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Encore Wire (WIRE)

Participants
Daniel Jones Chairman, President and CEO
Bret Eckert CFO
Brent Thielman DA Davidson
Julio Romero Sidoti
Call transcript
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Operator

Welcome to the Encore Wire Reports Fourth Quarter and Full Year 2020 Results Conference Call. My name is Jenny, 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 that this conference is being recorded. the to turn Jones. now will call Daniel over I Mr. Jones, begin. you may

Daniel Jones

these CEO uncertain in and and families confidence serve the call. during your working interest to the President, and our this continued Wire. and the morning of CDC safety Jenny Chief safe with you, your We remains following on while Eckert, in Officer. guidelines Wire time. priority welcome of I'm their Chairman Encore Board The investment, continued good Jones, times. is customers conference Thank our us me Encore quarterly appreciate top Thank for morning we and during and to are we critical you conditions, call and joining maintaining health support of and Corporation Encore employees Daniel our Bret our and Financial this Wire for

the model challenging resiliency Our again and of strong in results strength exceptional business exhibit our times. deliver XXXX in earnings to

Our serve strong with drive growth of current us fully XX, I at to million balance our are sheet hand for remained to and responding to to our plans. expansion shareholders. allowing employees and operational the remains of cash our December how fund customers crisis, on proud value remain $XXX.X our

X.X% XXXX late XXXX, full a began XX basis, copper on strong. on steady our X.X% X.X% prices, experience the both and during compared periods a Copper of XX sequential fourth which basis a for a throughout sales a Aluminum comparative X.X% on the the addition, one note fourth compared continue gross wire business quarter, strength copper December quarter on The Detailed us basis. conditions in XX Copper XX.X% spreads XXXX. ended month increased In quarter unit rise year-over-year. to for increased increased the X.X% some Copper same to basis year spreads. and decreased percentage market comparative December items quarter XXXX volumes on we location X.X% in the impact allowed model. the which to increase to a positive year. of agility quarter highlighting basis finished model COMEX and as in adapt for XXXX, X.X% XXXX to of our the March spreads XXXX. ended profit had sequential below our quarter year and represented and changing year and months the unit to flexibility full-year X and increased the XX the to key fourth net ended volumes are results. quarter December On a

levels, into As half stated quarter began previously, second late in to restored second more the beginning patterns the to return customer optimism buying accelerated historical XXXX. of and the

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

Encore Wire we manufacturing continued COVID-XX related critical positioned products, impacted. capacity storm and We we as the will is and our Although which weather the well demand distribution may this into to believe well during as for visibility serve to developments, extent have limited the to sector market be time. markets to continue to adapt

come enhance over turn We to our Bret challenges, our near-term distributors depend us our long-term our for our we to contractors, the to deliveries, for can I'll from rates focused call now quick believe on fill opportunities remain continue position, in the order results. financial continue cover competitive navigate we coast-to-coast. the business. superior Bret? to orders electrical As that on as

Bret Eckert

for XXXX. questions may year fourth take the financial minute, have. ended any Encore's Thank you will you, Daniel. XX and December will review, In review a the results we After we quarter financial

making presented be indicate instead of each quarter that were me December compared we the and with be cause may the $X.XXX to fourth copper from contained XXXX the Copper sold months months wire refer selling XXXX XX net $XX in fourth in in period the fourth in copper of ended versus months review pound fourth X.X% might the net volume million per net XXXX. cost pound legislation XX versus a copper income was diluted purchased average considered in XX XXXX. actual of SEC purchased income copper decreased share of discussed Net to income sequential was quarter XXXX. X.X% forward for profit the fourth December Accounting while of in sold December pound the per the supplemental for third company's common XX.X% $XXX.X for share a we securities dollars the of ended for same Fully increased let XX XXXX wire and per the the XXXX, per sold, the per $X.XX pound measures Also increase looking. were comparison, the fourth per sequential in $XX.X wire measured measured income the be we in of to to unit in copper compared fourth XXXX. sold cost ended X.X%, selling period respectively to in XXXX. in increased $X.XX XXXX profit the of to XXXX while earnings quarter that pound in $XXX.X of share million fourth same conference XXXX. $X.XX in X.X% comply forward-looking, fourth order December XX.X% risks basis. XXXX. in XX compared X.X% fourth months versus during periods Accepted to price of these in Generally XXXX increased compared period Fully - for Sales quarter XXXX. identify discussion Aluminum believe $XX same for quarter quarter per we Net in that XX.X% same third fourth a Gross for Copper December XX net for XXXX Before directly increased posted the Fully during XXXX were volume quarter December each the certain In fourth compared XXXX, copper $XX.X including the reports ended XXXX. XXXX. of months was December the million billion X.X% price this website. non-GAAP versus building while average copper call, quarter million and in volume was was versus Gross XX XX sold, copper quarter quarter this in fourth the the were most to results XXXX for the The quarter the news releases differ increased XX-month versus EBITDA, price investors versus versus fourth billion common statement involve of certain increased the financial increase XXXX. XX% quarter and which quarter the $X.XX and XX diluted purchased third earnings XX pound per in XX.X% XXXX X.X% information the a versus average quarter common pounds for detailed of for million the financials, $X.XXX of of the to net of statements in throughout increased the average $XX.X and of quarter million ended XXXX. average months percentage sales in X.X% the to a copper Principles, in could the combined The financial of of attempting I to wire the Copper XX call to million of useful wire were On XXXX of of XXXX those ended the pounds ended during fourth to uncertainties. wire Net diluted prices XX advise with XXXX of of million December was the particular increased as million months quarter ended quarter quarter in XXXX copper of Net XXXX the on XXXX. represented in $X.X contained XX.X%. in XX.X% of be price per the of today. XXXX of due you unit fourth quarter million XX our $X.XX comparable during three-month all of materially that Net sales quarter of quarter selling statements the XX sales in $XX.X in the are profit XXXX. you sales Gross uncertainties on such our versus sales risks unit the certain conference $XXX.X quarter the the discussed $XXX.X of more wire measures accordance with XX.X%. percentage for XX.X% was period ended third versus XXXX. XX wire of sold, reconciliations X.X%.

line of Our prior balance is to sheet with February remains $XXX a credit letter lenders entered credit we revolving five-year through paid of our long-term zero. facility, February agreement no down and a have credit provide On and the into our XXXX, replacing letter debt X new existing million revolving credit we facility. revolving very XXX company's and credit million credit for to of XXXX, strong, X

we $XXX.X the at the during the open XXXX, of the had shares stock year, repurchased in first common we in million a were quarter XXX, XXX addition, predominantly cash of In end market.

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

accelerated reach. with XXXX. in machinery for on distribution environment. is market Our capital early $XX our earnest second expenditures service of announced equipment expansion plans the year quarter manufacturing timing current planned The XXXX. due capacity already commenced, Phase to in Phase X to progressing remains new have the required orders will our continues opening times repurposing construction focus lead were is we earlier existing on increased in on manufacturers, Spending with of and this of completion two-phased Total has X the in the schedule. million plan of expand certain expansion XXXX. the and our X well center and Phase extend center as in anticipated a

$XX to total million $XX $XX CapEx XXXX to XXXX, $XXX in million and expect to million We in to in $XX million from XXXX. million $XXX million range

and remarks. to should high cash capital the planned floor balance to levels for of few Our will a turn now allowance I provide final fund expenditures. Daniel strong ample consistently generate operating flow to sheet ability over

Daniel Jones

you, Bret. Thank

Encore XX fourth quarter December highlighted we performed very XXXX. in and year-ended As well the

employees our model past to and tremendous very have rallied dwell. the efforts. this difficult in sheet I of Our to their one our, strong our each and enabled balance of I'm employees want they're low-cost thank periods location valuable for structure, and have withstand to continuing us prove during and crisis proud associates

take support. also We thank now listeners. for stockholders continued Judy our our questions from their will

Operator

first question [Operator Instructions] Please comes from And from Brent our ahead. DA Thielman go Davidson.

Brent Thielman

and whether the first that? the Good just we Congrats Daniel, some But quarter. Bret. I'd - across maybe you love current Daniel see I customers what today? demand a get of the morning, your are the could beyond And about country great suspect to assessment weather issues is on in your with telling quarter. environment here

Bret Eckert

You're talking QX? about currently, in

Brent Thielman

Well.

environment? the across of QX what maybe are far the your in but yeah, customers saying think, I maybe in demand speaking of just sort country generally thus happening what's about terms in the business,

Daniel Jones

XXXX, guess what a the back obviously I feeling as was COVID and have in the and with was But so effects of you. Yes. uncertainty or that, March huge the there that metropolitan well later did states in closed that closed opened QX that we to back specifically. deliveries construction were areas you were up, the very QX, year see can down and

Texas well things, that it's that be other demand the sure slowing some many I it type states, it going of for stuff sense raw no with the really discount performed us copper, signs in continue. piece, when in will a without the of and impacting aluminum weather your along some continuing results. frame but time as that's other There is so the of to good, there's some with saying is many for XXXX, seeing there the week a showing the many and forces this industrial into bit is forget raw on growth week, looks the expect Bret, being positive positive materials is are materials. have following in area. good. There market, some like urgency The strong in tightness it's it stuff will be to to commercial true down you to quite left simply The to so of so effect current week's processing with And piece know, question diminish market. this we we and not was tightness years, really for specific forward-looking Residential too incredibly it which discipline discipline push there's but and that or

Brent Thielman

have running - that benefited the to with copper seen you any - Daniel, any aluminum degree? piece has

Daniel Jones

think would always that there's for sure. I some support sentiment that

substitution. though, has and The there's discussions lot of was up this looks discussions to around there or nice December demand us thing COMEX copper as a our that there's for you. both. on higher Even many $XXX what $XXX. strong have some We the is up prices XXXX a was ended copper. of to you the of know that in average good guess, $XXX As aluminum and times super enough and around gets really ran anyway then around March maybe we been, like It in we the there's substituting hadn't support and low seen ran The scenario year. amount the a over Brent, has like tremendous been expensive, the mix

and it's delivered run more So is have is who some had and intense, about aluminum The type product metal also on we itself in that less and on it price who increases focus way counterintuitive. get the what have when the the it's you disruptions along But you. supply has of which needed. when can chain COMEX with

industry is and and the without the the So equation predominant still is in other one delivery good. no price

Brent Thielman

be starting optimal costs to of few an the goods I the your half I going question, the here of you at a SG&A, in we up suspect, the - take as should sold ramp to center guess think about level. service How first it's impact up since quarters year. cost to running the

Daniel Jones

process training where mean, with fight we piece and a a already I requirements people move in market started committed up Yes, We've get a the to we're I so. bit to for would demands whatever. But employee already that little we've people and that with of think count, wise, lot some quicker. in service were head running on the and today. the

from piece delivery years three, on services more in complexion way request that still You be order the few significantly market the to That than just needs been may product in are those have have four a the to years the were that delivered. chain. ago, have and in There's at front complicated today ago end. and the that other we performed five four, offer some step the supply they

that we have come of some flexibility and So larger space if floor jobs to will process had and some some some up you have the to around. loosening

that that's it's done job I second that what QX, operations the sales amount. And and the we XXXX means is, of half fair in fantastic those think team have think folks into I that, the services, the a for to with charge continue. going

a it's trend the being of we that's and than be extended it really those I we've to the be a expected. for the discussed time do, and going if we're little quicker might pay to shipping benefits the a to of already we wise. going that X-month little out upside, the on raw But to But the or I road have or a service quarter. period bit just we see for than able able what then cost for because better bit little bias everybody. quicker a a materials be otherwise start - the the Otherwise, if might won't think draw than We DC more flat. some have actually looking market conditions would map product and to little a maybe the in though of having the want we'll center some new see support and think things quicker be I late we charge you you're will, that whatever that new their physically until at. Hopefully, than service we'll contribution second think

that some able will able And be that bit those services. handle So some and there for we'll also more efficiently we'll dancing a jobs to move to on the kind things be charge but there'll be learn be of doing we're aware and Brent carefully service centers and don't the that going the it can. with we're distribution watching for we best for pay be center. fully what to old be around, themselves. charge But trying to necessarily services those We'll little

Brent Thielman

and it's moving and to be sounds it some around Okay. it's as in up Fair jobs up it's discipline want but more though put types selective allowing forced for enough, hopefully, keeps copper you wonder, the Daniel. of me. on take mentioned, sorts and last you industry, you Yes and to I helping today. question appear in if not you you've the put margins orders up to sorts allowing the here, of

Daniel Jones

super think that's We fair try a always Yes, I selective. assumption. be to

a of they customers We XXXX current, to have the time. as itself they're quality model lends bills the have, are, in think on important they the which to is all our is high the testament I fantastic we've through had and customer they are base, our still to paying COVID receivables out the whatever challenges distribution that higher quality point that it's their distributors

chasing So It's that itself any accident, that the we individual after. customer across. quality order the job not the the comes go we're quality and of by not of blindly

for We job we're familiar you and And for been it. order the here is, they to from that from that do on that fantastic fantastic after maintain have is charge a - integrity won. folks specifically to group do what as going finish us really trying of with orders of a we and know years, start

finished somewhat. that been expectations copper from - goods of through there disrupted has supply and and all raw whole the entire is chain delivery So type no tightness way this question

going question, that is continue have the some in ability continue do. to is as to distribution to some high there higher you're a we've little quality, no to can. you and markets team sales and we'll upgraded few do best do charge in sales But upgraded the representation things So to some The there got a we markets.

Operator

Julio Our Instructions] [Operator from next Sidoti. from Romero question comes

Julio Romero

the the So, you market resi talk maybe that Can versus end that 'XX? residential quarter at you to was the non-resi whether strong of or continue to and XXXX. very mentioned mix year in earlier mix

Bret Eckert

fourth On quarter, Bret. XXXX versus on Residential the about question, Julio. residential full then the quarter of resi a XX% full-year year versus fourth In XX%. was XX.X% XX.X% in in Good was Yes. resi XX.X% This our a basis. quarter is fourth and full year XXXX. XX.X%

So it started people was or of kind to COVID definitely homes its second heavier a pairs. buying took and of RVs as grips instead remodeling and emphasis going

Julio Romero

That than higher in resi-mix think the past. been it's little bit a is I traditionally,

guess, how mix kind you steady that to trend resi continues mix I for Just or do to see a do So of state think you 'XX? evolving? that see upward

Daniel Jones

leadership XXXX being Yes, think today, pretty see through I opinion strong. it we We it's the that here of Julio. end mean, sitting the also of our sales

Julio Romero

Brent quarter. center second service Okay. earlier, opening the in think on Yes, repurposed it I asked but

that there trying think allows think about you to for the it efficient in charge more 'XX? there be Just I how more specifically missed perhaps mentioned I this impact year? better terms it, service. impacts and P&L of Is P&L anything did you to that

Daniel Jones

you'll square the some incremental But I it's costs is incremental depreciation the got not even I otherwise, obviously footage layout. though think much you've and heads. more, so really it, add, a have some you've mean, huge hit is Julio.

north in in the efficient, end. more on out goes and comes everything south the end the dock on doors much As

want how the is stage it staged cut them. - being are exactly So lines we to

and were your ourself able touching many add And why footage see that almost so, heads. incrementally product think is not which we'll square less, to double you I

product the we're period. And X something move we feet value to look do hold so going our more our ability to in us the to month to we prop that the get in with under X is market as

center. on right goals our the think that won't being and new and So low focused we're with a you're thinking the way service provider always about been to I change cost -

Julio Romero

looks of inventory in a where unit $XX Your lean the glance, year. a million copper just At basis assumption? an it fair little a on dollars is, first given

Daniel Jones

consistent a in kind was little a grew There all big it's year-over-year. of bit. LIFO in, I that our push. bit it pretty But a skews things and mean, we

the You know, demand - of it was fourth lot a as and quarter. third was can there you in see

that continue to And quarter so were with keep entire orders. raced we in up to

inventory at the end fairly And the so constant year-over-year. finished of day

Julio Romero

sequentially great seasonally into very continue the why Overall you reason saw it a was in weaker what's quarter any XXXX? sound quarter optimistic. the fourth quarter fourth a spread, and Is spreads rose typically into there you and can your

Daniel Jones

as Julio, about we bit we lot talked had a little of the market. approach We've a discipline this.

copper an see You can That's read has the kind supportive what is what trends. been there look COMEX at of us. environment and and doing always for that out you been

it will underlying very our And certainly It that. be so goal obviously is and to we focused that margin on is that continue seems to going of that. continue aspect the to support

Operator

Now have time. questions at further no this we

Bret Eckert

folks for you forward look next you. to we Jenny, you call. thank Okay. and joining us Thank thank and

Operator

you, this today's Thank for gentlemen, participating. and Thank ladies conference. you concludes

now You disconnect. may