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Encore Wire (WIRE)

Participants
Daniel Jones Chairman, President and CEO
Frank Bilban CFO
Julio Romero Sidoti & Company
Zane Karimi D.A. Davidson & Company
Tom Brashear Preston Capital Management
Bill Baldwin Baldwin Anthony
Kerry Rigdon Mcpherson & Mayberry Partners
Steve Garvin Sandhill Capital Partners
Call transcript
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Operator

Welcome to the Encore Wire Third Quarter Earnings Conference Call. My name is Cheryl 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] Please note that this conference call is being recorded. the to turn President Jones, now CEO. and will call Daniel over Chairman I begin. may you Sir,

Daniel Jones

Thank Good conference Cheryl. the you, And Encore welcome gentlemen Eire to and Corporation quarterly call. morning ladies and

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

to increased There X.X% Our in date of note. nine months comparison. quarter, in comparisons in the business the of third to volumes and quarter remains strong third items September of X% the XXXX as to month quarter XXXX. in XXXX Copper unit were XX. XXXX, third quarter year of evidenced nine increased an increase Unit key the third by volumes our the results versus some ended

increase wire, achieved orders third pricing restrained Despite the in we passed volume third quarter not our and unit market margins XXXX quarter building construction XXXX. of though was demand margin on meet even for were strong targets. versus did the that competitive The by US

margins fell in year's in last above. versus first pressure profit quarter competitive the with and the prices, months, third copper nine drop noted along concert with Gross

to price is purchased and our key spread between given the period. the any in the of cost of One of metrics sold wire copper copper earnings the raw

copper third XXXX the of XXXX decreased The decreased copper of third of also X.X% X.X%. comparison. the price contracted spread, of quarter of in versus decreasing while wire copper average X% while spread the sequential comparison. spread purchased versus copper as decreased quarter decreased a selling X% sold third price X.X% The The the average XXXX in in nine the XXXX third quarter X% the of quarter the on month quarter

were It highest over should in decade. the XXXX third spreads of noted the be a in quarter the that

quarter of support sales margin represented XXXX, under However, US rights laws. believe third that enforce to our in X.X% aluminum net of can continue levels. currently markets which our end In the the the those remedy we strong wire trade we

XXth and duty Department the ranging cable XXX.XX% XXXX. a investigations step condition, which determinations, US aluminum anti-dumping October Commerce is November The AD-CVD to from vote combined for approximately China. from resulting these from XX.XX% final its and signed XX, wire final rates is US international in imported XXXX, duty expected On countervailing not in until trade

appears activity. Based the its on with economy US a enhance believe contractor their we superior our employees year. outlook for associates and position. rates believe construction good solutions strong thank tremendous construction customers and for service shareholders competitive continue and distributor We efforts. our customers, discussions projects audiophile for to their as and there's our next We our

Frank, want turning to I call comment. Before the over few and take moments more to a

down this and is effective of XXst As stepping as December September, retiring we year. in Frank announced CFO

this will Frank team. transition of is his Eckert earnings on in well. this been member be exceptionally the His call Bret and our been So going last successor, vital has executive that call a has role.

success of immense be great made to this for forever contribution growth and We will he's company. the grateful the

time he traveling. and deserves golf, XX our have the time By more for been spend playing hunting his he will CFO retires, family with years. to He

retirement. of and Encore Frank at long All wish us a Wire happy

on Brett's through team enjoyed. us take we've Encore to we confident hate we time. the abilities continue have to along we at have financial the results and leadership delighted in one path Although successful see Bret Frank with go, more are our great Frank,

Frank Bilban

Encore's for minute will we questions a may the you the you, any quarter. review Daniel. In financial we'll review, After financial Thank results take have.

get XXX-XXX-XXXX results. and you is call you a financial website McCarthy press covering glad also. Dennis received Encore's have available can should on copy Each Or to this a release of copy. at of our The release we'll you be

looking. In we the considered to let comply certain statements certain forward that conference we that looking. make as throughout that identify could this We to review be today. discussed you advise risks to particular instead certain might and legislation. forward results may those uncertainties statements be differ that And me attempting involve of such here Before order financials, indicate cause all to from each call, statement actual with securities materially

SEC discussed conference and comparable each supplemental financial to to of refer releases measures investors posted uncertainties. the call these non-GAAP www.encorewire.com. discussion most with risks information for to in Also, including we believe you on for measures EBITDA a which news reconciliations useful I be Company's GAAP of during the this reports detailed more of directly presented accordance and financial are

in the Net price $XXX.X in ended X.X% sold million results. for compared XXXX Copper decreased third third XXXX third of September pounds for of copper unit XXXX. of Net financial measured were copper versus third increased the per quarter point XXXX. million $XXX.X quarter selling the of XX XXXX of for sales contained volume of to third average of The quarter pound XXXX. versus XXXX. Now third to quarter versus $XX.X of in million third in the wire quarter XXXX in the quarter wire million third the the the of quarter the income decreased quarter the sold $XX.X X%

the versus per third months contained same for unit sold copper X% $X.XX the the ended sales wire measured in million months volume Net during common of in net third September Copper $XXX.X period quarter pounds month in nine XX, the ended of XXXX. nine the in earnings increase September $X.XX in XX the to share XXXX. September the compared XXXX. XXXX, was of million in were XXth $XXX XXXX quarter nine versus Fully diluted ended

months XXXX. September Fully the same the XXXX XX, net diluted per per September nine of the unit in were pound in $X.XX sold period decreased the of for September versus XXXX, average months ended to in offsetting on wire X.X% The copper XXXX XXXX. dollars. in XXXX, common XX, price XX, volume Net period the the $XX.X decreased months selling in versus September sales nine million versus impact share ended $XX.X ended million earnings same ended XX, nine income nine the months $X.XX

of On XXXX million sales per decreased second X.X% decreased sold net the $XXX.X of X.X%. a copper in sales volume during $XXX.X average for Sales copper selling quarter by quarter purchase pound the comparison. while due wire unit of a a sold Copper the offset quarter a to sequential slightly the of were building decrease dollars sequential decreased X.X wire third comparison, increase XXXX. wire of million quarter price price copper X.X% versus on

the Fully of diluted net $XX.X of XXXX per versus XXXX. quarter the in second quarter in income common third million Net for in quarter of versus was third the income $X.XX quarter XXXX. was XXXX share second $X.XX of $XX.X million the

Our sheet and have we long-term zero. is of credit balance to debt, revolving our strong, down no is very line paid

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

plans our significant highway refine our but these to connection plans issues continue property. a by may We proposed for project, expenditures, bisect new remain delayed in which capital with arising

We a cash dividend during quarter. declared also the

website. A replay Investors of the this our call will be available section in of

I'll Daniel? President Daniel our Chairman now Jones, back the turn over and CEO. to floor

Daniel Jones

Thank you, Frank.

future. performed we believe As well and in the well quarter, past for positioned we're we the Encore highlighted

now take we’ll listeners. questions Cheryl, from our

Operator

Thank Instructions]. you. [Operator

Our Romero. from Julio first question comes

open. now is line Your

Julio Romero

morning, everyone. good Hi,

Daniel Jones

Hello, Julio.

Frank Bilban

Julio. Hello

Julio Romero

on going retirement. Frank, you. Definitely all, the of congratulations miss I’m to First

Frank Bilban

Thank you, I'll miss you as well.

Julio Romero

a copper have of average the increases I the Can of prices declined copper of somewhat say just on maybe that timing to selling They to First seem more versus than price out question spread? due more that price on parse you amount side. purchased. of competitive normalization pricing, how the is dollar have the much is the maybe of of

Daniel Jones

part take volatility we That's you quarter. question. of I’ll the for the intra is Daniel. industry, that not abnormal Julio, Yeah, have This when the had

bias you some copper. selling traction The on on price. typically, from overcorrect upside sell downside for sure, on tend is trend the because or does to on as the do downside, upside, in process lose same both the COMEX On exaggerating with it the better we directions the maybe true prices or on a

Frank Bilban

the a in had quarter business. the they quarter quarter as spreads we although the had we third as to it's copper drop. X% had And we spreads spreads obviously and third aluminum on XXXX go, the that far copper of in that's same big and outlined mostly third quarter basis, dip third As

same discounts, in we cash spreads beyond in breaker third XXXX would quarter quarter, in which, consistent our XXXX, is we be all distribution last we that commissions spread costs made Daniel that in it which will earnings emphasized and the the maker that somewhat and comments, a show the deal the we we as had is We costs, have or our quarter that and -- $X.XX our goes $X.XX of remarkably net the of would more deal we have remarkably made tend If or to manufacturing is G&A costs, out. $X.XX to his our control. made real the net have in the to close

Julio Romero

of that's helpful. maybe that Okay, dollar forward? of kind of maybe in price say. overall then. spread I follow to other a going XQ the I that back turns more my the XX, or little mean, normal up quarters, should would be bit a fourth that premium get guess copper COMEX life if of quarter you as in I up for it reflective quarter, How third are maybe likely

Daniel Jones

$X.XX, than X, Julio, X, question. X, of had we're Yeah, X, again. is swings of swings in was good one X, in eight $X.XX QX. days more X, the we X, Daniel This X, X almost

the days And the or drop on days. put COMEX, that increase that, a those business XX of through following then, to into $X.XX in price increase you of the recoup or and industry depending days get $X.XX puts -- four a so timing five of through swings you price

discounting recall whatever price know bias that had basically so I in one copper down, increases. their a the a if the the or be And minute was seven on we doing those motivation to reason. what it a see. days on email stuff would whatever three and days were or trend competitor to trend, discounting They there's And the don't downside, be or by the lead usual wouldn't QX, you the they of And and exaggerated. happens be two for lead timing down

the the it next thing some week, get upside is forces it when the But you good discipline. COMEX when on turns,

volatility or critical So have just don't specifically be I too the and whatever. QX, speaking

was several pretty sense they're don't passed us from I And specific So but know so It business significant. for we the there's the whatsoever meet on perspective. test competitor volume what just made orders. to doing a didn't they're one why no doing

QX trend yet can't to discipline, I changed The forces normally has some thing. which that. you upside speak good mentioned, the is But a but really as COMEX of on

Julio Romero

quick do that on how refresher here quick those in just be it. terms just competitive got that a landscape proposition -- last for of guys the the that discounting, sort guys kind many that about, of who And have. what Okay, may you me is that can what one Can to can order rates, I do guys of of fill talk value you the deliveries, you mean, on do do, players speak? industry so in just reliability, you

Daniel Jones

things can do forever. than delivery. only remains and to things. that Yeah, And And that go kind differently quote competitors. the It We still doing I've do and there's wire things of get out a hold we're building the to it things. able helps a And that little to that those repeat two bit things us that price somewhat there's there's couple those business. price And, here sell our and be case. doesn't said

environment good overall good quarter. to and that's had on with increase. sustain Again, $X.XX five business a days $X.XX nine was predicted more or of we four was had the just posted, swings than really of volatility to or had. a we COMEX, that a pound a good. within so, eight try But volatile we kind any really business And price

that business can and if of And bit folks we of up again, little you two tend or to crazy a go. from things catch get a the some doing There's a that. one disease perspective, couple keep we with some guys the And right here there's that cannot. all

in reflected had definitely as And was highlighted, we of So spread. Frank the that. some it

good here we're control We got of a very doing. what

kicks things upside the side COMEX and in again, the as fought bias trend in. market [indiscernible] we can price issue And the on in but it discipline a of and One forces for was whatever or point fight the then get on pricing the we the on deliver. you some reason, delivery past at

so thrive. we can when And that's really

maybe of three regular and on have out our a keeps And accounts two, so service maybe to think and manner, do only do two we the obviously what that ridiculous price that and basis one I there's doing we're up and one the location delivery. lead think or in pretty that best with

Julio Romero

hop I on Thank you. color. I'll appreciate And queue. in Got the it.

Daniel Jones

And all looking of Julio. here. the I would on them pretty screen. give names are at I'm the much

So I don't to want say [indiscernible].

Julio Romero

thanks much. Alright, very

Operator

Zane from comes question next Karimi. Our

is line open. now Your

Zane Karimi

gentlemen? morning, good Hey,

Daniel Jones

Good morning.

Zane Karimi

more So little versus have targets guys not first talked impacted relative orders should little margin a pricing -- off, bit have and a thinking copper you you and can pressure you that about talk bit on what Julio quarter, color well, the we How moving percent targets, the on forward? quarters. competitive as be this softness to about of And the jump how was as this? has well how bidding more prior competitive a much about a the this of met

Daniel Jones

would somewhere it's percentage hard that up, be. we is orders it's of bottom gauge of as Well, of pricing From front on ones overall what passed, We an on unit too X% that a just the basis, If deep hard exactly maybe percentage of a Zane a XX% quotes that we did or to that's pass, poundage the volume mouthful. and and the see. intentional between the because discounting end. the

you over. the posturing odd whatever perspective, they're loyalty a seven names in deep of five usually where have volatility lead a the right of from in pretty six then don't disciplined. on you the a to some change I anything swings business way. into swing lot in market from days. for behind going to, on QX, just market days go other that positive the but have COMEX want folks, in behavior too There's And $X.XX There's of a lot again the the reason or but $X.XX a lot or

one the perspective, we from It's years. when website, tough and most we believe that post will their on competitors I've which folks or ridiculous it. opens do it increase But So -- closes the COMEX to seen they price of or is copper have right? substantiate XX things not, in --

building We're not selling we're selling wire. copper;

And volatility so a downside. the upside, increase. supports posting you bias the reverse that on is get or we have true a when on the price for argument and have, trend COMEX you But the the

COMEX on way a corporate the or other. website, one frenzy, feeds posting basically the So

market opinion. when So it's price. orders levels But a they're they're pressure conditions on unlike in our to significantly pretty -- love our the to in by. the and them based are the that have ridiculous a past. downside basis in on it's trying But not come our delivery on outpace it's We'd at or pass. met, beat COMEX that's hard criteria, if if below And done not what we've

And so opens mapping COMEX closes, the week, or $X.XX in a within on starting and week. you do where look mid-week, at $X.XX the swing got and little that you QX, week, and you've

that And four lose increase. price job the of we discipline in in Our of increases folks if did fantastic price again, maintaining support a copper, QX. and/or marketplace. lead followed that And you lose the just five or you again,

hard And if with comes jobs. some want it's so I that that's right by on what here, pass customer. led every order the to the

it's so, a we'll order pass. them to by watch go if anyway. to the is anyway. good chance it back there, they're we'll a our up a get And standards, not listen, hard When hard chance it's back delivery that get There's not there's good but

Zane Karimi

Thank for Okay. that. you

Daniel Jones

The purpose is good.

Zane Karimi

in pockets now for the just demand a it then or the there. market or products in with more stronger robust general you U.S. And there particular strength markets? their are is any Thank right your

Daniel Jones

QX. Midwest pretty stations area. looks is not out are really good and a some issues if for Northeast a dead mean, coming the Pacific in doing some have right pockets. in They're full, air. The major Texas strong, there's it us started don't areas are up. picked and Movie just strong, full. pretty area, strong. not one out good occurred weather Northwest metropolitan really The spot is slow pretty the airports all Southeast or There's of -- well. is a don't theaters Gas now. in all really of a is I my The pretty QX there's know weak that is The dead is spot. There's market I cranes it'll it all well busy. the know travels. are I Most

Zane Karimi

final talk And you. one your Can to little the Thank a building about bit here. highway then plans? been one and How Okay. proceeding relative you expectations more hopes? they've your

Daniel Jones

Yes. very It's going pretty meeting yesterday. well. on a I had productive

project And we East. involves particular property acreage acreage have have the to the and the to this the North East. We to

feel working I we'll wrapped end And move so up some progressing that this should. year the had have confident and it's we're forward. like yesterday of hashing and a out by And very good and really details it everything meeting

Zane Karimi

Thank gentlemen. you, Great.

Daniel Jones

Yes, sir. Thank you.

Frank Bilban

Thanks, Zane.

Operator

comes from Capital line Our Tom open. Management. next from Tom, Preston now question is your

Tom Brashear

Good morning, you. gentlemen. Thank

Frank Bilban

Good morning, Tom.

Tom Brashear

service. you your It's working been with for for XX pleasure you thank a years. Frank, great past the

Frank Bilban

[indiscernible] locally, and especially I'm nationwide and to dying. all of you I'm certainly retiring. not

come can me. You still see

Tom Brashear

Very forward and that. good. on answered pricing has already. to question competitive been was My Look

So thank you.

Daniel Jones

Thank Tom. you,

Operator

from comes Our Baldwin Anthony. from Baldwin next Bill question

Your line open. is now

Bill Baldwin

everybody. Yeah. Good morning,

Daniel Jones

Hey, Bill.

Frank Bilban

Bill. Hey,

Bill Baldwin

in us today terms feel limited spreads that where Is talk to Can November? on in aluminum give I nature? that comes your on copper, versus you opinion? the in a you do for this the expect a about bit any vendor you in and color vote exact detail volume to and you but the or you think a to that don't talk going what business get offer of us of into spreads? business that And the you year can stands volumes affect And talk little things spreads and ago and do

Daniel Jones

where went situation It times so a that And There's some us, to against, petition is, good. wasn’t Hey China the that’s super has in the filed led been been statement. that then prepared investigating aluminum update that And competitively and us we we sketchy business gave where government this Daniel. did the into it looked it's The good. always term Bill for and the suspicious cheaters. to we great.

was It’s Whereas There yet. post-petition that some it improvement. like today? It’s see where better. to we’d not

all positive headed And the right in moving direction. the it’s the feel and in in we in about our think right direction. that’s I had team think, good place. got I We’ve that right I DC. meetings

business. is a part our good Aluminum of

spent don’t a manufacturer. a the As service be to you great wanted money on I we’d of we and it’s things copper. in amount primarily return we’ve market And we’re the And substantial but to investment. service we side do to significant any of tremendous a reason secret, and know we that’s from here that piece. substantial that amount do for the think petition aluminum filed. like aluminum see the And

But where today It’s in it’s not be, headed to it’s better. needs direction. but it that

Bill Baldwin

That’s Frank how appreciate indicated you good the it. you the to just in And QX? color, ask LIFO about thinking, was

Frank Bilban

to LIFO of of in quarter $X.X cost was decrement third the million sales. a XXXX

Bill Baldwin

part the when business better your part Okay. to in think opt And more perhaps, you as terms spring to season looking bit of Do the you business, or residential to not XXXX see the XXXX you of beginning and at business be outlook of a forth. on that do to we improved this year as the kicks are so going see look is you? in

Daniel Jones

we’ve Yes, you signs again. know Bill this seen on the Daniel residential some piece. good we -- is

there. But We a entrenched category. market. real existence, doing like We’ve first in good product with good got situation we were years residential. or As on in four manufacturing XXX% that going feel that we’re you in know, three things our we’re

distributor the We’re service positive got signs. side. strong on delivery seeing We’ve in market the we’re the and really piece, partners good on

spot. in think I we’re that good the

Bill Baldwin

see [indiscernible] are, that the I like we’re might do -- I they improvement think just think, Nebraska, beginning start we where to with is actually, After correct? some in actually to see numbers. the that like it's mortgage rates

Daniel Jones

on sir. Yes, us All for residential, XX states yeah.

Bill Baldwin

thank you very right, much. All

Operator

Our comes next question from Rigdon. Kerry

Your line open. is now

Kerry Rigdon

that degree of and Frank I already the a for a gentlemen. thank true really to Good been made pleasure. have a want echo to highest question been his morning the more professionalism. statement, commitment settlements don’t It’s have

Frank Bilban

you. at Right thank back Kerry, you

Operator

question I'm line now time we no is [Operator question speakers at this Instructions] -- from your Steve have further Steve a showing Garvin. open. And do

Steve Garvin

just look fishing Kerry years. to Hi had you echo I you guys. over we the some working Frank, Tom No but question. with golf And maybe or and forward could to do the congratulations. maybe or wanted what around catching pleasure up, something, said.

Frank Bilban

beautiful have see I my And you. to Fall. Thank drive to up wife may Niagara

Steve Garvin

June one? July which or

Frank Bilban

You us guys. can give tour a

Steve Garvin

you. Thank right. All

Frank Bilban

Thank you.

Operator

this speakers And at questions queue. in I time further no show

Daniel Jones

for you, questions. the running the the Thank Look participation call. to forward for Cheryl, call. thank you in next the And

Operator

you Thank your gentlemen, ladies today's thank for and you participation. this And conference. concludes

You now may disconnect.