Encore Wire (WIRE) 19 Feb 202019 Q4 Earnings call transcript

Welcome to the Encore Wire reports Fourth Quarter and Full Year 2019 Results conference Call. My name is Adrienne, and I'll be your operator for today's call. [Operator Instructions]. Please note this conference is being recorded.

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

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

unit for in volume as evidenced with X.X% increase unit Our though in to strong XXXX. was we business by face in increase remain The in achieved even vigorous our products the the compared volumes markets XXXX continued our marketplace. competition

the profit noted competitive demand full for pricing margins the with the fell Despite quarter copper XXXX building by fourth market with competitive the pressure fourth restrained of in versus and quarter concert were U.S. quarter strong in XXXX's fourth in versus year drop construction Gross wire, prices along XXXX. and basis, above. the margins of

the the year sold of the price decade. contracted key the XXXX, of XXXX of while in average The spread copper metrics X.X%. of the between of quarter The of copper any over fourth spreads highest quarter XX.X% cost and decreased purchased decreasing should XXXX One copper the as price in a in copper in It earnings that fourth quarter the in the raw wire of X.X% XXXX X.X% of XX.X% of the purchased copper decreased given the were versus be the the selling to versus fourth is wire fourth decreased noted quarter average while full in the period. fourth sold spread price XXXX, spread the our quarter of comparison.

support currently strong still those again. believe can we However, margin markets end levels the

sales we laws. trade aluminum XXXX, wire, enforced of under rights U.S. represented in successfully remedy our the our net which X% In

duties required will cable of Commission’s of result to As to final the and China XX.XX% U.S. XX.XX% wire decision, from ranging the upon to at rates duties depending a from rates pay plus exporter/supplier. ranging aluminum be Chinese from imports at countervailing Trade XXX.XX%, antidumping International affirmative XX.XX%,

and there customers, U.S. continued discussions customers our a next on economy for good distributor believe the continue contractor we our and rates projects outlook as activity. enhance We appears Based position. is to their with year. order for superior is construction strong believe competitive fill our construction

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

But let's some We Bret? first, also to results. news have financial cover about our exciting plans. expansion our share

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

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

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

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

XX, wire versus billion XXXX sales income selling XXXX the December to versus versus year diluted in December copper quarter in $X.XX unit $X.XXX contained $XX XXXX. X.X% earnings million the XXXX. in measured Net of to in the of million quarter of fourth were in year per The XX, December wire per copper Fully ended XX, in the the ended $XX.X pounds the pound fourth the increased sales for were year the of billion the of on XXXX, more XX, versus Copper average impact price sold, XXXX, volume offsetting XXXX. XX, December compared fourth XX, December quarter Net fourth net the of $X.XX common sold ended year decreased for XXXX, volume, than XXXX, XXXX. December ended year the $X.XXX decreased X.X% unit ended share for quarter in dollars. the year the ended

million X.X% common prices on for period a same Net of XXXX. sequential decreased of the during dollars Net XX, the net of of in the due the the income copper year X.X%. the unit of decreased versus the fourth $X.XX volume quarter Fully in versus basis, XXXX. the were net copper quarter million diluted income quarter of per the XXXX. increased period fourth third period XXXX. in an XXXX. net quarter versus earnings of quarter comparison. while were million XXXX million third a for share $XX.X common building in fourth million price sequential increased $X.XX versus for $XXX.X Copper $X.XX $XX.X XXXX $XX.X was million the December of X%, to $X.XX quarter current in income diluted Sales per third XXXX, $XX.X versus On purchased sales in share sales decrease was wire in sold in XXXX to ended same Fully quarter wire $XXX.X the quarter

strong. very remains sheet balance Our

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

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

our dividend a We website. declared A accessible call replay also section the of the conference quarter. this cash of Investors will be on during

Jones, the turn our over Daniel Chief Daniel? and Executive Officer. to now President floor I'll Chairman,

Thanks, Bret.

As basis. the and We year we positioned continued in the future. well for Encore performed believe we're past quarter highlighted, in a well growth full

to us north continued some XXXX existing foot new have at in square begin which X expansion and a the higher order center, of will capture customer bandwidth and campus. further service marketplace expect sales will strengthening a compete news level necessary phases. act service will also the share we our incremental to This of Phase X first to of plans, modernizing in while facility at our rates. about in as quarter We to located our XXX,XXX a throughput increased proceed to the end facility Phase two with allow allow provide for construction fill the logistics industry-leading volumes.

will the will of expansion expect XXXX. of plans X complete quarter and in X We to following second Phase our commence Phase construction

extend Focus is stakeholders. employees, reach. in on X existing inception. distribution is anticipated XXXX. repurposing exciting been completion significantly center an time This our our since construction to and customers market under capacity Encore's manufacturing We've Phase and expand for

today. to continue grow We

$XX XXXX to We $XX and our in meet $XX the anticipate reach X-phase plans to from to million million million and customers. to million million needs $XX to XXXX, capacity manufacturing range growing in our XXXX. of total Our million will capital in $XX expenditures increase expansion extend $XX

of for we stand Stockholders. our outstanding the with high from consistently diversity forthcoming ample will of and filing Our to capital serve strong of XXXX closing, Courtney proxy after expenditures. flow should at We've in balance to sheet remainder years Meeting company's cash individual retiring generate March. ability service. term that Board on current his not yesterday levels in XX Annual fund our reelection an that allowance Don provide planned operating Board bring more the the identified our In Board announced will information He and to of was

their thank employees efforts. We and for associates our tremendous

thank stockholders for support. our also their continued We

We'll now our take listeners, questions Adrienne. from

[Operator our question comes Instructions]. Julio Romero from And Sidoti. from first

I of labor, of on any year-over-year of notable your many As such maybe copper? overhead if seen cost inflation ask kind semi-fixed in And on have components as were a wanted you far other quarter, fourth than the so, basis? materials any as or your any if in to of of those -- the

we It increase few work took increases get we things But increases the to had us covered. were saw some that that yes, benzene. -- had something increase allowed would get quarter up labor. weren't a really we price some in increases a had in to increase in labor just then in lesser those in And We to expensive. market -- in to price There also extent, that and that We an fuel. diesel more picked the was pass-through. some have

maybe you're able does help bring from what talk standpoint? any And so, capital the service to turning would maybe Are I of Kind new helpful. that mean, logistics to be? you allocation doing costs? for what there. That's be might if down can that what efficiencies center and those a you there you Okay. about

now, turning much are. We're at the we we're process than orders trying to of numbers, in some but looking the finalize those of currently obviously, faster

running in customers have on basis a equipment, with consistent for. the will we at turning right and quickly it. to to as upgrades rates we possible today basis and fill more some Our be XXX% our center in reliability of really capacity on right is a demands X as a capacity. basis, field on the more the [indiscernible] speed the And with distribution meeting to Along tipping have obviously, and Phase existing behind add what wanted room consistent

any that on would offer? portfolio? lines it. adjacent to in something for product to Got Or like be color would currently capacity you what expand what something maybe And your the be you'd current

electrical but for the standpoint. will time give umbrella. -- be the necessary consistently We're machine some some will time There this speed to us some job same come from will mean, some that up and distributor capacity address add fringe service the reliability still on additional are in the all market, additions, that will piece field I to from time servicing products the under it service flexibility a sites the be center requirements and

from D.A. next Thielman from Brent our And Davidson. question comes

this? could about Daniel, of you're we cash. a talk speak now implications And that can things the how think you investments, these with do openly you to why financial about about little doing more be to prioritized? I able were the start guess were other There these

the demanding. market is Well,

Our in question. to from existing pushing are faster a product room with that need customer move. the orders. service user moving handle We're are to more accounts are no that coming space move is itself that just required piece base The end the and lot us this direction. services and reliability requirements in to these some speed of the to to in, and today addition our the comes There's we

XX, XX. to like the see It's compete is premium that putting marketplace. and XX on turns can as or You shoot have finished sites I and job reliability We successful and that that the goods weren't these X% continue speed maintain to like we to measurement a too some we're to to for fast. as out. X% to again, I'd really clearly compete. user fourth the have quarter but continue in speed for we bandwidth end in reliability to try

you done think do you've what you could capture with share do this And help capture you also, historically? over premium you additional can market think And this? additional

hang type There's able cut think after X that or is We advantage from keep the price basis if to can potentially the investing a this only the sell for going to we're service to is marketplace. things price out kind years. I've wire. X% maybe one. market building to X% bid delivery. we're can or of the We're that said auction in things the do. and changing. that that The improvements we dynamically Anybody do X. and the the It's delivery we to and It's a in, these point side on way We easy on an price. And changing. XX maintain continue

would I the really allow there are you of into? country. further that And country pockets to the Encore underpenetrated, is you're all little reach hit the of you a But to feel historically, I've of -- mean, Okay. this pockets areas able always thought

should is surprises, access if time, and times. the on areas to a necessarily couple service some to don't some for well that of XXXX. we some And some sites we machine to that geographical off the access are would that planning category we unpredictable of some that and early strategic have I pay speed mean, are -- made that as And some There it's will, XXXX predictable. less not flexible going in the job these reliability, volume product as to changes that like. distribution from, of we have little you comes and of us is have a do in

we're a should of reliability speed those perspective. in is what couple from So that a way areas to our support it and be building not

areas. in the it so to specifically, there help will want a are in top X us but definitely both them X consumers They're name I X. And country couple of area wise. or don't

definitely will it so help And us.

Yes.

And on X% implies a guess, on the gross One I softer. and what went the Okay. got around about it average bad all competitive happened? conditions looking quarter of down then what kind little mean, you bad set last this price I selling just Can more itself, actors of actor, margins, a pretty talk quarter. little there? bit at

$X.XX, fantastic was continued was. -- October, it on hang mid-$X.XXs, in that about of were it to X And basically up that. in went price What that out it to. last ended And or I X in didn't put number. range COMEX, the were the we We the October, price start COMEX that days for high to do that is because $X.XX -- and increase the we rise $X.XX -- we at $X.XX event mid- then $X.XXs, month that successful with to increases able think, around have Yes. in the was we $X.XX price we early November $X.XXs a able and COMEX where off about stick $X.XX, as Brent, from October, We range mid-October saw, on first low us. that's front historically, increase in to to is

announced. $X.XX old lose hold the discounting was ability you at that go it And back range. to then You increase that runs right price and to up the levels into back

think $X.XX over So low you up put the start price around December $X.XXs, out finishing up -- a and $X.XXs announcement and high mid and end December process was the I increase into in and the $X.XX. roll

of You issue as when in right the Christmas got as up stops have volatility and really cents just cost just the your XX-some-odd October basically price of basis was to had or what first a volume of increases whatsoever. -- selling on face on from week kind it And a Day consistent no the you. everybody much you went wasn't it traction

think And really. But more I of there's I X the that of timing, X bad X or X know mean, should a only left the or us name was don't of I think. in industry, actors. I I it

of the the of more way COMEX timing it's volatility in think hitting. I the was

it, increase, $X.XX announced You a lose you price COMEX. and in a the day you pound announced $X.XX or

just And be, the are what paying have ability and what some hang in might -- the have was of match full year, there's their year-end market, bills busy the to You of posturing you maneuvering in And on for in if with December. trucks to -- some in price folks or time. it and and the that it's increase. was it pretty that busy the end the are maybe of programs but The inventory we're people it we're don't brutal. you, the to lack toward not and And a in not the on feel relative time discipline, very did market. market shipments is the feel will, are again,

the unsustainable. catch happened -- with fourth feel industry, and maybe X%, from the you're of what And and cost mean, you risk able needed. to that's the kind in early not $X.XX of get It it look just increase I X% cover [indiscernible], at that's quarter. you'd the disease gone that's the COMEX the to you a doesn't October, $X.XX at when in price

you years the point? last itself? feel and does That's the at last one this have Daniel. pretty to couple is like environment to with think my maybe does last than commentary. relative this trends setting couple this industry year you of this particularly, about busier how of be going is, contractors, as it dialogue aside the forth, I mean, your guess, customers, your years appreciate busy so year, market, distributors that, -- I helpful feel I the market

when for or dialogue most days having hopefully we're spending the It's there's us want cycle and it to narrowed well one and a in lot the planning when quite bid distributor as part, behind bit. time just site planning. the Those It more and order, does. something job you are that's something forth the the users itself. prices the and partners more into matured there's from have, but And frame as time, more the of the with on becomes an end a checking X actually going or quote far you we that perspective marketplace. From X back lowest past

auctioned you it's some And conversations one massive way those marketplace, end the resources on ground, of these and we specifically, when quality coming of half that invest lack something out through have in the delivery service saw going the But the you XXXX today. ongoing of worth it both and are might some front issues be service or real actually In into second so other. and jobs the in the whatever. past,

And got the side people's it versus little it swing I just the in the and favor pendulum so the did some industry, attention, delivery price. in low a bit of mean,

from your question Baldwin [Operator Crescent. is Bill from next Instructions]. And

situation was housekeeping items indicate couple for year to XXXX? us the here. of A you the Can what LIFO fiscal

Sure, Bill. Bret. This is

decrease nonevent. So LIFO was was for to It of pretty cost year. about the a sales much $XXX,XXX a

and year? residential how shipments markets much the of Okay. the And went in your can QX full for Bret, you tell into us, the

Sure, Bill.

XX%. it the was QX So And just short full then a year XX.X%. it about basis, on was of basis, on

So pretty consistent.

Pretty flat.

quarter. [Indiscernible] in the

function of timing the what announce kind function week? copper increase? a that to prices? price a Or of is the copper you Daniel, dictates announcement day the And do price on that plan increase? the a mainly of a Or of how -- time-wise of decide Is

Yes, you years, copper. Without support is it. throughout price any the love of as do super the in has of sir. we increase just A lot COMEX know, think to put deserve type we'd copper, just we not the with a the timing of But out cost, because to visual market.

As the and noncopper-related basis, back on upside the trend certainly helped. bias out stick. you consistent that could they I the don't or without over items years the point just go a on know,

the the the of marketplace. it's COMEX, most the visually to don't don't for actual a too have trend with increase, manner. bias deep us in price into general, mechanism I have a quick pretty forward us, we But in folks for with -- price But a sheet execution to get off the following you that the orders have part, pricing have of want in to days the the or unless it's accepted an announcement for we path price some -- normal this, go but increase

where But I and itself market look lot has the mean, for are. we with us, market. a day in at it's intel It situation. daily each a to we do the

me, As you quite a there's travel bit. of or know, X here, customers with that including us X

strict you quick office Bill, market it of forth about days, a and We discipline. that once have answer time itself it, it's a conditions. And you and and a have of discussions a cost heading that into maybe a timing but creep week price of of let busy takes the there's it whatever the and settle kind sometimes into -- in we three pretty the set a sometimes, back days or customers it couple goes it frame, and into several and post lot any see time to increase,

just X put increase. maybe X that X would of day or go. where have pretty increase a on get attempts And the trend. support, or was some of $X.XX lost COMEX a the imagine price were behind after increase way QX, that copper X, COMEX X you out, each the once But price calls underlines visual days or the we can they of And next right day You have unfortunately, $X.XX you some X bias window in put that out it to it's the in that quickly the or

the In market.

what but wait existed and to that some there's super-fast further. as do. old to has don't X. folks And see just X actually specifically, the to know what the trigger past, pull competitors. But correct us, XX-some-odd in not that to you have know, and to sheet, happens. sit for XX don't For or we'll they'll the and go are discount But issue I other companies down how used years. We're or again, do about we back

care takes run. of the So I guess long in it itself

I here. I there, appreciate call these Daniel. competitors you your because the -- calls got know difficult it's to talk on insight on

And lot [indiscernible]. of a Yes, sir.

are Unfortunately, none of don't get see data. We public. of these other any competitors to their

Right.

you customers they going out capacity But they've of satisfy you there know a perform and these way Daniel? you're the trying any or think mean, unused for not. are they excess comment to here timely of Do that copper you if the that, prices got don't got it can on your perform they out basis while a they capacity -- them, mean I and way I guys And in there. got feel have person the fill? marketplace, ton a and lot a makes service to have that up. discount are I seems

of run don't years. it's don't who that I has -- I mean capacity. a are Maybe know. as -- this been I multiple way I far trying know all mean they to ton to are running. plants don't As know. budget number they know, I for I some

Okay.

looking as might it X transformational over word. not Wire years. a just hard public capacity of the as to lot have so like seems because don't Congratulations this to your It But use is XX for to it's here, projects looks for you here. me next me, understand. appeal the capital out you like, event I Encore any a get to on far Daniel, So numbers

pretty Yes, your Bill. support. about excited Appreciate sir. We're it,

from question And from Sidoti. the comes next Romero Julio

of allow of I an x incremental as units of Or sales we should per you amount think post Should certain about above percentage think should that kind that year? to incremental a about expansion How market? volumes in kind grow XXXX?

QX, a much fantastic job super we're Well, service our yet. think news We're money. at, larger you make after can. And exact if the not and can where bit answer, to and speed to to and center a little this some as I to at. going we areas can we're begin want getting we poor. don't in to reliability XXXX and we're give orders putting to not anything case. a we're to stick of for I'd with. piece, is be I do fair too reliability. on But close interesting around. We're about I'm going That's Julio, we pretty pace the use to on And the great these cautious -- about up good say go out to like pick going going turning We've as been

to fringe that we far items it's As add a add same we operate to allows little few piece, center umbrella marketplace. a bit currently the with in to capacity as the additional be that in existing that under the us service building, distribution charge going to more the which

that, the other and we've of not and marketplace able prices. type be to standpoint X% maybe approach marketplace going into just again. and for years watching That's that going in doesn't service way. X%, try it be work been What go some that to of from any people do gain is cutting volume we're XX Historically, that premium to do to our delivery.

and speed added in Phase those in with hoping fringe some we time picking pick today, new based facts reliability machine piece additional them that X the up more of existing and Phase on know on today, we'll and the the up. products. we volume the we X with percentage -- a it's that So And and flexibility can think as points be couple on we're

we turn I'll no And call the further final remarks. questions. have back for

anything Okay. say? Bret, do to want you you have

No.

thank the folks you for quarter. Thank you. questions. you and appreciate while patient to Talk we the of handling support next being answered the call. We Adrienne, you

disconnect. you you, and and you today's Thank now conference may call. for concludes participating, This ladies Thank gentlemen.