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Encore Wire (WIRE)

Participants
Daniel Jones Chairman, President and Chief Executive Officer
Frank Bilban Chief Financial Officer
Brent Thielman D.A. Davidson
Julio Romero Sidoti & Company
Bill Baldwin Baldwin Anthony
Call transcript
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Operator

Welcome to the Encore Wire First Quarter Earnings Conference Call. My name is Jennie and I will be your operator for today’s call. [Operator Instructions] Please note that this conference is being recorded. I will now turn the call over to Daniel Jones, Chairman, President and CEO. Mr. begin. may you Jones,

Daniel Jones

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

Jennie of Daniel Chairman am Frank Bilban, me stated, President, is As and CFO. CEO this Jones, morning of Wire. Encore the Board our And with the I

increased line volumes. first the versus Margins in quarter quarter The results top by in with Net XXXX. was higher of in XXXX Unit some quarter the key quarter comparisons driven to unit the note. versus the comparisons of year. the primarily the are pleased of improved in last are XX.X% We first first of dollars There significantly quarter increased volumes XXXX sales first our increased also improved XXXX. XXXX. and first quarter of XXXX items first versus

on in of given quarter first versus earnings selling copper spread on expansion X.X% One the average hope the the quarter conditions, slightly quarter markets activities quarter purchased internal sold the somewhat unusual the to pricing XXXX comparison. We cost sold industry the decreased highly is is believe comparison of also. sequential of copper first X.X% management which not of of while for and market XXXX to quarter quarter increased as XXXX sequential appear price first down strong. rest XXXX, in quarter decreased price believe while of dampened in wire spread in happened versus significant odd comparison. the the first contributed quarter our purchased of some weather, decreasing improved is between any The end of dependent first metrics year due of copper at were wire but the the price by XXXX XXXX. copper that pricing Margins, during of competitors the X.X% in which and We the period. that We first in decreasing key volumes this pressure raw of the a last X.X% The to the first turnover are copper average market larger spread to quarter X.X%. our the in in winter rough settles of two our competitive

enhance the order activity. fill is We expected construction there for continue until a imports customers our the XXXX government’s believe of U.S. good driven quarter is preliminary The of $X.X our the also strong appears customers, contractor affected from year. position. million expense in first the of quarterly a as we comparison. which investigations results we and aluminum April and price The gears, compensation stock XXXX, in are of projects construction XXX.XX%. ongoing $XXX,XXX the accounting The increased on primarily rights. U.S. the performance stock expense on our the duty ranging superior sales X.X% Shifting our our and XXXX, believe first competitive countervailing in Department Commerce discussions year. XXXX rates end results with antidumping countervailing U.S. China not their by Based economy the for at sequential from The represented outlook on of final imposed laws. our distributor remedy laws, stock rates compensation enforce quarter to the wire increased on XX.XX% rights stock X, under versus to U.S. rest aluminum were duties mark-to-market appreciation driving of trade net quarter first by to the remedy of continue the wire On strong market, net

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

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

Frank Bilban

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

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

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

sheet balance Our strong. remains

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

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

the cash another conclusion will call the also We after available dividend conference replay for be declared quarter. of This this session. during

visit call our XXXXXXX floor enter reference over turn If conference our the CEO. I XXX-XXX-XXXX Daniel replay, taped Jones, the and Chairman, you the pound now Daniel? number the wish website. hear to and you sign and President to will can or

Daniel Jones

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

Operator

have we question And a from Instructions] [Operator you. Thank Brent from D.A. Davidson. Thielman

Brent Thielman

Thanks. morning. Good

Daniel Jones

Brent. Hi,

Brent Thielman

things at kind there there Daniel, And periods part I distinct quarter, that the guess happen where behavior that two were normalizing? issues it sort indication related to kind competition then second were all of saw in of or of changes quarter the in end you by of the did the was any pricing once? separate of

Daniel Jones

a tough several the but are behind and and in good what going was think are answer guys it’s call, bigger or couple to the and and that but at disruptive, whatever, mean that forward. years there us snake looking I I it’s last for some were activity a on things gone occurred, Brent, through It’s a that like past things it’s seen disruptive them of rock we a not we was over to have they the uncommon. public

Brent Thielman

Okay. the demand of kind had when guess of seen way was quickly? the it that mean pretty to things the in these And my have sort it you correct I past, second and I as seen has question, industry you Daniel, had that tended well, the presume

Daniel Jones

own Yes. The the involved fly have super with got guess odd wall here. Brent a stuff I to timing, part, on I I like on we am our but be – not going would but was occasionally, the

disruption going of respect volatility completely on to making, We the the had the they So mean that it of hey, material but they the and first timing cost raw mentioned circumstances they in respect what should, favor I will you for be we normal I do. in of and it think times everything to And it do. a the we what did the market, decisions I the got they of along just be of do as timing market, side, the forward. standpoint going as that with it, in quarter the got some from was were but saw to I in will that some better they better

Brent Thielman

really mean sort this mentioned it are Okay. I that but any strong is guess or parcels mean volume broad-based? I driving quarter, the was of And weather, of I country that you your pretty

Daniel Jones

and rains in we job a in with floods was those the weather truckloads And that and a hard events X times It dry sun were There that pretty routine or pretty the ice were have sites I dampening and It significant then of too. comes whatever. out it effect. a and some out. shipping here go, some some into positive. a roll some plus, week at again and were a are but with you it areas very jobs mean we the things material some and and falls did not there hit bottom and we locations you out, situations on had country couple get involved

Brent Thielman

That’s pass great. I Thank will you. on. it

Daniel Jones

Brent. sir. Yes, Thanks,

Operator

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

Julio Romero

Hi, good morning.

can just So much without spreads that higher how competitor pressure, the effect quarter driven to the effect? try in you do your could gone have pricing maybe you of think quantify

Daniel Jones

good than I quantify, to copper a That’s significant idea. the anything. any really it again question, have quarter. a don’t timing would We I because more I of But think. don’t volatility was in mean, know, had I scenario

I and was something think $X. almost the about low was $X.XX the high

the So worth we of volatility had quarter. in $X.XX

was was the I can I in mean bias to tell that adverse it trying events. some Julio. to timing, the issues up the stated really don’t as it, demand the idea. with you, of kind or maybe had in competitive just for type quantify know of good, I no on how I the press trend release, marketplace was match So copper. copper that have competitively underlying along increased with on there some it pricing, good, the cost were of going an increase timing was effect

it really hard say don’t what know to – I would it So, be. it’s what would

Julio Romero

Okay, shipments in XQ. that’s had affected in fair. a said, you but shipments sequential well, had weather you you as year in pretty as nice Last XQ jump

the Just the in constraints volume quarters? think couple industry, how about understanding next the should growth we of for labor

Daniel Jones

a getting will out XX can’t XX, through years of are – can’t labor remember good next there X is we XX on weren’t that But that’s topic. applicants or I Yes, type hiring then great a month or for XX, sometimes X and maybe XX. and me a those XX or remember, people. year issues, day going X mean I we’re clearly XX we be I

national almost dealing and as paper news as able to far trying – just in different being with but as So, up day in pass appropriate the get the day past tightness issues qualified as about the through it’s It’s on obviously gone far Encore There pretty and able is every to people qualify limited Dallas it. tests, tight. and to labor. Wire. and we’ll We’ve every not through something pick

pretty got aggressive some We programs. our things are training on We’ve doing own.

our that poach where makes people stay people in do and we’re of whatever kind spots and the to right stretching can guardrails. people piece sense right own we’re thin got growing and somebody the time and the the we’re we trying are is think bit, here in of the We’re and a to that the we’ve and growing inside little most But day, of areas a working market. lot pretty of it rob it good new get them from end of I

that this cultivate to to and actually convince new work. ways a great We’re going to to is have to and find continue people grow place

Julio Romero

one Okay. And from more then just me.

has time driven how and work been of data demand more talked mix type Has hiring type shift over the work. You’ve of that by of of center end about customer a kind the why of the spread sustainable you? part the over that become delivery growth has been more reason differentiator itself does customer to long-term? being a lend more for And that of little end

Daniel Jones

is and emphasis through deliver. that answer yes, the without needs delivery of try all been definitely those always the of breaking for to you be on into going to where we different that deeper, And delivery. a lot itself. lot performance and something our there’s and focus success We make growth a industry much too easy within have on always to it the cycles has in been of The detail, an reasons, a little down is certain and went question but history different the economy things,

that this types next performances being One QX when QX of the those in of the changed handled. quote the or job that call, as has definitely today next of have demands way there, things and it we is or piece the that a the you see

it Phase price. try appropriately Last large, other. X to service customer price building might come, phase on that X, Phase or there’s things didn’t focus X for We comes Phase If more phases on be and X the want thing is whatever to to delivery. and the down we talk about the you or to

the have a more So, the past. it the service in really delivery is market they more than of appreciates little

quarter and that’s for ‘XX this sure. only to year, first of back heightened going been So,

conversations so really is piece want more comments don’t pricing on it to to with delivery and which gone So, you I’ve I’m – trying the down that cut than about before that. to price, and be to route supposed supersensitive too

we’re So, that’s at. where

Julio Romero

Appreciate hop back Thank the queue. you. I’ll answer. into

Daniel Jones

Julio. Thanks, bet. You

Frank Bilban

Julio. Thanks,

Operator

from Anthony. question next Our Baldwin from Bill Baldwin comes

Bill Baldwin

morning. Good

Daniel Jones

Hey Bill.

Frank Bilban

Hi.

Bill Baldwin

quarter? was LIFO in what of impact Frank, Couple housekeeping questions the here, the

Frank Bilban

LIFO in of cost sales. the quarter a addition to million $X.X was charge or

Bill Baldwin

expenditures capital Okay. And were what quarter? your in the

Frank Bilban

the quarter for was $XX.X million. CapEx

Bill Baldwin

you forecast a And for Okay. CapEx? do the now have right year for

Frank Bilban

new which in have – but The it before has we have forecast million, said present million, he plan. $XX discussions call is so with that to may same potentially – yes, change sir. targeting is current The his subject and this after $XX meetings more the which to Daniel them million $XX Board of

Bill Baldwin

Okay.

aluminum that positive a here should Regarding we in Daniel? duties spreads that the forward, implemented going countervailing were April, expect have to impact on

Daniel Jones

time. of don’t know that going the short that be in but read a a with think had market side is me, today there’ll already Bill, there aluminum have yes. in seen just There’s stop-and-start can aluminum will answer bit that lot scenario on of I yes. that question publicly, but and a is only Venezuelan that to issues you the that, We’ve definitely I in stokes improvement market lot on direct suppliers your a answer area. be quite over going there’s bullish that

Bill Baldwin

of in at fairly show of demand your price the for favorable period aluminum that see up a copper relation aluminum for more in over not we However, quickly time? or aluminum. of or become Does to all price

Daniel Jones

Encore substitution the in copper new it for it over prefer demand It’s would There referring Well, expensive, aluminum doesn’t to the We that’s a will and stage the certain of and so the into that that, a not for That’s versa. question debated aluminum on of be. copper. there’s aluminum what been depending way what to piece consistently enter gets Wire when cost copper amount, But this it substitution demand copper. vice involved the on really question gets the When to between in scenario, copper early time. is does would conversation the continually it as you’re about is. the more of normally, that in increase the the if increase each, up. comes that prefer costs other ship no is with piece necessarily The beyond and a relationship the to copper dollar time. just but sell aluminum for – quote conversation, substitute pretty of take are most expensive

And so sell the it’s overall, tightness the prefer we’re definitely ship is aluminum it’s up copper, in that aluminum where substitute with often. not. coming conversation. than coming up customers Today, that, market but in in it, there are more it, But happy and in really the situations not really today, it a to it’s as not for

Bill Baldwin

Okay.

the point expensive guess that aluminum the as little While bit. relation But wouldn’t really this and a weakened just at describe quarter, bit kind copper, in it’s been at you prices past as look in in times? to where being the I we copper in indicated a at you increased of time little

Daniel Jones

Right. does during copper When don’t performance QX, the that significant inside other That comes production, a the at quarter. in solid when a fantastic first you occur, hit I quarters, volatility see the that thing I look the things quarter had the sales in to be performance that of folks very, the said and we $X.XX you versus that earlier, swing quarter in and our of put but if that’s department, the through XX our piece. any quarter. that days. specifically which other to are are first at in want looking good overlooked quarter considered, $X.XX up whatever, the $X.XX All we you aluminum is the very pretty get volatility to one it the – had, numbers

Frank Bilban

toes on toes, that right, situation. kind that’s on I top on And of is your in everybody mean, their

Daniel Jones

for that’s sure. not It’s for sissies,

Bill Baldwin

no. No,

Frank Bilban

adjustment rights to QX, that’s on And due QX the in a just in the and the build of had appreciation stock. good fact stock performance the that top increase we of out $X.XXX over

that. like to we’d see QX In So, –

Bill Baldwin

or earnings, but affect cash reported – your affect flow your That Right.

Daniel Jones

Right.

Frank Bilban

Yes.

Daniel Jones

Exactly.

Frank Bilban

it. That’s

Bill Baldwin

of number. for chemical relief certainly, up affect the that Yes, in some lower what those right. talking are in that the pay these about wondered quarter I PVC business? I in reported of shows you see just companies does products? Did at Right, you products. some your within all raise if any know the for pricing the

Daniel Jones

Yes. I CDI, flat. The our was the use a mean, yes, adjustment about bit. basically what little flat. rigid. piece you was quarter you, have we Benzene plasticizer The as know, first about flat. up was not in PVC was of for product, piece nylon The equation flexible

pure around of just So, it quarter. in volatility conversation – the the a is copper the cost really real from standpoint, a material raw and

Bill Baldwin

So, okay. the copper,

Daniel Jones

Yes.

said, is in days, both $X.XX So, something, Yes. up ways like I and down. $X almost to the XX by way,

Bill Baldwin

Daniel, is improving Is over pretty percent of under that the the continue productivity you and made as much the relatively investments labor the equipment. of to keeping years, sales overhead your and control? make a –

Daniel Jones

Yes, – I mean

Bill Baldwin

I is the with your I least at be have your increasing got going like believe got labor looks labor overhead the really labor to market, noted sales, but had last some, a of years? percent as few overall costs and not it to up over

Daniel Jones

Yes things think doing question. And it’s constantly sir, we I as great are would. a and anybody

answer back the – constantly point I really levels that – though been be over up We Again, of or next or – in this times. to our and still you side you in the gone do is actually May, service production our years the looking And X.XXX I’ve match because processing and that’s talked you to production the our But and month inventory plant productivity a got the lot you XX lunch. real to have And you’ve market. a times who significant unbelievable this. floor. call. it’s in in standpoint improvement or really But real I But and the and what forth you this the the make floor. have to answer on the this X.XX But your maintain month our it I’ve and the at over we’ve point roster a up turn improving careful to never industry But position, in in on for eats all whatever. of rate you the on make low-cost a We’re pick on we plant on up floor, when we prices us. about and to got fill and still things. better XX stay just up day manner like lot shop said, past

some that’s overlooked you and just one there’s should of So, be things that them. do not

that I’m brought up. glad you So,

Bill Baldwin

you. Absolutely. for job, success and performance, the Well, good Good of rest thank year. best of

Daniel Jones

sir. Thanks questions. for Yes, the

Frank Bilban

See you, Dan.

Operator

further We have questions no at this time.

Daniel Jones

you’ve and how the appreciate look Well, call quarter. on and guys forward participation seeing Jennie, the appreciate call to next handled the you and we the questions

Operator

concludes gentlemen, today’s conference. Thank you you. and for Thank Ladies this participating.

disconnect. now may You