Encore Wire (WIRE) 14 Feb 242023 Q4 Earnings call transcript

Ladies and gentlemen, thank you for standing by. I would like to welcome everyone to the Fourth Quarter and Full Year 2023 Earnings Conference Call.

[Operator Instructions] I will now hand the call over to Mr. Bret Eckert, Executive Vice President and Chief Financial Officer.

You may begin your conference.

Bhavesh. Thanks, welcome Wire and Call. Quarterly the to morning, Corporation Encore Conference Good Bret and Wire. President Executive Financial I'm Vice Encore Chief Eckert, Officer, of With Daniel of me is CEO this Chairman and Jones, the President, Board. morning

earnings risk forward-looking for release our factors such comments, forward-looking materially to comments to that everyone of Before cautionary we actual included release and call the filings. to results earnings now we'd certain include over begin and the the from and remarks. remind statements. in like like the to everyone I'd refer I'll described today's in statements, language SEC some on differ our call our our Daniel? turn to opening Daniel may

joining in Thank for and call you, Bret. Wire. you, Encore support. Good Thank continued for on your us and Bhavesh. investment, interest morning, appreciate you We your the confidence Thank everyone.

past Over today deepen these levels service strengthened pre-COVID we contribute to our and invested improving ability investments cost, the capacity in gross higher compared reduce to baselines. efficiency should when several invest compete to We to believe years, to our vertical integration. increase and continue model and have have margin levels our and

which We record quarter in over and demand experienced representing continued volume strongest pounds course quarter, This the of cable increased in quarter. the through the copper us from copper fourth number mid-XXXX, the a year. full wire resulted shipping the of fourth

and this our to respectively, Copper challenges by volume X.X% grew We motivated facing sector. XX% pounds represent goods workforce to manufacture by the ship customers quickly quarter relationships campus, fourth results finished quarter compared shipped by by and the shift to single-site XXXX. leveraging fourth in demand the compared over and the despite XXXX positive deep levels. when third over of supplier our in macro shipped a when integrated grew XXXX to increased a pounds and copper in XX.X% quarter XX% the baseline. XXXX Specifically, of vertically aluminum captured and pre-COVID shipped These

reflection service focus Since steadfast with a at provide under same in manufacturing end complete the quarter of also is initiatives customer orders, our proposition on, believe of of performance providing that our substantially to constant the strong facility fill we founded reinvestment expanded completed compounding innovative was coast outstanding advantage year. exceptional marketplace. as coast. commitment We the our we inception, such our on this The customer products orders have XLPE on a while grown the competitive on quickly combined third shipping centered the organically our value service shipping focus continues to were complete to rates quickly that and

operations higher also and a changing our new and energy quickly our business while renewable one servicing adapting demand, location growing We that to level conditions, model believe of structuring core us of agility to market market as segments. areas service such in affords centers our data

to well future have cable investments throughput the us build-to-ship As demand for will electrification and in modern wire with believe noted the copper our continue demand demand. to made strong broad for will meet that and sustainable XXXX future economy. appropriate We our center compete service and products model, facilitate and to we of above, remained make our of combined our positions

electrification strength and funds our success our We future and Additionally, the our historical federal firmly needed unique should products. for demand that the legislation providing a direct believe we believe our team. the that of broad culture experienced for infrastructure reflection bolster current is for of recent

financial will to quickly and the remain success. I'll the performance turn complete We over and cover our fourth With orders ship our ability in also X location differentiators that that, supplier believe our integration, our quarter. call vertical critical campus future now relationships in strong to deep Bret? Bret customer to

Daniel. year million, gross gross XX.X%. quarter volumes And quarter fourth copper of diluted $X.XX, $XXX.X million, XXXX. of earnings year XXXX were basis, earnings year you, up up profit copper fourth diluted XX.X% per full profit net over XXXX share fourth and of per full quarter quarter was the Fourth share full XXXX. and full quarter over Fourth X.X% year it full a of of income include of quarter on Thank XXXX $XX.X net income highlights XXXX the of up year quarter Fourth $XX.XX, fourth volumes X.X%. were third quarter unit of unit XX.X%

December share XXXX. cash Capital million XXXX, year of hand We March compared shares fourth repurchases and XXXX. $XXX.X in There share We year Board repurchase shares quarter by of our expenditures was XXX,XXX for that $XX.X in outlay XXXX. repurchase through up repurchased million the on the XX, X,XXX,XXX $XXX.X full the full million XXXX had end of end of purchased XXXX. quarter $XXX.X of the common for million for of XXXX. cash of shares We a the company's to of as at to of XXXX. in million reauthorization the the the fourth $XXX.X stock X December approved of is million Total in of

resulted demand the This which pounds fourth number record As the from us mentioned, the we increased year. quarter. quarter in the the strongest a wire Daniel representing continued experienced mid-XXXX, quarter, copper in full course shipping of volume copper over cable fourth of and through

and period, increased the selling just period which the we abatement year compared the in in in first sales volume fourth mid-XXXX, is was every time copper for current discussing since quarter The have that shipped to offset average our anticipated an in XXXX current year driven XXXX volumes margin sequential above. year least year both prior prices with the by quarter of at consistent ended copper was the by quarter recent showed in decrease the year. gradual over history, the in current the and growth net addition, dollars in been the highlighted that In we decrease

slowing third continued copper of fourth copper a X.X% of versus decreased in the the gross albeit driven the margin cost was pound to average the XXXX fourth by prices copper percentage abatement spreads in compared resulted copper noted XXXX. XX.X% while in offset resulted of the profit The which the a partially of XX.X% per third profit during fourth third sold in for cost of quarter gradual in This the selling of X.X%. of decreased quarter purchase, pound of per quarter quarter XXXX pound quarter Gross in average wire to the XXXX of purchased XXXX, the XXXX. price decreased decrease average average quarter, selling the compared decrease quarter in primarily the per above, by

compared of sales Aluminum wire year organic uncertainties remained the prior to continuous year driven sales constant quarter of of represented on basis net in location business and and XXXX employees, and ended persistent Aluminum current kept quarter strategy, our on the the reinvestments in detail X.X% of the to a ongoing basis. XXXX. overall in skilled the by hard and At testament XXXX a all one fourth improvement. attention suppressed strong in availability of levels. the year XXXX full quarter of full were compared historic and a the and was the fourth XX.X% volumes labor quarter a level, our believe working down quarter significantly effectively year above macro earnings to historic model. continued in in and the slightly certain business elevated culture is growth margins in fourth This tightness availability raw to global the for We full a recent and flat XXXX. materials, of

Our cash and balance flow remains generation sheet strong.

we deepen repurchases deepen $XXX almost to have growth construction polyethylene, as driving we fueled XXXX, million. the inception processes through of vertical a our improve we our These well share continue and quarter, XXX,XXX since shareholders Incremental of vertical in XXXX, position dividends. organic cash many our applications, XLPE cross-link water have to and repurchased data should integration projects our and quarter in of applications. stock solar as is including have centers, capacity capital other gas, of on the and for our total manufacturing in and efficiency common in types repurchased oil During X,XXX,XXX and insulation. favorably us a and continue XLPE to of cable used In to outlay to transit, to common in first and began insulation service related shares model. million increasing facility compounded $XX.X wire wind focused to treatment future. compete integration facilities, returned the utilities on Since investments stock shares investments

our costs reduce further well in quarter expand As wire sustainable the facility million facilities of substantially and our Daniel and was the mentioned, as efficiency, XXXX XXXX XXXX. position in in through as completed integration vertical a $XXX.X will processes capital third select manufacturing increase were Capital to Total spending in and responsible modernize company. environmentally to as XXXX. expenditures manufacturing capacity serves improve new

range total in to million million We million to XXXX. capital expect from million XXXX, million $XXX $XXX And in XXXX. $XXX to in million expenditures $XXX $XXX to $XXX

We investments a floor now Daniel cash turn flows. will existing over these expect reserves the to I to with few continue remarks. for to final fund cash operating and

Thank you, Bret.

other The an positions we well is and to quarter planned speed to us the in important It and future. and quarter of the facility of advantage. the in our future. XXXX provide May Plant a for the X in XXXX, customers experienced ability demand servicing under in in testament and should center opening also construction remain service capture capital of model, us unmatched that competitive our build-to-ship Our XXXX, or the opening in new and the the agility deliver single-site new competitive the to of projects capacity third XLPE the efficiency of opened XXXX, third

Our without serve to their unmatched raw availability of and advantage, speed to this commitments serving conditions and us Despite continue in a market level supplier of exceptional unique performance current remains to evolving uphold We persistent our tightness needs. operational well business continues consistent suppliers. in have giving success materials, our partners wouldn't competitive Encore. to of our and market certain customers' agility model the the us

in to our challenges we upon as Encore the nimble focused remain team customer of remain in the ready path. service, unbeatable of quick place confident line ahead, and core our operations that executing strength the stand values coast on any coast. navigate Looking we deliveries I to company,

for safety, I employees want thanking to our to quality by their and hard and work excellence. close commitment

contributions. would their Our continued happened not have without success outstanding

team results also allowed our opportunity as independent Our us choice of their to I in our and Encore partners have invest incrementally to dedicated sector. want continued the strong thank our in distribution for as we reps the position value financial employer support. an

questions confidence our their investment. now Lastly, We'll Bhavesh. for and thank listeners, you shareholders to our take from

very sir. much, you Thank

[Operator Instructions]

limits. time as We questions kindly limit that request X analysts their to

comes Romero first Julio the Company LLC. Our from line Sidoti question of & from

Excellent.

I to the I'll So operator stick instructions. guess

Just, volumes, the I I'll capacity maybe you the can in volumes, question the on product guess here increased regards utilization? with drove what really are one impressive quarter, speak where output lines to here just is you toss to fourth volume

increases was well. healthy industrial, comparatively is government that also, like speaking category buildings, market to product some strong. pretty biggest our broad. with that product somewhat in saw commercial piece. geographically overall individual category particular The Pretty and It jobs centers, Yes. as We data hotels, is strong office residential

are residential side. piece us. industrial for signs very some the the saw was also and We then expecting doing or on well seeing positive And

Quick does on saw model. Yes, on, swagger a in jump Julio, really orders, be level that to service think our back well in that, during with allowing align competitive rates high I you to some strength fill our us the of service is got continue We only to those order year. incremental early lot but is, ship order XXXX. I'd volume high, high, the the quick orders thing also get to -- and with very to demand

from the Securities. Moore line CJS from comes Chris question of next Our

on Great quarter. maybe range, I the little right, math SARS even in But If was just think impact bit share. market so been my $X.XX a better. is it probably the have would

obviously, few guys you the share up picked years. last over So

the managed away, gone let's has less supply that chain lead is issue -- better. times The the supply Your about that. chain and shorter, are now talk but

the So you're like big private. -- Competitors it picking a it's still share comparers up because quick are looks turn model.

in in given I see volumes that numbers. their to up year-over-year don't not volumes assume level fair were that industry XX% So But up were QX, QX? your

It's a Chris. question, great

quickly. it's these So we're to right? the turn mean has level very it better. very, alluded right really right? mentioned private as I And think, way. to to question, orders very, everyone's You Julio's I us, our I anecdotal, all service able never but do been today

of in shortages different get X continued skilled or the the side deliveries. job you if labor X, it's load Given to X very on disruptive your have

start and the quickly so last differentiator. ship one is you may to being the to really a need very able orders The delivery be complete these process,

your I think it's a good part. assumption on

I difference standpoint, making have from a consistent from our fence, really us a was the some time, think continue orders there's levels. is from perspective. the to to taking allowed volume fantastic share in right? definitely piece But that a very of sector, and of that, growth, I on in of order some capacity levels. think to And price-sensitive. orders. and because capacity It always be what at side keep think, clearly a a year, mind, I it's service to our at likely Service that is take serve continues the that's X a these standpoint, From there's 'XX we

Maybe it. be I in one the to big what gross or -- of question 'XX? guess to reach sneak that you question the and margins try the normalize. gross in margins the could big I'll your more puts continues in takes one bottom just is, Obviously, Got questions will here. where are

one. tough a That's

price well, You can abatement. I -- going we're and mean of really, from as copper, a seen much tell at a the purchased. tell how the fact cost pound slowing average we look stated, just to I me to right? Daniel copper And make, in right? we you you fourth price the the decrease decrease we've X.X% guidance, of quarter, Chris, talked think quarter in don't I that the if about sales give third X.X% third the the that and

cost If quarter, you the to X%. look the compared X.X% down ASP at the third quarter was second and was down

piece can is in the level, gap had kind environment ASP see for early to big right? it We peaked The We $X.XX, right? a hit at about you kind right? supportive XXth and of plays So a through think year you copper Copper as went abatement our it, quarter on of $X.XX the closed. December. the the fourth $X.XX, is it steadily think, quarter, pretty that low, I rose in October I of in of the on still and

an building environment environment like. a we copper, had you so And always that of which is

And kind so that a role in plays it. of

paying investments, made We've do dividends. impacts lot right? I over last And investments the think, obviously, of a And those several that years, are margin.

that somewhat pandemic the costs down throughout as year. material were you other the the of went Some up in navigated

And has benefit so to that it. a

the tight pennies and So run you still competing a as good -- X be week month. we're a day, order Everyone business And got put that's as good those be all what great we to far competitive, business so there's as very a operations X going into a sure of really We're It's a a is. bottom X at job time, make go -- if you this many your making going those things as time. it. to it's a is. to can. that order at is together, looking of we X And for and where do trying

the Thielman of Our comes from Brent next D.A. line Davidson. question of

last is Obviously, in volume quarter, there of that volume to as a can still about outstanding now fourth excess and goes? deliver it there? guess in is there the utilization that could quarter of place right capacity years way you've as obviously lot capacity this if were is Is lot Or from to the initiatives a for get about over perspective? few capacity. us a think as conditions had good a you the I -- enhance Daniel, the there

a on AI those and specific little I fantastic question demand the within bottlenecks deep also market from Simply at categories, team the Brent, The data team on the too of demand too, product with has of center getting demand ups without the in the The additional side. job volume and sites. at jobs a ebbs tacked also as bit job call. has to an product peaked customization flows evaluating a done increase there's But kind a category the these the those and -- appreciate quite Yes. downs of done fantastic one bit other.

out. The to answer team those quite and built a left. flexibility have a of that's we sorted in things We question bit of long your space

copper copper quite with react being bit and efficiently. more the to as than comfortable order ship aluminum built lot using model super can't are mentioned, comma it. that we've never but to one-off equipment grown designed a demand that's with can't start taking specific aluminum. boats, and stop kind a speed it. on the not ship of a why and agility have it a We And and a -- products type build-to-ship years We place it again, this we and I'm of this of we the custom moves Bret core over and because, but an constantly, period, is

question. So capacity we're the constantly addressing

have use and I'd and you in short mark, continue side the as enough. rather prepared sit plenty on space to than equipment categories know, we've missing it service the story when the you come that the we we rather of up need grow coming mentioned that capacity got to it and in earlier remarks. those in heard But

the that ultimately the you sneak Any quarter. how more and in spreads industry Daniel, prices course of comments reacted that? volatility have you of just pricing sort through Okay. and sorry. you would qualitative evaluate did some in see If the I even offer terms in standpoint in, can to the copper quarter through yourselves the of how just That from could one

I and October to for going With it in the high. rhythm November, most have is a the I'm in which December, bit pretty of type from about more And on Yes. that quarter $X.XX-ish copper volatility, for up. early fortunate increase in a low the brought was grew to glad the end it it little that a was. in in quarter then good was into something the and it year. increased which you $X.XX part, in low think Very quarter the something, the per There on $X.XX of the pound significant, is COMEX the

allows timing meets we're able the to it have from every start long price the month maybe As agility to able that have in in And and the in to flexibility. take we every of that the next X.X today, end of and then way inventory through and as low month, ship success the be the month, with market. still weeks quarter, timing ebbs quarter. you increases And ups us the and and again, to the and when of those that the and the will, being able downs shipped come special orders that if the to turn the high the we the flows flows through

to We're competitors attracting a you on at able go deep if rather maybe attention most that can I of not reacting idea sustain, to screen, the we'll And on the by got than price. just see I [indiscernible] the it know too that. price. competitor's our spread cutting we've leave will, I'm to list of into supposed probably

of of question line the Barga Our LLC. ] [ from next comes Funai Alfred

morning. this for call you thank And this

And facility facility? in that into then of other You will was startup the for optimization cost this substantially in XXXX polyethylene potential coming noted savings share terms it's from cross-linked or expectations now your QX. and new you a be benefits moved Can that phase. compounding completed

question. of appreciate the I facility is did end smart. we completed -- the third This quarter. the We Bret. that's the Alfred, at

our that's then purchased and instance. and and the it your talked are now, it's products and said, retardant, right comes of like about running, and once a get that, And not polymer fire for fully the utilizing in, then XLPE like one It's process process, of a you still into, as And cross-linked up a going you move get optimization Not of I've commissioning one-size-fits-all, a little but you're to bit insulated right? facility phase a require you You up right running. start-up. right? -- kind some every

you're can create that, not you piece. or as And optimize, that's to putting called something of optimization not that's to for, inexpensive. not different start XLPE so in you grades make And that's within and sure the necessary

that to those you're it's And start XXXX, think optimization, As maybe be we'll the before, I said to benefits you of at think X- into a point, third start-up process. to I as that of kind going XX-month so then see trickle quarter going get in. I and through

it's not a be switch. going So like flipping to

as You're benefit it's full you of in 'XX, going to second see that but of start I going before to go be gaining think to investment. a the be you the half bit through, little

a question Company, & We follow-up from Julio from have Romero Sidoti LLC..

see XXXX. know sequential you kind follow As path? of of ramp Does a we more do trending? volumes I of 'XX, expect 'XX kind of we to kind the cadence how saw kind more look of Or of this construction -- the traditional do same in you seasonality quarter-over-quarter cadence.

No, I can't touch been mean I that, interesting. it's Julio.

You We've trend the had never 'XX. before. trend can that see in

think lot I and with right? you at right? it if our you the doom went in, a March a a did bit, see level the into this year about a destocking and April, lot people we earnings in so in and And as call, we first of distributor gloom, unpack talked entered pontificators tripled and quarter 'XX into of right, little

inventories that we the behind that end And a never us. we as drawdown they typically a typically into we're of they in right down then and took second plays quarter. that when impacted you about in quarters on we through of some has ebb distributors into you align our by model. the up has And day, And with fourth by can take effect year. inventories inventories that at the weren't talked them the of them between build and do up the and they'll up built those those the to flow summer end see. back have a significantly, on, glad or destocking of Because service months, got build the you the count once the then really really distributor that down that, that the their go and back to and piece third supplier quarter, call they see level that

think $X.XX And model as that quarter, time right? the move with to the a regard is somewhat quickly. quarter in a the supporting I within our Daniel service about helps talked our price ability had market the copper significant. to fourth still We differentiator, is service very a

talked So it's you now see. for very you look difficult 'XX, think I can what everything about, to to it's

an You've this got year. election

in You to little better that data one in the give what had out from digest me hot to came and a copper take is inflation a December. you rate But going And trying other. do, the everyone is to tell Again, it's I'll sense. hard cuts.

trend I we as you look at us 'XX, 'XX. see and in get accomplished what where into the it think just we'll and was takes

there. you of factor of on Daniel, the guess got if machine would Or And terms mentioned bottlenecks I bottlenecks? of enough then guess, there table? capacity, has about and be success another plenty would Would had Fair you left And bottleneck will. kind also of the labor? kind in team kind talked you you those be alleviating evaluating there? I the what biggest the be of it

improvement. we challenge. the we the The in back 'XX specifically is piece towards still labor candidate folks started at related layoff. had certainly It the When quality year. all and We've [indiscernible] was a having the training into versus preemployment the in the better testing never with huge numbers way better. significantly the onboarding years significantly of to hiring and question. Good piece what 'XX, a XX-some-odd expense 'XX of goes Yes. the The hiring look that versus and end

Freight as a a as that we they cleared up. were as we better. as the certainly process, bit labor bit a lot A whining in piece be of maybe that of and The quite It's it we at little was. coming severe favor point. not better. to had things think as through our learned the bottlenecks COVID, kind about came It's that long working manageable. doing in this In we're bad seem lot is

ready which be the ] Sterling. wait and on itself, in great perspective. Anchor, team, the us electric, up from Concrete, all to did on Plumbing, projects. really like Humpy's Hill and these for & fantastic getting a quality happy Services, On Pier buildings of require we'd with construction team Coal And to A Wilkinson, our guys But a process it's run Those it. Heinen members, job [ couldn't

say really aspects, We're know significant Super this other that's right all tight, now us the political talk no not front just that bottleneck in ends over atmosphere, a we goes has with a got a We're in on. that and got and right this our right It's up think we've us. starting with It's robust were got pretty that of now, where we'll a handle copper the I all a have see in We've Julio, anxious up. been each talking having days supply the X hype year. The in, an and situation. above this team or us around to we've us momentum about a backups great than incredibly good we tight where lot spot certainly the girl of into right you off in success guy market. control the world. Don't let things whatsoever. takes fine. anyway, 'XX in for a ground the have see thing in It's of around partners, the

of next comes Brent Our question from Davidson. D.A. Thielman

for for we're may Daniel, that some suggest to that I point guess, product mean, line results tough seeing stabilization? I anything to aluminum,

aluminum. a a very manufactured. in secret, good no always copper. product do -- And Aluminum an Yes. comparably odd with job a lead perspective, we've It's the focused it's not it's to Copper a on is speaking aluminum pricing copper. is it's is and positive. importers mined We I they tight There's a to price. big think market, that have influence inventory, secret any no the question. don't When from

that lot We choose our the got going projects, those tail chase with spots. times, the very our some about great that that but We've not style pick And and a on model in service. do cut well discounters. it's aluminum, -- comes flows, of of do to going price, not is in. and we our end It's goes, and a on projects product fantastic we're up ebbs to to it we partners market that my fringe but

plant to profitable bit market bit and product been just us. that category. it the And of is more a bit just the it in on It's fight more have over past. a little as into bit than very gives direct little We a little constant government past. the the strength, in have we XLPE it. And that and product it's things for a control where has better. But it's more a fist looking with have that And volatile go -- they the will little addition that still

Okay. growth And just 'XX. Bret, sustaining the the of CapEx differentiate you can versus CapEx, for maintenance CapEx that sort on maybe just and outlook

right, the to X that just $XX appreciate don't any right? vastly to I CapEx. -- that given you find next give call new we maintenance But I'll million you with would I line you and million again, We I in Because appreciate a tell equipment. on equipment. floor angle it, CapEx, is the I'm bolt to it. go that. maintenance retire spend your machinery it's spot of another We to year, like like going you're $XX that, Yes, and to through as to right, that. definition taking got me

and equipment. evaluating you're current your machinery So always

with of any to closely maintenance sort times our working time. down You're manage

speeds the the equipment. new equipment versus old and line at looking You're

as decisions repair something much safer. be efficient include at it I looking that million. That's replace. at we what $XX million how those in look And energy on $XX and more to basis a You're go-forward can are we for or or the draws look

it's But we just that. in some think folks consistently I lower from it's $XX if maintenance than our look pure that equipment CapEx, back million, million, would it much the say and new $XX capital, consistently, over years. be million, and machine you would $XX anywhere

of comes [Operator line Matt Instructions] question Jackson Capital. the Our next from Scopia of

the could which the hoping just was quarter, I you positive? negative impact had or in give LIFO

throughout in quarter. and quarter, the in mind, environment was yes, rising had where Well, an keep copper the we

of just pickup million. about quarter, under fourth the It in $X pretty so a was was And significant. it

If It that's balance right, price. the pickup more a your you and orders, million, a you're your a of a about of third was effect, it's quarter, it month cost just compare is it $X because really sheet beginning product. to

copper or adjusting on to make within down, match revenue expenses with your depending And just what -- up your so you're month. your does to that

model. was and goods the so inventory month, finished that over it in there. And the material, a Buy change we our beat pickup. But the it's XXx, hedge out same turn business because perfect ship shape it's small cannot you the it again,

further to to appear Eckert, this time. call at you. back be questions I'll turn over the Bret Mr. There no

Bhavesh, so Enjoy thank you investment participation Wire. day. your Thank for everyone's your interest much. Encore in today. I and your appreciate you

Happy Day. Valentine's

may much. This you you Thank participating, now for disconnect. and conference very concludes you today's We thank call.