WIRE - Earnings call transcript Q4 2018

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Operator

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

Daniel Jones

Thank And Daniel a to Wire of is Corporation full CEO you, Frank the and Chairman great Encore quarterly to Anna. and CFO. me year. conference fourth good Wire morning, Bilban, and quarter call. this the our report I'm of Jones, with President, welcome the Board and morning Encore pleased We're

in year. unit and a of XXXX second were history net the the EPS for tax $X.XX Our the $X.XX that's XXXX and EPS federal cut operations, is the increase in The company. the sales core over of XX% the in best represents of up EPS from

the the of wire XXXX the period. X.X% X.X% XXXX, spread and of between One sold versus the of key wire cost The XXXX increased copper as versus purchased of X%. in the the sold selling copper copper of is metrics any price and in copper average XXXX earnings to purchased raw spread given in price wire price increased average increased our

of comparison. also across Copper on trend fact country. encouraged by quarter during increased the environment a strong improved fourth spreads in of We sign quarterly view are as XXXX this the this industry margins third spreads sequential quarter X.X% versus the construction We the the XXXX. positive of

that customers conversations outlook distributor Our contractor and XXXX indicate the reps, is with our very sales for their also good. customers

fill to our support We that effort maintain margins. to lead continue believe to an enhance and order superior and continue price industry in increases We position. our increase rates

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

are and thank tremendous accomplish this been historically efforts. their impressive believe employees We able what have our our we and We for performance is lean associates holding despite inventories. to

stockholders now thank our support. Frank? for Frank will Officer their discuss our financial Chief also Financial results. continued our We Bilban,

Frank Bilban

financial financial should of the After results we'll review copy questions Each a get we'll also financial Internet of Encore's review, received to minute, XXX-XXX-XXXX, Elizabeth any a be covering we'll a glad In take call you or Encore's the quarter. and have copy. Campbell press for have. Daniel. This on release you available you, at Thank release the may you you the results. can is

you each risks Before we review such discussion more the uncertainties. certain each me term website involve to financial posted make non-GAAP here that attempting to reconciliations comparable today. be call, useful from to these statement statements including considered that certain may of statements of could as measures and legislation accordance measures of uncertainties forward-looking, you financial indicate particular cause for the to with we information are that and reports presented might financials, directly in www.encorewire.com. In to GAAP, certain most on be actual to EBITDA, forward-looking. call which supplemental risks this investors, that throughout Also, our news believe for of let the those be instead to we and identify releases with detailed comply securities order we a results company's discussed during all I refer advise materially SEC discussed and conference this differ conference the

copper quarter to of measured financials, the million, the XXXX. the $XXX.X in Unit of million for volume, XXXX pounds $XXX.X quarter quarter compared in Now contained net were sales during for fourth fourth versus XX.X% the decreased copper quarter fourth selling increased and the of of ‘XX in prices sold price X.X% sold in the wire Sales ‘XX. the the fourth fourth per average pound $X.XX were net diluted fourth fourth as $X.XX EPS income the quarter $XX decreased quarter XXXX XXXX fourth in of the decreased of ‘XX. $XX.X million X% of XXXX. Fully ‘XX. quarter versus quarter to Net fourth due was million in copper fourth versus quarter quarter lower which per of XXXX the of in primarily earnings for the the known prices, versus share of

pound unit Sales were selling in copper X.X% employees December in XXXX the Net the XXXX. X.X% billion average coupled from a except operations XX, company increased the core tax versus increase offset the wire versus XXXX, adjustment which XX, XXXX. XXXX. in bonus EPS per per million building the year of price a income of during million nickel from $X.XX $X.XX is prices, selling deferred period On wire a million quarterly was the corporate in quarter average volume ended year EPS XXXX the the the $XX.X third of the a due unit versus in fourth copper XXXX. Net $XXX.X December comparison, $X,XXX adjustment quarter the The increase the of quarter XXXX quarterly $XX.X fourth However, copper sold the $XX net slower last Copper the of Net $X.XX XXXX third versus XX, and generally in the million $X.XXX the higher full in EPS $X.XX increased Copper million of by of line to the primarily for for on sold. that quarter includes during the for the pound the $X.XX X.X% volume for of for price income for the in core was delineated liabilities, of prices in in XXXX the third discussion of decrease versus fourth XXXX fact versus special which period the volume at increased XXXX to offset $XX $X.XX, X% fourth of ending quarter versus fourth increased X.X% of the year of sequential XXXX. comparison, XXXX sales quarter same during million the quarter in same The quarter officers in from in decreased mildly was with operations year. a end includes EPS XXXX. was to by and associated in the fourth sales paid all quarter $X.XX with same for EPS December was XXXX, $X.XX period year for with XXXX. billion construction in a quarter XXXX versus ended unit industries. XXXX the versus were of XXXX. $XXX.X earlier. sequential $X.XXX

balance Our very strong. sheet is

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

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

We be after session. replay available also cash We'd call quarter. will another this the this conference during declared for of dividend this you, to remind like conclusion

taped please call and to pound the our Jones, CEO. I'll enter hear Chairman, Or visit the President floor If reference XXXXXXX over Daniel the XXX-XXX-XXXX website. sign. conference turn to back replay, you and the Daniel? wish can and our you now

Daniel Jones

Thanks, Frank.

As well we are highlighted, our take positioned now performed we'll believe Encore listeners. we the the future. well questions Anna, in quarter. And for past we from

Operator

you. Thank

from now go from will Davidson. begin We ahead. session. [Operator Please a question-and-answer Zane the have Karimi Instructions] we D.A. question And

Zane Karimi

Frank. Good quarter. morning and the congrats on and Daniel

Daniel Jones

Zane. you, Thank

Frank Bilban

Thanks.

Zane Karimi

as where I was most little your you for a are seeing strength just in? are as on hoping particular regionally, you if products activity guys product you lines which well provide more the seeing could color

Daniel Jones

air most think I Zane, the goes anyone metropolitan areas. in the who see of regionally as far as in travels cranes you Well,

require There lot in mind, it product but high-rise whatever pulled to construction, those seems and out maybe areas, some two tenant industrial a to new hospitals, centers be so. locations wire our construction along buildings, pretty to all different to product changes expand. continue be pulled does it you in. So causes well. come know, universities, not shipped is to at going be to Commercial both, of data delivered be and new Its and and

to it's at most part, to and but for or commercial, both what in are point. There geographically, expanding again, you, some maybe coast-to-coast. think some fashion. general, major really the be industrial decent pretty differences seem have I this we're some And in that, outliers cities

Zane Karimi

Okay. Thank for And you there. then just a follow-up that.

margins the level about With last competitive strong quarters, pricing how opportunities market the and two are the and you are these sustainable? of thinking

Daniel Jones

the or in and QX time capitalize cost this a materials do. XXXX, in consistent pretty little into companies or do some deliveries there in there in and and with whatever the other QX which those call movement is 'XX, occur on year. quarter. we what most to raw drops Well able on exactly past and off stick to some consistent years and to were don't the know of for missed quality timing saw in and the bit might But continuing the were demand continued was competitors things the remain landscape I and But of on don't in competitive happen fourth of we issues some our opportunities

Zane Karimi

answers. in those Great. queue. back I'll And Thank jump for you

Daniel Jones

for support. Zane, . it appreciate Thanks your

Operator

go Please Company. & Sidoti from Romero Julio from is question next Our ahead.

Julio Romero

morning, Hey, good Good morning, Frank. Dan.

Daniel Jones

buddy. Hey

Frank Bilban

Morning. Good

Julio Romero

sustainable over can just the - in would the I would So quarters the takes as of drivers on just just jump drivers spread the on talk upwards, question expansion be one last on function of especially a wanted how that's other lately, expansion. be the other of up landscape that And seen those any Zane's to seeing kind there, But go-forward puts big those sequentially. driven two about that we've competitive color you how of what been step follow you've drivers understand any and spread spread a basis. additional

Daniel Jones

Again, likely wire I And sell least story and mean, and occurred most what think that's building that see. of is them issues things continue great question. clearly there two some the there's only fundamental I and Yeah, where have that that's one and delivery. we at is

you a can sales consistent phenomenal situation our and add reps in product, if are wire. selling force stated for some a press have things way, while that is a we building a release basis. sales in our the value I in the value we need on where those by to of get do stated As now, system, The job there for sell we some

handling order and at knows. they've So get good order we can away our of take typically price. the done and really orders done is how you that a much the job with once new who But executing of

piece favor we've raw favor in is a of in mix When bias we the where about that you talked you bias want delivery that is confident to delivery. when not over the consistent as piece do so upside and equation, a you've very delivery is materials thing. into bigger to where time maybe, but the and on tell us right we be And for that's can you a we get a a you it is trend, I'm situation on well when got good necessarily in a

So here. a won't on I too go be we're for will, some speaking we're party and Super area demand competitors good, I deep was momentum on went October, just particular after and our very you that lot have it have the have think have and ask is up if a November a through because thing provide yes. are things to get a increased we it more. able and the based some be really very able typically But execution really Thanksgiving when QX, into had, able in market and I to back to see if and on and it's But market into softer success value folks and don't charge when you're December, an quarter good specifically do wrapped weather and bit Bowl great We there's you a we and what people in little can was sustained, the a the can got in work that and screen, and the we've quarter good. year, last you. which quality you of of come Christmas things you rewarded to through pricing that what

Julio Romero

give forward? how the there. just where outlook have we trended Obviously aluminum you I That's price spreads and for can on see aluminum spreads going color certainly appreciate had nice into helpful. update any step-up. have volume detail general an copper you lately the there a in get the Can side? maybe But us products

Daniel Jones

to If petition. issues something that Julio, the all. at public mind take. there market weren't - are in on absolutely that you It were and the I we aware filed commenting is we there We on back sit a that could continue some necessarily going were Yeah, that and don't know,

based so timeframe heading but it's it's I prefer sell we direction. to time. But trending order. it where I aluminum It's not the that performing that and a is But so We in margin but on we I'm means. copper right room along heading up direction. shutdown all the secret any to and be - miss be, not don't don't overall adjustments Aluminum it's prefer and copper great, ‘XX whatever this, I performing it's as a do government it's stepped the It I've probably were should. lot going think as good, with everything need aluminum. got And we recent and the better We've right to that not aluminum and public been will great the should little the on it were in very sales better, grow lot aluminum is better. a in there, better, we'll confident sell

Julio Romero

just Great. mentioned the is, on call. talked you some maybe opportunities Dan, last you And one mentioned about pursuing when I were the last you there. here know cash we deployment,

deployment to wanted cash if Just about any going forward? update see there was

Daniel Jones

we're not to We able with, occur gets France publicly, we some that looking opportunities but where up of else experience to constantly have. sack familiar end something to going here want and ahead are in [ph]. can add super and investigating we’re haven't interested specific watch with in and don't getting constantly be what we’re happen we in announced we I the Yeah. say the and We're anything full, us we've that this some better not and industry but is specific somebody got to into money.

timing And is to going are something anxious has a get consistently just on announced started But couple announce Timing constantly got good trying forward. been it's projects. to some We and nothing able we've and and and be so we'll ideas hopefully we're Julio. improve, of yet to issue. a everything

Julio Romero

XXXX. in queue and of Very luck good. best in back hop I'll

Daniel Jones

Thank support. you. the Appreciate

Operator

you. Thank

comes Bill Please Baldwin ahead. question Securities] Anthony next go Our from [Baldwin

Bill Baldwin

Hi, good morning, and Frank. Dan

Daniel Jones

Hi, Bill.

Bill Baldwin

of tell us was - impact item a just the what the fourth kind Can housekeeping I've Frank. you LIFO in quarter?

Frank Bilban

million minor. cost It LIFO, relatively of in a detriment was was $X.X the fourth quarter sales. to

Bill Baldwin

or Okay. you aluminum the And year-over-year the and do numbers any the I far you major your copper purchased $X.X as copper aluminum, pounds, the volume million. measure wire? year-over-year pounds mean, aluminum aluminum, can give as as same on way and as wire, far aluminum us

Frank Bilban

to QX talking You're QX year-over-year ? or

Bill Baldwin

Yes. QX QX? to

Frank Bilban

the to aluminum X.X%. QX, QX down volumes were

Bill Baldwin

okay. X.X%

Frank Bilban

total our it of a net QX was sales sales And of X.X% dollars, as of only 'XX.

Bill Baldwin

number said more that X%? you then time, one Repeat

Frank Bilban

X%. down No,

Bill Baldwin

okay, been of data good. a Down aspect has know And important X% on volume was, business. I center fairly the the very incremental

the it visibility But a pretty business think an have know I looking out been lumpy wrong. year, large on visibility are that there be from this to XXXX. it correct me and in wonder guess those can't I I if do Daniel, forward and time has center just - kind kind time. much is incremental of orders what it's I I'm data going - of you large had on construction

Daniel Jones

specific I think the nothing on don't that want But to call. Bill, Yeah, it's… share I

Bill Baldwin

this of just as do see specific, to that your as of build-up is you it course of very concerned? kind of there Not far a of year, or to this and sense general you the equal kind year, see continue past it demand trend

Daniel Jones

the I where headed that's answer. with and Yeah, was

will slowing. it's there try the something it I conversations site saw code headquarters and number to not secret and keep is the the whatever not now of centers - really is that than moving of whatever. to with, you, in quotes in names construction different slowing. we're be Amazon not west, publicity that exact have the and was more. The the to But feeling involved keep stuff, I definitely they're lot it's what close they think that's the whatever you the it's also that kept data mean, the locations what

Bill Baldwin

at more when involved but vehicle wiring these that here that building forth you get seems have Do get LNG you to building of to Are and more you're and refineries aluminum on wire get more an building on in business? on that complex [ph] copper Gulf expected projects users the work to so things than large involved or heavy refineries? do that, impact those and all going like of in area, investment or the or they gas CapEx you into it's again, midstream your getting area are capital Another refineries wiring wire not get be turnarounds and Daniel in Coast. oil

Daniel Jones

for that’s offering. It product. answer Both They our good couple copper fit of yes, the a industrial specific is do and yes. commercial to our Yes. aluminum a pretty geographical areas, product is use but

Bill Baldwin

situation is Thank guys beginning how are up so and plants on as forth, how very job utilization, you you and with that able are to other congratulations a far that? and to area much that show and efficiently strains continue labor mind, well. One volume are I other or this the you to run as doing is just your stresses came increased you to want that to ask doing

Daniel Jones

The a speed very to those a rate it. our production, what offering things it question, great. that but jump There here might what that are get and are motivated of they great folks, we got but and presentations We've it, plants got pretty motivated operate factor positive - middle use things. takes of day capacities interviews being to our qualified limiting that's and rationalized put just qualified It stress - them just and We have because we're we've do back people going to day and motivate today to We about quite running it's it don't few constantly it people. a don't in applicants and hire, enough, well. public those. little on doing really at just and you because to they good a if them and upgrading takes high include and we're and are We in help a need things takes and and longer every there in-house in more the some it's our no we're in know plants and is good difficult doing more but train and in the handful of fantastic along takes Constantly few could those and place be listen into folks today is of. get are personal publicize we logos people. with it's getting right to all a identify proud what we're and programs peal

there that at rolling have I I well, from you don't mean no that's tell point. anything - so Bill. negative perspective, And along really it's is to this

Bill Baldwin

Dan much, Well, and thank continued success. very you

Daniel Jones

the Bill. support. Sure. Appreciate Thanks,

Operator

Thank you.

Our next Evans go Advisors. Heartland question comes from Brad Please ahead. with

Brad Evans

Good morning, gentlemen.

Daniel Jones

Brad. Hey,

Brad Evans

the great team. a fiscal for year on Encore Congratulations

Daniel Jones

buddy. you, Thank

Brad Evans

impressive pretty copper. light mean quarter fourth in It's I $X.XX of

So competitive the the I within know it's very you to inclined hypothetical. encouraging something give see industry, to I you're rationality that ask just can and behavior Daniel but forward a guidance, more of not maybe if

So as point? do what would that cause worry happen potentially do you either think be could cause at you to what of down. break that think industry kind to newfound this about What most rationality you could this about

Daniel Jones

It's think question something great and onto a I you’re there.

I far difference If today happened about not we don't to but listen, some - our they say spell started areas anything site. years, rewarded able we're $X the can there's It's the choose some one receive that and to negative I a negative know to the am building we and - really, for out in only something times and to really there couple ahead XX they're not of you competition of try good it's XXXX after is chaos mean, delivery of a at order. things, doing and get think I'm I as a in in want for two be no to those everyone, market the don't creates pound to well I anything, is I well in have of, again, that's that's sure that the there And do as I all well that's wire but the are that far don't bring is and last too our that somewhat executing we you up see and a of value at normally in delivery that not $X.XX-ish the job - that a bit about today, over to a want little of where pound, we're but concerned. we quote year ended market. the there's

And that were fourth want balance you between ahead so as the each have people, reps what's we that important, a and wire two and things where I gets goes our plants of delivery the credit quarters and way for when building the last markets. two rewarded quarter should one market able is that phenomenal And from fourth sell know get important If if that swing was do the to well. or we 'XX, in don't in quarter, other, market. the be best truthful. it and the but to I piece to have our lot the in and in that didn't be the perspective, overused, sales it of it's but one And delivery the in execution of we

to I things think I lines doing can it's of history you know lot be well will enough Brad, a a We're in up change. market that we that a in rewarded. well make where our and

a it's not inside overstepping disciplined So a it's rolling are guardrails and situation - it's something. I own and staying well and market. just things pretty along our we're think We're really a

Brad Evans

to we type financial bit for a into demand input little here, as a we not forward and if environment, to would get a environment copper to you get relatively we intrigued into copper leads to or imagine but long one hard seeing perhaps really possibilities to input subdued stays here. that, what this were of [ph] before by an that as be It It's robust environment, interesting environment discipline in so - as rising get the declining is move happen if industry

Daniel Jones

conclusion to on you're support to want, something, copper think whichever point. enough this bullish you copper incredibly find think environment, you can I'm I I at I look mean the you mean if but Yes, at copper I on articles

Brad Evans

deficit in hard it's is Yeah, the to point. not a at read perhaps this story market where

million full quarters. a million, us spent kind for to $XX it in let CapEx what could three can So your like first you looks the might Frank, as you did perspective, for the you year CapEx be roughly give budget any know where spent us and XXXX? you just $XX sense from - of

Frank Bilban

get For to year, next come CapEx Currently, it's any is question. the make mid we when just pay delayed $XX were and $XX the going the we spent year. XXXX they I think year, because undertaken the estimate sure of about looking the that's you some out, we over this and invoices and that without budget the million the at before could pay best But we're things in things they go to we the for could just now we and know, million large have out, in later go right just full we and year. project 'XXs call answer in and be say,

Brad Evans

it. Got

I So is fortress balance balance mean your clearly, sheet sheet.

requirements this liquidity you've for clearly could business the prices, dividend, accompany the well CapEx fair got to as surge as at as as enough working meet the that with withstand point, capital So copper well higher statement?

Frank Bilban

very fair. Yes,

Brad Evans

and - on in bit? the see is a Okay. the scrap did much great - you quarter help And question availability my fourth last you copper again congrats in did a little quarters,

Frank Bilban

Well, And a fourth that a best we're way to was advantage story penny get than I well, for But guess we lot when a take tighter a Brad, years doing can was and it but that scrap save that in our of secret. we're And you opportunistically. everything don't quarter tight it, of after opportunity of fraction know the is any the to or in little kind can Any we QX. here three. previous bit we that there I we that's and of answer pretty in area. think the

Brad Evans

Appreciate and congrats. questions. it. again for Thanks Thanks the

Frank Bilban

Thanks, us. Brad. Come see

Operator

you. Thank

with a Please Romero. have Julio follow-up ahead. go We

Julio Romero

my Hey, you. just follow-up answered. Thank was

Daniel Jones

Thanks.

Operator

like this And audio or looks Instructions] up time questions follow [Operator questions. it we no have at

Turning the closing for back call remarks.

Daniel Jones

quarter I very Thank all forward appreciate first look you and much. support. your calling and in you call you. And thank Anna, folks, to appreciate

Operator

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

disconnect. now may You

Encore Wire (WIRE) 20 Feb 192018 Q4 Earnings call transcript