Q4 2023 Encore Wire Corp Earnings Call - Q&A
Operator: The Ultimate Parody Site! Ladies and gentlemen, thank you for standing by. I would like to welcome everyone to the fourth quarter of the four-year 2023 Earnings Conference. At this time, all lines have been placed on mute to prevent any background noise.
Okay.
Ladies.
Thank you for standing by I would like to welcome everyone to the fourth quarter full year 2023 earnings.
Earnings Conference call.
At this time 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'd like to ask a question. During this time simply press the star followed by the number one on your single Thank you Pat.
Operator: After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press the star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, please press the star followed by the number 1 once again.
He would like to withdraw your question. Please press the star followed by the one once again.
Operator: Thank you. I will now hand the call over to Mr. Brett Eckhardt, Executive Vice President and Chief Financial Officer. You may begin your conference. Thanks, Vivesh.
Thank you I will now hand, the call over to Mr. Brett.
Executive Vice President and Chief Financial Officer, You May begin your conference.
Thanks, the vast good morning, and welcome to the Encore Wire Corporation quarterly conference call I'm, Brett accurate executive Vice President and Chief Financial Officer of Encore wire with me. This morning is Daniel Jones, President CEO and chairman of the board before we begin our comments, we'd like to remind everyone that today's earnings release.
Brett Eckert: Good morning, and welcome to the Encore Wire Corporation quarterly conference call. I'm Brett Eckert, Executive Vice President and Chief Financial Officer of Encore Wire. With me this morning is Daniel Jones, President, CEO, and Chairman of the Board. Before we begin our comments, we'd like to remind everyone that today's earnings release and certain of our comments on the call include forward-looking statements, and actual results may differ materially from such forward-looking statements. I'd like to refer everyone to the cautionary language included in our earnings release and to the risk factors described in our SEC filings. I'll now turn the call over to Daniel for some opening remarks. Daniel?
Certain of our comments on the call include forward looking statements and actual results may differ materially from such forward looking statements I would like to refer everyone to the cautionary language included in our earnings release and to the risk factors described in our SEC filings I will now turn the call over to Daniel for some opening remarks Daniel.
Daniel L. Jones: Thank you, Brett. Thank you, Vivesh. Good morning, everyone.
Thank you Brad Thank you Bob.
Daniel L. Jones: Thank you for joining us on the call and for your interest in Encore Wire. We appreciate your continued investment, confidence, and support. Over the past several years, we have invested in and continue to invest in improving our service model and efficiency levels to reduce cost, increase capacity, and deepen our vertical integration. We believe these investments have strengthened our ability to compete today and should contribute to higher gross margin levels when compared to pre-COVID baselines. We experienced increased copper wire and cable demand from mid-2023, which continued through the fourth quarter. This resulted in us shipping a record number of copper pounds in the fourth quarter, representing the strongest volume quarter over the course of the full year. Specifically, copper pounds shipped in the fourth quarter grew by 5.9% over the third quarter of 2023 and grew by 18.8% over the fourth quarter of 2022. These results represent a positive shift in volume when compared to a pre-COVID baseline.
Good morning, everyone. Thank you for joining us on the call and for your interest in Encore wire.
Appreciate your continued investment confidence and support.
Over the past several years, we have invested and continue to invest in improving our service model and efficiency levels to reduce costs increase capacity and deepen our vertical integration.
We believe these investments have strengthened our ability to compete today and should contribute to higher gross margin levels when compared to pre COVID-19 baselines.
We experienced increased copper wire and cable demand for mid 2023, which continued through the fourth quarter. This resulted in us shipping a record number of copper pounds in the fourth quarter, representing the strongest volume quarter over the course of the full year specifically.
Specifically copper pounds shipped in the fourth quarter grew by five 9% over the third quarter of 2023.
And grew by 18, 8% over the fourth quarter of 2022.
These results represent a positive shift shift in volume shipped when compared to a pre COVID-19 baseline copper.
Daniel L. Jones: Copper and aluminum pounds shipped in 2023 increased by 21% and 74%, respectively, when compared to 2019 levels. We captured this demand by leveraging our single site, vertically integrated campus, deep supply relationships, and motivated workforce to quickly manufacture and ship finished goods to our customers despite the macro challenges facing the sector. The strong performance is also a reflection of our steadfast commitment to outstanding customer service and our constant focus on quickly shipping complete orders, combined with our expanded reinvestment initiatives, such as the XLPE compounding facility that was substantially completed at the end of the third quarter of this year. Since our inception, we have grown organically under the same value proposition that we were founded on.
Copper and aluminum pounds shipped in 2023 increased by 21% and 74% respectively. When compared to 2019 levels. We captured this demand by leveraging our single site vertically integrated campus.
Deep supplier relationships and motivated workforce.
We manufacture and ship finished goods to our customers despite the macro challenges facing the sector.
The strong performance is also a reflection of our steadfast commitment to outstanding customer service and our constant focus on quickly shipping complete orders combined with our expanded reinvestment initiatives such as the <unk> compounding facility that was substantially completed at the end of the third quarter of this year.
Since our inception, we have grown organically and at the same value proposition that we were founded on manufacturing innovative products, while providing exceptional customer service centered on quickly shipping complete orders coast to coast.
Daniel L. Jones: We manufacture innovative products while providing exceptional customer service centered on quickly shipping complete orders coast to coast. We believe our focus on fill rates continues to provide a competitive advantage in the marketplace. We also believe that our one-location business model affords us a higher level of agility in adapting to changing market conditions, structuring our operations to quickly service areas of new and growing demand, such as data centers and renewable energy, while servicing our core market segments.
We believe our focus on fill rates continues to provide a competitive advantage in the marketplace.
We also believe that our one location business model affords us a higher level of agility in adapting to changing market conditions structuring our operations to quickly service areas of new and growing demand such as data centers and renewable energy, while servicing our core market segments.
Daniel L. Jones: As noted above, demand for our copper wire and cable products remained strong in 2023, and our build-to-ship model, combined with the throughput of our modern service center, positions us well to compete for future demand. We believe that we have made and will continue to make appropriate, sustainable investments to meet future demand that will facilitate the broad electrification of our economy. Additionally, we believe that the current federal legislation providing funds for the infrastructure needed for broad electrification should bolster demand for our products. We firmly believe that our historical, recent, and future success is a direct reflection of our unique culture and the strength of our experienced team.
As noted above demand for our copper wire and cable products remained strong in 2023, and our build to ship model combined with the throughput of our modern service center positions us well to compete for future demand.
We believe that we have made and will continue to make appropriate sustainable investments to meet future demand will facilitate the broad electrification of our economy.
Additionally, we believe that the current federal legislation, providing funds for the infrastructure needed for broad electrification.
Bolster demand for our products.
We firmly believe that our historical recent and future success is a direct reflection of our unique culture and the strength of our experienced team.
Brett Eckert: We also believe that our one campus location, deep vertical integration, strong supplier and customer relationships, and our ability to quickly shift complete orders will remain critical differentiators in our future success. With that, I'll now turn the call over to Brett to cover our financial performance in the fourth quarter.
We also believe that our one campus location deep vertical integration strong supplier and customer relationships and our ability to quickly shift complete orders will remain critical differentiators in our future success with that I'll now turn the call over to Brett to cover our financial performance in the fourth quarter.
Brett Eckert: Thank you, Daniel. Fourth quarter and full year 2023 highlights include fourth quarter earnings per diluted share of $4.10, full year 2023 earnings per diluted share of $21.62, fourth quarter net income of $66.1 million, full year 2023 net income of $372.4 million, fourth quarter gross profit of 21.5%, and full year 2023 gross profit of 25.5%. Fourth quarter copper unit volumes were up 5.9% over the third quarter of 2023. Fourth quarter copper unit volumes were up 18.8% over the fourth quarter of 2022, and on a full year basis, they were up 6.7%. We had $560.6 million of cash on hand at the end of December 2023, compared to $730.6 million as of the end of December 2022. Total expenditures were $164.5 million in 2023. We repurchased 476,300 shares in the fourth quarter of 2023.
Bret Thank you Daniel fourth quarter and full year 2023 highlights include fourth quarter earnings per diluted share of $4 10 full year 2023 earnings per diluted share a $21 62.
Fourth quarter net income of $66 1 million full year 2023, net income of $372 4 million fourth quarter gross profit of 21, 5% and full year 2023 gross profit of 25, 5% fourth quarter copper unit volumes volumes were up.
Five 9% over the third quarter of 2023 fourth quarter copper unit volumes were up 18, 8% over the fourth quarter of 2022 and on a full year basis was up six 7%, we had $560 million six of cash on hand at the end of December 2023.
<unk> compared to $736 million as of the end of December 2022 capital expenditures of $164 5 million in 2023.
Purchased 476300 shares in the fourth quarter of 2023 repurchased 2661 792000 shares for the full year 2023.
Brett Eckert: We purchased 2.661,792,000 shares for the full year 2023. Total cash outlay for shares was purchases of $85.1 million in the fourth quarter of 2023 and $460.2 million in the full year 2023. There is a share repurchase reauthorization that was approved by our board for the repurchase of up to two million shares of the company's common stock through March 31st, 2025. As Daniel mentioned, we experienced increased copper wire and cable demand in mid-2023, which continued through the fourth quarter. This resulted in us shipping a record number of copper pounds in the fourth quarter, representing the strongest volume quarter over the course of the full year.
Total cash outlay for share repurchases of $85 1 million in the fourth quarter of 2023 and $462 million and the full year of 2023.
There is a share repurchase reauthorization that was approved by our board for the repurchase of up to 2 million shares of the company's common stock through March 31 2025.
As Daniel mentioned, we experienced increased copper wire and cable demand for mid 2023, which continued through the fourth quarter. This resulted in us shipping a record number of copper pounds in the fourth quarter, representing the strongest volume quarter over the course of the full year. In addition for the first time in at least our recent history.
Brett Eckert: In addition, for the first time in at least our recent history, every quarter of 2023 showed copper volume growth over the sequential quarter in the current year. The decrease in net sales dollars in both the fourth quarter and year-ended 2023 was driven by an anticipated decrease in the average selling prices in the current year period compared to the prior year periods, which is consistent with the gradual margin abatement we have been discussing since mid-2021, and that was offset by increased copper volume shifts in the current year that were just highlighted above. Gross profit percentage for the fourth quarter of 2023 was 21.5% compared to 23.3% in the third quarter of 2023. The average selling price of wire per copper pound sold decreased 3.2% in the fourth quarter of 2023 versus the third quarter of 2023, while the average cost of copper per pound purchased decreased 1.2%.
Every quarter in 2023 showed copper volume growth over the sequential quarter in the current year.
The decrease in net sales dollars in both the fourth quarter and year ended 2023 was driven by an anticipated decrease in the average selling prices in the current year period compared to the prior year periods, which is consistent with the gradual margin abatement. We have been discussing since mid 2021 and that was offset by increased copper.
Volume shipped in the current year that were just highlighted above.
Gross profit percentage for the fourth quarter of 2023 was 21, 5% compared to 23, 3% in the third quarter of 2023.
The average selling price of wire per copper pound sold decreased three 2% in the fourth quarter of 2023 versus the third quarter of 2023, while the average cost of copper per pound purchased decreased one 2%. This resulted in the continued gradual albeit slowing in abatement.
Brett Eckert: This resulted in a continued gradual, albeit slowing, abatement of copper spreads during the quarter, primarily driven by the decrease in average selling prices noted above, partially offset by a decrease in the average cost per copper pound purchased, which resulted in a decreased gross profit margin in the fourth quarter of 2003 compared to the third quarter of 2023. Aluminum Wire represented 9.9% of net sales in the fourth quarter of 2023 and 12.9% of sales on a full year basis.
Copper spreads during the quarter, primarily driven by the decrease in average selling prices noted above partially offset by a decrease in the average cost per copper pound purchase which resulted in the decreased gross profit margin in the fourth quarter of 2003 compared to the third quarter of 2023.
Aluminum wire represented nine 9% of net sales in the fourth quarter of 2023, and 12, 9% of sales on a full year basis aluminum volumes in the current quarter were effectively flat compared to the prior year quarter and down slightly on a full year basis in 2023 compared to 2000.
Brett Eckert: Aluminum volumes in the current quarter were effectively flat compared to the prior year quarter and down slightly on a full year basis in 2023 compared to 2022. However, we believe earnings in the fourth quarter and for the full year ended 2023 were strong and remain significantly above historic levels. This is a testament to our organic growth strategy, our one-location business model, historic and recent reinvestment in the business, and our hardworking employees, all driven by a culture of constant attention to detail and continuous improvement. At a macro level, persistent tightness in the availability of certain raw materials, ongoing global uncertainties, and the continued suppressed availability of skilled labor kept overall margins elevated in the fourth quarter of 2023. Our balance sheet and cash flow generation remained strong. During the quarter, we repurchased 476,300 shares of our common stock for a total cash outlay of $85.1 million.
'twenty two.
We believe the earnings in the fourth quarter and for the full year ended 2023 was strong and remained significantly above historic levels. This is a testament to our organic growth strategy, one location business model historic and recent Reinvestments in the business and our hard working employees, all driven by a culture of constant attention to detail.
And continuous improvement.
At a macro level persistent tightness and the availability of certain raw material ongoing global uncertainties and the continued suppressed availability of skilled labor kept overall margins elevated in the fourth quarter of 2023.
Our balance sheet and cash flow generation remained strong during the quarter, we repurchased 476300 shares of our common stock for a total cash outlay of $85 1 million.
Brett Eckert: Since the first quarter of 2020, we have repurchased $5,634,069 shares of our common stock and have returned almost $785 million in capital to shareholders through share repurchases and dividends. Incremental investments to deepen vertical integration in our manufacturing processes, as well as other projects focused on driving efficiency and increasing capacity, should continue to improve our service model. These types of organic investments have fueled our growth since inception and position us favorably to continue to compete in the future. In 2022, we will begin construction on a cross-linked polyethylene XLPE compounding facility to deepen vertical integration related to wire and cable installation. XLTE insulation is used in many applications, including data centers, oil and gas, transit, wastewater treatment facilities, utilities, and wind and solar applications.
Since the first quarter of 2020, we have repurchased $5 million 634069 shares of our common stock and have returned almost $785 million of capital to shareholders through share repurchases and dividends and incremental.
Investments to deepen vertical integration in our manufacturing processes as well as other projects focused on driving efficiency and increasing capacity should continue to improve our service model. These types of organic investments have fueled our growth since inception and position us favorably to continue to compete in the future.
In 2022, we began construction on our cross selling polyethylene X L. P E compounding facility deepened vertical integration related to wire and cable installation <unk>.
Installation is used in many applications, including data centers oil and gas transit wastewater treatment facilities utilities, and wind and solar applications as Daniel mentioned, the new facility was substantially completed in the third quarter of 2023.
Brett Eckert: As Daniel mentioned, the new facility was substantially completed in the third quarter of 2023. Capital spending in 2024 through 2026 will further expand vertical integration in our manufacturing processes to reduce costs as well as monetize select wire manufacturing facilities to increase capacity and efficiency and improve our position as a sustainable and environmentally responsible company. Total capital expenditures were $164.5 million in 2023.
Capital spending in 2024 through 2026, we'll further expand vertical integration in our manufacturing processes to reduce costs as well as monetize select wire manufacturing facilities to increase capacity and efficiency and improve our positioning as a sustainable and environmentally responsible company.
Capital expenditures were $164 5 million in 2023.
We expect total capital expenditures to range from $130 million to $150 million in 2020 for $130 million to $150 million in 2025, and $100 million to $120 million. In 2026, we expect to continue to fund these investments with existing cash reserves and operating.
Daniel L. Jones: We expect total capital expenditures to range from $130 million to $150 million in 2024, $130 million to $150 million in 2025, and $100 million to $120 million in 2026. We expect to continue to 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. Our ability to capture the demand we experienced in 2023 and deliver unmatched speed and agility in servicing our customers is a testament to our single-site, build-a-ship model, an important competitive advantage. It also positions us well for the future. The opening of the new service center in May of 2021, the opening of Plant 7 in the third quarter of 2022, the new XLPE facility that opened in the third quarter of 2023, and the other capital projects under construction or planned should provide us with the capacity and efficiency to remain competitive in the future. Our unique business model continues to serve us well in current market conditions and remains a competitive advantage, giving us unmatched operational agility and speed to market in serving our Despite persistent tightness and the availability of certain raw materials, our supplier partners continue to uphold their commitments to Encore.
Cash flows I will now turn the floor over to Daniel for a few final remarks.
Thank you Brett our.
Our ability to capture the demand we experienced in 2023 and deliver unmatched speed and agility in servicing our customers.
Testament to our single site build to ship model, an important competitive advantage. It also positions us well for the future the.
The opening of the New service Center in May of 2021, the opening of plant seven in third quarter of 2022, the new <unk> facility that opened in the third quarter of 2023, and the other capital projects under construction or planned should provide us the capacity and efficiency to.
Main competitive in the future.
Our unique business model continues to serve us well in current market conditions and 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 continue to uphold their commitments to encore.
We wouldn't have this level of success without the consistent exceptional performance of our suppliers.
Looking ahead.
We remain focused on executing upon our core values of our company unbeatable customer service nimble operations and quick deliveries coast to coast.
Daniel L. Jones: We wouldn't have this level of success without the consistent, exceptional performance of our suppliers. Looking ahead, we remain focused on executing 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 place as we stand ready to navigate any challenges that line our path. I want to close by thanking our employees for their hard work and commitment to safety, quality, and excellence. Our continued success would not have happened without their outstanding contributions.
I remain confident in the strength of the encore team in places, we stand ready to navigate any challenges that liner path.
To close by thanking our employees for their 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 this sector.
We will also want to thank our dedicated independent reps and our valued distribution partners for their continued support lastly, thank you to our shareholders for their confidence and investment.
Operator: 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 also want to thank our dedicated independent reps and our valued distribution partners for their continued support. Lastly, thank you to our shareholders for their confidence and investment. We'll now take questions from our listeners above us. Thank you very much, sir.
We will now take questions from our listeners.
Thank you very much sir.
At this time I would like to remind our teleconference participants in order to ask a question. Please press the star followed by the number one audience anytime keypad.
Johnny request the analysts limit their questions to one time limits may pause for a second question.
Operator: At this time, I would like to remind our teleconference participants that in order to ask a question, please press the star followed by the number one on your telephone keypad. We kindly request that analysts limit their questions to one, and if time permits, they may press for a second question. Our first question comes from the line of Julio Romero from Sidoti and Company, LLC. Please go ahead. Good morning, Daniel. Good morning, Brent. How are you guys?
Our first question comes from Manav Yulia Romero from Sidoti <unk> Company LLC. Please go ahead.
Thank you Natalie and good morning, Daniel Good morning, Brett how are you guys.
Great.
Excellent.
I guess I'll stick to the the operator instructions.
The one question I'll toss here is this on on volumes really impressive volume output here in the fourth quarter can you maybe speak to what product lines drove the increased volumes, where you are with regards to.
Daniel L. Jones: Excellent. So I guess I'll stick to the operator instructions, just, you know, I guess the one question I'll toss here is this on volumes, really impressive volume output here in the fourth quarter. Can you maybe speak to what product lines drove the increased volumes where you are with regard to Capacity Utilization? Yeah, the commercial market was pretty strong. We saw some, you know, healthy increases, and individual jobs like hotels, government offices, data centers, you know, that particular product category is somewhat broad.
Capacity utilization.
Yes.
Commercial market was pretty strong we saw some.
Healthy increases.
And individual jobs like hotels.
Government office buildings data centers.
That particular product category is somewhat broad.
It also.
Comparatively speaking to residential or industrial is our biggest piece.
Okay.
Pretty strong overall.
Geographically with that product category as well.
Brett Eckert: It also, you know, comparatively speaking to residential or industrial, is our biggest piece. Pretty strong overall geographically with that product category as well. We are expecting and seeing, you know, or saw some positive signs on the residential side, and then the industrial piece also was doing very well for us. Yeah, Julio, the only thing I'd jump on that is I think a lot of the strength you saw in the volume does align well with our service model. You know, we really got back to our swagger early in 2023, quick order, you know, order to ship, very high, high, high order fill rates. And that service level is allowing us to continue to be competitive with those orders but also get some incremental demand during the year. Okay, excellent. I'll hop back in queue.
We are expecting and seeing.
Our source.
Positive signs on the residential side.
And then.
The industrial piece also.
It was doing very well for us.
Yes, I think I'd jump on that is I think a lot of the strength you saw in the volume.
Does align well with our service model.
Really got back to our swagger early in 2023 quick.
Great quarter quick order to ship very high high high order fill rates and that that service level is allowing us to continue to be competitive with those orders, but also.
To get some incremental demand during the year.
Okay excellent I'll hop back in queue, thanks very much.
Operator: Thanks very much. Thank you. Our next question comes from Chris Moore from CPS Securities. Please go ahead.
Thank you. Our next question comes from Mono Crystal Ball Cynthia Securities. Please go ahead.
Operator: Hey, good morning, guys. Great quarter. If my math is right, I think the SARS impact was probably in the 20 cents range. So it would have been even better.
Hey, good morning, guys.
Great quarter.
If my math is right I think that Sars impact was probably in the 20 <unk>.
Daniel L. Jones: But maybe just a little bit on market share. So obviously, you guys picked up market share the last few years, your lead times are shorter, and you've managed your supply chains better. You know, the less the supply chain issue got away. Let's talk about that.
It would've been even better but maybe.
Maybe just a little bit on market share. So obviously you guys picked up share over the last few years. Your lead times are shorter and manage the supply chain is better.
Yes.
Not the supply chain issues have gone away, but let's talk about there. So it still looks like youre picking up share because of the quick turn model competitors big competitors are private so we don't see their numbers, but given your volumes were up 19% year began in Q4, a fair to assume that industry volumes were not up that level in <unk>.
Daniel L. Jones: So it still looks like you're picking up share because of the quick turn model. You know, competitors, big competitors are private, so you don't see their numbers. But given your volumes are up, you know, 19% year over year in Q4, it's fair to assume that industry volumes were not up that level in Q4. It's a great question, Chris, and you alluded to it the right way. I mean, everyone's private but us, right?
Four.
It's a great question Chris.
Alluded to it the right way.
Everyone's private but us right. So it's really all anecdotal right I do think as I mentioned to <unk> question, our service level today.
Has never been better and we're able to turn these orders very very very quickly given the continued shortages of skilled labor.
Daniel L. Jones: So it's really all anecdotal, right? I do think, as I mentioned in response to Julio's question, our service level today has never been better, and we're able to turn these orders very, very, very quickly. You know, given the continued shortages of skilled labor, you know, it's very disruptive to the job site if you have to get your load in four, five, or six different deliveries. The last delivery may be the one reel you need to start the process, and so being able to ship these orders complete very quickly is a differentiator. You know, I think it's a good assumption on your part.
Very disruptive to the job site. If you have to get your load in for five or six different deliveries. The last delivery may be the one real you need to start the process and so being able to ship. These orders complete very quickly as a differentiator you know I think it's a good assumption on your part I think there's clearly some growth.
In this sector and I think there is some piece of that that likely is taking share because of our service level.
Keep in mind, it's always one order at a time and continues to be a very price sensitive service is making a difference from our side of the fence and thats really what allowed us to take on orders from a capacity standpoint, we definitely have the capacity to continue to serve.
Daniel L. Jones: You know, I think there's clearly some growth in the sector, and I think there's some piece of that that is likely taking share because of our service level. But keep in mind, it's always one order at a time, right? It continues to be very price sensitive.
Orders at these levels.
From that standpoint.
23 was a fantastic year at consistent from a volume perspective.
Got it maybe I'll just try to sneak one more in here obviously, the big question or one of the big questions continues to be where gross margins would normalize I guess the question is what are the puts and takes that you could reach a bottom in gross margins in 'twenty four.
Daniel L. Jones: Service is making a difference from our side of the fence, and that's really what allowed us to take on orders. From a capacity standpoint, we definitely have the capacity to continue to serve orders at these levels, and, you know, from that standpoint, 23 was a fantastic year. It consists of volume. Got it. Maybe I'll just try to sneak one more in here.
That's a tough one and you tell me the price of copper and I can tell you how much we're going to make this right and that really is while we don't give guidance right I think.
Brett Eckert: Obviously, the big question or one of the big questions continues to be, you know, where gross margins won't normalize. I guess the question is, what are the puts and takes so that you could reach a bottom in gross margins in 24? It's a tough one.
Daniel stated we've seen.
Slowing.
<unk> mean, if you just look at the fact that we talked about from the third the fourth quarter to the third quarter of three 2% decrease in the average sales price and a one 2% decrease in the cost of copper pound purchase if you look at the third quarter compared to the second quarter ASP was down four three in the <unk>.
Brett Eckert: You tell me the price of copper, and I can tell you how much we're going to make, Chris, right? And that really is why we don't give guidance, right? I think, as Daniel stated, we've seen, you know, slowing abatement. I mean, if you just look at the fact that we talked about from the third, the fourth quarter, the third quarter, a 3.2% decrease in the average sales price and a 1.2% decrease in the cost of copper pound purchase. If you look at the third quarter compared to the second quarter, ASP was down 4.3%, and the cost was down two. So you can see that gap is kind of closed. The abatement still is at the ASP level, right?
Cost was down too. So you can see that gap has kind of close the.
The abatements still is on the ASP level right.
Copper plays a big piece of it right, we had a pretty supportive environment of copper in the fourth quarter right, we hit our low.
I think for the year at about $3 54 to $3 55 early in October and then steadily rose as you kind of went through the quarter and it peaked at $3 94, I think on the 28th of December and so you had a building environment of copper, which is always an environment you know that.
We like.
Brett Eckert: Copper plays a big piece of it, right? We had a pretty supportive environment for copper in the fourth quarter, right? We hit our low, I think for the year, at about $3.54, $3.55 early in October.
And so that kind of plays a role in it we've made a lot of investments over the last several years and those investments I do think our are paying dividends and obviously that impacts margin.
The other material costs that were up in the pandemic navigated down somewhat as you went throughout the year and so that has a benefit to it. So theres. So many things that go into it everyone's looking for where the bottom is.
Brett Eckert: And it steadily rose as you kind of went through the quarter, and it peaked at $3.94, I think on the 28th of December. And so you had a building environment for copper, which is always an environment that we like. And so that kind of plays a role in it. You know, we've made a lot of investments over the last several years, right? And those investments, I do think, are paying dividends.
Trying to we're competing one order at a time and if we do a great job all day with five of those together, we got a good weekend for those make a good month and Thats really what this business is it still going to be very competitive one order at a time and it's going to be a pennies business as far as making sure you run your operations as tight as you can.
Brett Eckert: And obviously, that impacts margin. Some of the other material costs that were up during the pandemic have gone down somewhat as you go throughout the year. And so that has a benefit to it. So, you know, there's so many things that go into it. Everyone's looking for where the bottom is.
Alright, I appreciate it I'll leave it there thanks guys.
Thanks, Chris Thank you Chris.
Thank you. Our next question will come from Brent Thielman da Davidson. Please go ahead.
Hey, thanks.
Yes, obviously at scanning volume this quarter, you've had a lot of initiatives in the last few years.
Brett Eckert: We're trying to, we're competing one order at a time. And if we do a great job all day, put five of those together, we have a good week, and four of those make a good month. And that's really what this business is. It's still going to be very competitive one order at a time, and it's going to be a penny business as far as making sure you run your operations as tight as you can. All right.
Enhance the capacity I guess Daniel is there.
Is there a way for us to think about capacity utilization is in the fourth quarter ago, which is that as good as it can get from a volume perspective or is there still a lot of excess capacity in place right now.
You could deliver over and above that the conditions were obviously there.
Yes.
Jim has done a fantastic good I appreciate the question to Brent in the call.
Operator: I appreciate it. I'll leave it there. Thanks. Thanks, Chris.
The team has done a fantastic job of evaluating bottlenecks as you know the market demand kind of ebbs and flows a little bit from one product category to the other.
Operator: Thank you. Our next question comes from the line of Brent Thielman of DA Davidson. Please go ahead.
But also without getting too deep within those product categories. There's also ups and downs on the demand side.
Daniel L. Jones: Hey, thanks. Yeah, obviously, at standing volume this quarter, you've had a lot of initiatives in the last few years to enhance capacity. I guess, Daniel, is there a way for us to think about capacity utilization as the fourth quarter goes on? Is that as good as it can get from a volume perspective, or is there still a lot of excess capacity in place right now that you could deliver over and above if the conditions were obvious? Yeah, you know, the team has done a fantastic job of evaluating bottlenecks as, you know, market demand kind of ebbs and flows a little bit from one product category to the other. But also, without getting too deep, within those product categories, there are also ups and downs on the demand side. Some of the customization at these data center jobs with the additional AI demand tacked on, you know, quite a bit of an increase in the volume piece at those specific job sites. But the team sorted those things out.
Some of the customization at these data center jobs with the additional demand.
Demand tacked on.
Quite a bit of an increase in the volume.
Pizza at those specific job sites.
The team.
Sorted those things out we built in flexibility.
That's a long answer to your question of we have quite a bit of.
Space left.
We are using quite a bit of the equipment.
Super efficiently.
We designed it to stop and start.
And to react.
And kind of have a build to ship model.
Because again a lot of this demand is one off.
Custom type.
Specific products.
Daniel L. Jones: We built in flexibility, and that's a long answer to your question about whether we have quite a bit of space left. We are using, you know, quite a bit of the equipment super efficiently. We designed it to stop and start and to react, you know, and kind of have a build-to-ship model.
With the core being aluminum and copper boats more copper than aluminum.
And as Brett mentioned, it moves constantly but.
We built this place on speed and agility over the years and grown with it.
Daniel L. Jones: Because, again, a lot of this demand is one-off custom-type, you know, specific products with the core being aluminum and copper bolts, more copper than aluminum. And you know, as Brett mentioned, it moves constantly, but we've built this place on speed and agility over the years and grown with it. I'm never comfortable taking an order that we can't ship, but that's a comma, not a period. Why can't we ship it?
I'm never comfortable.
In order that we can't ship.
But that's a common out of period why can't we ship. It. So we're constantly addressing the capacity question.
I'd, rather have the equipment come in and sit.
And use it when we need it rather than coming up short.
And missing that service Mark as you know you heard the story enough, but now we've got plenty of space on the capacity side to continue to grow in those categories that we mentioned earlier in the prepared remarks.
Daniel L. Jones: So we're constantly addressing the capacity question. I'd rather have the equipment come in and sit and use it when we need it rather than coming up short and missing that service mark. As you know, you've heard the story enough, but now we've got plenty of space on the capacity side to continue to grow in those categories that we mentioned earlier in the prepared remarks. Okay, if I could just sneak one more in, sorry, I'll do that.
Okay, if I can.
Could just sneak one more and sorry debt.
Daniel.
Or would you evaluate sort of spreads and pricing through the course of the quarter and just from the standpoint.
Daniel L. Jones: Daniel, how would you evaluate the sort of spreads in pricing through the course of the quarter, just from the standpoint? You did ultimately see some volatility in copper prices through the quarter. Any even qualitative comments you can offer in terms of how yourselves in the industry reacted? Yeah, very fortunate in the quarter for the most part.
You did see ultimately see some volatility in copper prices during the quarter.
Many even qualitative comments you can offer in terms of how.
Yourselves and the industry reacted to that.
Yes.
Very fortunate in the quarter for the most part the low for copper in the quarter on Comex was pretty early on in October.
Daniel L. Jones: The low for copper in the quarter on COMEX was pretty early in October, around 350-something, 354-ish, I think it was. And then it grew in November, and it increased a little bit more in December, which is a good rhythm to have going into the end of the year. There was about a $0.40 per pound increase from the low in the quarter to the high.
<unk> 350, something 54 ish I think it was.
And then.
It grew in November and it increased a little bit more in December which is a good.
Rhythm to have going into the end of the year.
There was about a 40 cent per pound increase from the low in the quarter to the high.
Daniel L. Jones: With that type of volatility, which is significant, I'm glad that you brought it up; as long as the timing meets the end of the month and the start of the next month, and it flows from low to high through the quarter, we're able to have success with price increases in the market. And again, the timing of being able to turn the inventory every month, if you will, maybe every three and a half weeks today, allows us that flexibility. And then when we have that agility to take in those ebbs and flows and the ups and the downs and the special orders that come in and still be able to ship the way that we ship through the quarter, we're able to sustain, if you will, that spread rather than reacting to maybe a competitor's idea of... I know I'm not supposed to go too deep into price, and I can see on the list on the screen that we've got most of our competitors on here, so I should probably just leave it at that. Okay. Thank you guys, I'll get back in the queue.
With that type of volatility, which is significantly I'm glad that you brought it up.
As long as the timing meets the end of the month and the start of the next month and it flows from low to high through the quarter.
Able to have success with price increases in the market.
And again, the timing of being able to.
Turn the inventory.
Every month, if you will and maybe every three five weeks today.
Allows us that flexibility and then when we have that.
Agility to taken those ebbs and flows in the ups and downs in the special orders that come in and still be able to ship the way that we ship through the quarter.
We're able to sustain if you will.
That spread rather than reacting to.
Maybe our competitors' idea of attracting attention by cutting the price.
I know I'm not supposed to go too deep into.
Price and I can see on the list on the screen. We've got most of our competitors onto yourself should probably just leave it at that.
Okay.
Alright, Thank you guys I'll get back in queue. Thanks, Brad.
Thank you I appreciate the help.
Yes.
Operator: Thank you. Our next question comes from Alfred Poulin of Barga, LLC. Please go ahead.
Thank you. Our next question comes from Manav outfit benign of Fargo.
Please go ahead.
Operator: Good morning, gentlemen, and thank you for this call this morning. You've noted that the cross-linked polyethylene compounding facility was substantially completed in Q3, and then now it's moved into a startup and optimization phase. Can you share your expectations for 2024 in terms of potential cost savings or other benefits that will be coming from this new facility? Yeah, Alfred, that's smart. I appreciate the question. This is Brett.
Good morning, gentlemen, and thank you for this call this morning.
You noted that the crosslinked polyethylene compounding facility was substantially completed in Q3, and then now it's moved into the startup and optimization.
Can you share your expectations for 2024 in terms of potential cost savings or other benefits that will be coming from this new facility.
Alfred that smart I. Appreciate the question this is Brett.
Brett Eckert: You know, we completed the facility at the end of the third quarter. You then move right into, like you said, kind of commissioning and startup. And that's a process, right? It's a process, and you're still utilizing some of your purchased cross-linked polymer as you get the facility up and running. And then once you get it fully up and running, the optimization phase comes in. And I've talked a little bit about that, right? You know, right now, it's a one-size-fits-all, but not every one of our XLPE-insulated products is going to require, like, a fire retardant, for instance.
We completed the facility at the end of the third quarter. You then move right into like you said kind of commissioning and startup and Thats a process. It's a process.
You are still utilizing some of your purchased crossed and polymer.
You get the facility up and running and then once you get it fully up and running in the optimization phase comes in and I've talked a little bit about that right not right now it's a one size fits all but not every one of our of our <unk> LTE insulated products are going to require like a fire retardant for instance, and so as you start to optimize you can create.
Brett Eckert: And so as you start to optimize, you can create different grades of XLPE to make sure you're not putting in something within that that's not necessary or called for, and that's not inexpensive. And that's the optimization piece. As I said before, I think it's a 9-to-12-month kind of startup and optimization. I think so, as you get into maybe the third quarter of 2024, we'll be going through that process. And then at that point, you're going to start to see those benefits trickle in. So it's not going to be like flipping a switch, right?
Different grades of X LTE to make sure you're not putting in something within that that's not necessary a called for it and that's not an inexpensive and thats the optimization piece.
As I said before I think its a nine to 12 month kind of start up and optimization I think so as you get into maybe the third quarter of 2024 will be going through that process and then at that point youre going to start to see those benefits trickle in so it's not going to be like flipping a switch.
Brett Eckert: You're going to be gaining a little bit as you go, but it's going to be the second half of 2024, I think, before you start to see the full benefit of that investment. Thank you.
Youre going to be gaining a little bit as you go through but it's going to be in the second half of 'twenty four I think before you start to see the full benefit of that investment.
Okay. Thank you.
Thanks Alfred.
Operator: Thank you. We have a follow-up question from Julio Romero from Sudoti and Company, LLC. Please go ahead.
Thank you.
Question from Julio Romero from Sidoti <unk> Company LLC. Please go ahead.
Brett Eckert: Hey guys, thanks for taking the follow-up. You know, as we look to 24, kind of how do we see the cadence of volumes trending? I know you saw this kind of sequential quarter over quarter ramp in 23. Does 24 follow the same path? Or do you kind of expect a more traditional seasonality of construction kind of cadence? No, I can't touch that, Julio.
Hey, guys. Thanks for taking the follow up.
As we look to 'twenty four kind of how do we see the cadence of volumes trending.
I know you saw this kind of sequential quarter over quarter ramp in 'twenty three 'twenty four followed the same path or do you kind of expect a more traditional seasonality of construction kind of cadence.
You know I can't touch that Julio.
Brett Eckert: I mean, it's interesting, you know, you can see the trend in 23. We've never had that trend before. I think if you unpack 23 a little bit, right? You went into the year with a lot of pontificators and a lot of doom and gloom, right? And so as people got in, we did see, and we talked about this in our first quarter earnings call, you know, a destocking at the distributor level in March, and it trickled into April, right? And we talked about on the call that at the end of the day, we're glad we got that piece behind us. And then once you do that, you know, a distributor really has to align with a supplier that they can count on. And that plays right into our service model. You know, when you typically see distributors build back up their inventories or build up inventories into the summer months, second and third quarter, they then have to go through a level of destocking, and they'll take those down by the end of the year.
It's an interesting.
You can see the trend in 2003, we've never had that trend before I think if you unpack 23, a little bit right you went into the year with a lot of it.
Pontificaters and a lot of Doom and gloom right and so as people entered in we did see and we talked about this in our first quarter earnings call.
A destocking at the distributor level.
In March and it trickled into April right, and we talked about in the call that at the end of the day, we're glad we got that piece behind us.
And then once you do that a distributor really has to align with a with a supplier that they can count on and that plays right into our service model. When you typically see the distributors build back up their inventories are built up inventories into the summer months second and third quarter. They then have to go through a level of Destocking and we will take those down.
By the end of the year and that has some effect on the ebb and flow between the quarters that you typically see because they took them down and never really build them built them back up significantly.
Brett Eckert: And that has some effect on the advent flow between the quarters that you typically see. Because they took them down and never really built them back up significantly, we weren't as impacted by that drawdown of those inventories in the fourth quarter. I think our service model is still a differentiator, right? We had a somewhat supportive copper price in the fourth quarter. As Daniel talked about, a 40 cent move within the quarter is significant. And that helps a ton with regard to our ability to service the market very quickly. So I think if everything you talked about now, what you can look to for 24, it's very difficult to see. You know, you've got an election this year. You had inflation day that came out a little hot in December.
We werent as impacted by that drawdown of those inventories.
In the fourth quarter I think our service model is still a differentiator right.
Had a somewhat supporting copper price in the fourth quarter as Daniel talked about a 40 cent move within the quarter is significant and that helps a ton with regard to our ability to service the market very quickly. So I think it's everything you talked about now what you can look to for 24, it's very difficult to see.
<unk> got an election this year yet.
<unk> inflation data that came out a little hot in December.
Brett Eckert: And everyone's trying to digest the rate cuts. Again, tell me what copper is going to do, and I'll give you a better sense. But it's hard to take one from the other.
And everyone's trying to digest the rate cuts.
Again tell me what copper is going to do and I'll give you I can give you a better sense, but.
Hard to take one from the other I think you just look at the trend in and what was accomplished in 'twenty three and we will see we will see where it takes us as we get into 'twenty four.
Brett Eckert: I think you just look at the trend and what was accomplished in 23. And we'll see where it takes us as we get into 24. Fair enough there. And then, Daniel, you talked about the success the team has had in terms of evaluating bottlenecks and alleviating those bottlenecks. And you also mentioned, you got plenty of.., you know, machine capacity, if you will. I guess, what would be the biggest bottleneck?
Fair enough there and then.
Daniel you talked about the success.
Team has had in terms of kind of evaluating bottlenecks and alleviating those bottlenecks.
And you also mentioned you know you've got plenty of.
Machine capacity I guess, if you will I guess what would be the biggest bottleneck.
Left on the table, but would it be labor or would there be.
Daniel L. Jones: kind of left on the table. Would it be labor, or would there be... another kind of factor there? Yeah, good question. You know, the labor piece is still a challenge. It was certainly significantly better in 23 toward the back end versus the way we started the year. But when we look at numbers specifically related to 23 in the hiring and the onboarding piece and the expense that goes into all the pre-employment testing and what have you and training versus 22, huge improvement. The quality of the candidates is significantly better.
Another kind of factor there.
Yes good.
Good question the labor piece is still a challenge it was certainly.
Significantly better in 'twenty three.
Towards the back end versus the way we started the year.
When we look at numbers <unk>.
Specifically related to 'twenty three.
Hiring and the Onboarding piece and the expense that goes into all the pre employment testing and what have you and training versus 'twenty two.
Huge improvement quality of the candidate significantly better.
Daniel L. Jones: You know, we've had 30 odd years of hiring folks without having, you know, a layoff. In that process, As long as we're doing the things that we think we learned coming through COVID, they seem to be working in our favor at this point. The labor piece is manageable. It's not as severe and as bad as it was. It's certainly a lot better.
We've had 30, some odd years of hiring folks.
Never having.
Lay off.
In that process.
As long as we're doing the things that we think we learned coming through Covid.
They seem to be working in our favor at this point the labor piece is manageable, it's not as severe in as bad as.
It was it certainly a lot better.
Daniel L. Jones: Freight came in quite a bit better. A lot of the bottlenecks that we were maybe whining a little bit about have kind of cleared up. On the construction process itself, you know, great team members, Hill Wilkinson, Potter Concrete, Humphreys Electric, Hennon Plumbing, Coal Services, Anchor, Sterling. Those guys really did a fantastic job for us on getting these buildings up and running, ready to run from a quality perspective, and, you know, it's the A-team, which we like to wait on and require in our projects, but couldn't be I don't really know of a significant bottleneck that's in front of us right now, other than all the hype and the talk that goes into the political atmosphere, which we have no control over whatsoever.
Freight came in quite a bit better or a lot of the bottlenecks that we were maybe winding a little bit about.
It is kind of cleared up.
On the construction process itself great.
Great team members still Wilkinson.
Potter concrete Humphreys electric Hinton plumbing coal services anchor Sterling those guys really did a fantastic job for us on getting these buildings up and.
Ready to run from a quality perspective, and it's the.
<unk>, which we like to wait on require and our projects but.
Couldn't be happy with all of it don't really know a significant bottleneck thats in front of us right now.
Other than all the hype in the talk that goes into the political atmosphere, we have no control over whatsoever.
Daniel L. Jones: The things that we have a say in, right now, Julio, I think we've got a pretty good handle on them. We've got the right guy or the right girl with backups in each spot, and the momentum, you know, that you were talking about in 23, for us anyway, certainly has not been a let-down, you know, starting off this year. We're just anxious to see, you know, where this copper thing ends up. Super tight, you know, around three days supply above ground in the world. It's an incredibly tight situation, but it's fun.
The things that we have a say in right.
<unk> now Julio I think we've got a pretty good handle on we've got the right guy or the right girl.
With backups in each spot and.
The momentum that you were talking about in 'twenty three.
For us anyway, certainly has not been a let up.
Starting off this year, we're just anxious to see.
Where this copper thing ends up super tight.
Three days supply above ground in the world.
It's an incredibly tight situation its fund it's a robust market.
Daniel L. Jones: It's a robust market. We're having a lot of success with our partners and, you know, we've got a great team around us in all aspects, and we'll see where this takes us. Okay. I appreciate you guys taking the follow-up questions and best of luck in the first quarter. Thanks, Julio.
We're having a lot of success with our partners and.
We've got a great team around us in all aspects and we'll see where this takes us.
Understood I appreciate you guys, taking the follow up questions and best of luck in the first quarter.
Thanks Sylvia.
Operator: Thank you. Our next question comes from Brent Thielman of D.A. Davidson. Please go ahead.
Thank you. Our next question comes from Brent Thielman of D. A Davidson. Please go ahead.
Operator: Hey, thanks for taking the follow-up. Daniel, I mean, tough, tough results for aluminum. I guess, anything to point to?
Hey, thanks for taking the follow ups.
Daniel I mean.
Result for aluminum I guess anything to point to.
Daniel L. Jones: For that product line, that may suggest we're seeing some stabilization. Yeah, you know, aluminum is a, uh... It's an odd product, comparatively speaking, to copper.
For that product line that may suggest we're seeing some stabilization.
Aluminum is.
It's an odd product comparatively speaking to copper copper is mined aluminum's manufactured.
Daniel L. Jones: You know, copper is mined, and aluminum is manufactured. And it's no secret that we've always focused on copper. We do a very good job on aluminum. It's a tight market, no question. There's a big influence from a pricing perspective, not to the positive. When the importers have inventory, I don't think it's any secret that they lead with price. We pick and choose our spots.
And there is no secret we've always.
Focused on copper.
We do a very good job in aluminum.
It's a tight market no question.
There is a big influence from.
Pricing perspective, not to the positive.
When the importers have inventory I don't think it's any secret that they lead with price.
Pick and choose our spots we've got fantastic.
Daniel L. Jones: We've got fantastic partners in the market that we do great with on aluminum, but we're not gonna chase our tail on some of those projects that, fringe projects a lot of times, that end up going to the discounters. And it's not my style to cut prices. Our model is about service. It comes and goes, ebbs and flows, but it's a product that we do very well with. We have to have it
<unk> in the market that we do great with on the aluminum.
But we're not going to chase our tail on some of those projects.
Fringe projects a lot of times that ended up.
Going to the discounters and.
Not my style to cut price our model is about service.
It's.
It comes and goes ebbs and flows but it's a product that we do very well and we have to have it it's still very profitable for us and.
Daniel L. Jones: It's still very profitable for us. It's just a little bit more volatile than it has been in the past, and the government's looking into things as they have in the past, and it's just a constant struggle in that product category. But the XLP plant, in addition to that, will give us a little bit more strength, a little bit more control over where we go with that product and direct that market a little bit better.
It's just a little bit more volatile than it has been in the past.
The government is looking into things as we have in the past and it's just a constant fistfight on that product category, but the.
The <unk> plant and the addition of that we will.
Give us a little bit more strength, a little bit more control over where we go with that.
Product and direct that market a little bit better.
Brett Eckert: And just on the CapEx, maybe Brett, who did just differentiate sort of maintenance, sustaining, gap backs versus growth CapEx and that outlook for 2020. Yeah, and I appreciate that because I appreciate the angle you're taking with that. It's one that, again, you've got to say, give me your definition of maintenance capital expenditure, right? Because we spend $40 million to $60 million in any given year on what I would call maintenance capex, but I'm going to tell you that's vastly new machinery and equipment, right? We don't like to retire equipment. We like to find a spot on the floor and bolt another line next to it as we go through it.
Okay.
On that Capex, maybe Brett.
Okay.
Differentiate.
Sustaining capex versus.
Growth capex in that that outlook for you for 2000 quarter.
Yes.
I appreciate that I appreciate the angle you take them with that and it's one that again.
Give me your definition of maintenance Capex right, because you know we spend.
$40 million to $60 million in any given year right that I would call maintenance capex, but I'll tell you that the vastly new machinery and equipment right. We don't like to retire equipment, we like to find a spot on the floor and bolt in other line next to it right as you go through it. So you know you're always evaluating your car.
Brett Eckert: So, you know, you're always evaluating your current machinery and equipment, you're working closely with our maintenance times to manage any sort of downtime, you're looking at line speeds in the new equipment versus the old equipment, you're looking at how much energy it draws, and can something be more efficient on a go-forward basis or safer. And those are decisions we look at as we look for repair or replacement. That's what I include in that $40 to $60 million. I think some folks would say just pure maintenance capex is much lower than that. But we consistently, if you look back on our capital, it would be anywhere from $40 to $60 million, and it's consistently new machinery and equipment over the years. Very good. Thanks. Thanks, Brent. Thanks, Brent. As a reminder, if you'd like to ask a question today, please press the star followed by the number on your telephone. That's star number 1 to ask a question. Our next question comes from the line of Matt Jackson of Skopje Capital; please go ahead. Hey, how's it going?
Machinery and equipment, we're working closely with our maintenance times to manage any sort of downtime youre looking at line speed in the new equipment versus the old equipment Youre looking at how much energy it draws and can something be more efficient on a go forward basis are safer and those are decisions. We look at as we look for repair replace.
<unk>.
That's what I include in that $40 million to $60 million I think some folks that they've just pure maintenance capex, it's much lower than that but we consistently if you look back on our capital it would be anywhere from that $40 $50 $60 million and it's consistently numerous new machinery and equipment over the years.
Okay very good thanks, guys.
Thanks, Brent Thanks, Brett.
Yes.
As a reminder, if you'd like to ask a question today. Please press the star followed by the one for Anthony five Star one to ask a question.
Our next question comes from Nandan <unk> of square capital. Please go ahead.
Hey, How's it going I was just hoping you could give the LIFO impact in the quarter with a negative or a positive. Thank you.
Operator: I was just hoping you could give the LIFO impact in the quarter. Was that negative or positive? Well, yeah, in the quarter, and keep in mind, you had an environment where copper was rising throughout the quarter, and so in the fourth quarter, it was a pickup of about just under $2 million. It was pretty significant. You know, if you compare it to the third quarter, it was a pickup of about $5 million.
Well, yes in the quarter and keep in mind that you had in an environment, where copper was rising throughout the quarter and so in the fourth quarter. It was.
It was a pickup of about just under $2 million it was pretty significant.
Compared to the third quarter. It was a it was a pickup of about $5 million. That's a product that really is more of a balance sheet effect right because your costs and your orders.
Brett Eckert: That's just a product. It really is more of a balance sheet effect, right, because you're costing your orders, you know, at your beginning-of-month price. And so, depending on what copper does, up or down, you know, you're just adjusting to match your revenue with your expenses within that month. And so, it was a small pickup, but again, because we turn our finished goods inventory over 12 times, it's the perfect hedge out there. Buy the material, change the shape, and ship it in the same month.
Sure.
Beginning of month price and so depending on what copper does up or down you're just adjusting to make you to match your revenue with your expenses within that month and so it was a small pick up but again, it's because we turn our finished goods inventory over 12 times, it's the perfect heads out there.
By the by the material change the shape and ship it in the same month.
Brett Eckert: You cannot beat that business. Thank you. Thank you. There appear to be no further questions at this time. The best.
You cannot beat that business model.
Thank you.
Thank you.
<unk> no further questions at this time.
Daniel L. Jones: Thank you so much. I appreciate everyone's participation today. Yeah.
I'll turn the call back over to you.
The vast thank you so much I appreciate everyone's participation today. Thank you for your investment and your interest in Encore wire and Joe Youre Happy Valentine's Day.
Operator: Thank you for your investment in your interest in Encore Wire. Enjoy your day. Happy Valentine's Day.
Thank you very much.
Operator: Thank you very much. This concludes today's conference call. We thank you for participating, and you may now disconnect. Please wait; the conference will begin shortly. Please wait; the conference will begin shortly.
Today's conference call. We thank you for participating and you may now disconnect.
Please wait the conference will begin shortly.
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