptive. for that type choose we orders we the the had out strategic very So aluminum first of some things far we marketplace business. that doing say, part, a importers super beat for as quarter in pass. the

we and consistently very two ship also or first guys from copper compete one that standpoint disciplined the with the that sell in quarter. aluminum, the So

piece. basically aluminum based a it it's continue on think importing, can't on I temporary the someone as situation adding cutting value It zero and just price. is just

Got it. as And question. housekeeping lastly just a

drove that? going XXX think, percentage year-over-year. forward? up, unusual Anything I I how maybe margin think SG&A see And a sales as that basis was of that points you

couple Well, things. there was a of little

was them of One freight.

impact things nationally at of freight about saw, people is We couple talking on York, also stock apples-to-apples sale a added of color the saw But were to increased year with Daniel land on a repeat some add $X.XX in we Julio, basis, freight didn't options we we that last year New even of might SG&A. little lot an up that want quarter. a to the in about freight. and of some your conference, As the and did a rates this

Well, the in there's that in deliver, and and thing with in the loads market again ship, in holding quarter, business the the freight marketplace. can't several you increase in the around available trucks per the first trucks country, and the what truck getting overall can't volatility have

some that carriers obviously companies electronic of XX and logs impact instituted the and posturing, industry there were and exclusive was as was laws to trucking far and that as there some of including was a we products there states. So the in lot ship trucking changed and by

available on requirements the equipment ship rail So delivery lead which outbound the that we the is do and basis of in times our ship, freight We are required. by outbound the truck. not a by truck all because U.S.

some there So was adjustment there.

price starting to Some companies March than in January. are put that new more increases. demand, February, of some up pop We out so

The about an about Some through the three name good haul They for bad what in it's didn't of some quarter. of they is, the industry is, to freight geared specifically the thing them those were of toward issue. tight. trucks held, And the type or deal. to are agree it rates. thing increase The get two it them freight

forward rates those pricing that into So build in we quote into establish going to marketplace. the been scenario, we have able the and that

the the and issue, issue, So little into levels in keep require, as In going read that price want you meantime, news. service can are no about pay you It's a question. we that anything are bit build an we indicated, it more. going. the for freight to to we to But the the going

cost How increases? it. Got your Obviously, one point increases. the one to the for you from you And along? your distributor How terms see just there's absorbing maybe inflation passing customers customers appetite about appetite your do in see industry. just do last those with in price of the

Yes. been positive, really it's Julio, actually.

it. and whatever, them a job conversations, the huge is from dealing They much get believe those field volume only for freight topics I is, trailers, on bit they understand standpoint. same across are the in and come We with in. drive-ins, increases. that the building situation and board, a are that quite two that specifically the there's In They flatbeds, materials folks, see it. with sites, negotiations, whatever wire business, so, refrigerated sell that. whatever issues of They there's pretty one delivery other

was huge least XX of increases unless it typically my So to kind been on industry, whatever It that from XX, it on for because, side, February. mid- that it. our January, there's topic pass recognition make for are price pain of cost increases freight might has it. say, able in and blamed are or not see material copper a cost raw actual years, their through. be, you not to the or It's it they argument get They late at was in, part as shocker discussion a

for Fortunately board across us, this and they in products the categories. other see

been, easy, to say business with been They conversation customers. freight has it. want the the so, like see And it's I relatively but it's don't

taking my Thank questions, Appreciate you for guys. it.

Julio. Thanks bet. You

Julio. Thanks

Mr. question next it Heartland Funds. Evans is dropped. from with like has Evans And The Brad looks

Baldwin It Securities. Anthony question. to go will Bill comes the with Baldwin We from next

Good morning. Hi.

Hi Bill.

Bill. Hi

color And what regarding plans this see budgets of CapEx or kind offer nature I kind wanted to year? of you the programs? your then those could of for of just some

our Okay. point best will start at year million. of that million with will $XX I Well, a $XX spend we is now, Right number. this and estimate the between

publicly announced anything haven't And Bill, we yet.

looking are we that projects working some on. got have We at,

until know, that's should can what and any we I make announcements. a toward offering we have we probably and attitude it pretty do from service at As a what leave aggressive you standpoint got

at I are of are probably kind a at We different One are specifically looking hot. win a pretty over There's categories. the like time do to and will in service at. offering that other. project where one couple the and out areas, that's we

Thank good. Very Okay. you.

you. Thank for sir. Thanks Yes, the call.

Bill. Thanks

The Brent next question is a from follow-up D.A. Thielman Davidson. from

guys. got of thoughts sort What of reaction today, context Thanks of A And the to in you on any Frank, to on given remind stock the you guess, that? be what of Hi. the I quick you terms authorization? can seems follow-up. short-term are quarter, at there? have sort left in headwinds us buyback the here just where

one, where adjusting the the company back strike a almost XXbX-X we or Board that It's at levels Number least, which board adjusts will number always plan and point buy into the option. with buy call back have Number Well, meeting at Board discusses, that's the quick company certain at and in three. every place go can automatically always phone more the We a deems stock. supported at market appropriate. two. an

volumes think tells behalf, we be were for side, X% call. I some least volumes say, market us down of at a emphasized, let's and go spreads I as people. that. copper buying quite side about really industry the which were positive we up something enthusiastic pricing and go copper but about is go XX%, what on the up, XX% Daniel with our think our think is on that's the XX% business, doing to have today, on their overreacting The might my but here opportunity is, It key line bottom takeaway somewhat a I the is

I Okay. you. Thank appreciate Great guys. it. answer,

Thanks buddy.

you. Thank

is go ahead. Brad Please next from question Heartland. our Evans from And

problem of had there. that guys. about I little a Sorry technical bit

I end fighting must don't don't Evidently, a guys on hey, even we on But it it. we too. mean, I know. we aluminum good this couldn't we are are hear you be getting line. these lines We are something. we through have or earlier. Well,

We Frank this thinks the to will read of have to them stock's buying the call wait for opportunity. algorithms transcript that the to find out a for

So obviously, on obviously keen the miss the and volume. volumes, market's reacting to headline the everybody's

that basis, So copper you a the different know to volumes down happen first Frank, were were let linked from quarter on volumes direction a fourth quarter What here. linked skin the to quarter to what me cat copper try quarter? please? do

Yes. On QX to QX?

sir. Yes,

Copper volumes X.X%. were down

it. Got

Okay.

down X%. So

bit kind of understand this So puzzle the then people put a might me help this help and little together.

receivable So from to the quarter the X%. Revenues accounts were X% down fourth up were first quarter.

likely lockstep volume in on So number the copper with the side.

that So paints the quarter obviously of volume. part into ramp latter in a of significant terms of a picture the

That's answered January the a you the a were Daniel's bad the great question sales AR just only months. earlier volume. sales to of terms not our but was quarter And and the That for of response, in is how loaded very total it. three function in

point. my That's

volumes I point maybe down upwards year-over-year? So digits Frank, my is, mean, double as XX% January much were as in

Yes.

so would as have up as could year-over-year? been volumes much XX% March And

Well, certainly returned basis. normal more a February and March to

in industry that XX give easily that or this terms in we so, And more. extend days XX to

selling had of are you that. would we huge opposed have days XX have we receivables if If of month a to money the and sitting collected that some our balance sheet is XX on quarter would in still the the first last of in quarter, as

Okay.

linearity stronger. then, so February January the weak obviously, very So be much quarter, within and March clear to the just and

for of as exited Correct? may as you the the market reflected kind and second you optimism quarter. the pacing in of into quarter end progressed have really conditions the the So business

Correct.

said. Well

Okay.

in really an and see perhaps. down pretty out you and a impact historically dynamic was be I I other the so competitors spread bringing and least paints was the to in an of volumes was knives up, that of highly quarter on the the were say spread observation quarter, improving and really well, had encouraging the for having picture weak competitive So be to which would to on volumes environment, that I thought kind mean,

sir. Yes,

things the I right. earlier, got are shoe that telling few am complement have mentioned there I a doing As it, those we great fits, guys, and when out to wear hey, just you, competitors

from fact job. hit a volume a And to. you up are the to awful guys be is like back like paid about Brad, on are Everybody's to we they was supposed a like mean, And getting really transparent this you that then this, quarter. from in January it I that So just have shipping standpoint. good doing are couple got the perspective. on supposed they addressed. look, aluminum would a need of Those good Everybody's explain outliers import better, somehow bit, piece a I to the are way deal pretty and it but to.

I and an along things to discipline issue quarter should, side. just the market but have issue are other held. good from magnifies that is know the However, on that That's is. their my of piece going the credit in doing we know have the get and style. is, to direction, the or copper don't on opinion, the this aluminum when they importing. the guys poorer motivation larger spreads that's don't in trying what the and are no is are They with the business the the like if clearly not I It perspective but what this my they

I aluminum mean a I go Daniel, copper that. of a that some have at on I where, for from the I favoring Rusal perspective, aluminum aluminum lines benefit then copper where color. seen marketplace? metal the price. we spike question appreciate least it have perspective, last metal in the my this competitive copper? becomes And terms of news material in versus that preferred perhaps, side, am other with dynamics. along better on you amongst Thank is to the does huge volatility positive Okay. seems raw does a like are clearly, really gather pricing the perhaps on a curious, just clearly, where causing have really things,

in going trended the price what first to on point that favor had copper quarter anyway. question Copper to directly, specifically even quarter. But the in we with discipline. still down was your out I answer and more copper Well,

start $X.XX So $X.XX, focus the that's end quarter of what another have the on puts sign. environment, and phenomenal spread, are up indicative still you that's your heck business exaggerates When again you and the guys the right to if if When you start pressure, these out withon copper stay on the feeder, have off that's we aluminum term doing jobs use. start piece? we process, the copper the at don't COMEX $X.XX throughout they the which at quote Today, come really project. the and and the March with

know, I starts in should you and the $X.XX, you $X.XX the of $X.XX, $X.XX the As past, then get get, on versus you don't we conductor sizes. aluminum larger know, aluminum copper, about copper discussion some use

And if quoting the good that a of market go one to the throughout. the to copper, we stay That's sign. so case in not discussion copper If today. in there's other. from will, That's start lot we you valuation, another

C type on board not So on across an the They what inventory scenario. products A, the it aluminum you the items categories. product it's are even deeper get piece It's can't aluminum the an deal. B, is, though not on is that the situation,

not Brad, lot this push, So there, the switch a going there's or at point. the to we on but substitute are seeing

last had me. one And one Super. that I to occurred just

a So out a just that freight obviously is costs headwind underneath mean from I surprised who crawled anybody has rock. were

good share, rates fill reasonably mean, end Encore day, being So the customer service, it someone the of At at demand what the the is is take the your mean, Encore, and and of I freight a headwind end quarter not. on superior to market based it for recipe that's day said being I tight, is. for in

I is, the you Well, what but to am to best first the yes. to answer supposed said only quarter, speak

forward quarter. looking guys. your for good, Thanks Have Thanks well, time. second the a to

you Brad. Thank

care Take Brad.

And would we turn I the to this for any call remarks. at time. your closing host further have questions back no like to

again in appreciate and talking Thank you to call quarter. everyone you. we forward look just next who we Well, joined to the

you. today's gentlemen, disconnect. and conference. Thank concludes now for you and Ladies Thank may this participating you