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Encore Wire (WIRE)

Participants
Daniel Jones President, Chief Executive Officer and Chairman
Bret Eckert Chief Financial Officer
Zane Karimi D.A. Davidson
Julio Romero Sidoti & Company
Call transcript
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Operator

Welcome to the Encore Wire reports First Quarter Results Conference Call. My name is Adrienne, and I’ll 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 this conference call is being recorded.

call Daniel the turn now over Jones. to I’ll you may begin. Daniel,

Daniel Jones

Daniel ladies Adrienne, Corporation and I’m Wire. CEO With and Bret of you, morning our the and Chairman quarterly the of and good call. me Wire Thank Encore Encore Chief morning, gentlemen, Financial Board President, the welcome conference is this Jones, Eckert, to Officer.

win during continued and economic health of us and difficult together our to to working guidelines created investment The uncertainty, to your maintain top CDC appreciate support has The conditions. this it the and We COVID-XX our these their pandemic times. employees priority and fight. families safe following pull safety we’re and remains

utilized the to facilities temporary pop-up very medical against and fight power that We the are products being proud buildings in of some COVID-XX. we are manufacture

very Our we critical serve time. during to this continue distributors remain thankful

of of weather unprecedented by the posted quarter the sheet times and The note. XXXX There XX, strong results this are facing to our first we resiliency country. evidence business March earnings key quarter very some in our despite pleased balance times. ended I’m items our in model strength first the are the tough to

well quarter volumes copper prices a and versus last of Copper the versus a first of Comex fourth in as Gross as despite the XXXX. drop quarter versus in increased profit quarter unit basis. increased the first X% sequential quarter XXXX on first XXXX X.X% margins of quarter increased year’s

were copper any period. decrease some market to shift a increased pricing particularly sold how the represented gross distribution between price Comex manufacturing sequential in the spread pleased wire month constraints in the in prices daily comparison. a margins the in the in X% kept finished and seller’s key quarter. spread we as the profit to to given I’m metrics This raw a of which quarter March, slight of the lifted copper One average sector Despite earnings our we able maintain copper on for selling the a is of with The cost prices copper significant purchased quarter. and strong.

wire our of in of X.X% aluminum net the first XXXX. quarter Finally, represented sales

the long-term our duration uncertain and the and impact this outbreak COVID-XX on time. its at business severity ahead of are Looking

Some as we to are extent and the of this well varying our distributors as to are impacted. sector users the distribution manufacturing end products pandemic have demand will our as our into surrounding visibility COVID-XX Developments disruption limited of well the for daily capacity of which as global and related crisis. changing products levels experiencing market be

We markets believe Encore serve storm, to the Wire during to this positioned well continuing the weather critical time. is

on navigate the near-term long-term remain for opportunities we the we challenges, business. As our focused

this not during crisis, We which order to also position. rates, our fill superior have faltered competitive believe continue enhance our

As electrical from orders fill order the rates can in to deliveries come count distributors our quick to from coast. contractors, coast on continue ensure to

over will to to turn our Bret? call the results. financial I now cover Bret

Bret Eckert

the After first a XXXX. have. Encore’s results you may review, we financial March financial In review Daniel. you, will ended Thank questions for minute, the quarter any we take will XX,

to statement Before be attempting be certain of to as making instead and company’s you to could we results me uncertainties. these statements legislation that news indicate review the discussion materially such that and all involve the that and today. that might each and a I to refer conference reports be In risks each throughout considered financials, call, we those discussed forward-looking, releases certain statements of detailed cause forward-looking. of you differ this SEC for let uncertainties from advise we actual risks order identify more securities may particular with to certain comply

presented measures call our website. of to discussed we on for comparable measures in accordance posted EBITDA, believe are Also, to included financial conference information useful this during be investors, most GAAP, supplemental non-GAAP with reconciliations financial the which directly

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

of quarter in the million the $XX.X net XXXX. quarter $XX.X in first share $X.XX earnings first were in quarter diluted Fully versus to versus quarter XXXX Net common of income first XXXX of the XXXX. increased million $X.XX of XX.X% for first the per

Sales We dollars sales were on XXXX increased a million of the look to at sequential a it XXXX. $XXX.X of comparison due basis, quarter $XXX.X quarter quarter net first million during wire fourth building for a the wire offset by on X.X% basis. decrease per of selling quarter the per – increase copper of volume sold, sequential pound unit X.X% copper sold in pound slightly price average a copper versus

per $XX.X the quarter X.X%, of sales purchased quarter in price of XXXX quarter was million Fully of of in copper quarter decreased diluted wire first in first versus the while share decreased XXXX $X.XX $XX.X of income for common the net was the million $X.XX XXXX. the XXXX. Copper X.X%. income prices Net versus fourth fourth

Our strong. balance remains sheet very

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

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

During XXX,XXX the the repurchase open did quarter, we market. shares in

the quarter. cash $X.XX a declared also during We dividend

plans Our $XX initial We million expenditure million million $XX reaffirm recently in development quarter. ranges XXXX. of $XX as $XX site XXXX, XXXX, million to this million to schedule continue our million previously work to and grading and on two-phase capital announced in in $XX we’ve started $XX expansion announced

and flow expenditures. sheet capital balance should high generate levels provide operating fund strong consistently to of allowance to planned Our ample ability cash

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

final the a remarks. Daniel turn I’ll now floor over for few to

Daniel Jones

you, Thank Bret.

the performed in ended Encore highlighted, well XX, March first quarter we As XXXX.

We continuing low-cost have and for valuable us strong to prove growth withstand Our as balance are I’m to and positioned our our in this structure and I enabled this now. believe future the periods we’re have during difficult well they overcomes sheet thank efforts. employees crisis global each want rallied to pandemic. of for and their of very associates this past, employees country proud tremendous

stockholders We for our also thank continued their support.

listeners. Adrienne will questions our take from now

Operator

Thank you.

from the [Operator Zane We And question-and-answer will session. now from Davidson. our Karimi question D.A. first begin comes Instructions]

Your open. line is

Zane Karimi

quarter. Congratulations on the

Daniel Jones

Thank you.

Zane Karimi

ratio wondering, market slowdown? aluminum and split copper relative I with of So demand first of what to historically, off, change the the are seeing to does was the or regards kind with you how

Daniel Jones

may changed that We hadn’t markets see anything too of over some up much really of aluminum much. in to on jobs out but in quarter. for the start dip be there’s distribution first that occasions, It and and that larger really both changed with copper specific to the change existing most didn’t the part

Zane Karimi

the And versus the kind demand so can saw first particularly speak Okay. non-residential – versus and okay, quarter resi speak April? what the then trends you far you you within thank Can industry, through to you. of in

Daniel Jones

have the a that the piece jobs aluminum in piece. in two on similar way in will can quarter. strength the other. demand from shift first market to or But A or the significant delays weather or quarter. be the really development volume segment of based point did wouldn’t We maybe existing of we times next the in residential one all issues. significant at lot it’s move percentage one residential see will There’s – the that month Again, first sites

pretty sort resi, consistent in there point. of it is demand good but great, not it’s and some it’s strength solid So – this it’s at not was

Zane Karimi

to Thank Regionally Okay. our suppliers COVID degree speaking, you. most distributors? what to been where impactful has fellow and and customers, and the

Daniel Jones

Northwest, we obviously the there release, disruption job were were for for the hookup a temporary have what in press was were And as most temporary hit. some in the northeast closed geographically, that and we of bit then in was quarter. some shipping in distributors, what the, delays first the Pacific medical the East sites some were still there we you. in still or some regionally, mentioned and the shipping have and the and customers, tables whatever part, California. you But and the But of little whatever Yes,

Zane Karimi

you. thank Okay,

Operator

our question Company. from comes Romero Julio Sidoti next & from Instructions] And [Operator

is line Your open.

Julio Romero

are good well. hope doing afternoon, you guys Okay

Daniel Jones

there. Hey

Julio Romero

seeing hoping So maybe I on disruptions can you you you is seeing was if I if you’re notable limitation where constraints? know could could suppliers landscape, those highlight freight? mentioned. you elaborate don’t maybe chain the customers, on the competitive of I mean, what or through most value part talk

Daniel Jones

to company The were degrees. fantastic used service was there we different in the disruptions did every that Yes, a fantastic. category job, trucking

to of realized in on Distributors get from road exceeding offloaded. you a It’s the the the of be and was or with fantastic. efforts the people deliveries from the the Some coming so lack service the an with they of carriers were to There side. the went service will, effort the lot were forced or But seriousness of if an that was normal away, their discipline, you support the in, of deliveries, route normal, mentioned had equal a disruptions drama. spots the situation. involved the I’ll I have some contributions the tell what along maybe entire worked were seriousness where perspective exceeded on the the mean, the us we drivers that disruptions, with I saw that on closed think from chain. you were trucks there also and use unloaded you. to

no the if people It’s a that It I type got good things lot And became coming it whatever last I getting The done. delivered And frankly, saved refreshing those just have types are of very discipline quite those to job and on was everyone will, delivery unloaded. see. out went everybody, – to are the there operating. other you appointments There work and of think hassles, chain, approach and believe delivery business are rigid side. the just will less trucks efficient. to more in to

do open, a a If really was job good really property So the It of with that thing or to see. people to were went closed. again, to it site being ran we work. a problems into, was – some had they

kind think job and the done. I of together got pulled everyone

Julio Romero

maybe months of in a last the selling prices cliff if held that month? more to holding in shocked held potentially your falling of there pricing outperformance in two relative what truck than Or modeled. held Got this function had well it. price it the said discuss was up the environment, copper I maybe your you up? in the That’s first that average year in face how much expectations some better quarter, helpful. – well can But I’m average up and the was the off but just on up you the of your

Daniel Jones

uncertainty said to effort it really price like sheet good together fantastic years job a great on in job. XX people The about the guys and the at for everybody and and through question. was right wire tried that was that it to a of it. purchasing pulled the There’s place at things pricing. a obviously, and sell the We two came and combination. every to delivery. made really And sales, super the good right only It going have, When did some piece. disciplined pretty focus you in shipping, that did well, department that balance always girls have and be in in the delivery when office we we January. Yes, there it’s and We’ve showed sales into I’ve have we now, a repeatedly February. we’re building March started and then and have comes time, lot the in

when deliver here. just you’re know if don’t cut price order low buying, if again, price to there’s with don’t the I’ve cut and were has what on reluctant see for that you what of We competitors is harped When I know our you on on like been a price it can’t something why which, years. and that I the the few would call can that the you looks lead you

that. So should stop probably with I

service that sure down. But And listen, means money to promise. let things make people we to it lot it here around a a it’s a can do that to us We keep we takes don’t do want the from a perspective. discipline to

do. felt thing the so the it thing And it’s to to that continue think and right was we right to do

We’re we offering back again, the think worth team incredibly And goes it a disciplined. office really The entire to it’s it. here. and sales value, was

actually almost field the bit run and the could your in lot those for of reps drama said, aside watch. A – normal price little and a shopping sales fantastic of to was goes a Our were I that with in kind and business, it fantastic. the pretty business things, like set it all you like

did to disciplined, our well the guessing, job. working credit way, of and the the XX% I lot from super people home, And we folks, mean, of they’re I’m great probably so they a personnel. by folks here. our goes And have XX%, over are a office

Julio Romero

color expansion capacity And you there. guess, plans. on I for the Thank Great. the just

reaffirmed And know delay bisecting plans over given three project just You potentially progressing? your maybe property. if that Can the that’s your I OT years. would delayed, that, and how that��s discuss spending turn, plans? next don’t that the gets potentially in your expansion you

Daniel Jones

different see of We the pass question And for of very day. job I’d blessed first look part to some like But an effect. the of you. have times some don’t question, take what maybe first. a well. were site it don’t The rain them, a and each and see around. part that. that warmth progressing some last and drive I unfortunately with couple I And we’re and sunshine the the timely I through having

And It’s into We fantastic. that of so the glimpse to a to happening. ability website, be what’s moving drone it’s photography our potentially post kind on real we’ll doing actually and some have give well.

know, and along job. well. several very a to around I We’ve my doing construction used we’re that Can’t timing know are weather program they’re we’ve They fantastic don’t had, see very poured. here times, good in moving had and doing. the XX, we’ve it’s pros. and wait been safety years, real these fortunate concrete they they’re obviously expansions with XX But group working XX guys have and really a going being They a robust what with

Julio Romero

taking healthy and for of questions. be for drones in the will I a those lookout your on best Stay Thanks luck. site.

Daniel Jones

Thank for you. Thanks listening.

Bret Eckert

Julio. Thanks

Operator

[Operator go Instructions] with Julio ahead. a please question, is on the line

Julio Romero

know number is, if just don’t the missed quarter. CapEx in I one guess I quick follow-up I

Bret Eckert

Is it CapEx?

Daniel Jones

the for quarter? What’s CapEx the

Julio Romero

Yes.

Bret Eckert

pull one I second, and Julio, Give me will that.

quarter $XX.X So the was just CapEx $XX CapEx first over in quarter million. the in first million.

we We’re just some I now. mean, really right – in move to try really dirt

the As across said, Daniel street.

So work. a lot of utility grading

Julio Romero

much. very Thanks Great.

Operator

no have questions. further we And

Daniel Jones

Okay. time the and this in Encore and and day. We your your appreciate your support enjoy your interest investment morning. Appreciate

Operator

gentlemen. for you Thank call. This Thank conference concludes you today’s participating. ladies and

disconnect. now may You