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Encore Wire (WIRE)

Participants
Daniel Jones President, Chairman & CEO
Frank Bilban CFO
Julio Romero Sidoti & Company
Zane Karimi D.A. Davidson
Bill Baldwin Baldwin Anthony Securities
Brad Evans Heartland Advisors
Call transcript
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Operator

Good morning and welcome to the Encore Wire Second Quarter Earnings Conference Call. My name is Zenera [ph] and I will be the 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 turn the to Mr. call over will now President and Chairman, Jones, Daniel CEO. Mr. may you Jones, begin.

Daniel Jones

quarterly Thank you, to Corporation welcome and gentlemen call. Zenera, and good the morning, Encore ladies and conference Wire

am As Board is the Wire; Frank Daniel Zenera our Encore state, Jones, President, Financial Chairman of this CEO me with Chief the and Bilban, of and morning I Officer.

comparison. dollars to rising our primarily second the of in six-month XXXX Unit quarter and was significantly quarter XX.X% volumes pound the increased comparisons year-to-date by shipped. the both We prices. note. both the six and items the second top months raw of key sales in are There improved in pleased quarterly some higher material bounced XXXX the results comparisons back XXXX, increased to first quarterly in versus with in Margins of line Net are XXXX. copper copper increased on strongly and driven XXXX versus XXXX. of The quarter

of increased In of cost the spread quarter copper of sold of purchase XX.X% X.X% versus comparison. in versus increased declining XX.X% of The in between spread average sold wires on earnings sequential on earnings of quarter the the aluminum the selling an the dollar purchases spreads second XXXX on percentage while to we and strong average to price of including X.X% copper continued quarter of The XX.X%. quarterly basis. purchased the wire increase the was wires nominal increased key in quarter six-month our on sales XXXX. The the change is $X.XX dollar the second experience expanded a XXXX comparison and of while quarter driven is primarily price second on which the positive copper in quarter the XXXX, in net metrics higher rebounding due sales the One as first nominal expense raw any on of compensation $X.XX stock of given by copper sequential of change second XXXX, unit spread China. The XX.X% price amount sales represented from in copper XX.X% therefore in pressure the period. an versus to increased in a XXXX quarter XXXX, a quarter on variance second second competition of import our the margins

redetermined continue wire take Remedy We to will Trade continue aluminum appears to actions the is and to competitive rates customers construction activity based warranted. enhance U.S. discussions enforce The fill U.S. regarding we a Laws conditions believe that if and action and believe outlook we'll strong rights our for We position. their superior there on order further construction under with projects our monitor is forward. going our as is customers, be economy our good to

and the come believe to the rates associates electrical is quick in impressive clearly employees for thank we our orders the fill can our best and coast performance on tremendous count As from We deliveries from ensure distributors coast. people industry. in our their efforts. to have We contractors,

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

Frank Bilban

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

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

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

remains Our strong. sheet very balance

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

end In the addition, had at of we quarter. of the cash million $XXX

also We call We'd conference dividend during cash the be will after like the quarter. declared replay that know the another you session. this for conclusion of available to

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

Daniel Jones

you, Thank Frank.

believe we and quarter past the now forward. the in well well-positioned performed Encore questions highlighted, take go we from As to audience. we're We'll

Operator

Thank you.

session. ahead, question-and-answer question [Operator the Our comes go from is your begin line now open. Instructions] Julio first will Romero. We Please

Julio Romero

Good Dan. Hey. Frank, morning, good morning,

So about third expect seen and go-forward pricing at just the you copper comment spreads? of $X.XX spreads Can we've here trending on How can prices the through affecting quarter. industry to month how $X.XX we to how first that's basis? drop you the see least

Daniel Jones

well it to timing of or turns product. and thing -- move Also one potentially the some trend it volatility sent way for point couldn't bit upside would We Typically little distribution, there second the buy point. and But to a business bias way goes pretty bit. happens. that comment last business other. the or pound a the And a If the as depending the there a occurs QX. the one in step in volume the they But at some the accepted does overall, same was I price on drop have you the I way is At a this based in the and at cycle market and same we able attempts me, the it little on speak so the how that The industry you do QX this, That's buying of try tail the the in I ahead up volatility to third were volatility but downside, have any the this per job typically or us, the really QX. on don't other, there's demands, specific drop thing detail, the of trend but that there. Unfortunately, the great can will question. June. for move numbers within contractor's on but in at still timing Julio, bias the call, pretty toward volume drop QX to able to when what after doing way that saw XX means in catch up get were it quarter the is is the of We exactly month QX on still well end the of years a and throughout if is. increases of or site. front on and it down. the is out $X.XX anchor on the saw of the about quarter $X.XX

going to and advantage forward So in is QX going good. of those opportunities take we're business

Julio Romero

Got QX it. about And here. just thinking

of coming spreads copper You've to regards comp got in a as well the up terms last tough year in of pricing. third here quarter as

copper given it to that Just to quarter-to-date, is accretion assume volume margin going fair is in the drop come real from spreads any leverage?

Daniel Jones

Three in lot four You ifs. that. know, of a involved it's ifs or

Julio Romero

Sure.

Daniel Jones

as in they speak -- scene, folks in on at I'm of bottom pretty is pretty the off, the or that or indexed but QX bottom the much in a business to on rate is kind it the too hasn't QX the point of Again, demand the have the to holding jump is out have watching to decent the buying on not -- the or supposed that cycle, it's good. waiting missing material, whatever copper for some so market, attitude

of on effect, now. we from So the bit that less if cycle going quite see has because delivery, to calendar an this certainly makes year volatility quote shortened has sense, that a that and right

Julio Romero

And helpful. maybe at think a and categories. here. on then got service last you CapEx looking in That's updates lastly, any things spend? just nice Is you've quarter cash it. Got mentioned offering the I were balance there you

cash the in what deployment? any and there maybe can Just update we regards when expect to

Daniel Jones

the copper have be just the project as the as as with has eye because to we're not anything. good what other haven't certainly cash move way one doing important a effect on on announced watching a Again, but or continue is we to we a pretty we to our specific and timing too bit little anything, cash grow try

Julio, $XX projecting news We some as $XX as back kind So -- anyway, unfolds, customer not the or guessing that's little a anything in demand to for with of I'm get million that a project, likely have know period. spend you in going as been we've we'll I we're for year we announce house was million. this next an We're but and I'd rather and come over now right big But as the as spend doing continue things the sitting on know, far most it between whatever. unfolds, -- announcing to $XX year don't you some if this as as will specifically is you. we frankly million sit, things call. announcement and wait about and to bit

Julio Romero

earlier. That's helpful. what quarter? sorry if the And CapEx missed in just then the it was lastly, spend I'm I

Frank Bilban

we million. In $XX.X [ph] quarter, the spent

Julio Romero

all That's it. I have. Got

Frank Bilban

For $XX.X the make year-to-date, million, would that Julio.

Julio Romero

for lot, Thanks questions. taking my Got a it. Thanks guys.

Daniel Jones

it. appreciate We

Operator

is next Zane Our question from your line comes open. Please go ahead, Karimi.

Zane Karimi

puts the freight how are SG&A if just and much were give wondering could up? this that, within on within if and they takes was us I captured some were costs color quarter what you

Daniel Jones

for SG&A. QX QX QX? to to it sequentially QX or Okay. Are comparing just reference you

Zane Karimi

QX to QX.

Daniel Jones

companies Freight right, of regulations sales to QX. X.X%, new well. and X.X%. the trucking year issues as nationwide other industry in of are shortage truckers last we've up, a so the is the Diesel about up are is QX that and lot of 'XX All in percent talked as QX with I'm sure was trucking some it it's the a commence plaguing about. quarter all This talking in with it your of

a cost a did has quarter both on basis. with externally freight Daniel people per that and internally our However, and making sequential down been push big come pound of

tend give the sales. internally. Commissions, the component down but two itself there's appreciation and require expense. quarter in Stock the freight everything it's the and control of G&A dollar people liability rules at so, for really was primary million that mark market 'XX biggest comp to end commission. G&A of stock the most here higher because that doing and this was you're just this each flat us value we was for that. X.X% expense at here, X.X%, compensation up of driver Freight We end to of GAAP to sales: the QX, are it doing rights. to was the at QX. $X market was higher year, stock study, million were the we stock 'XX at the than state So the winds the commissions example so components was The stock and at $X.X end of of of quarter,

take credit to that So here we on got QX. basis in in some

Zane Karimi

away asked for that. minor then you We a volumes by And volumes, QX? slower Thank on thought this did pivot just would there up, you. a about Got taking we talking you from based given volumes have guys quarter? walk be

Daniel Jones

question sure there pass the where competitors for Good to of we volume. some some opportunities Zane. not were coming. on Yes, were chose There that -- I'm the on

of the they of forces come bump had earlier end. two, mid-point at cures toward tailwind one in price the it was you've earlier, some a made things really whatever, the to little they quarter. most that than back of and quite toward copper us quarter the likely of day tail in price lackey There's the the ills. in think a with bit basically times, not of know, a the But few, downs or little the are two on I a market and quarter, sheets Last that I of more and a but of competitors and copper in was the mistake quotes indicated or a part there's and of as market a little but confusion much. there before, lot the as if so as part discipline, ups the few early-to-mid quarter of you kind initiated but a end lot of day heard good from out down

Zane Karimi

moving you one that. Thank I see do in the forward? most then for And if you What regions final may. activity

Daniel Jones

Really, year. this is activity. doing time up There's others, coast. are versus it's Europe. but not pockets last quite to geographically in bit U.S. job well for a and Summer typically month that speaking, are a coast vacation August as is months, of few areas most July This as

has basis in a good a stock the to there's for going Currently data with in are certain But good, a business that West is see those getting really centers coast our is job quite time you some are most paid been both are Geographically, geographic then on areas down as in, industrial, sign has running folks really been residential, those East a on good, board, So to the middle has most not bit. for by looking a plants. competitors spot. part, lot influence and move of the but purchase which the Don't for particular for pretty up Coast their distribution, jobs, much centers do plants, picked is commercial, map of good one the then wouldn't any predict. solid. the timing copper across dead any if orders the we're on Coast is execution and up that the always to know, the world-wide area real we're numbers, running and our going we're somewhere data obviously of business and

really earlier, stated I I is but it's wouldn't you good. great, As good. it's tell business

Zane Karimi

Great. back in the I'll Thank very today. you time for queue. jump much

Daniel Jones

the call. for Thanks

Frank Bilban

Zane. Thanks,

Operator

Thank you.

Baldwin. your question go is line is Please next from Bill Our ahead, open.

Bill Baldwin

Frank. and you. Thank Good Dan morning,

Daniel Jones

Good morning, Bill.

Frank Bilban

Bill. Hey,

Bill Baldwin

Hard work paying off.

Daniel Jones

sir. Yes,

Bill Baldwin

company? running you Can of your what maintenance generally idea now give some CapEx the at is

Daniel Jones

Bill. Well, it's of guess, a a bit

at but say have expansions not the a least at If you to for a $XX we'd to over that's five-year and maintain here freeze little years really anything place some with million fair million plants; running were some year. to do that about could $XX barometer least, spend a million would I'd right in period be extra to to say a for us years $XX upgrade and there. little and in At be less, I is $XX and that now could depreciation million a

Bill Baldwin

upside production wire the Okay. forward? to Do copper and building in Personally you both aluminum in have you configured, do you wire increase have the going production? your building ability

Daniel Jones

sir. Yes,

orders in, some or given we'd We the already X-X and orders we that running mix know some if without built, the based come days not numbers, exact love we're have so basically you as may on are run, may folks. product sure actually machinery we

Bill Baldwin

the level Okay, from sounds pretty second coming low-cost pressure that -- a Was it's similar the like of the first for of to the of it in in this just were very timing Was saw the good. we building happen. Well, level discounting import? wire matter of all market in much aluminum quarter as quarter? it

Daniel Jones

have of here, On a remedies of mind to whining kind options comparative industry. whatever. the end, the action into remedies looking super and and we're -- the all interest a assessing clearly and But we're might our were options same what basis, and warranted. clear, for back, that topic time cheaters be be first it's we're the not the to take are anything. [indiscernible]. toward words those coming as deal things Again, a it's the sitting whichever publicly conversations The be. also hot kind nasty, quarters are in But after going the trying unfold, those And our assessing is you, topic what and are. Bill, is and two to what but interim, our I'm at about

Bill Baldwin

they Dan? from help resolution? to over trying on to come any Are this, head getting you Are understand. I the commerce some

Daniel Jones

short is answer The yes.

Bill Baldwin

good. very Okay,

your for much very time. you thank well, Okay,

Daniel Jones

the Appreciate you. Thank Bill. support. bet, You

Operator

is our your you. Thank Please line from Brad comes next go question Evans. And open. ahead,

Brad Evans

some the strong? marry the you volume up quarter marketplace Daniel, that relatively based market pent interpret reported top; comments that with you you the upon you exited think can how would describe the being in second demand with as that on you year-over-year growth from your I

Daniel Jones

little May what a and Yes, a can swing quite I June said, they pound volatility the disruption actually causes came April bit mean and I fair. as bit of somewhat and that was and the that's intra-June on [ph]. perceived were be and little in $X.XX Like of in were marketplace. there per chaos was there comax

get and or because three copper for then and three increase new For and out the to the bias on days what way. example, days wait was next process copper you you a two at the business [ph] and or have drops or sheet and up for advised the then other you'll sit you put come two in

because reported it it's it some pretty that the hits is could decent even issues, don't like So really you. have a don't activity, forward transportation level, have demand standalone for other There's in country well. are in Texas the good as listen, around industry it's will, warm challenges The at it getting industry bit of you moving -- a had time sites what think shipped you really type point going and you have common and the more some a quarter. and stuff little paper demand the lot and some disruptive. issues if it's because this a getting any really got our are what not be transportation QX, Job have of I are things funnels and if obviously on we some we you out going has there -- than product, into have activity, But along. that along all in good just being would conversation now labor whether other that hey,

of are paying in a service has Our bit. little order energy, to time, just We that on us it, off time on the we getting like customers type quote purchase levels. the timeframe time, like feed pressure we they're of of shrunken paid

we'll XX, anything All of QX we of June much ended stop going June XX. activity, to just call, can't energy and on that kind QX are business, things a but don't feel the those our because speak I too stuff, like on. all on quarter

Brad Evans

color into of dovetailed question kind that my you actually. next appreciate and I

demand the been as quarter. the pricing input first and both quarter second look quite You pricing, in both volatility the copper and impressive as has year-to-date and well at spread with the

factors there's in already of area because as great mentioned, it material input other articulated, mean, been money lot to a -- this a [ph] be when cost, part answered it faster be that got market but I maybe understanding now rising on attention have for business time of my a that bit lot lot cost I of already copper we've of moving in would trucking pieces there your as raw a labor volatility lose pay of to discussed. central and then not could you before, here to pretty a deal the fact fashion. guess you right in just folks probably a And moving said easy location, little auger amplify your strengths. a that are question, are with you as volatile the real you've You has price this volatility plays diesel you in there basis, into to

Daniel Jones

think and by so that's accident. We not

As mentioned the up, little is the mentioned, volatility are and you when in there, everything whatever a you and cost you you see see up here all copper.

too started I or get excited. and you just around [ph] bounced January can't think we so, off million around $XXX

we I in that runs time building far the with but and we business have it longer, don't not or the get most point people downside as correlate as you the at that The things. And copper price or these past, in the doing, dependent those thinking panic, the other, with compete go I history, they're can't one record, a $X.XX, detail the their the want screen. track pretend you I as a with it's look and and about $X.XX it if can necessarily or doesn't we've some see it of on saying way you thinks that there all down dealt look not the go not with is. what We because get I we in volatility, on Folks is copper really -- into you lower you people everybody can sure we -- in know with on average, on this copper do. they're of to are We day wire any at I But way don't is the call wire. of to do too all in to doing. the what that back I'm building topsy-turvy a a I'm other the trend upside starts and we're years in no what have it not and things On industry turns. items sell whatever, comfortable we categorically. is This if prepared we comments, do, because are attorneys moving not bias best stated Brad. across my the good. what have then know All do, -- working question what it's bunch us, the here of the to things hard as premium volatility not gauge doing wire. on the and but possible. we've got supposed the but as month industry, if they this good live of if good. We're But service those and business to available month. charging need play job within those right and a over now demand doing, are sites, little there when It's love delivery potentially it's running is is bit what product for I'd again, regardless [ph] copper in strong building right a now Folks the and again, is and business

Brad Evans

the of that terms How of advantage Daniel, is -- today? that amplify appreciate color. in I create trucking with marketplace? big just tight Encore just how load could market in the for an market you does the truck is

Daniel Jones

day material our What available. the every is of each loads happens, market or this there truck there truckload are market XX show Dallas alone, shipment goal. a that's is XX that statistical to evidence for in just In

that industry-type haul. and market really, vacuum. Since a can't Texas, in there that You couple seasonal that South January, the Trucks all around lot wait in materials with there's not industry. at -- to to trucking the get of influences for out example, produce there's trucks a down came moved trucking that to for country. whatever need effect be of things have Rules, enough changed the and in just regulations,

and necessarily So for lack trucks it a basis you expensive, a It's people carriers availability huge of our manufacture their of ordering best and days treat are vendors the companies have attempt and we training, what into carriers a those is throw right on tires that ordering much week at as we because as trailers, per expense the the it's not drivers gets itself. but our then on don't chaotic them. trailers, times -- Companies a trucks to equipment and how as mistreat just mile working more competition their and seven we're including issue can our trucking getting are is and driver and imagine you, little services crazy approach here culture now.

the we obviously value, not are itself on want the if and of delivered. but the step get the We truck demanding is important doesn't delivery rate

of that, each more it's few probably We trucks all in could day. tight. load So a

the that X% think not effect a week, busy. We're between the comes this but the XX%, that happened. for weekends. put days more XX doing of only seems and now staying next to push company the to it day not it's but somewhere on side, a into that's it goes, just battle a in have would more power seven but town something falls while we this which hours trucks because that on little the to a and and one each I We've and day been fighting a day, kind we're loading be percentage materials

Brad Evans

on sounds the like now in trucking is important It marketplace. spread right maintaining discipline Appreciate copper as that. tightness some that prices the input the on as almost

Daniel. lot, different challenge, Thanks a it's I a it's appreciate it. a While profitability. probably

Daniel Jones

Thanks, Good great bet. questions. You and point Brad.

Operator

question your And Please Romero. our open. you. go is from line comes Julio ahead, last Thank

Julio Romero

the had We Prysmian aluminum a cable close I follow-up June. general on back side. in on saw quick here the

on impact? pricing rational customers to can if industry that they your become comment in regards firmer what of we from industry that you're impact your Just flow in to does assume pricing, through when can a you And hearing business?

Daniel Jones

question, of loaded a that's Boy, ones. good a bunch

Julio Romero

Yes.

Daniel Jones

stuff some from been When news, going are get don't question. has they to they a not tariffs, the obvious dumped, their out, together? anyone don't about discussions perspective, that together, it being whatever. to what have an I extent singling there know industry That's great aluminum but in

if If wire they bringing affected of also here is were with that. assessed is part or that distributing being big that's category way the in Aluminum in in and All cheaters addressed. and has category and other been and addressed. the assisting the building that. of our a one Everyone being industry they're again manufacturing the here, dumping, of of

that's guilty not or categorically, where you one. going I'm that one So it's even at. one tell particular manufacturer company other is other, specifically to to the the really over

what always others I and haven't. Julio an you think don't I Cable industry, what I mentioned is own whatever, at commerce has [ph] -- Jun and news remedies our fill remedies so insight blank. competitor I well-documented Prysmian are They've consider imported when and opinion enough competitor, to we're I coming on as appropriate. done the unfair things on you, [indiscernible] been is the in that can't -- have been something department and for has I'm well-reported our working good is in to a tell a have But stuff The speak market and be that most good in as in trade in sure my the working the associations, that's and assessing to. part,

industry. similar happening the to in what's they're probably overall think I

got You best that's seek today, you conditions the react and can I to remedies at. think that you've you as to condition some to in other want and we're the it's in market get

Julio Romero

Got color. it. Appreciate Dan. the Thanks,

Daniel Jones

Thanks, bet. You Julio.

Operator

you. Thank

We this time. further no have at audio questions

Daniel Jones

call you us. Thank paneling the for Zenera. for Okay,

quarter. really it to went and to look forward I well talking you think and seeing you folks guys I next

Operator

you participating. and Thank today's thank you you, This for Daniel, and gentlemen. Thank concludes ladies conference.

disconnect. now may You