Q2 2021 Encore Wire Corp Earnings Call
[music].
Welcome.
And the Encore wire reported second quarter results conference call.
My name is James and I'll be your operator for today's call at.
At this time all participants are in a listen only mode. Later, we will conduct a question and answer session. During the Q&A session. If you have a question. Please press star 1 on your phone on.
And so not this conference is.
To the on it.
I'd now like to turn the call over to Daniel Jones, Mr. Jones, you may begin.
Thank you James and good morning, and welcome to the Encore Wire Corporation quarterly conference call.
As stated on Daniel Jones, President and CEO and chairman of the board of Encore wire and with me. This morning is Bret Eckert, our chief financial.
Being richer.
Thank you for joining us on the call and for your interest and Encore wire. We appreciate your continued investment confidence and support the.
The health and safety of our employees and their families remains our top priority and we're following CDC guidelines and maintaining safe working conditions, while we continue to serve our customers.
The record results and the second quarter ended June 32021 are grounded in the rich history and core values of our company.
Unbeatable customer service and nimble operations and quick deliveries coast to coast.
Encore is 1 location.
Vertically integrated business model.
Strong management team and deep raw material supplier relationships have allowed us to remain fully operational and while maintaining our high standard for fill rates to meet the surging demand and the current environment.
By continuing to meet the evolving needs of our customers, we were able to increase copper volumes sold.
Sequentially over the first quarter of 2021, as well as an increase over pre pandemic historical levels.
We believe we can sustain this volume growth compared to the prior period levels for the remainder of 2021.
Copper unit volumes increased 33.4.
<unk> percent on a comparative quarter basis, and 15, 1% on a sequential quarter basis.
Comex copper prices experienced upward volatility throughout the second quarter, peaking and made before pulling back slightly at the end the quarter.
The upward volatility had a positive impact.
Packed on spreads and copper spreads increased 234% on a comparative quarter basis and of 109, 2% on a sequential quarter basis.
We believe encore wire remains well positioned to capture additional market share and incremental growth and the current economic.
Environment.
As we address the near term challenges, we remain focused on the long term opportunities for our business.
We believe that our superior order fill rates and deep vertical integration continue to enhance our competitive position.
As orders come in from electrical contractors.
And our distributors can continue to depend on us for quick deliveries from coast to coast.
I'll now turn the call over to Brent to cover the financial results.
Thank you Daniel and the minute, we will review encores financial results for the second quarter and 6 months ended June 32021 after.
After the financial.
We will take any questions that you may have.
Before we review the financials, let me indicate that throughout this conference call, we will be making certain statements that might be considered to be forward looking and.
In order to comply with certain securities legislation and instead of attempting to identify each particular statement as forward looking we advise you that all.
All such statements involve certain risks and uncertainties that could cause actual results to differ materially from those discussed today and I refer each of you to the company's SEC reports and news releases for a more detailed discussion of these risks and uncertainties.
Also reconciliations of non-GAAP financial measures discussed during this.
Conference call to the most directly comparable financial measures presented in accordance with GAAP, including EBITDA, which we believe the useful supplemental information for investors are posted on our website.
Net sales for the second quarter ended June 32021 were $744.4 million.
Compared to $253.6 million for the second quarter of 2020.
Copper volume measured in pounds of copper contained and the wire sold increased 33, 4% and the second quarter of 2021 versus the second quarter of 2020.
Gross profit percentage for the second quarter.
2021 was 37, 3% compared to 14, 4% and the second quarter of 2020, the average selling price of copper wire per pounds sold increased 129, 6% and the second quarter of 2021 versus the second quarter of 2020, while the average.
The copper per pounds purchased increased 73, 5% net income for the second quarter of 2021 was $183.1 million versus $12.3 million and the second quarter of 2020.
Fully diluted net earnings per common share were $8.82.
And the second quarter of 2021.
First the 60 and the <unk>.
Second quarter of 2020.
Net sales for the 6 months ended June 32021, 118, 9 billion compared to $556.4 million for the 6 months ended June 30 of 2020.
Copper unit volume increased 16, 2% and the 6 months ended June 30 of 2021 versus the 6 months period ended and the previous year.
Gross profit percentage for the 6 months ended June 30 of 2021 was 34% compared to 14, 8% for the 6.
It's ended June 30 of 2020.
The average selling price of wire per copper pound sold increased 89, 2% and the 6 months of 2021 versus the 6 months ended June 32020, while the average cost of copper per pound purchased increased 65%.
<unk> for the same period comparison.
Net income for the 6 months ended June 30 of 2021 was $224.2 million versus $31 million and the 6 months ended June 32020.
Fully diluted net earnings per common share were $10.81.
For the <unk>.
6 months ended June 30 of 2021 versus the $1.50, and the 6 months ended June 32020.
On a sequential quarter comparison net sales for the second quarter of 2021 were $744.4 million versus $444.1 million during the first quarter.
Order of 2021 sales dollars increased due to a 47, 7% increase and the average selling price per pound of copper wire sold combined with a 15, 1% and unit volume increase of copper building wire sold on a sequential quarter comparison.
Gross profit percentage.
For the second quarter of 2021 was 37, 3% compared to 19% and the first quarter of 2021.
Copper wire sales prices increased 47, 7%, while the price of copper purchased increased 13, 2% and the second quarter of 2021 compared to the first quarter.
And the 21.
Net income for the second quarter of 2021 was $183.1 million versus $41.2 million and the first quarter of 2021 fully diluted net income per common share was $8.82, and the second quarter of 'twenty, 1 compared to $1.99, and the first.
2 daughter of 2021.
Aluminum wire represented 6.1% and 6.6% respectively of our net sales and the quarter and 6 months ended June 30 of 2021 are.
Aluminum wire volumes have increased for both the quarter and 6 months ended June 32021.
First quarter of to the comparative periods and the prior year.
The favorable market conditions, and the second quarter and 6 months ended June 30th were driven by rising raw material prices and surging demand in addition.
And production challenges across the sector, including inconsistent access raw materials disruptions and the distribution.
And network and access to skilled labor created unique market conditions and the first half of 2021, we expect these disruptions will begin to abate during the remainder of the year.
Our balance sheet remains very strong we have no long term debt our revolving credit line is paid down to zero or 2 phased expansion plan.
<unk> announced last year remain on schedule and.
The New service Center opened seamlessly and mid May and is fully operational today phase III, which is focused on repurposing. Our now vacated distribution center to expand manufacturing capacity and extend our market reach is on schedule for and early 2022.
Yeah.
We've been under construction since inception, and we continue to grow today.
Standing financial results through June 30th have fortified our already strong balance sheet, and we will continue to bolster our cash reserves.
Market conditions have also afforded us the opportunity to accelerate our capital expenditure plans.
And incrementally invest across our campus. We believe these investments will broaden our position as the low cost manufacturer and the sector and further increase manufacturing capacity to accelerate growth the.
<unk> spending in 2021 through 2023 will expand vertical integration and our manufacturing.
Onstream processes to reduce costs as well as modernize select wire manufacturing facilities to increase capacity and efficiency.
Capital expenditures and now expected to range from $150 million to $170 million and 2021 of $140 million to $160 million and 2022.
And <unk> and $60 million to $80 million and 2023, we expect the fund these investments with existing cash reserves and operating cash flows.
I will now turn the floor over to Daniel for a few final remarks.
Thank you Brett.
As highlighted encore performed exceptionally well and the second quarter and 6.
And at June 30th 2021.
And our low cost structure, 1 location business model and strong balance sheet.
Position us well to compete and the market.
Our results further validate that our vertical integration raw materials supply chain strength.
Production capacity.
6 months and ability to quickly shift complete orders are differentiators and the current environment.
I wanted to take a brief moment to recognize our employees and associates for their hard work.
Perseverance and hustle during these unprecedented times and our performance this year could not have happened without their extraordinary.
Ordinary efforts and contributions the.
The results of allowed us the opportunity to incrementally invest and our team as we continue to position encore as an employer of choice and the sector.
I also want to thank our shareholders for their continued support.
And James we'll now take questions from our listeners.
Very good. Thank you we can begin our question and answer session. If you have a question. Please press star 1 on your phone if you wish to be removed from the question queue. You May press the pound sign of the Husky and if youre using a speakerphone you may need to pick up the handset first before pressing the numbers.
Once again and do you have a question and press star 1.
And our first question comes from Julio Romero of Sidoti and company.
Hey, good morning, Daniel and Brett.
Morning.
Wanted to start on the the.
The nice <unk> results here can you speak to the trend of gross profit dollars throughout.
And I know you talked about on the release.
The comex, peaking and may and pulling back slightly in June did your gross profit dollars per unit followed the same trend and in other words of day did they kind of peaked in may and pullback in June.
No.
And as you looked at coming out of the.
The first quarter of the trailing months and the first quarter March.
And really started the C. Some of the strength and the margins that accelerated each month in April and May and.
And likely probably peaking in June.
As we went through that process. So it was somewhat consistent with the with the increasing comex, but.
The fornix kind of bounced around quite a bit and the month of June after peaking in may.
And the demand stayed very very high throughout that period, so margins kind of track with that.
Got it that's very helpful. So I guess, yes June was you did see strength coming out of the quarter and I guess, what I'm trying to get at.
On the fifth Sir.
Okay.
And as you exited June I don't know if you can give us a sense I mean was it still was the amount of dollars per year and it's still at that.
And about 100% run rate of our first quarter copper spreads.
And you say that again Julio what's the question.
Okay.
As you exited June was the amount of dollars growth gross profit dollars per unit and other words, the copper spread was that spill out about sequentially compared to the full Q1 still at I know you mentioned and the release.
And the spread was up 109% year over year, sorry of 109% sequentially.
What's the exit rate still around that.
It remains right on through June yes, Sir yes.
Okay, Okay great.
Maybe switching gears a little bit to the.
So the Capex you talked about you know you alluded to some some vertical integration and modernizing facilities can you maybe give us a little more color and and.
You may expect from those investments.
So as you look at this I mean.
These incremental investments are going to continue to position us.
And to take costs out of the system right.
To make some excess of accelerated changes at our facilities that we believe are.
Some of it further insulate our competitive position as of that low cost manufacturer.
It's going to help us drive growth and both efficiencies and unit sales that were doing this because what we're what we're doing I think is going to be able to purchase and all market conditions and that really is the key incrementally invest today to be able to capture growth and efficiency.
Fish and sees that we can carry on and the future of and that's what the Capex is going to be focused on again vertical integration and some modernization and capacity increases.
On the campus.
The labor Julio continues to be the challenge and anywhere we can.
Upgrade if you.
We're going to be some equipment change into.
Some other areas of opportunity for us.
And where we are able to maybe take some of the labor out of the process.
We're super aggressive in that area also and Theres definitely.
And will my opportunities Air force and the plants and.
Coming out of.
The challenges that we've seen both with the Covid.
And just the overall lack of.
The labor in the market.
You know there's some things.
And we're able to do and we've got the money to do it and and we're going to knock it out.
Okay and.
And I guess, maybe just last 1 for me and I'll pass it on and it's just on.
On your balance sheet, you've got a very nice jump and receivables year to date and I think if we back out the incremental capex youre talking about sales.
Still leaves us with and I think over 100 millions of receivables that should eventually I think turning to cash.
How are you thinking about that that cash balance. It's a good problem to have but just curious how youre thinking about that.
Yes, I mean, you know as stated from the Capex and where we're.
Looking at and and constantly doing some things to upgrade and.
Update.
And to get on the leading edge and the operational side and take some cost out.
And and whether whatever storm a common and then.
We're constantly looking at.
And buying the stock back and.
And the potential of doing some of the other.
As for our shareholders for sure.
Great. Thanks, very much I'll hop back of the queue.
Thanks, Julio Thanks Julia.
The report.
Our next question from Brent Thielman of D. A davidson.
Yeah.
Hi, yes. Thank you.
The thing Hey, Daniel on any indication there has been some sort of pull forward and volume by the.
Distributors just in light of the move and copper and the first half and that the constraints that are sort of widely reported out there I just wonder if there has been.
And then and then more of an intent the desire to get the product they.
Projects today, and potentially future projects I'm, just hoping you can comment on that and whether you're seeing and many of that pull forward and the first half of that might take away from the second half of the year.
Yeah, It's a great question I don't see the pull forward.
The the demand that we've seen has been pretty concerned.
Consistent.
There's more of a sense of urgency on the delivery side.
And the immediate order of immediate ship.
And there's certainly some opportunities.
You know that we've taken advantage of going forward, but.
Nothing out of the ordinary.
Our.
You need probably easier and sales team and.
The folks have done a really good job of managing that demand.
The immediate order immediate ship is still what we're after.
And I haven't really seen any.
On.
The pressure has not been too great really to take something too far out of <unk> for the questions come up it's part of the negotiation process typically but nothing out of the ordinary.
On the demand that we see.
Today.
As of right there along the same.
Same categorically, it's along the same path that we were in.
And also from the volume perspective for the second quarter.
It was very similar to what we would expect to manage from the intake.
The.
With the higher volumes.
We reported so.
And there's really not that much pressure to take a lot of stuff forward. There were some jobs that were.
Maybe put on hold during.
The pandemic height of the pandemic and at the end of 'twenty and the first part of 'twenty..1 we had the you know the ice storm.
And if you don't have the weather event in February but.
Since those things feel to be behind us.
The bigger issue is getting it out the door quicker versus holding it for the second half.
Okay. That's helpful and then what.
And what sort of sectors are driving this volume growth and are there any product categories and the portfolio debt.
Just seeing outsized gains right now and just high demand sectors.
Wow.
The residential and recreational vehicle.
The segments we're.
Were particularly strong.
They were exceptionally strong and Q2 volume and.
And there were supply chain issues the contributed to some of that but overall volume specifically in those categories are up.
And the tight labor market contributed to.
Some of the.
Increase in volume.
Numbers for the commercial side commercial seems to be picking up at a pretty rapid pace the industrial sector.
Numbers for the commercial side commercial seems to be picking up at a pretty rapid pace the industrial sector.
And is actually recovered to some level and it seems to be pretty strong.
And the request for quotes and the second.
Second quarter were fantastic and all 3 of those areas.
And.
And if theres 1 net out performed the other from a.
Volume standpoint surge, if you will and Q2 it would've been the the recreational vehicle and the residential side.
Okay and.
And the service Center I know that was intended the kind of open up.
Space and and improve your overall kind of service capabilities, I guess I assume that wasn't a big contributor and the quarter, but now that it's fully operational what do you what do you see income net investment today.
Sir.
Yeah. It's a great question, we were able to move all of the finished goods into the new building actually and the month of May.
We continue to ship and all.
All of the teams here did a fantastic job of.
Making net appear to be seamless too.
Carrier customers and so.
And Youre right I don't think we saw a huge contribution other than to morale and the second quarter, we expect to stretch our legs, a little bit and maybe hit our stride later in the year and.
And see that sort of the center.
Our comp as you know.
Distribution centers and service centers don't pay for themselves.
But there are some things we're doing over there.
And from the added value standpoint for end users prep, if you will before it goes to the job site.
And just a lot more efficient with all of our product and 1 location.
Currently so it will be more of a second half <unk>.
<unk>, but it.
It did help morale.
And what's hot and Texas time of the year end.
And the feeling is over there that's a little bit cooler and net buildings.
So certainly there is some benefit but it's more creature comfort and it would be on the operational side of it we'll see and the second half.
Okay.
And I guess, Daniel or Brett as I think about I think about the service center and.
You're starting to get the benefit of it here on the second half of the year and.
And obviously, even more so into 2022 and then tack on the.
Other investments that Youre, making and.
Internally.
Assuming we have kind of the static.
Yes sort of demand environment and the things continue to chug along here and then can we can we sort of look at that end of 2022 and say that should provide.
<unk> now that the incremental capacity the ability to grow volume next year.
Yes, absolutely.
The old the vacated distribution center as we mentioned and the press release I think.
We're adding some capacity there and there is some rationalization that we've gone through.
Typically when you look at residential commercial industrial and the 3 different segments.
And you would like for them all to be up or down on and consistent manner, but they typically ebb.
Ebb and flow and neither 1.
As predictable may be as of the other and so when we went through that rationalization.
Utilization of the capacity needs and some of the upgrades from a cost savings perspective.
That's what the.
The old <unk>.
Vacated building will be cognizant of.
Modern.
The modernization of some of the equipment that we would like to swap out.
No.
And and really attacked that cost savings on.
<unk> and be the low cost and the sector and that's that's the position that we want to maintain and hang on to.
And with the additional capacity and it comes with that.
And there are some efficiencies that we can do.
As mentioned about the service center being able to kind of stretch out and see what we have and move maybe a little bit more quickly.
And that 100% order fill.
<unk> is a fantastic number and cures a lot of <unk>.
<unk>.
For us as a company specifically.
You don't want to have.
Customers waiting are looking or calling or checking on back orders.
And really really don't care for back orders so I.
And I think it's going to be more fourth quarter than third quarter.
From a timing perspective.
And there have.
Been a few.
Hits and misses from supply chain standpoint on some of the equipment and auxiliary equipment, but for the most part.
We've got fantastic vendors and and great partners and theirs.
And they're doing what they can to take care of us. So you know.
And I think more so the service center.
And more so additional capacity will be.
Representing.
And towards the end of the year.
Okay.
Thanks for taking the question and congrats on an incredible quarter.
Thank you Brent Thanks, Brent Thanks for your support.
Our net.
Excuse me our next question from Eric Marshall Hodges Capital management.
Hey, good morning, guys.
Congratulations on a great quarter, I think ive listened to every conference call since October of 97 and this is.
Definitely a standout among the some.
Some of the great quarters that you.
Guys have had over the years, but just to try to understand you mentioned.
About and nothing out of the ordinary as far as pull forward and volumes here in the quarter were there anything that may have allowed you guys to take market share because of anything disruptive that it may.
It happened at a competitor.
We've heard about chemical plants being shut down first half of this year, maybe polypropylene shortages or something that would cause you guys to be able to take the type of spreads that you were able to take care of in the quarter on the volume that you were able to take was there anything out of the order.
Hey, Barry.
As far as your competitors and ability to deliver product.
Boy, that's a lack of T bar question and I've loved the jump.
You know it.
From a series of perspective or 1.
The 1 campus.
This model.
But some folks don't necessarily always agree on this but.
For us it shows what you're capable of having 1 location.
We have phenomenal vendors that took care of us.
There were some.
Ordinary events that occurred in the quarter.
And from competitors.
It was 1 and put a letter out and.
And they couldnt accept any orders at all.
The period of time and there were another other letters went out threatening.
On force majeure to get out of the.
Things that they probably shouldnt have gotten into to begin with but.
It really comes down to and operational management type scenario.
We tend to manage our business a little bit differently than some of the competitors.
And.
I'm trying to be of supply.
Slide as I can but.
You've heard forever Eric.
Price and delivery when it comes to building wire.
Some building wire competitors over the years tried to lead into the market with.
The price we.
And Don as you know, we lead with delivery and service.
And our model backs that up on a consistent basis and this is the perfect scenario for us to maximize that management opportunity and.
It comes down.
And 2.
We're hyper focused on 1 product category. If you will the 600 volt space, we're not in a lot of other items and.
You know what the risk of sounding.
Sounding a little over the top we're really good at it.
The.
Aside from just.
And the execution and you guys of ability are there the letters that went out by competitors that they couldnt deliver product was it because of raw material shortages, specifically that you guys have your own plastic mill you guys, maybe had access to materials. The competitors didn't was at all.
Is it related to raw material shortages or just execution on logistical problems.
The mix of both of it was timing.
The cutting the price to take an order and you can't ship it and that becomes an issue.
And then why.
Why they couldn't ship it.
Absolutely there we're short on materials, which again is mismanagement.
And it was a chicken of the AG right and so.
That's the way it's been.
My 32 years.
And this just happened to be on a grander scale.
The first quarter, where we had a competitor cut the price to taken the order and then they couldnt ship it.
And that's just became exaggerated and this quarter for those same exact reasons, but.
And again.
The short on material because of the way you want.
So as far as you want 2 of those conversations but.
And.
It was a blend there.
We're shortages and it were.
Material needed to be on the job side of the certain time and again.
Low price is no good if the wire doesn't deliver right and.
You can go and vice versa. I mean, you got to be competitive and you got to deliver you've got to perform.
You have to do the execution thing that you mentioned, but.
And really at the end of the day.
Our philosophy and approach to the market.
We didn't.
And we didn't do a whole lot of things a whole lot differently than what we normally do.
And 1 of those moments and time, where a forced discipline happens and the market where the competitors cutting prices can't deliver.
So the low price really didn't earn them.
And anything.
Delivery prevailed and.
And again, we're really good at it and.
We're good at not taken the order that we can't ship and all of those things and and immediate order and immediate shift is still the best.
Best most profitable way to do it because you can see the.
And and copper, which can fluctuate from <unk>.
60% of our cost of goods sold it could be 80% of our cost of goods sold and.
And thats not an operational control and has to do with the other raw materials as you mentioned when you have.
Contributing factors to the <unk>.
Cost side, like PVC, raw materials, or nylon or paper or freight.
And the trucking industry.
It is a huge challenge currently.
Our model is and in house carrier that's.
And it's been fantastic for us and the service standard.
<unk>, it's super expensive right now but.
The go out into the market and request of truck and the open market today.
As 3 or 4 X what it took.
Traditionally is and so there's all kinds of things that contribute to it Eric and <unk>.
And with your history with us.
Stan <unk>, you've heard of the story over and over again, we're just we're doing more of it.
And you've heard me say in the past the raw.
Raw materials typically spin.
Specifically copper most of the time.
Forces discipline in this industry and cleans of lot of things up.
And this happened to be.
Copper PVC nylon paper aluminum freight pallets reels and everything that goes into the equation.
Is tight it's hard to get its all more expensive and.
We're able to.
Basically take those cost and manage them and.
Barge for it.
And then you made some comments earlier about kind of end market demand historically, I think commercial industrial and spent about 70% of your business.
What does that look like today.
The residential I know, it's been a growing mix over the last.
The year or 2 but can.
Can you give us an idea of.
Of.
Where that mix stands today and what it would mean, if we saw a meaningful pickup and commercial and industrial.
Yes.
Eric right accurate here for the quarter.
Residential was about 34%.
And that.
That compares to the 26% if you looked at the second quarter of last year, although that's not a good comp because your role and right in the Covid on a 6 month basis youre at 33%.
Is it agile.
Compared to 25 last year. So you saw a slight uptick I think we are close to 30% resident.
And so and the fourth quarter of 2020.
And so that market contributes and.
And there's opportunity there as well as on the commercial side when you look at.
Our next question from Bill Baldwin of Baldwin Anthony Securities.
Yeah.
Good morning, Daniel and Brad and.
Hello Bill.
You guys have been working hard.
[laughter] net smart you know.
Bill.
Go ahead.
Yeah.
Yes.
Couple of things when you look out.
2.
Longer term and your markets and you look at.
Sectors of the market out there that the maybe or not so directly tied to.
BP.
The spending to the economic cycles.
I know of data centers has been a strong area for you for quite a while.
Uh huh.
I assume that that market probably from what I read is going to get the tenure debate.
Market the company is continuing to spend on.
<unk>.
We read a lot about solar and renewables.
A lot of the.
Investment going into those projects.
A lot of.
Investment and it looks like and I don't read too much about it but I noticed that the going into the battery storage.
The storage type projects.
J D.
And you all talk about.
Encore wires.
The ability I mean, the do you all participate in those markets are those all of those markets that the cause.
Could represent some good the growth the.
The kind of away from the G. D. P type markets you serve.
Several of our data centers down for you over the last several years of these.
Are these <unk>.
Important substantial markets for encore wire.
And.
Yes, it's a great great observation Bill we're certainly.
Participating at the level and the renewable side today.
And then our existing.
The product offerings and will handle.
And certainly an area that we are.
Hyper sensitive to and.
Without saying too much too quickly.
<unk>.
Sure.
And watching those.
And those opportunities and catching up as quickly as we can.
On some of the machinery necessary to do a great job instead of just a smaller job.
We feel like that opportunity is.
You had mentioned.
Is there it's pretty fantastic.
We would certainly like to participate.
At a higher level and just put.
And it definitely.
Do you continue to see the data center market is the continued robust growth market the looking out.
And last several years.
It's been really strong as you know we've talked about in the past and that continues right.
There's there's.
Iterations and.
Improvements too and you know the latest and greatest.
And out over the.
Type of opportunities in the data center demand area that we've adjusted to and adapted to and it.
And it fits what we're currently doing and.
We're doing some things to also potentially get a little bit deeper into.
The market as well bill.
Very good very good and well.
He fell of certainly ahead of the expertise and know how to do all of that.
Just wanted to congratulate you to you on.
The quarter you move into your.
Distributions.
On that or.
And certainly with seamless it looks like your days of sales outstanding debt.
[noise] declined fairly substantially and your inventory turns increase the.
Is it is that a correct observation breadth there and the second quarter did you say.
The improvement in the days outstanding as well as turnover.
Yeah, great observation.
Et cetera, and bill and the answer is absolutely yes.
It was fairly substantial to me it was fairly substantial we were able to move the needle despite the heavy increase in receivables.
As well as the inventory turns it's turning on hot we've talked about this before it's running hotter than we wanted to turn and.
And our product.
Observation of you're taking the order, making order ship and order and it has never been more of that way today and net is model is set up to be very successful in times like this and that's what we're showing the results today and we'll look to continue to find ways to as we've talked about with the incremental investments to expand capacity take cost out of the system.
You have done for 30 years or kind of what we're going to keep doing we're good at it.
Well the surprise me you had last and invested in inventory and the second quarter than you did at the end of the first quarter.
We're moving inventory as you can tell by the numbers.
I mean.
We would expect that after the kind of.
What we are is that you posted so.
Congratulations good job thanks.
Bill I appreciate the support.
Our next question from Brent Thielman D a davidson.
Yeah.
Hey, thanks.
A follow up Daniel and Brad.
And you guys have always been really judicious just around buybacks and respect the fact you guys.
And really increase the capex for this year and next so I don't want to sound like in the Q than you and sitting on your hands and you saw.
Docs trading 7 times first half earnings of 1.5 times book it sounds like the outlook and.
Really positive.
And so maybe just update us on the buyback policy your availability and and kind of what what would cause of any caution or pause about stepping in here.
Yeah, I mean, as you know Brent we bought back about 441000 shares primarily and the first quarter of last year.
We do have a.
The <unk> 1 plan that we have disclosed and that remains in place today.
You know how the receivable collection process works here and so as these receivable balances are collected over the next quarter or 2.
And we continue to evaluate the highest and best use for cash where we can invest on our campus incrementally to take out costs.
The tender and drive growth that benefits all of shareholders for the long term.
As we look towards those and see what other opportunities on this campus to invest we continue to evaluate opportunities to get back on the market and buy back stock and so you know.
And that remains top of mind with this team as well as the board.
Okay very good thank you.
Thanks, Brett.
Our next question from Joe Peroni of Forest Hill capital.
Hey, guys. Thanks for taking my question.
And I just wanted to say.
Cost so haven't followed the company for nearly 20 years, just what a standout.
This was you know you guys are always talking about being vertically integrated and.
On time deliveries and things that maybe in a normal time and you don't get enough credit for but when you start to have supply bottlenecks.
Like we've seen it's clear.
Clear that it's paying huge dividends and.
Hats off to you guys for execute and a great strategy and.
Performing and a tough time.
<unk> per 1 Brent kind of touched on my my first question, which was.
The stars of the line for you guys and it looks like they're remaining of line at.
As we move into the third and fourth quarter, I know everyone's trying to figure out kind of.
What spreads are going to look like and how sustainable is the quarter like this and frankly, I think everyone and we're thinking the same thing after the first quarter and you've proven.
And then that things can continue to move higher.
Beyond how you look at buyback.
And if you could just touch a little bit about.
Thoughts on upping, the dividend or a special dividend.
Should you have similar or close to similar quarters, and <unk> and <unk>.
And as a follow up just if you could talk about kind of market share that you've been able to take and.
Premiums that you guys have historically been able to charge over competitors for being on time.
How are customers looking at you know and and respecting your ability to do that and do you think that'll have a long tail effect and as you've been able to supply of customers, who haven't been able to get it anywhere else and things.
And the poser.
A lot Joe.
And <unk> been 20 years.
And I took some notes, though so let me start with the market share piece.
Our approach to the market really hasnt changed.
We think that we have and know that we have.
Fantastic customers.
1 thing about our receivables going up by you know of.
Couple of hundred million dollars. They are all current.
So something that is near and Dear to my heart is getting paid.
And we keep a really close eye on that so the market.
And that piece is with mainly.
Existing customer base.
We have a.
And a culture or way or manner to state.
The state committed to customers that we are.
Have had success within the past and we continue to grow with those.
And customers that are existing.
And any markets that we felt.
We needed to upgrade.
We've either done that already or continue to do that.
Which also was not a new product.
Practice, that's what we do.
But we're trying to continue to take the market share.
And with our existing customer base. So it's not like we're out.
Knocking on any new doors.
As far as the special dividend, we're looking at.
All of the options.
And that are out there.
And something that we don't speak a lot about from a balance sheet standpoint is it's nice to have all of that cash.
If the copper runs up to $556 the cash.
Total evaporate.
Copper drops to $2 to cash flow of that right. So.
We liked the have the cash and allows us to do things, obviously that we want to do immediately.
And.
But we are certainly considering all options looking at.
Level of cash that we're going to have on some of these receivables are collected.
And our special dividend certainly would be an option that we're looking at.
The customer visibility piece of that you brought up was that sort of super smart.
At the low question.
The way that we go to market.
And when we tend to.
Find a customer and and end user the match up with those values. It goes incredibly well.
The same when we treat a vendor of the way that we treat our vendors.
We're not necessarily calling in 4 of 5 people and getting a bid on something and go on with the lowest number that's on our approach.
And we go to market and the same manner.
And if you're looking for the lowest purchase.
<unk> price, we're probably not.
Always the best opportunity, but if youre looking for a partner to <unk>.
Get the job done and do the things and to honor the commitments.
The us, but we're not going to do that and what.
Somebody elses price on that.
They sound.
And it's simple but.
1 of the challenges here is to keep it simple and then the other pieces that's the.
Different and the market today.
Versus any other time and my 30 years.
Sure.
At the level of its App is there truly is an opportunity.
<unk>.
For us and even some of our own competitors to create.
Brand preference if you will.
And.
And there is some of the asset exist over the years, but and the last 6 months.
And it's become a heightened more alerts.
And user to specifics too.
Building wire if the house.
Maybe the large residential development and they are waiting for raw materials.
And the meter continues to run some of those Ceos I think are brought into the conversation where in the past maybe the.
Arent needed if you will but I.
I personally have had more conversations and the last 6 months with.
And the end users.
At the at the highest level.
And then in years past, it's just it's just a higher level conversation and Theres a brand.
Brand preference that seems to be created and.
And it's.
More about quality and.
Bree and cost savings and those types of fun conversations versus a low.
Lower price opportunity so.
I think your visibility and all 3 categories of your question are spot on and match up with basically right where we are.
Remember were sitting.
Deliberate and I it sounds like too that this wasn't.
Just something that happened just in 1 or 2 month throughout the quarter, but kind of continued throughout the quarter and I'm, assuming in terms of brand preference and they.
The conversations that you're having with other <unk>.
Customers and distributors.
And those that.
Our continuing its not like this was the 1 time kind of shortfall and the industry. That's now been rectified.
And assuming that July isn't substantially different from June in terms of People's preference for actually getting on time deliveries versus maybe what they were doing prior.
Talk to the recent ramp up of that Joe.
Joe You know this is the second quarter conference call on that.
Right.
Yeah.
Certainly.
We're not changing we're not changing our approach to the market we're adapting.
And it's smart to adapt.
And we.
We're still executing on the core values that we've had in place for years. It just.
The opportunities are greater.
We're a lot bigger company and we have quite of bit of horsepower here and.
We've got the right Guy and the right girl and the rot.
Spot and.
This is fun times to be in but.
We're super attentive to the.
And the details and were.
Anxiously.
On taking cost out of areas.
As aggressively today as we were and the.
Past because.
It's the industry that we're in and.
I think we know what we're doing and.
And again, it's not that we have changed any.
Behavior here and some spectacular fashion.
It's just the market.
As you know the wins are behind us and we're doing the things we have to do and stay alert and.
A lot of this.
I'm not going to tell you that it's easy by any stretch of imagination at all.
But we've we've got a.
The special company here that was set up to perform and.
These kind of times and it's it's on display.
Perfect well thanks for taking my question and look forward to seeing what you guys had the same for your third quarter call and thanks for the support Joe appreciate it.
And we are of a follow up from Julio Romero.
Hey, Thanks for taking the follow up guys.
It's been about 4 years since I've been down and the plenty.
How much undeveloped land.
And when you have left on your campus poster, you're currently announced the investments by year.
And 'twenty 3.
How much land would be left the maybe further expand on over the next day and not.
No.
Not over the next 3 years, but rather over the next 20 to 30 years.
Yeah, Julio we're sitting currently on 450 acres.
We continue to pick up.
Land as it comes available.
Probably sit and the little north.
On sitting on currently a little north of 200 ish, so you've got more than enough room for growth.
The land and the footprint of rehab is not a constraining factor for us.
Great. Thanks very much.
And so we appreciate you Julio.
And once again is that of a question press star 1.
And it looks like we have no more questions.
Well. Thank you guys very much and we look forward to.
Speaking to you guys again, and the third quarter call.
And for the support.
Thank you ladies and gentlemen. This concludes today's conference. Thank you for participating you may now disconnect.