Welcome to the Encore Wire reports first quarter 2022 results conference call. My name is Cheryl, and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. During the question-and-answer session, if you have a question, please press zero one on your touchtone phone. Please note that this conference is being recorded. I will now turn the call over to Bret Eckert. Sir, you may begin. Thanks, Cheryl. Good morning, and welcome to the Encore Wire Corporation quarterly conference call. I'm Bret Eckert, Chief Financial Officer of Encore Wire. With me this morning is Daniel Jones, President, CEO, and Chairman of the Board. In a minute, we will review Encore's financial results for the quarter ended March 31st, 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 securities legislation, and instead of attempting to identify each particular statement as forward-looking, we advise you that all such statements involve certain risks and uncertainties that could cause actual results to differ materially from those discussed today. 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? Good morning, everyone, and thank you for joining us on the call and for your interest in Encore Wire. We appreciate your continued investment, confidence, and support. The continued strong results in the first quarter ended March 31, 2022, marked the fourth consecutive quarter of elevated margins and spreads. Stable demand, coupled with developing global uncertainties and persistent tightness in the availability of certain raw materials, drove copper, aluminum, and other key raw material prices higher in the quarter. Because of this trend, we were able to increase average sales price for our products, keeping spreads strong throughout the first quarter of 2022. We still believe our one-campus model is a strategic competitive advantage in the market today, giving us unmatched flexibility to quickly pivot and adapt to dynamic external market forces. By continuing to execute upon our core values of providing unbeatable customer service and high order fill rates, we were able to increase both copper and aluminum volumes shipped on a comparative quarter basis over 2021 levels. Volumes shipped were also up sequentially over fourth quarter 2021 levels. We believe existing market conditions and the current outlook should support gross margin abatement continuing at a gradual pace. Copper unit volumes increased 8.6% on a comparative quarter basis. COMEX copper prices increased steadily throughout the first quarter, along with increases in other key raw material costs. The upward volatility positively impacted and supported market spreads. Copper spreads increased 86.1% on a comparative quarter basis. With the new capacity coming online this year, we believe Encore Wire remains well positioned to capture incremental market share in volume 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, environmentally responsible leader in our industry. We believe that our superior order fill rates and deep vertical integration will continue 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 Bret to cover our financial results. Bret? Thank you, Daniel. Net sales for the first quarter ended March 31st, 2022, were $723.1 million, compared to $444.1 million for the first quarter of 2021. Copper unit volume, measured in pounds of copper contained in the wire sold, increased 8.6% in the first quarter of 2022 versus the first quarter of 2021. Gross profit percentage for the first quarter of 2022 was 33.7%, compared to 19% in the first quarter of 2021. The average selling price of wire per copper pound sold increased 43.2% in the first quarter of 2022 versus the first quarter of 2021, while the average cost of copper per pound purchased increased 19.3%. Net income for the first quarter of 2022 was $161.5 million versus $41.2 million in the first quarter of 2021. Fully diluted net earnings per common share were $7.96 in the first quarter of 2022 versus $1.99 in the first quarter of 2021. Aluminum wire represented 11.5% of our net sales in the quarter ended March 31st, 2022. Aluminum wire volumes increased for the quarter ended March 31st, 2022, compared to the comparative period in the prior year. Favorable market conditions in the first quarter ended March 31st, 2022 were driven by consistent demand for our products. Persistent tightness in the availability of certain raw material, developing global uncertainties, and suppressed availability of skilled labor drove copper, aluminum and other key raw material prices higher in the quarter. Because of these trends, we were able to increase average selling price, keeping spreads strong throughout the first quarter of 2022. This marks the fourth consecutive quarter of elevated margins and spreads. We expect these conditions will abate in the future, but we are unable to predict the timing of that abatement. However, we do believe the existing market conditions and the current outlook should support those margin abatements continuing at a gradual pace. Our balance sheet remains very strong. We have no long-term debt, and our revolving line of credit remains untapped. We had $466.1 million in cash at the end of the quarter. During the first quarter, we repurchased 500,917 shares of our common stock at an average price of $116.55 for a total cash outlay of $58.4 million. We also declared $0.02 cash dividend during the quarter. The new service center opened in mid-May 2021 and is fully operational today. The repurposing of our vacated distribution center into a newly formed plant seven will expand manufacturing capacity and extend our market reach. We expect this transition will be completed in the second quarter of 2022. The incremental investments announced in July 2021 continue in earnest, focused on broadening our position as a low cost, sustainable manufacturer in the sector and increasing manufacturing capacity to drive growth. Capital spending in 2022 through 2024 will expand vertical integration in 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 leader in our industry. Total capital expenditures was $32 million in the first quarter of 2022, and $118 million for the full year in 2021. We expect total capital expenditures to range from $150 million-$170 million in 2022, $150 million-$170 million in 2023, and $80 million-$100 million in 2024. 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, Bret. The strong performance in the first quarter ended March 31, 2022 further attests to the strength of our one campus, vertically integrated low-cost business model, which continues to thrive under current market conditions. We wouldn't have this level of success without the consistent exceptional performance of our long-term suppliers. Our deep relationships and strong internal management team, coupled with consistent execution, positions us favorably in the market, allowing us to maintain our overall low-cost structure. Looking ahead, we remain solidly committed to execute upon the core values of the company. Unbeatable customer service, nimble operations, and quick deliveries coast to coast. I want to close by recognizing our outstanding and dedicated employees for their hard work, tenacity, and commitment to safety and excellence. Our performance over the past four quarters could not have happened without the extraordinary efforts. Our success in the market continues to allow us the opportunity to incrementally invest in our team as we position Encore as an employer of choice in the sector. I also wanna thank our shareholders for their continued support. Cheryl will now take questions from our listeners. Thank you. We will now begin the question and answer session. If you have a question, please press zero one on your touch tone phone. If you wish to be removed from the queue, please press zero two. Once again, if you would like to ask a question, please press zero one on your touch tone phone. Our first question comes from Brent Thielman from D.A. Davidson. Your line is now open. Hey, thank you. Good morning. Congrats on another great quarter. Thanks, Brent. Hey, Daniel, I think historically your unit volumes, you know, typically slow in the first quarter, but it sounds like they were up from Q4. I guess I find that interesting, and just wondering if that's a function of sort of continued tightness, the desire to get materials onto a job site as fast as possible, you know, whether you sort of see the demand environment ramping up in the fourth quarter. What are your thoughts around that? Yeah, I think you're right on track with it, Brent. We've seen, you know, pretty steady demand coming from all the sectors. You know, residential is still strong. The commercial side is strong, and the industrial side is strong as far as the amount of quotes that we're seeing and the execution on the delivery side. Our fill rate is significantly improved, you know, in the first quarter. There's a lot of things that occurred, kind of came together. From a demand perspective, we're continuing to see, you know, each of the sectors, you know, to be pretty strong, including the aluminum piece. Okay. Daniel, when I look at the continued strong spread increase, are you seeing larger spreads or premiums, you know, for certain of your products, you know, relative to the whole portfolio, just based on industry demand for those products or just a lack of availability? I'm just wondering if there's a few sort of select products that are really moving the needle here, or is this just really across the entire portfolio? It's really across the entire portfolio of products. The sales team's done a real fantastic job of managing that intake so that we're able to execute and perform, you know, and the production team, the operations team is really backed them up. There's not one particular category over the others. If you had to, you know, pick one, you know, for whatever reason, it could be, you know, the aluminum push has been good. The residential push has been good. The commercial side has been really good. You know, and industrial is strong as well. There's really not one that's just outpacing or outperforming the other. The overall market itself has been really good for us. Daniel, just beyond, you know, copper, which we can all see is still pretty tight in the market, what other things, you know, still kind of contributing to this sort of supply-constrained environment for the industry that there might be preventing others from meeting the kind of lead times that you're able to meet? You know, we've got, as we mentioned in the prepared statement, you know, we've got fantastic support and partners with our vendor situation. Although things are tight and they have to be managed incredibly well, the execution of our team has been fantastic. I really think that one location model has allowed us, you know, the opportunity to perform maybe a little better than some of the competitors in the market from that perspective. There's still tightness in the market pretty much across the board. You know, aluminum's tight, copper's tight. Some of the PVC raw materials are tight, pretty much across the board. Freight's tight. You know, there's still that pressure, if you will, to really pay attention to what's happening. We were really aggressive and able to, you know, perform real well in the first quarter on cost controls, material usage controls, maximizing the trucks that do show up on time. It's really not. There's not one particular item that stands out as being a problem as far as the supply chain piece goes. It's all still relatively tight. Brent, it's just a real focused push. A lot of pressure on the people side here, and everybody's responding, you know, the way that they should at this point. It's actually going, you know, pretty well. You do feel the pressure when you come in. If you walk through the plant, you know, it's incredibly clean. The people are showing up on time and doing a great job. Okay. Well, thanks for taking the questions. I'll get back into queue. Best of luck. You bet. Thanks for the support, Brent. Thank you. Our next question comes from Julio Romero from Sidoti & Company. Your line is now open. Hey, good morning. Thanks for taking my questions. You bet. You guys talked about stable demand and persistent tightness on the supply side. How has the operating environment changed, if at all, over the last two months? I'll take that. I mean, it's evolving, right? It's probably a lot like what you see in your personal lives. You know, it just ebbs and flows. Something will get a little bit better, you know, one month, and then it tightens up the next month. I still think throughout the supply chain, you're seeing the impact of underinvestment during the pandemic, you know, and reactionary terminations or layoffs, but you're trying to build back your workforce and get that investment dollars flowing again. That still kind of trickles through what we see today. You know, when one thing gets a little better, it backs up for the month, and three others go the other direction. You know, it's still a lot of effort. Team's executing exceptionally well. Our suppliers are executing exceptionally well. They're doing it in a continued tough environment. You know, it seems like when they fix one link of the supply chain, you know, it puts strain on three others. That's, you know, was consistent last year, and that same pattern held through the first quarter. Okay, very good. If you could speak to the end market mix, you know, how much of your sales these days are coming from non-residential versus residential? Then secondly, on the non-residential side, if you could talk about, you know, are the same subsectors that have driven growth in the past, you know, data centers, hospitals, warehouse, are still the key drivers of growth today? I'll take the first one. Daniel wants to get into the detail on the second one. From a residential standpoint for the quarter- It was about 31%. That compares to 32% for the first quarter of last year. It's pretty consistent. Just looking at like the first quarter compared to the fourth quarter, you were at 31% residential in the first quarter, we were at, like, 29.5% residential in the fourth quarter. It stayed fairly steady and consistent between those two. How do you want me to phrase the answer, Julio? What was your question? Yeah, just asking, like on a non-residential side, you know, which subsectors are driving growth today? Okay. Well, on the commercial piece, overall, it's good categorically. You know, without getting too deep into the details, there's some changes on the demand side that are good. Some of the differences on the approach on the quote side has changed a little bit. Seems to be more driven toward, you know, the service side, which we thrive with. The timing of the deliveries, which is, you know, one of our strengths, that has really paid off for us in the last quarter. The approach to the commercial quote side, the timing from the quote to delivery has shrunk dramatically. The volatility in raw materials, the volatility in finished goods deliveries in the industry have helped to drive that. Once the quote is given, purchase order is placed and the delivery, that whole timeframe is really compressed and causing a little bit of chaos. It's a good chaos for us because we're able to step in and make those deliveries. The industrial side is not too far from that. We've also seen, you know, solar projects really were a nice pickup in volume in the first quarter. Again, a lot of those are not custom products, but custom delivery concerns, potentially. We were able to charge for that service and it was good, you know, it was good volume in the quarter. Those two would stand out from a volume perspective over maybe some of the others. You know, the discussions in prep around you know the upgrade to the grid has been really good discussions. There's actual orders you know in the pipeline. I'd say solar and data and then the grid upgrade has been the you know something that kind of stands out as being you know from a volume perspective. Q1 specifically. Okay. That's very helpful. Then just last one for me is, you know, you talk about the expanded stock repurchase plan. You've gotten much more aggressive with buybacks, which to me looks like you have good confidence in the underlying business. You know, how are you thinking about capital allocation going forward? Thank you. Great question, Julio. You know, we've just expanded buyback, increasing the authorization to 2 million shares through March, end of March 2023. As you know, we've now repurchased 500,000 of those in the first quarter. You know, if you go back to the repurchases, even going back to when we started this buyback in March, April of 2020, we've purchased over 1.4 million shares over that period. You know, we continue to see, after CapEx, in the growth and the CapEx focused on deepening the vertical integration to take costs out to help us with our order fill and speed of shipment, and then environmental and things that are associated with that. But the next highest and best use continues to be the share buyback. I think the board's authorization and the execution on that in the first quarter give you a good indication as to what we think of the stock. Great. Thanks very much for taking the questions. Thanks, Julio. Thank you. Once again, if you have a question, please press zero one on your touch-tone phone. Our next question comes from Ron Patel, Private investor. Your line is now open. Hey, guys. I'm gonna follow up on the question that was just asked, regarding share buybacks. As you mentioned, you bought back a ton of shares in this last quarter at an average price of $115. The stock, from what I can tell currently. Excuse me? is trading below that price. What do you think gives you the confidence to deploy capital in that manner that potential investors and Wall Street may not be understanding or appreciating? What are your plans in terms of delivering that message in terms of increasing investor awareness and potentially increasing analyst coverage? Thanks. Good question, Ron. The analyst coverage side, I mean, Julio at Sidoti and Brent at D.A. Davidson have long covered us. They're both very solid analysts, and I think do a great job. As you navigate through our repurchases, you can go back in history, and we've typically bought back the stock closer to book value, and that's really what you'd evidence when you look at the buybacks in March of 2020 and April of 2020 when we got about 441,000 shares. Subsequent to that point in time is we started to experience the growth we had last year and started to look at the triggers we utilize as far as the best and the highest and best use of cash. The opportunity when you're buying back to these levels is almost more of a return of capital to shareholders, right? It shows the confidence we have in the stock. You know, if you look at our PE, we're sitting below four right now. With the trailing twelve-month earnings of little over $32. We all feel, including the board, confidence in the value of the stock and think that the buybacks at these levels are very much still warranted. You see the board's intentions in the directions we've got with the authorization of up to 2 million shares through the end of March next year. With the 500,000 we repurchased this quarter, again, I think that was a very good use of cash. You know, even with the $58 million that we spent in the first quarter on buybacks, the $32 million that we spent on CapEx, you know, we still grew past $27 million. From a cash perspective, the balance sheet remains very, very strong with sufficient resources to fund all of our CapEx growth, without leveraging the company and still have the opportunity to look to other uses. That's what the alignment in the announcement that came out in February related to. Awesome. When I look at forward estimates, you know, they consistently show earnings potentially going through a drop off with... I apologize that my questions are probably not as polished as Brent and Julio's. Essentially, I'm just wondering, do you see that drop off in gross margin anytime in the near future? If not, what kind of gives you that visibility? It's a good question, Ron. I mean, it's a tough one. I've always said, you know, if you tell me exactly where copper and all other raw material costs, access to skilled labor, distribution and freight costs, right? I could give you a better indication. It's a difficult one. You know, this is a different world we're in today. A lot of constraints across the board on the raw materials, and you need them all to be able to make, you know, residential and commercial building wire. The pandemic and the shortages and the tightness in supply chains really highlighted the significant component that each one plays in producing a finished good and a final product. You know, we had, I think, a gross margin of around 15% in 2020. You look at gross margin on a year-to-date basis last year of 33.5%. Obviously, you know, as we look towards this, we really had said all last year that we thought that from a copper perspective, it probably peaked in June, and we expected it to abate. Most of last year, we always said we just didn't know when it would abate. We didn't know if it would be abrupt or gradual. You know, four quarters in now, we feel more comfortable with that gradual abatement. If you look at the margins as to what they did for last year, for the fourth quarter, and then where we came out in the first quarter, it has shown it's abating at that slower pace. You know, there's still. As you look at this, we look at the outlook, we look at the tightness that still exists, and you look at the demand, and those are the factors that we are considering as we kind of look out. We don't give guidance, Ron. It's based on what we're seeing right now, we see it continuing to trend at a more gradual pace. Okay. Okay, that's fair. My last question is related to the. You mentioned that you've seen some pickup in orders related to the upgrading of the grid and solar installations. With the passing of the bipartisan infrastructure bill and the upgrading of rural broadband and, I guess with the upgrading of the grid, you know, I imagine there's some upgrading to the wiring of people's residential houses as well. Where there might be concerns of new home sales falling off, does that put in some sort of floor with the passing of this infrastructure bill going forward into the future? Just love to get your perspective on that. Yeah, good question. As far as the residential piece, each house, you know, based on the square footage measurement would show that there's more copper going into a house, definitely with the upgrades that we're having. The broadband piece, you know, we strictly manufacture 600-volt building wire. As the grid is upgraded, there's service entrance cable. There's all kinds of products that will contribute to that. With the increase in demand and increase in volume, you know, categorically, we'll see demand coming from even as you'll see. You know, you might see some number of houses, the building permits, whatever it might be. I'm trying to kind of not get too deep into it, and it's hard to answer that, but there should be demand coming from these quotes that we're already seeing. We will be able to participate at a higher volume. I may be too vague, but it's not a bad thing for our 600-volt cable category for this to go forward. Okay. Great. I'll jump back in queue. Thanks, Ron. Good questions. Okay. The presenters at this time, I show no further questions in queue. Well, thank you everybody. Appreciate your time this morning. Appreciate your investment in Encore, and enjoy your day. Thank you. Thank you, ladies and gentlemen. This concludes today's conference. Thank you for your participation. You may now disconnect.