Q4 2021 Encore Wire Corp Earnings Call
Speaker 1: Good morning and welcome to the Encore Wire Report's fourth quarter and full year 2021 results conference call. My name is Zunera and I'll be the operator for today's call. At this time, all participants are in a listen-only mode. Later, we'll conduct a question and answer session. During the question and answer session, if you have a question, please press star then 1 on your touch tone phone.
Good morning, and welcome to the Encore wire reports fourth quarter and full year 2021 results Conference call. My name is scenario and I'll be the operator for today's call. At this time all participants are in a listen only mode.
We will conduct a question and answer session. During the question and answer session. If you have a question. Please press Star then one on your Touchtone phone.
Speaker 1: Please note this conference is being recorded. I will now turn the call over to Mr. Brett Eckert. Mr. Brett, you may begin.
Please note. This conference is being recorded I will now turn the call over to Mr. Bret Eckert Bret you may begin.
Speaker 2: Thanks, Inara. Good morning, and welcome to the Encore Wire Corporation quarterly conference call. I'm Brett Eckert, Chief Financial Officer of Encore Wire. With me this morning is Daniel Jones, President, CEO , and Chairman of the Board.
Good morning, and welcome to the Encore Wire Corporation quarterly conference call I'm, Bret Eckert, Chief Financial Officer of Encore wire with me. This morning is Daniel Jones, President CEO and chairman of the board.
Speaker 2: In a minute, we will review Encore's financial results for the quarter and year ended December 31, 2021. After the financial review, we will take any questions you may have. Before we review the financials, let me indicate that throughout this conference call, we may be making certain statements that might be considered to be forward-looking.
In a minute, we will review encores financial results for the quarter and year ended December 31 2021.
After the financial review, we will take any questions. You may have before we review the financials. Let me indicate that throughout this conference call. We may be making certain statements that might be considered to be forward booking in order to comply with certain securities legislation and instead of attempting to identify each particular statement as forward looking we advise you that.
Speaker 2: 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 such statements involve certain risks and uncertainties that could cause actual results to differ materially from those discussed today.
All such statements involve certain risks and uncertainties that could cause actual results to differ materially from those discussed today.
Speaker 2: 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 measure presented in accordance with GAAP, including EBITDA, which we believe to be useful supplemental information for investors, are posted on our website.
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 measure presented in accordance with GAAP, including EBITDA, which we believe to be useful supplemental information for investors are posted on our website.
Speaker 2: I'll now turn the call over to Daniel for some opening remarks. Daniel?
I'll now turn the call over to Daniel for some opening remarks Daniel.
Speaker 2: Good morning, everyone, and thank you for joining us on the call and for your interest in Encore Wire. We appreciate your continued investment, competence, and support.
Good morning, everyone and thank you for joining us on the call and for your interest in Encore wire.
We appreciate your continued investment confidence and support.
Speaker 2: Our operating performance and results in 2021 mark a milestone year in the great history of Encore Wire. By leveraging our one location, low cost business model.
Our operating performance and results in 2021, Mark a milestone year in the great history of Encore wire.
Leveraging our one location low cost business model.
Speaker 2: tested sales distribution network, strong and dedicated employee base, and deep supplier relations, we were able to deliver exceptional results.
<unk> tested sales distribution network strong and dedicated employee base and deep supplier relations, we were able to deliver exceptional results.
Speaker 2: Throughout the fourth quarter of 2021, sales prices and margins remained strong as we successfully navigated raw material constraints and price volatility.
Throughout the fourth quarter of 2021 sales prices and margins remained strong as we successfully navigated raw material constraints and price volatility.
Speaker 2: We remain centered and nimble adapting to changing customer needs and fluid market dynamics. By continuing to execute on our core values of providing unbeatable customer service and high order fill rates, we were able to increase both copper and aluminum volumes on both a comparative quarter and annual basis over 2020 levels.
We remain centered nimble adapting to changing customer needs and fluid market dynamics.
By continuing to execute on our core values of providing unbeatable customer service and high order fill rates, we were able to increase both copper and aluminum volumes on both the comparative quarter and annual basis over 2020 levels.
Speaker 2: Copper unit volumes increased 10.8% on an annual basis and 3.9% in the fourth quarter over comparable periods in the prior year.
Copper unit volumes increased 10, 8% on an annual basis and three 9% in the fourth quarter over comparable periods in the prior year.
Speaker 2: COMEX copper prices increased during the fourth quarter averaging slightly higher than the third quarter of 2021.
Comex copper prices increased during the fourth quarter, averaging slightly higher than the third quarter of 2021.
Speaker 2: All other raw material costs also increased slightly during the quarter.
All other raw material costs also increased slightly during the quarter.
Speaker 2: Subtract volatility positively impacted and supported current market spreads. Proper spreads increased 133.7% on a comparative quarter basis and 149.2% on an annual basis.
This upward volatility positively impacted and supported current market spreads copper spreads increased 133, 7% on a comparative quarter basis, and 149, 2% on an annual basis.
Speaker 2: With the incremental capacity coming online this year, we believe Encore Wire continues to remain well positioned to capture market share and incremental volume growth in the current economic environment.
With the incremental capacity coming online. This year, we believe encore wire continues to remain well positioned.
To capture market share and incremental volume growth in the current economic environment.
Speaker 2: As we address the near-term challenges, we remain focused on the long-term opportunities for our business.
As we address the near term challenges, we remain focused on the long term opportunities for our business.
Speaker 2: We believe that our superior water fill rates and deep vertical integration continue to enhance our competitive position.
We believe that our superior order fill rates and deep vertical integration continued to enhance our competitive position.
Speaker 2: As orders come in from electrical contractors, our distributors can continue to depend on us for quick deliveries coast to coast.
As orders come in from electrical contractors, our distributors can continue to depend on us for quick deliveries coast to coast.
I'll now turn the call over to Brett to cover our financial results Brett. Thank you Daniel.
Net sales for the fourth quarter ended December 31, 2021 were $687 9 million compared to $380 8 million for the fourth quarter of 2020 copper unit volume measured in pounds of copper contained in the wire sold increased three 9% in the fourth quarter of 2002.
Speaker 2: Copper unit volume measured in the pounds of copper contained in the wider sole increased 3.9% in the fourth quarter of 2021 versus the fourth quarter of 2020.
'twenty one versus the fourth quarter of 2020 gross profit percentage for the fourth quarter of 2021 was 34, 2% compared to 15, 4% in the fourth quarter of 2020.
Speaker 2: Gross profit percentage for the fourth quarter of 2021 was 34.2% compared to 15.4% in the fourth quarter of 2020.
Speaker 2: The average selling price of wire per copper pound sold increased 70.5% in the fourth quarter of 2021 versus the fourth quarter of 2020. While the average cost of copper per pound purchased increased 36.4%.
The average selling price of wire per copper pound sold increased 75% in the fourth quarter of 'twenty, one versus the fourth quarter of 2020, while the average cost of copper per pounds purchased increased 36, 4%.
Speaker 2: Net income for the fourth quarter of 2021 was $141.6 million versus $24.1 million in the fourth quarter of 2020.
Net income for the fourth quarter of 2021 was $141 6 million versus $24 1 million in the fourth quarter of 2020.
Speaker 2: Fully diluted net earnings per common share were $6.91 in the fourth quarter of 2021 versus $1.17 in the fourth quarter of 2020. Net sales for the year ended December 31, 2021 were $2.593 billion compared to $1.277 billion in 2020. Proper unit volume increased 10.8% in 2021 versus 2020.
Fully diluted net earnings per common share were $6 91 in the fourth quarter of 2021 versus $1 17 in the fourth quarter of 2020.
Net sales for the year ended December 31, 2021, or two 593 billion compared to $1 $2 77 billion in 2020 copper unit volume increased 10, 8% in 2021 versus 2020.
Speaker 2: Gross profit percentage for the year ended December 31, 2021 was 33.5% compared to 15.2% in 2020. The average selling price of wire for copper pound sold increased 84.7% in the year ended December 31, 2021 versus the year ended December 31, 2020, while the average cost of copper per pound purchase increased 49.5%.
Gross profit percentage for the year ended December 31, 2021 was 33, 5% compared to 15, 2% in 2020.
The average selling price of wire per copper pound sold increased 84, 7% in the year ended December 31, 2021 versus the year ended December 31, 2020, while the average cost of copper per pounds purchased increased 49, 5% net.
Speaker 2: Net income for the year ended December 31, 2021, was $541.4 million versus $76.1 million in 2020. Fully diluted net earnings for common share were $26.22 and the year ended December 31, 2021 versus $3.68 in 2020.
Net income for the year ended December 31, 2021 was $541 4 million versus $76 1 million in 2020.
Fully diluted net earnings per common share were $26 in 'twenty two.
And the year ended December 31, 2021 versus $3 68.
In 2020.
Speaker 2: Aluminum wire represented 10.5% and 8.3% respectively of our net sales in the quarter and year ended December 31st, 2021. Aluminum wire volumes have increased for both the quarter and year ended December 31st, 2021 compared to the comparative periods in the prior year.
Aluminum wire represented 10, 5% and eight 3% respectively of our net sales in the quarter and year ended December 31, 2021 aluminum wire volumes have increased for both the quarter and year ended December 31, 2021 compared to the comparative periods in the prior year.
Speaker 2: The favorable market conditions in the fourth quarter and year ended December 31, 2021 were driven by volatile raw material prices, supply constraints, and continued demand for our product.
The favorable market conditions in the fourth quarter and year ended December 31, 2021 were driven by volatile raw material prices and supply constraints and continued demand for our products. In addition production challenges across the sector, including inconsistent access to raw material disruptions in the distribution network.
Speaker 2: In addition, production challenges across the sector, including inconsistent access to raw materials, disruptions in the distribution network, and access to skilled labor, created unique marketing conditions in the second, third, and fourth quarter of 2021. We expect these conditions will abate in the future, but we are unable to predict the timing of that abatement, or whether such abatement will be gradual or abrupt.
And access to skilled labor create a unique marketing conditions in the second third and fourth quarter of 2021, we expect these conditions will abate in the future, but we are unable to predict the timing of that abatement, whether such abatement will be gradual or abrupt our balance sheet remains very strong we have no long term debt.
Speaker 2: Our balance sheet remains very strong. We have no long-term debt, and our revolving line of credit remains untapped.
And our revolving line of credit remains untapped, we had $439 million in cash at the end of the year compared to $183 1 million at the end of 2020.
Speaker 2: We had $439 million in cash at the end of the year, compared to $183.1 million at the end of 2020.
Speaker 2: During 2021, we repurchased 475,557 shares of our common stock at an average price of $91.04, including 82,178 shares repurchased at an average price of $128.54 in the fourth quarter of 2021. We also declared a $0.02 cash dividend during the quarter.
During 2021 <unk>.
Repurchased 475557 shares of our common stock at an average price of $91 <unk>, including 82178 shares repurchased at an average price of $128 54 in.
In the fourth quarter of 2021, we also declared a <unk> <unk> cash dividend during the quarter.
Speaker 2: The new service center opened in mid-May of 2021 and is fully operational today. The repurposing of our vacated distribution center to expand manufacturing capacity and extend our market reach will be completed in the second quarter of 2022.
The New service Center opened in mid May of 2021 and is fully operational today. The repurposing of our vacated distribution center to expand manufacturing capacity and extend our market reach will be completed in the second quarter of 2022.
Speaker 2: The incremental investments announced in July of 2021 continue in earnest, focused on broadening our position as a low-cost manufacturer in the sector and increasing manufacturing capacity to sustain and drive growth. Capital spending in 2022 to 2024 will expand vertical integration in our manufacturing processes to reduce costs as well as modernize select wire manufacturing facilities, increase capacity, and efficiency.
The incremental investments announced in July of 2021 continue in earnest focused on broadening our position as a low cost manufacturer in the sector and increasing manufacturing capacity to sustain and drive growth capital spending in 2022 through 2024 will.
We will expand vertical integration in our manufacturing processes to reduce costs as well as modernize select fire manufacturing facilities to increase capacity and efficiency.
Speaker 2: Total capital expenditures were $118 million in 2021. We expect total capital expenditures to range from $150 million to $170 million in 2022, $150 million to $170 million in 2023, and $80 to $100 million in 2024. We plan to continue to fund these investments with existing cash reserves and operating cash flows. I will now turn the floor over to Daniel C
Total capital expenditures were $118 million in 2021.
We expect total capital expenditures to range from $150 million to $170 million in 2020 to 150 million to $170 million in 2023 and $80 million to $100 million in 2024, we plan to continue to fund these investments with existing cash reserves and operating cash flows.
I'll now turn the floor over to Daniel for a few final remarks.
Speaker 3: Thank you, Brett. The results in the fourth quarter and you're into December 31 2021. Further attest to the strength of our one campus vertically integrated, low cost business model which is thriving under current market conditions.
Thank you Brett the results in the fourth quarter and year ended December 31, 2021 further attests to the strength of our one campus vertically integrated low cost business model, which is thriving under current market conditions.
Speaker 3: I want to personally thank our suppliers and vendors for their exceptional performance in 2021.
I want to personally thank our suppliers and vendors for their exceptional performance in 2021.
Speaker 3: Our deep relationships and strong internal management team, coupled with consistent execution in 2021, positioned us favorably in the market, allowing us to maintain our overall low cost structure.
Our deep relationships and strong internal management team.
With consistent execution in 2021 positioned us favorably in the market, allowing us to maintain our overall LOE cost structure.
Looking ahead, we remain laser focused on continuing to fulfill the core values of our company.
Speaker 3: Looking ahead, we remain laser focused on continuing to fulfill the core values of our company.
Unbeatable customer service nimble operations and quick deliveries coast to coast.
Speaker 3: I want to close by recognizing our employees for their hard work, tenacity, and all-out hustle during these unprecedented times. Our performance this year could not have happened without their extraordinary efforts and dedication.
I want to close by recognizing our employees for their hard work tenacity and all out hustle. During these unprecedented times our performance this year could not have happened without their extraordinary efforts and dedication.
Speaker 3: The results in 2021 have also allowed us the opportunity to incrementally invest in our team as we continue to position Encore as an employer of choice in the sector.
The results in 2021 have also allowed us the opportunity to incrementally invest in our team as we continue to position encore.
An employer of choice in this sector.
Speaker 3: I also want to thank our shareholders for their continued support.
Also want to thank our shareholders for their continued support.
We will now take questions from our listeners.
Speaker 1: Absolutely, thank you. We will now begin the question and answer session. If you have a question, please press star, then 1 on your touch tone phone. If you're using a speakerphone, you may need to pick up the handset first before pressing the numbers. Once again, if you have a question, please press star, then 1 on your touch tone phone. Waiting on standby for any questions.
Absolutely. Thank you we will now begin the question and answer session.
I have a question. Please press Star then one on your Touchtone phone if youre using a speakerphone you may need to pick up the handset first before pressing the numbers. Once again if you have a question. Please press Star then one on your Touchtone phone.
Leading on standby for any question.
Speaker 1: And the first question comes from Julio Romero from Sedido & Company. Please go ahead, your line is open. Thanks, yeah, hey, good morning, Daniel and Brett. Thanks for taking my questions.
And the first question comes from Julio Romero from <unk> Company. Please go ahead. Your line is open.
Yeah, Hey, good morning, Daniel and Brad Thanks for taking my questions.
Sure.
What's your crystal.
It'll ball, telling you guys about.
<unk>.
Speaker 4: way pricing for your end product should trend over the next year assuming proper kind of days at the current levels.
The way pricing for your end products should trend over the next year assuming.
Copper kind of stays at the current levels.
Well as far as pricing.
Speaker 3: You know, that's a two-headed monster. It's processing and delivery, and you can't separate the two.
It's that's a two headed monster, it's pricing and delivery and you can't separate the two.
<unk>.
And I'm, obviously extremely bullish on copper.
Speaker 3: And I'm obviously extremely bullish on copper.
Speaker 3: which leads me to be pretty bullish on the crossing also. I think that we can continue to...
Which leads me to be pretty bullish on the pricing also I think that we can continue to.
Speaker 3: perform at the level that we're performing and deliver with the fill rates and lead times that we have, I think we'll be able to continue to process the product accordingly.
Perform at the level that we're performing and deliver with the fill rates and lead times that we have I think we'll be able to continue to price the product accordingly.
Okay. That's helpful.
Speaker 4: I guess turning to your capacity expansion, the press release talked about expanding vertical integration and modernizing some facilities. Could you maybe expand on specifically the vertical integration portion? Are you adding another rod mill? And how much incremental copper rod could you produce?
Turning to your capacity expansion the press release talked about expanding vertical integration and modernizing some facilities could you maybe expand on specifically the vertical integration portion.
Are you, adding another I know the rod mill and how much incremental copper rod could you produce.
Speaker 3: Yeah, what we're doing, we have a pretty aggressive ESNG program that's posted on our website. And along those lines, there's some opportunities for us to address existing equipment. And in that process, there'll be some.
What we're doing.
We have a pretty aggressive <unk> program, that's posted on our website and along those lines or some opportunities for us to address existing equipment.
And in that process there'll be some <unk>.
Speaker 3: capacity enhancements in areas. But specifically to speak to, you know, the rod mill, we are going to do some improvements there in that category. It'll give us a little bit more flexibility. And I probably should just leave it at that.
<unk> enhancements in areas.
But specifically to speak to.
The Rod mill.
We are going to do some improvements there in that category that will give us a little bit more flexibility.
And I, probably should just leave it at that.
Okay.
Okay.
And.
I guess.
Yeah.
Right.
Speaker 4: What do you think of normalised maintenance cap, you're putting a lot of CapEx in over the next few years, but what's the normalised maintenance CapEx run rate for Encore Wire look like post these incremental investments? So say, normalised maintenance for 2024 and beyond.
Do you think a normalized.
Maintenance youre, putting a lot of capex in <unk>.
Over the next few years, but.
What's the normalized maintenance Capex run rate for encore wire look like post these incremental investments so.
Normalized maintenance for 2024 and beyond.
Speaker 2: Yeah, I still think we're in that 40 to 60 range, 50 to 70 range. As we go through and do this modernization effort, that helps as well, right? Because you're replacing older equipment with new equipment. I think we'll navigate back ultimately to that 40 to 60 range after we get through this wave of expansion. Julio? Yeah, I think we're in that 40 to 60 range after we get through this wave of expansion.
I still think we're in that 40 to 60 range 50 to 70 range and as we go through and do this modernization effort that helps as well right because you're replacing older equipment with new equipment and so I think we will navigate back ultimately to that 40 to 60 range. After we get through this wave of expansion Julio.
Okay.
And then maybe last one for me here is just.
Speaker 4: give us a sense of how much incremental product, incremental volume you expect to be able to generate once your capacity expansion is kind of fully in place.
Can you give us a sense of how much incremental product incremental volume you expect to be able to generate.
Once your capacity expansion is kind of fully in place.
Speaker 2: Yeah, good question. It's consistent with what we communicated before. You know, once we complete the repurposing of our vacated distribution center, which we expect to come online in mid second quarter, you know, we've talked about, you know, 15% or so incremental capacity coming associated with that. And I think that number is still very relevant. And that's 15%.
Yes, good question.
Consistent with what we had communicated before once we complete the repurposing of our vacated distribution center, which we expect to come online in mid second quarter, we've talked about 15% or so incremental capacity.
Come in associated with that and I think that number is still very relevant.
Other than that 15%.
Post and dramatically.
Okay.
And it comes on and then made up for it.
Speaker 4: And then beyond just thinking about, you know, you had to, obviously you put out 2024 at best expectations. Just I'm just trying to get a sense of like when all said and done even with that.
And then beyond.
Just thinking about obviously you put out 2024.
Capex expectations, just I'm, just trying to get a sense of like when all set and done even though with that.
Yeah.
Speaker 2: More to come on that Julio, right? You know, we've been obviously a little vague with regards to the incremental investments that we're making as we get closer to that, like we did with the repurposing of the distribution center and the opening of the service center. We'll start to disclose a little bit more about the incremental capacity associated with those investments.
More to come on that Julio right. You know we've been obviously, a little vague with regard to the incremental investments that we're making as we get closer to that.
We did with the Repurposing of distribution center and the opening of the service Center.
We'll start to disclose a little bit more about the incremental capacity associated with those investments.
Speaker 4: Fair enough. Thanks very much for taking the questions and best of luck in 2022.
Fair enough. Thanks, very much for taking the questions and best of luck in 'twenty two.
Speaker 3: Thanks for your support. Thanks. Thanks, Julio. Thank you. Our next question comes from Brent Thaleman. Please go ahead. Your line is open.
Yes, thanks for your support thanks Julio.
Thank you. Our next question comes from Brent Thielman. Please go ahead. Your line is open.
Hey, great. Thanks, good morning.
Speaker 5: Hey, Daniel, I was wondering if you could just now that the service center is sort of fully up and running, can you talk about some of the benefits you're seeing within the business, having that new facility, you know, it's hard to parse out within the financials with doing for you that maybe you could talk all the way.
Hey, Daniel I was wondering if you could now that the service center is sort of fully up and running can you talk about some of the benefit youre seeing within the business, having that new facility.
It's hard to parse out within the financials with doing for you maybe you could talk qualitatively about what you've seen in <unk>.
Speaker 3: Yeah, what we've done Brent, by the way, thanks for the support and the question. What we've done is, when we vacated the old distribution center, we added some capacity.
Yes.
We've done things.
Thanks for the support and the question what we've done is we've.
We vacated the old distribution center.
We added.
Some capacity too.
Speaker 3: enhance our service levels, specifically the lead times and the fill rate.
Enhance our service levels.
Specifically, the lead times and the fill rate.
Speaker 3: which allows us, as you have heard in the past, and I'll repeat it, it's price and delivery. We like to focus on the delivery side and fight.
Which allows us as you have heard in the past.
And I'll repeat it.
Price and delivery.
Like to focus on the delivery side.
<unk> for the pricing.
Speaker 3: where that benefit has shown up as we are able to fill the trucks a little bit quicker.
Where that benefit has.
As shown up.
As we are able to fill the trucks a little bit quicker.
Speaker 3: and a little bit fuller and more on time, we're able to charge just a little bit more, maybe, for the most part. And then also with the increase in the challenges in the industry and in the country as far as getting products moved.
A little bit Fuller.
And more on time, we're able to charge just a little bit more maybe.
For the most part and then also.
With the increase in the challenges.
The industry and the country has for us getting products moved.
Speaker 3: coast to coast, maximizing that opportunity, each trailer that bumps the dock, there's more mark.
From coast to coast.
<unk> that opportunity each trailer that bumps to dock.
There are some pretty significant.
Speaker 3: value in making sure that that truck is full along with
Value and making certain that truck is full along with.
Speaker 3: what you're able to do when you deliver the product complete and on time.
What youre able to do when you deliver the product complete and on time.
Speaker 5: Okay, so I mean beyond some of the external factors that are helping.
Okay. So I mean.
Beyond some of the external factors that are helping.
Speaker 5: this huge spread that you've been posting the last few quarters, that facility is also incrementally contributing. Is that fair? That's very fair. Absolutely. You know, and then specifically to the new footprint of the existing service center that we're operating out of, there's really no physical limitations in that building. You know, we have ample...
It's huge spread you have been posting in the last few quarters.
That facility is also incrementally contributing that that's fair.
That's very fair, absolutely and then specifically to the new footprint of the existing service center that we're operating out of.
Theres really no.
Physical limitations in that building.
We have.
Ample space to.
Do the.
Speaker 3: added services that are required in different markets that we predicted would benefit and that's starting to show up as well. Each of the market segments that we serve, as you've studied and written about over the years.
Added services that are required and different markets.
We predicted would benefit and thats starting to show up as well.
Each of the market segments that we serve.
As you've studied written about over the years.
Speaker 3: There's fluctuations and there's volatility within each category. And so that new footprint and space allows us to operate.
Theres fluctuations in Theres volatility within each category and so the new footprint and space allows us to operate.
Speaker 3: You know, quite a bit more efficiently to move those finished goods and those purchased items, you know, to get them off the off the deck pretty quickly.
Quite a bit.
<unk> to move those finished goods and those purchased items.
Get them off the off the deck pretty quickly.
Okay.
Speaker 5: OK, and then back to some of those external forces at play, I mean, that is kind of beyond just the price of copper. We can all see what that's doing. But I think about
And then back to some of those external external forces at play.
It's kind of beyond just the price of copper, which we can all see what that's doing.
About <unk>.
Speaker 5: the supply constraints, freight, access to other materials and inputs. Are all those factors still contributing today to the kind of levels of profitability and spread that I guess are beyond what you would expect?
The supply constrained trade access to other materials and inputs are all of those factors still contributing today to.
Kind of levels of profitability and spread that I guess, there beyond what you would.
Expect normally from the business.
Speaker 3: Yeah, I mean, not something that we didn't expect. It's actually something that we've built the company towards to be able to respond quickly and to deliver when other folks, maybe they can't. Now clearly there's supply chain issues, there's labor shortages.
Yes.
Not something that we didn't expect it's actually something that we've built the company towards to be able to respond quickly and to deliver win.
Other folks maybe they can't now clearly there are supply chain issues there is labor shortages.
Speaker 3: There's uncertainties around COVID. All those things continue to.
Yes.
Uncertainties around Covid.
Those things continue to you know.
Speaker 3: you know, have an influence on job sites and.
Have an influence on job sites.
Speaker 3: different phases of each project potentially. But again, as the product is
Different phases of each project potentially but again as the product is.
Speaker 3: put to us from a request standpoint of, hey, can you do it in this fashion? Again, we focus on that delivery piece, which has allowed us to maybe charge a little bit more on the price side. But again, we still have to stay within the guardrails of the industry itself.
Put to us from a request standpoint of hey can.
Can you do it in this fashion.
Again, we focus on that delivery piece.
Which has allowed us to maybe charge a little bit more on the price side, but again, we still have to stay within.
The guardrails of the industry itself.
It's been more of.
Speaker 3: you know, this instant gratification on the delivery.
This instant gratification on the delivery.
Speaker 3: maybe even placeholders on future jobs. It really is an extension of
Maybe even placeholders on future jobs.
It really is an extension of the.
Speaker 3: you know, the markets that we've seen in the past, but as I've talked about in prior calls over the years.
The markets that we've seen in the past, but as I've talked about in prior calls over the years.
Speaker 3: There's a few factors that force discipline into this market and that's when we can really throw some numbers out which you've seen.
There's a few factors that forced discipline into this market and that's when we can really throw some numbers out which you've seen.
Alright.
Speaker 5: And I guess another, you know, as you're out talking to, you know, customers on the distributor side, any sense how lean their inventories are? And I think about it in the sense that we get, you know, another leg up in demand.
And I guess another.
Youre talking to.
Customers on the distributor side.
How lean their inventories are in I think about it in the sense that we get another leg up in demand.
Speaker 5: see sort of a windfall in volume here. So any thoughts there just in terms of what you're hearing in the field?
Do we see sort of a windfall in volume here. So any thoughts there just in terms of what youre hearing in the field and some of those got yes.
Speaker 3: Yeah, great question. We're seeing, you know, we're simply a one category of what our distributor customers have to purchase and distribute. And so what we're seeing is in all of the categories, there's the same struggles that you mentioned, you know, labor shortages and supply chain issues and COVID uncertainty and whatever.
We're seeing.
We're simply a one category of what our distributor customers.
We have to purchase and distribute and so what we're seeing is in all of the categories. There is the same struggles that you mentioned labor shortages and supply chain issues and COVID-19 uncertainty and whatever.
Speaker 3: It's not specific, obviously, to building wire. It's across the board. So the more that we can put their mind at ease on our product category and take care of it with the service and the fill rate.
It's not specific obviously to building wire, it's across the board so.
The more that we can.
Put their mind at ease on our product category and take care of it with the service and the fill rate.
Speaker 3: There's value there because they have other things they can go and concentrate on and do. So the approach of trying to potentially make their job just a little bit easier in that moment in our product category, again, there's some value to that.
There's value there because they have other things they can go and concentrate on and do so the approach of trying to potentially make their job just a little bit easier in that moment.
And our product category again, there is some value to that and.
Speaker 3: We're doing the things that we feel like we need to do to capitalize on it. But, you know, our distributors are doing a fantastic job. You know, as Brett has mentioned many times, our receivables are what they are, but they're all current, which is a fantastic indicator on business itself. We're getting paid on time, so that's also a testament to the quality.
We're doing the things that we feel like we need to do to capitalize on it but.
Our distributors are doing a fantastic job.
As Brad has mentioned many times.
Our receivables are what they are but they are all current.
Which is a fantastic indicator on business itself, we're getting paid on time. So that's also a testament to the quality of.
Speaker 3: of the distributor that we choose to go to market with. So they're having issues on all categories. And again, you know.
The distributor that we choose to go to market with so.
They are having issues on all categories.
Again, you know.
Speaker 3: We're just trying to do what we can to perform once the order comes in.
We're just trying to do what we can to perform once the order comes in.
Speaker 5: And then with copper prices where they are, are you seeing any substitution for aluminum products? Is that having any impact on your copper unit volume?
And then with copper prices, where they are are you seeing any substitution for aluminum products is that having any impact on your copper unit volume.
Theres definitely substitution discussions when Congress at $4 50 would have it what have you but.
Speaker 3: There's definitely substitution discussions when copper is at $4.50 or what have you. But the support to that has been, I didn't look this morning, but I'm pretty sure aluminum is around $1.45, $1.50. And so it's come up as well. And then there's a decent...
The support to that has been.
I didn't look this morning, but I'm pretty sure aluminum's around $1 $45 50, and so it's come up as well and then.
There's a there's a decent.
Speaker 3: tightness, if you will, on the aluminum supply, which is, again, the price itself leads to the discussion.
Tightness, if you will on the aluminum supply.
Which is again the.
Price itself leads to the discussion.
Speaker 3: And then you have to work on the delivery piece. So it's definitely in the discussion, Brent, as you've seen in the past. There's a large demand for specific sizes of aluminum building wire that kind of pulls the availability away from traditional commercial or industrial applications, maybe, on the supply side.
And then you have you have to work on the delivery piece. So it's definitely in the discussion.
Brent as you've seen in the past.
There is there's a large demand for specific sizes of aluminum building wire.
It kind of pulls the availability away from traditional.
Commercial and industrial applications may be on the supply side and then.
Speaker 3: We're happy to follow up with a copper shipment. That's what they'd like.
We're happy to follow up with the copper shipments that's what they would like.
Okay, well great. Thank you for taking my questions. Congrats on a tremendous year Yep Yep. Thank you.
Speaker 5: OK, well, great. Thank you for taking my questions. Congrats on a tremendous year. Yeah, yeah. Thank you for your support.
Correct.
Speaker 1: Thank you. Our next question comes from Bill Baldwin. Please go ahead. Your line is open.
Thank you. Our next question comes from Bill Baldwin. Please go ahead. Your line is open.
Hey, Bill.
You may be on mute.
It looks like you have may have disconnected.
Okay.
Speaker 1: At this time, I am not showing any further questions. I'd like to turn the call back over to the host.
At this time I'm not showing any further questions I'd like to turn the call back over to the host.
Speaker 2: I appreciate everyone's interest today, their investment in ENCOR Wire, and you all enjoy the day. Thank you.
Charles.
I appreciate I appreciate everyone's interest today their investment in encore wire and you enjoy the day. Thank you.
Speaker 1: Thank you. And thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.
Thank you and thank you ladies and gentlemen. This concludes today's conference. Thank you for participating you may now disconnect.
Speaker 6: DA works forsubjective implicated Lisa
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