Q4 2022 Encore Wire Corp Earnings Call
Good morning, My name is Rob and I'll be your conference operator today at this time I would like to welcome everyone to the encore wire fourth quarter and full year 2022 results conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.
If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question again just press the star one. Thank you Bret Eckert you may begin your conference.
Thanks, Rob Good morning, and welcome to the Encore Wire Corporation quarterly conference call I'm, Brett accurately executive Vice President and Chief Financial Officer of Encore wire with me. This morning is Daniel Jones, President CEO and chairman of the board in a minute. We will review encores financial results for the quarter and year ended December 31.
2022 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 order to comply with certain with certain securities legislation and instead of a <unk>.
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 to be useful supplemental information for investors are posted on our website.
I'll now turn the call over to Daniel for some opening remarks Daniel.
Thank you Brett.
Good morning, everyone. Thank you for joining us on the call and for your interest in Encore wire. We appreciate your continued investment confidence and support.
Our results in 2020 to Mark another year of exceptional earnings.
Strong cash flow and consistent volume growth.
Single site vertically integrated business model affords us the flexibility and agility to quickly adapt to changing market conditions, while continuing to serve our customers at a level consistent with our high standards continued.
Continued tightness and the availability of key raw materials and the general inability of the sector to meet demand for the timely delivery of finished goods.
Spreads strong in the fourth quarter of 2022.
Our key suppliers continue to perform at a high level, which positions us favorably in meeting customer demand in a timely manner.
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 shipped in the fourth quarter and year to date periods in 2022 over 2021 levels.
I continue to believe that our operational agility speed to market and deep supplier relationships remain competitive advantages and serving our customers evolving needs.
We remain committed to reinvesting in our business with current and planned projects focused on increasing capacity efficiency and vertical integration across our campus.
Copper unit volumes increased seven 9% on both a comparative quarter basis and on a year to date basis.
Comex copper prices increased gradually throughout the fourth quarter, while other raw materials cost and inputs decreased slightly.
Copper spreads decreased 13, 7% on a comparative quarter basis and increased one 9% on a full year basis.
Aluminum spreads and volumes increased for both the quarter and full year periods in 2022 compared to 2021.
The gradual abatement of copper spreads in the quarter was more than offset by increased aluminum spreads and an overall increase in total volumes shipped we.
We continue to believe encore wire remains well positioned to capture market share and incremental growth in the current economic environment.
As we address the near term challenges, we remain focused on the long term opportunities for our business, including improving our position as a sustainable and environmentally responsible company in our industry.
We believe that our superior order fill rates and deep vertical integration continued to enhance our competitive position.
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 Brent to cover the financial results Brett. Thank you Daniel.
Net sales for the year ended December 31, 2022 were 3.0, $1 8 billion compared to $2 $5 93 billion. During the same period in 2021 copper.
Copper unit volume measured in pounds of copper contained in the wire sold increased seven 9% in the year ended December 31, 2022 versus the year ended December 31 2021.
Gross profit percentage for the year ended December 31, 2022 was 36, 9% compared to 33, 5% during the same period in 2021.
The average selling price of wire per copper pound sold decreased 5% in the year ended December 31, 2022 versus the year ended December 31, 2021, while the average cost of copper per pound purchased decreased two 7%.
As Daniel stated the overall increase in total volume shift along with an increase in aluminum spreads. During 2022 resulted in the increased gross profit margin for the full year of 2022 compared to 2021.
Net income for the year ended December 31, 2022 was $717 8 million versus $541 4 million in the same period of 2021 fully diluted net earnings per common share was $36 91.
For the year ended December 31, 2022 versus $26 22 in the same period in 2021.
Net sales for the fourth quarter ended December 31, 2022 were $693 9 million compared to $687 9 million in the fourth quarter of 2021.
Copper unit volume increased seven 9% in the fourth quarter of 2022 versus the fourth quarter of 2021.
Gross profit percentage for the fourth quarter of 2022 was 35, 8% compared to 34, 2% in the fourth quarter of 2021, the average selling price of wire per copper pound sold decreased 14, 1% in the fourth quarter of 2022 versus the fourth.
Quarter of 2021, while the average cost of copper per pound purchased decreased 14, 4%.
The gradual abatement of copper spreads in the quarter was more than offset by increased aluminum spreads and an overall increase in total volume shift resulting in increased gross profit margin in the fourth quarter of 2022, when compared to the fourth quarter of 2021.
Net income for the fourth quarter of 2022 was $154 million versus $141 6 million in the fourth quarter of 2021.
Diluted net earnings per common share was $8 28 in the fourth quarter of 2022 versus $6 91.
In the fourth quarter of 2021.
Aluminum wire represented 17, 8% and 15, 4% respectively of our net sales in the quarter and year ended December 31, 2022 aluminum volumes increased in both the comparative quarter and an annual basis over 2021 levels.
Results through the fourth quarter ended December 31, 2022 were driven by stable demand for our products and the general inability of the sector to meet demand for the timely delivery of finished goods persistent tightness and the availability of certain raw materials ongoing global uncertainties and suppressed availability of skilled lay.
<unk> kept overall spreads strong through the fourth quarter of 2022.
This marks the seventh consecutive quarter of elevated margins and spreads also worth noting copper volumes aluminum volumes in total volumes have increased on a comparative quarter basis for nine consecutive quarters our.
Our balance sheet remains very strong we have no long term debt and our revolving line of credit remains untapped, we had $736 million in cash at the end of the year.
During 2022, we repurchased 2 million 55470 shares of our common stock at an average price of $120 47.
Including 161701 shares repurchased at an average price of $138 53 in the fourth quarter.
Since the first quarter of 2020, we have repurchased $2 million 972000.
277 shares of our common stock for a total cash outlay of $311 6 million. We also declared a <unk> <unk> cash dividend during the fourth quarter.
In addition in February of 2023, the board of directors extended the repurchase authorization for up to 2 million shares of our common stock.
March 31 2024.
The repurposing of the vacated distribution center into plant seven to expand manufacturing capacity and extend our market reach was substantially completed in the second half of 2022.
The incremental investments announced in July of 2021 continuous artist focused on broadening broadening our position as a low cost manufacturer in the sector and increasing manufacturing capacity to drive growth in 2022, we began construction on a new state of the art Crosslinked polyethylene.
Ex LTE compounding facility to deepen vertical integration related to wire cable installation.
X L. P. Insulation today is used in many applications, including data centers oil and gas transit wastewater treatment facilities utilities, and wind and solar applications. We anticipate the new facility will be substantially completed by the end of the third quarter of 2023 cap.
Capital spending in 2023 through 2025, we will further expand vertical integration and our manufacturing processes to reduce costs as well as modernize select wire manufacturing facilities to increase capacity and efficiency and improve our position as a sustainable and environmentally responsible company.
Total capital expenditures were $148 4 million in 2022, we expect total capital expenditures to range from $160 million to $180 million in 2023 $150 million to $170 million in 2024, and $80 million to $100 million in 2025.
We expect 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.
Thank you Brett 2022 was another banner year for encore wire, our employees and our shareholders.
Consistent success further attests to the strength of our one campus vertically integrated low cost business model.
Which continues to thrive under current market conditions I believe our business model remains a competitive advantage, giving us unmatched operational agility and speed to market and serving our customers evolving needs.
Despite persistent tightness and the availability of certain raw materials.
Our supplier partners continued to deliver on their commitments to encore.
We wouldn't have this level of success without the consistent exceptional performance of our long term suppliers late.
The labor market also remains tight and Olympian constraint for many companies all of these factors have contributed to the general inability of the sector to meet the demand for the timely delivery of finished goods.
Which positioned us favorably to expand volumes shift for both the quarter and year ended December 31 2022.
Operationally, we continue to grow through investments that enhanced our service model increased capacity reduced costs and focused on the health and wellness of our employees.
Looking ahead, we remain solely committed to execute upon the core values of our company unbeatable customer service nimble operations and quick deliveries coast to coast.
I remain confident in the strength of the encore team in places, we stand ready to navigate any challenges aligner path.
I want to close by thanking our employees for their continued hard work and commitment to safety quality and excellence. Our continued success would not have happened without their outstanding contributions.
Our strong financial results have allowed us the opportunity to incrementally invest in our team as we position encore as an employer of choice in the sector.
I want to thank our shareholders for their continued support.
And Rob we will now take questions from our listeners.
At this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad.
Our first question comes from the line of Brent Thielman from D. A Davidson your line is open.
Hey, Thanks, Good morning, Daniel Bret.
Good morning.
I guess first question would be.
Daniel I mean aluminum seems to be a really nice tailwind for margins here for a few quarters now you saw strong spreads again in the fourth quarter, maybe just your latest view of what youre seeing in that market.
So in the sustainability of these these really strong spreads for that product line.
Okay.
Yeah, Great question. Good asked what we have is.
We're.
We're seeing demand across the board in the product category.
She and a little bit of a shift in the way the demand comes across the utility piece has been.
Relatively hot.
The data center piece remains strong and your aluminum feeder size and then.
There's some customization of some of those cables on the aluminum side that we're able to do in.
Speed to market with those custom cables.
Certainly beneficial for us.
The demand itself overall.
<unk> is very strong.
As you know there is heavy.
Government investment in utilities and renewables.
And I think we're just on the front edge of that so.
So we look for continued.
Strength in demand it does invite.
Imports were keeping a close eye on that there is a history.
With us in one of our.
Currently competitors that we partnered.
Way back in 2018 to address that problem. So we're keeping an eye on the imports.
But the other side of it is we're managing.
The demand in a way that is completely different than we've seen in the past the buying patterns are different.
And again, it's just an influx of cash and.
Money into that sector on the demand side for upgrading the utilities and the additional renewables that are out there. So it's a good it's a good market really good.
Hey, Daniel I know you don't break out your end markets is it fair to say that utilities are a significantly larger customer today than they had been.
Five years ago, because of that demand environment and your ability to satisfy those lead times.
Yes, I mean, it's fair to say that from a utility cable consumption for sure.
Theres different companies that are getting involved at each stage of the upgrade to the utility sector.
And the actual purchasing.
Patterns that were there historically for the longer term.
Layouts.
Material demand.
Consistent over time.
It is really short and it's just a.
It's a hot market.
And it looks like Theres with the government funds to continue to flow into that area.
And any investment that's happening.
On the private side.
That utility market is not an.
Certainly more important to us today than it has been in a while.
Hey, Brad it's Brad I'll, just add to that I mean.
It's also when you looked at this and it's not obviously just an aluminum story. It was a contributing factor, but copper volumes were up seven 9% for the year and seven 9% for the quarter and so those incremental volumes still at those elevated margins are also a big contributing factor overall to what you saw.
Seeing in the results the last the last.
Pound is worth more than the first one just because when you hit absorptions. So just don't want to lose side of that as well that the volume increase is contributing as well to the growth and the margin yes.
Yes, well.
That was the next I mean, just on the bigger kind of 80% of the business in copper.
I guess, Daniel with with copper prices turning higher in.
Historically, you've used this term of it kind of 14 discipline among competition and historically rising copper prices tend to be good for your margins over time, I mean, given how tight things are on the supply side.
Especially for those that.
Our vertically integrated and is there any reason.
Industry is responding differently do these higher copper prices now than they would in the past.
No I don't think so I mean listen we're in a good market.
We've got good competitors that.
Through the last couple of years have been able to.
Sure if their balance sheets, if they did have any issues.
They are making money they are doing great things.
And it's good to have good competition the.
The difference in this cycle that I see on the copper piece.
The tightness.
In the market on the shapes that.
Are necessary for the consumption point.
<unk> is really not.
Played out in that pricing model on the upside and it's coming.
There is there is.
Super tightness across the board.
Theres a buy America situation that has an influence on the shapes and where they come from obviously.
It's just a different cycle this time.
On the days supply.
Technical factors that overhang the market.
Keep a cap or a list.
But at some point you start to break through those.
Sure.
Economic lids, because if you can't get the material.
And the price becomes a little bit secondary so it definitely forces discipline in the building wire industry.
We've always done very well.
And a.
Slow.
Rising copper market is.
This time it's.
Really about hey, what shape is available and who can take that shape and get it to market the quickest.
<unk> point about the drive on the aluminum side from utilities and renewable.
A lot of that distribution ends up being copper and so you still have to perform across the board, it's not a scenario where you can.
Got your inventory in one product category and go different directions.
Tight tight copper market.
Based on the shapes and again Theres just not that much.
That you can get your hands on quickly above ground to do anything with so.
I can't stress enough, how important our vendors our Kansas.
Can't stress enough, how well they've executed also getting product to us.
In a manner that we can convert and get it to market pretty quickly.
Okay.
Just one more I'll get back into queue, Brad I think you guys in the past you talked about wanting to keep a.
A couple of hundred million dollars in cash on the balance sheet as debt.
And it is working capital manage the business.
Our cash balance now, but do you have a $1 billion over that Mark you arent as active with buybacks maybe in the fourth quarter as we've seen in prior quarters I saw you bumped up debt.
Capital spending plans, but it seems like youre sitting with a lot of extra cash here could you just talk about the various options you may be considering with the board with let's.
Just a massive cash balance here.
Yeah, that's a great question, Brent and it's something that Daniel and I talked to the board about every single time, we meet it's on the agenda and we talk through what's the highest and best use of cash and.
Capital expenditures invest reinvest in this business and you saw the expansion of that you still have P&L 400 $450 million of spend over the next three years, which is a big number.
We bought back even though it was a little more challenging in the market in the fourth quarter to execute the buybacks.
You know more than we said the authorization was coming in and the board re upped. It in August of this year that you refilled two of <unk> 2 million.
We get a little over two almost $2 1 million shares the reauthorize that for another $2 million.
And so that gives you an indication of history is any judge as to what we see as a good use of cash.
And we had a pretty aggressive buyback even in the fourth quarter and we see we still see value in that.
When you look at the dividend is only two cents a quarter, it's not going to move the needle.
We'll tell you it's still as you said, it's two to $2 50.
Two to 250, Amanda cash you need on the balance sheet to navigate if copper runs and it's whether or not it goes to $2 or $8 youre going to need the cash on the fringes, but we'll continue to evaluate look for opportunities.
The incremental investment that we can make and you saw how it is going to play out if you look at where some of the movement in the market is and where some of the strength of the market is in 2023. The industrial segment is it going to be a big driver from from what I see and what I hear you with manufacturing investment in the U S is forecasted to grow 15 plus percent.
A lot of major projects that are concentrated on semiconductor production battery manufacturing automotive infrastructure build out to support EV transition.
Our planned seven.
It's perfectly timed to help serve that high growth market and the investments we made there with the <unk> facility coming online right.
That's a big use of that type installation in those markets and so.
You've got some drivers with regard to that that show that these investments, we're making to take cost out or are going to make a difference. So we're going to continue to look for those opportunities across campus as well.
Okay. Thanks, I'll get back in queue I appreciate it.
Correct.
Your next question comes from the line of Julio Romero from Sidoti Your line is open.
Thanks, Hey, good morning, Daniela Brett.
Yes.
Good morning, it looks like they are copper spread dollars per unit it.
It looks like a debated by roughly the same dollar about sequentially for the last two quarters do you foresee any changes in the rate of spread abatement in the coming quarters.
I wouldn't think so.
Again, we're that's one of the things as you are well aware we fight.
Protect.
Some of Thats timing within the quarter of what would happen with the.
<unk>.
Timing of an increase in price in the market versus increase in matching up with what happens with the copper on that particular side, but.
I don't know of anything that would cause it to accelerate or go any other direction. It's still.
There's two things.
The work in this industry, it's price and delivery or delivery and price.
You had to pick which way that you go to market.
We go with delivery, we compete with folks a lot of times that go with pricing.
Probably shouldnt say too much about that but thats.
That's where we're at.
We're fighting to maintain.
What we feel like is a fair price for the services that are being requested of us and the more that we can do that and keep it out of the bid touch scenario in the market the better for us on that spread.
And I'll just add to that Julio.
When you look at this gross margin in the fourth quarter was 35%. It was 34, two last year right and so again just like the aluminum piece, there's a lot of things that go into play with regard to what the ultimate margin is going to be right. You've got that gradual abatement, you've got this increased volume at what our.
<unk> margins, which helps offset that you've got this investment with the projects that we're building to deepen vertical integration or expand capacity take cost out improve our service model that are coming online right and you put that all in a blender every month and every quarter and thats, what youre seeing kind of manifest itself in the margins in <unk>.
So as Daniel said, we continue to fly one order at a time and we'll continue to get that in service that order as efficiently as possible.
Great that's very good color.
<unk>.
Greg Youre pointing on the incremental volumes that are coming through that kind of leads into my next question I guess just.
Copper unit volumes rose, 8%, both in the quarter and year over year.
Any way to think about how much of that is driven by the capex. That's put in place over the last few years.
Yes.
Question I mean, we've talked about how plant serving the repurposing of the old distribution Center came online in the in the second half of 2022 right and so.
A lot of the incremental capacity that you saw that we experienced particularly early in the year was just done by flexing, our existing footprint right flexing, the existing machinery and equipment and leveraging the personnel, we have finding ways to move it through more efficiently leaning in on the shave getting closer to the finished good.
And allowing us the flexibility to be very responsive from the customer side.
As planned seven came online that definitely helped as you got later in the year, but we said that that added about 15%, 15% to 20% additional capacity on an annual run rate and so you saw some benefit of that but not the full benefit given the timing of when it came online.
Okay, Great that's very helpful.
So I guess, we should expect.
That annualized run rate to benefit you on the volume side in 2003.
Yes, the margin so it got to be there, yes, Sir.
Okay.
Wanted to ask about the <unk>.
Polyethylene compounding facility and just thinking about it.
We could talk more either on the strategic rationale or maybe the return.
On that once it comes online later in the year.
Yes.
Look we're after controlling our supply.
We're after lowering our cost on the front end.
That's.
Growing market for us.
There has been pressure.
From the pricing side.
Throughout the last.
Reporting period, so the entire of 2022.
We want to control the supply side, and we want to cut our costs on the input side that project allows us to do that.
We'll have the availability.
On a volume side to do with that what we want to do.
And again it's.
Get a bit more capacity coming online than what we currently consume so we've got plenty of space to growth for growth.
Again, it's the insulation over the metal so it handles both copper and aluminum for us and a.
Segment of our business that we feel like there's an opportunity there that we can cut some cost and grow a little bit with that market again, the money that's coming in.
In that segment from outside sources government sources private sources whenever it might be.
Hard to tell what the growth number actually will settle out, but it's definitely an opportunity for us but.
The net result is we wanted to control of that input and we wanted to.
Lower our costs.
Okay. Thanks job guys. Thanks, taking the questions.
Great. Thanks.
Thanks to the support.
Your next question comes from the line of Taylor Merit from Forge first asset management. Your line is open.
Good morning, guys great quarter.
My first question just generally on the ships Act inflation Act and the infrastructure Act.
Do you see potential timing of these benefiting encore are these actually expected to be significant tailwind in 2003 via new orders or more so 2024 and beyond.
I think there's something to be said for 'twenty three for sure.
Each of those segments that are affected.
It creates a tailwind.
Tailwind or some positivity around it.
The attitudes change.
There is business that will be invested in it might've been idle otherwise.
And then there is some new categories that will come from it.
It's a tremendous amount of.
Federal input.
It's landing at a time when we had.
Weather events, and whatever that created challenges for local and state municipalities on the utility side.
The renewable piece continues to evolve.
There is some.
Projects that.
May have gone by the wayside without additional input and.
And without some of the technological advances.
Been born out of this so it's a very broad.
Influx of a tremendous amount of cash.
That we see some niche opportunities for us with both the aluminum and the copper side.
Got it that is very helpful and my follow up is on the increases in capital spending guidance, how much if any was related to inflationary cost pressures or was it entirely due to incremental capital deployment opportunities youre seeing.
Yes, I think most of the inflation, because you're starting to see a bit of.
Of a turnaround in some of those construction costs some materials come in line and so.
We kind of had a pretty good sense for what we thought.
What was the material cost and the construction cost is going to be there's always ebbs and flows in those numbers Taylor, but.
Overall, the increments or really just the timing of the projects that we had slated in and the ability to kind of move those around as we thought.
First fit with regard to what we saw the market going.
Got it. Thank you very much that's it for me.
Thank you Taylor for support.
Your next question comes from the line of William Baldwin from Baldwin Anthony Securities. Your line is open.
Yes, Thank you and good morning, Daniel and Brett.
Hello Baldwin.
Okay.
Regarding these.
Large industrial projects.
So you talked about the semiconductors, and the battery plants and new plants and so forth.
Are those projects yet to be felt on the demand side.
Are they still in front of us.
As far as seeing the demand for your products into those projects.
Yes, we see that definitely and that's one of the areas from an industrial standpoint.
The four ports IC are forecasting 15, plus percent growth you hear about those all the time, the semiconductor or the battery manufacturing a lot of onshoring going on and so I definitely think those projects are in front of us 23 and beyond.
Right.
Yes.
Just from the standpoint of what <unk> been talking about in regards to the.
Physical tightness of this market.
So when those projects begin to actually show up and materialize.
Could that be the inflection point that has gone a really.
Causes.
Pricing picture to change quite a bit that we see for copper.
If the market's tight today I can only imagine what it's going to be like.
Yes, hi, good projects start to hit.
Right.
Tons of reports written.
The most recent one that was logical was in the Wall Street Journal on Monday.
Makes a lot of sense matches with a lot of what we're seeing in the market.
Again, when the supply and demand.
It takes over for these technical factors that drove her hanging the metals markets and folks really get a handle on the consumption side versus the supply side.
It's a bullish picture.
You still have games being played with the numbers coming out of China.
The reports that they will show on what's really there.
Remains to be seen in the Shanghai warehouse.
Just a lot of factors that go into it right.
And if copper goes up.
Credits into China, and if copper goes down its blended oil to China.
There's a lot going on there.
No.
You've seen this market for a lot of years.
No.
The good thing is when it when it relates to the actual execution of putting our product on the job site for consumption, that's where we're really.
Hitting on all eight cylinders and doing the things that we're supposed to be doing.
We're not.
We're not guessing on copper, we're not guessing on aluminum.
We go with the inputs.
And we put the product on the job site when it's needed.
And right now there is a market out there that will.
Pay for that.
<unk> significant any means but.
We've got a ton of repeat business with folks where we've earned the opportunity.
To keep it off the street, so to speak and not go out for quote.
And that's a good spot to be in but at the same time, it's a good responsibility and challenges our team and.
We will take our team against the other guy on the delivery piece.
Okay.
Absolutely absolutely.
Well.
I guess I mean, as you look in your Crystal ball, Daniel and Brad.
Copper prices, you know who knows where they go to is there a point in time.
Whether that begins to impact the ROI on the projects are going into it.
And begins to.
Mitigate perhaps the demand I mean is there some price point for copper.
That.
Projects can absorb.
Yes, I have an ROI that's competitive.
Certainly we'll be talking about more.
Substitution creeps in as part of the conversation, but when you look at the power consumption. That's in front of us on some of these projects.
You have to go copper you have to go with larger sizes more conductors.
Certainly we'll be improvements to designs.
Going forward.
For a lot of these projects, they're going to do Redesigns youre going to do improvements you're going to do whatever but at the end of the day, if the consumption of power.
Is where it is theyre going to have to have the.
The product that we make we're very.
Narrowly missed really if you think about it but.
Yes, I mean, I think the consumption piece on the power those numbers.
We're going to dictate what has to happen.
There are just too compelling.
As a solar business your solar business is that primarily aluminum wire <unk> cable and wire.
It's both but primarily its aluminum when you get into the field its breadth of distribution in <unk>.
Okay.
And a housekeeping item.
The percent of revenues this quarter in the residential side of the business.
Residential for the quarter for the year I'll give it yourself on an annual basis.
For the year, we're at 29, 6% in 2022 and above 31 in 'twenty. One if you look at it just for the fourth quarter. It's almost identical it's $29. Three this fourth quarter 29, 4% last fourth quarter. So.
Ultimately volumes are up.
Given those percentages, obviously you'd have to say volumes are up as a percentage stays safe right.
Right right right.
Thank you very much congratulations about Mount Sterling jobs, they're good to hear from you yeah. Thanks, Mr. Paul I appreciate it.
And we have a follow up question from the line of Brent Thielman from D. A Davidson your line is open.
Yeah.
Hey, Thanks, guys.
The details on the polyethylene plant investment just was wondering how much of that.
160 to $180 Capex for 'twenty three that that represents.
Well, you've got a number of projects as you know Brent right and also keep in mind that.
We started that in 2022, so youre going to have some of that spending.
<unk>.
Crossover if you will I'd, rather not get into the specific number with regard to it but it is a component of it but if you lean back in as to what we spent money on in 'twenty two.
Some of the bigger drivers of a problem with the Repurposing.
Of the old distribution center, making planned seven and then every single year, we've got $50 million to $70 million, just what I call maintenance, Capex, which is which is mainly additional machinery and equipment right replacing lines.
More often than not we're just bolting additional lines on moving equipment around getting more capacity with our existing footprint and that happens every single year here as we as we evaluate replacing an older line with maybe symptoms more efficient or not are keeping them both.
Got it okay.
Imagine it's not the investment it was implant revenue the distributions I guess, maybe my question is.
And the security and material supply mix a lot of sense, given what you had to go through it.
Covid.
And just maybe just curious the significance of this non core from a cost standpoint, I mean is it that 5% to 10% of your Cogs that arent in copper.
I assume youre now able to produce at a big discount in house.
So I mean is this sort of structurally changed your margins once it's up and going versus.
Historically, because you've got these capabilities in house now.
Yes.
Youre definitely to be able to obviously when we vertically integrate right. We find a way that we can make it cheaper than you can buy it there's a huge value to the certainty of supply, though right as you look at the utilization the green economy, the electrification that youre seeing in the types of of investment that's being driven by.
The infrastructure and inflation reduction act right a lot of that lies in really goes right towards the wire and cable with this type of insulation. So there's also value in your ability to scale right on your own timeline to be able to capture those opportunities in the market.
We always talked about our nimbleness right, that's really who we are right our ability to adapt very quickly because of the single site location is really our strength right.
Just another thing that gives us or adds to that nimbleness as we find a way to serve our customers at a very very high level.
Okay.
Okay, Alright, thanks, guys I appreciate it.
And there are no further questions at this time.
Thank you everybody appreciate your time today and enjoy the rest of the day well done Rob. Thank you.
This concludes today's conference call. Thank you for your participation you may now disconnect.
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