Good morning. My name is Emma, and I will be your conference operator today. At this time, I would like to welcome everyone to the Encore Wire Corporation 1st quarter 2023 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you'd like to withdraw your question, again, press the star 1. Thank you. Bret Eckert, you may begin your conference. Thanks, Emma. Good morning, and welcome to the Encore Wire Corporation quarterly conference call. I'm Bret 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. In a minute, we will review Encore's financial results for the first quarter ended March 31st, 2023. 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 generally accepted accounting principles, 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. Thank you for joining us on the call. If you're interested in Encore Wire, we appreciate your continued investment, confidence, and support. The strong results for the first quarter ended March 31, 2023 mark our eighth consecutive quarter of elevated margins. Stable demand in the quarter, coupled with continued domestic and global uncertainties and persistent tightness in the availability of copper, drove metal prices higher in the quarter, while other raw materials costs remained fairly flat. Our key suppliers continue to perform at a high level, which positioned us favorably to meet customer demand in a timely manner. By continuing to execute on our core values of providing unbeatable customer service and high order fill rates, ongoing margin abatement remained gradual in the first quarter of 2023. I continue to believe that our operational agility, speed to market, and deep supplier relationships remain competitive advantages in our serving our customers' evolving needs. We remain committed to reinvesting in our business with current and planned projects focused on increasing capacity, efficiency, and vertical integration across our campus. We also remain committed to shareholder capital return, as evidenced by our significant share repurchases in the quarter. Copper unit volumes were flat in the first quarter of 2023 versus the first quarter of 2022. Copper spreads decreased 4.2% on a sequential quarter basis as compared to the fourth quarter ended December 31, 2022. We continue to believe Encore Wire remains well-positioned to capture market share 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 company in our industry. We believe that our superior order fill rates and deep vertical integration continue to enhance our competitive position. As orders come in from electrical contractors, 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 the financial results. Bret? Thank you, Daniel. Net sales for the first quarter ended March 31st, 2023 were $660.5 million, compared to $723.1 million for the first quarter of 2022. Copper unit volume was flat in the first quarter of 2023 versus the first quarter of 2022. The decrease in net sales was driven by a decrease in the average selling price in the first quarter of 2023 compared to the first quarter of 2022. Aluminum wire represented 14.6% of net sales in the first quarter of 2023. Gross profit percentage for the first quarter of 2023 was 31.1%, compared to 33.7% in the first quarter of 2022. The average selling price of wire per copper pound sold decreased 11.8% in the first quarter of 2023 compared to the first quarter of 2022, while the average cost of copper pound purchased decreased 8.2%. This resulted in the gradual abatement of copper spreads in the quarter, primarily driven by a decrease in the average selling price noted above, offset somewhat by increased aluminum spreads, which resulted in the decreased gross profit margin in the first quarter of 2023 compared to the first quarter of 2022. The increase in SG&A in the quarter was primarily due to an increase in Stock Appreciation Rights or SARs expense, driven by the increase in our stock price at March 31, 2023 compared to December 31, 2022. We recorded $13.2 million in SARs expense in the first quarter 2023, compared to booking a $4.8 million SARs benefit in the first quarter of 2022, resulting in approximately an $18 million increase in expenses period-over-period. No SARs were granted subsequent to January of 2020, as this plan was replaced with a deferred cash plan. Net income for the first quarter of 2023 was $119.5 million versus $161.5 million in the first quarter of 2022. Fully diluted earnings per common share were $6.50 in the first quarter of 2023 versus $7.96 in the first quarter of 2022. We started off 2023 strong while navigating stable demand, fluctuating raw material costs, and continued gradual margin abatement. We also faced headwinds in February and March with the banking crisis domestically and globally. Our team rose above the challenges to deliver another strong quarter. Persistent tightness in the availability of certain raw materials, ongoing global uncertainties, and the continued suppressed availability of skilled labor kept overall spreads elevated in the first quarter of 2023. As Daniel stated, this marks the 8th consecutive quarter of elevated margins and spreads. Our balance sheet remains very strong. We have no long-term debt. Our revolving line of credit remains untapped. We had $697.4 million in cash at the end of the quarter. During the first quarter, we repurchased 702,478 shares of our common stock for a total cash outlay of $127.1 million. Since the first quarter of 2020, we have repurchased 3,674,755 shares of our common stock at an average price of $119.38, for a total cash outlay of $438.7 million. We also declared $0.02 cash dividend during the quarter. In addition, in February of 2023, the board of directors extended the repurchase authorization for up to 2 million shares of our common stock through March 31st, 2024, with 1,297,522 shares remaining for repurchase under that authorization. The incremental investments announced in July of 2021 continue in earnest, focused on broadening our position as a low-cost manufacturer in the sector and increasing manufacturing capacity to drive growth. In 2022, we began construction on a new state-of-the-art cross-linked polyethylene, or XLPE compounding facility, to deepen vertical integration related to wire and cable insulation. XLPE insulation is used in many applications, including data centers, oil and gas, transit, wastewater treatment facilities, utilities, and wind and solar applications. We anticipate the new facility will be substantially completed by the end of the third quarter of 2023. Capital spending in 2023 through 2025 will further 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 company. Total capital expenditures were $148.4 million in 2022 and $31.8 million in the first quarter of 2023. We expect total capital expenditures to range from $160 million-$180 million in 2023, $150 million-$170 million in 2024, and $80 million-$100 million in 2025. 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, Bret. Our strong start in the first quarter positions us well for 2023. The consistent success further attests to the strength of our one campus, vertically integrated, low cost business model, which continues to thrive under current market conditions. I believe our single site business model provides us with efficiency and scale advantages compared to the multi-location operational models standard in our sector. This remains a competitive advantage, giving us unmatched operational agility and speed to market in serving our customers' evolving needs. Despite persistent tightness in availability of certain raw materials, our supplier partners continue to deliver on their commitments to Encore. We wouldn't have this level of success without the consistent exceptional performance of our long-term suppliers. The labor market also remains tight and a limiting constraint for many companies. Operationally, we continue to grow through investments that enhanced our service model, increased capacity, reduced cost, and focused on the health and wellness of our employees. Looking ahead, we remain solely committed to execute upon the core values of the 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 lie in 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 happen without their outstanding contributions. Our strong financial results have allowed us the opportunity to incrementally invest in our team as we position Encore as an employer of choice in the sector. I also want to thank our shareholders for their continued support. Emma will now take questions from our listeners. Thank you. As a reminder, if you would like to ask a question, press star followed by 1 on your telephone keypad. Your first question comes from the line of Julio Romero with Sidoti & Company. Your line is now open. Thanks. Hey, good morning, Bret. Good morning, Daniel. Julio. Good morning. To start off on the copper volumes realized in the quarter, flat year-over-year, if you could maybe speak to what tempered volumes there? Bret, I think you called out in the prepared remarks some headwinds with the banking crisis in February and March. If you can elaborate on that impact at all, and has that impact continued into the second quarter? You know, Julio, we're not gonna really touch on anything post-March 31st. You know, we definitely saw, like everyone in the country saw, and even globally, there was a lot of uncertainty as you got into late February and into March, you know, with what was going on with the banks, what was gonna happen with interest rates. That always leans in on a commodity, right? Is the dollar stronger? Is the dollar weaker? You know, you've got to play with regard to that, so you saw some fluctuation in those copper prices, even though availability is still very, very, very tight, and the shape of copper, it's never been more critical. That had a little bit of headwind that we experienced. We also saw, which, what happens during those times is distributors tend to take a look at their inventory and take their inventory levels down a little bit because they see a lot of fluctuation in the copper balance. They wanna get a little bit leaner. We did see distributor inventories come down 15 to 20 days. That's actually a good thing in my mind. You know, you're coming into the second quarter. They have a lot leaner inventories, which plays very well into our immediate order, immediate ship business model. You know, I like that position as you head into the second quarter. Got it. I appreciate the detail there. I guess fair to say you've got available capacity to generate volumes above the first quarter run rate? Oh, absolutely. I mean, we've been adding capacity, but you're always gonna take a look at really balancing volume and margin. You know, you're looking to optimize your capacity and utilization. You got to continue to focus on customer service and profitability, and margin's important in that process. You know, those decisions are made on an order-by-order basis. Got it. Then maybe to turn to SG&A. I know you called out in the press release, the impact of the $13 million of Stock Appreciation Rights. Maybe talk about how you expect SG&A to trend for the remainder of the year. You know, I think it's been tracking. I think last year is probably a good indication. There's, you know, everyone had some wage inflation, and we'll see a little bit of that coming into it from last year to this year. Some of that you saw even in last year's numbers. You know, the SARs expense is just something you can't control. It's why we went away from them. You know, the stock price went from $137 at the end of December to $185 and change at the end of March. That delta is what you pick up and revalue every single quarter. You'll potentially get some of that back going into next quarter, depending on how things settle out. That's gonna ebb and flow. The standard cost, the commissions, freight's been looking better. Availability of freight's better. I think all in, you're gonna see, I think last year was a pretty good representative number. Really helpful. I'll pass it on and circle back with any follow-ups. Thanks, Julio. Thank you. Your next question comes from the line of Brent Thielman with D.A. Davidson. Your line is now open. Hey, thanks. Good morning. Maybe just picking up on Julio's question about the volume. Daniel, I'd love to hear to what you're hearing from customers and, you know, overall, do you still feel like you're in a demand environment that supports the capacity investments that you've been making and still making? Well, there's still areas that are, you know, the frequency of quotes is still pretty good, specifically to the industrial side. The commercial market is still going along good. The residential piece that we, you know, talked about a couple of quarters back, saw the biggest hit, if you will. Again, you know, the volatility in the quarter that had to do with COMEX prices fluctuating as much as $0.55 or $0.60 during the quarter. You know, some of the projects that are being discussed about may get pushed out a week, out a month, out a quarter, whatever it might be. Those things happen. We certainly are not gearing our capacity up for one specific quarter. The capacity that we have, you know, geared toward that service model where we feel, or where we know, our strength is what we're after. We do have, you know, an opportunity to catch up on some items, which is fantastic, for the service, which is what we were after when we started adding the capacity piece. Again, that volatility in the quarter of COMEX, coupled with, you know, the geopolitical forces, you've got the bank issue that was not really giving folks a lot of confidence. You know, it lasted about a week or 10 days. There was a pause there that you could, you could see and feel. As far as, you know, where the volume ended versus the comp, last year's first quarter, pretty happy with the numbers, and I'm pretty bullish going forward on what's happening in that industrial and commercial. Each one of those segments are doing real well. There are pockets that are still, you know, pretty hot versus other geographical spots, but for the most part, the industrial and the commercial both are, you know, moving along at about the pace that we thought would happen. Would you call your customer or, I guess, distributor inventory levels into the second quarter, sort of unusually low, especially considering this is when the construction season ramps up? You know, when you see the movement in copper like you have and the uncertainty with interest rates, you know, they may be on the leaner side going into the second quarter, Julio. They're definitely towards that side of it. You know, you typically start to see a build as you get into the summer months, so they can be responsive to that demand. It's not unusual to come in a little bit lean like this, particularly when you got the volatility in copper and you got a partner that you know that can deliver, right? It takes it off their balance sheet. The inventory balance, Bret, was quite a bit higher than last quarter and especially last year. You know, your raw material costs presumably are down. Could we infer that you're sitting on any larger sort of balance of finished goods that just didn't go in Q1 that ultimately should in the second quarter? Well, no. I mean, if you look at this, we've been... Since we opened the service center May of 2021, we've talked about needing to build inventory levels, right? You know, the key to this business is the shape of the inventory as well, right? Having a little bit more raw in this market when copper's as tight as it is and the shape is as challenged as it is, gives us more flexibility, and we got the balance sheet to sustain it. Having more width is super important. Get closer to the end shape, right? I can make it any color, I can cable it, I can string... You just tell me what you want, right? We do lean in to get a little bit more speed in customer service with regard to that. There was a continued commitment to build finished goods. All in for the quarter, you know, copper was up even though the other raw materials were fairly flat. All that's what you see in the balance sheet of inventory. Okay. It looks like aluminum spreads were, I mean, still favorable, but overall aluminum revenue was down from the fourth quarter, I guess, on an absolute basis, same as a percentage of total revenue. Sort of a two-parts question. Did that have a big impact on the gross margin comparison to Q4? Because I think aluminum's benefited your margins in the past few quarters. Just the second part of that would be, was aluminum also caught up in some of that distributor sort of destocking that you talked about? I think it goes both ways. Aluminum's a little bit more subject to imports, with some of the international markets, particularly China, opening up last year, right? You know, you did see an increase of some imports to catch up, and that tends to impact aluminum more than it does copper. You know, aluminum spreads were up compared to the first quarter of last year. I've always talked about copper spreads likely peaking in like the June of 2021, right? Although being very gradual. I'd probably tell you I would've saw aluminum spreads maybe peak in the fourth quarter of last year. You know, they're still very strong and they're still accretive to overall results. Okay. Maybe one more. I'll get back into you. Daniel and Bret, I understand you don't give guidance. Maybe could you just help us understand what would prevent you from seeing, you know, expanding margins into the second quarter from the first quarter? Because you had some pretty big factors this quarter, including lower spreads, kind of flat volume where you weren't getting the operating leverage. Your margin wasn't that much lower year-over-year. I'm just trying to think about those factors as we move into the second quarter and what, you know, what's gonna be the governor on margin expansion. Well, I mean, as you know, you know, we've talked about margin abatement, right? For 2-plus years now, right? The key is managing that at a gradual level. If you look at the last couple years' margins, you know, you could probably throw a bell curve on it, right? It always starts a little bit lower in the first, comes up a little bit in the second and third, comes back down. You know, the market conditions are gonna dictate it. The ability of our peers to be able to deliver finished goods in a timely manner is gonna impact it. How tight the metal continues to be and how significant that tightness in the shape is. You know what I mean by that is rod. You know, there's only one other competitor that has their own rod mill. If you can't get the rod you need domestically and you have to look internationally, you're going to countries all over the world. Dubai, you name it, right? That's a long way to go to get rod, and so that can be a limiting factor. All that's gonna come into play. You know, copper today, you know, now estimates will tell you China could be up to 60% of the world's copper consumption. If they start to get more bullish and get moving this year, that's gonna draw on the metal that you've got, you know, less than three and a half days above ground. You know, all those factors come into play as you look to convert. Skilled labor's not gotten any better. I think it's the new norm, the ability to manage that impact on every operation is something that we're gonna continue to lean in on. All that's gonna come into what margins do on a go-forward basis. You know, we work on every single order to make sure it fits within the parameters that we're looking for and putting customer service first and obviously profitability and margin plays into that. Okay. I got a few more, but I'll pass it on. Thank you. Thanks, Brent. Your next question comes from the line of Ryan Connors with NorthCoast Research. Your line is now open. Good morning. Yeah, thanks for taking my question this morning. I just had one which was bigger picture in nature, but actually segue from your previous response there to that question about just the tightness of copper markets. My question was around sort of recycled and recycled scrap availability as a raw material component, both for yourself you compete with in other related markets for raw material. I know you do have your own scrap purchase program in-house, but is that something you're investing in? Have you seen external other players investing in scrap processing capacity to try to build up that side of the raw material base? Curious any color you might have there. Yeah, no, it's a great question. As you navigate this, one of the things that we really saw as you got deeper into the pandemic and coming out of it is the scrap supply. It makes sense, right? People were not buying automobiles. You weren't seeing as many projects going that were causing a lot of scrap to be generated. The scrap supply got very tight. It goes hand in hand when there's only three and a half days above ground, right? There's a lot of scrap that is going overseas. A lot is going to China because at one point, they were paying COMEX for scrap, which you typically get a discount for scrap. You know, we have the ability in our furnace to process it, but we only buy the highest quality. The availability of scrap is extremely tight. It goes hand in hand with the tightness in the metal itself. You know, we did talk about last year, we were buying less scrap. The flip side of that is pure cathode. I can run faster. There's a bit of a give and take as you look at that. As the spread between COMEX and scrap tightens, I'd rather buy cathode than scrap. We'll continue to evaluate that, but the scrap market is very tight. I think as you look at the outlook for copper get past 25, there's a looming supply gap that's not gonna help the availability of scrap, right? It's gonna get folks continuing to maybe go after scrap closer to COMEX, and at that point in time, it's just not economical to pursue. Okay. I appreciate that. Thanks for your time. Thank you, sir. Your next question comes from the line of Uli Voss. Yes. With the DB- Thank you for. -Capit. Thank you for taking the question. I have a question regarding the new facility you're building, which should be completed in Q3. What implications do you see? Do you see more revenue or higher margins from that? The second question is, are you planning a new share buyback program since there's only a little spare capacity which might run out in the next two quarters? Can you evaluate on that one? Thank you very much. Perfect question. Thank you for that. I'll start with the second question. You know, you look at last year. Yes, the board authorized us to repurchase up to 2 million through March of 2024, and we purchased, as you know, a little over 700,000, leaving the balance for the remainder of the year. You know, similar to the authorization we got from the board a year ago. They also at that time had authorized 2 million shares through March of 2023. We bought back a little more than 1.1 million shares last year in the first two quarters. At that point in time, the board actually refreshed the authorization back to a full 2 million. It's something that when we talk to the board and meet with them every single meeting, we'll evaluate where we sit with regard to repurchases in the market and the remaining authorization, and then the board makes a decision as to how they wanna act. With regard to the XLPE facility, I mean, that's part of what we talked about in deepening vertical integration, right? You gotta look to see where you think the demand potentially is going. We've talked a lot about strength in data centers, right, in oil and gas. The infrastructure investments that are being made in transit and wastewater treatment, hardening of the grid with regard to utilities, and you got wind and solar from a renewable, right? All that takes this cross-linked polyethylene or XLPE insulation. you know, as a company or a manufacturer, you have to always balance the buy versus make. If we can put a facility in that we can find ways to make it cheaper than we can buy it, and then it also gives me a much broader access to supply. No longer limited by someone else's capacity, I can leverage my own to be able to lean into what the market offers. you know, it is part of our vertical integration strategy. We've got our own plastic mill that makes our own PVC insulation and PVC pellets, and now we'll have our own XLPE facility. It picks up the other side of the insulation. Maybe a follow-up question on that one. First, the CapEx, since you have quite flush with cash, which is great, could you envision another use for CapEx in terms of not only investing in the one facility or doing share buybacks, but making a takeover or going into copper mines or whatever, or is that excluded as an idea? The second one is, did you evaluate how your company is going to profit from the Inflation Reduction Act? Yeah. With regard to vertical integration or deepening, our capital spending, you know, we typically, and you see it in our, in our both our press release and the comments we made today, we stay pretty general until we get closer to a facility opening. We are focused over the next 3-5 years in continuing to deepen vertical integration as well as reduce costs and modernize select wire manufacturing facilities to increase capacity and efficiency. All that continues. As we get closer, we'll announce more specifics about other projects in the mix. You know, you're in this $150 million, $170 million, $180 million type spending. As we roll on another year, we'll update for any additional spending opportunities. What was your second question? If you looked how much you can profit from the Inflation Reduction Act, because I think you're in a prime spot, for cables and stuff, which is going to be needed in the oil and gas or even in windmills and et cetera. Absolutely. I mean, I think everything you see when you look out and say, okay, what's the market look like? It goes back to Brent's question. It really gets back to what you all think about, you know, the continued expansion of data centers and what AI might do to that, and what you think about renewables in this country. Look at EVs, right? 1% of the vehicles in the U.S. are electric, right? To get to that, you first got to build battery plants. You got to build the facilities to build the cars. You need more semiconductors, you got to build semiconductor plants. All that takes wire and cable. Once you get the electric vehicle, the electric vehicle charging capacity in the U.S. is not great, right? You're not stopping at a major gas station with a restroom and a chance to buy a drink, right? You're stopping at odd locations to charge the vehicle. That has to get more mainstream. The majority of a charging station is copper. You power it with aluminum. A lot of the things with regard to the infrastructure, the hardening of the grid, and the electrification is all gonna take wire and cable with a looming supply gap in copper alum headed out there in the next 3 to 4 years. You know, those are the constructs that we look to when we look for capacity additions and where we wanna build in the market. Yeah. Thank you. You should broad your shareholder base in Europe. I guess there's a lot of a great topic to go on a roadshow here because this topic is in everybody's mind here. Fantastic. Thank you for that. Appreciate it. Thank you. Your next question comes from the line of Mike Shlisky. Your line is now open. Good morning. Morning, Mike. My question is really on the process that you go through and your thinking, which I applaud, that caused you to be so aggressive, both on the amount of shares as well as the price paid in Q1, which I believe averages out to a little bit under $181 a share. As we go forward, you know, does that demonstrate a confidence in the future outlook in your cash flows? If you could comment on the process you go through and why you got so aggressive this quarter. Thank you. Yeah, no, listen, I think we've been pretty consistent. You know, we bought back, like 785,000 shares, I wanna think, in the third quarter last year. You know, we continue to execute on the board's authorization. We do see it as a return of capital to shareholders. Probably gives you some level of confidence in what we think in the value as you go through this process. You know, we only have really three levers. We've never done an acquisition in our history, and so when you look at our use of cash balance, you know you've got CapEx. We've got a very robust capital expenditure plan over the next 3 to 5 years. You look at the dividend, which is only $0.02 a quarter, and you look at stock buybacks. There's a lot of benefit from the stock buyback side, and that shows the confidence that we think is out there. I think with that authorization by the board for up to $2 million more shares and the activity we did in the first quarter, you can interpret. That makes sense. I appreciate. I have visited you. I've been there in McKinney. It was probably 15 years ago. I understand the philosophy on no acquisitions. I think the organic growth story has been exceptionally well executed. Thanks for what you're doing. Keep doing it. You should come back and see us. We've changed a bit. Okay, I might do that. Thank you. Thank you. Your next question comes from the line of Brent Thielman with D.A. Davidson. Your line is now open. Hey, thanks. Hey, Daniel Jones, I mean, you and your customers had to deal with a lot of erratic sort of movement in copper prices this last quarter. Could you talk about the traction you saw with attempted price increases, especially just given how tight the supply situation is in the market? Yeah. Good point, Brent Thielman. You know, you saw copper start off the year and start off the quarter around $3.70 something, you know, run up to $4.25-ish or whatever, and then back off a little bit and then actually ended up the quarter at the tail end of March with some strength. What ends up happening, as you can imagine, the industry does not change a price sheet on the way down, but when there's a price increase, there's a new price sheet that is an increase over the last one. We had really good traction within the quarter with a couple of different price increases going to a new price sheet. There's times when, you know, the industry will change the discount levels, and print a sheet and what have you. It was very clear and very consistent message in the quarter to, you know, get those prices up a little bit in reference to some of the raw material volatility. Then again, the demand in different buckets of our product offering has been pretty fantastic, specifically toward that industrial and some of the more niche products in the commercial line. So, you know, to hit the requirements on some of the repeat business, the demands of the customer, we charge for it. When it doesn't go out to the market, for on a bid process and get chopped up, it's good business, it's good margins, and everybody's happy. The price increase and the sheets that were in the quarter, you know, you announce them with a day or two, clean up and then, go right to that sheet. We had good success, which is another vote of confidence, for the bullishness that I have in the marketplace. That's really helpful, Daniel. I appreciate that. I just wanted to come back. I mean, you and others in your sector have talked about industrial projects, all the different things that are out there. I'm wondering if you can just talk about how meaningful that is now for Encore. I know you don't like to give, you know, percentage parameters. I get that, but just something to help us understand from the outside looking in, how much of a bigger deal that is as it relates to your business. If I could just follow up too, maybe just helping folks understand what the biggest drivers of the aluminum business are right now, 'cause that still looks very healthy. Yeah. The industrial piece, the way the market works for us on the industrial side, there's limited capacity, and there's limited availability of product. Majority of the volume that comes through, is on a custom, you know, built-to-order basis to begin with. The volume is pretty substantial from a copper pounds perspective, the footage, the multi-conductor combinations, the color combinations, a lot of those things are specific to, you know, the job itself. It's a pretty fast-paced, but once you get in, and start to work through some of the requirements of the end users and the installers, that's where our service model kicks in, and we can go from, you know, not having the product on the floor to delivering the product for installation pretty quickly. That allows us to charge for that value and charge for that service level. When you're seeing the amount of quotes that are coming in, and the work that you have to put in ahead of time before you actually arrive at quoting that price, it's shielded or it's insulated really from the usual price cutters that we deal with in the marketplace, specifically because the amount of time and work that was put in leading up to those custom specifications. It's good volume. It's good margins. The other part is, it, you know, a lot of it is backed by some of the opportunities that are there with the interest rate, infrastructure and some of the reduction acts that are there in the marketplace that our feds are financing. Huge opportunity, hundreds of billions of dollars into the electrical market. We're just trying to make sure that we participate in the areas of opportunity that we've identified. As far as the aluminum piece goes, you know, aluminum is less volatile really from a pricing perspective in the marketplace, on a bias or a trend basis. You had aluminum start off the year and start off the quarter in the low 140s a pound and, you know, ran up to, I think it was about $1.70 some odd, $1.71 or something a pound, and then, you know, fell off a little bit and then stabilized toward the end of March. As it relates to the metal price itself, that's quite a bit of volatility for aluminum, which attracts, as you know, from our story in the past, it attracts some of the opportunistic threats that we've dealt with historically from imports. The good thing there is, when it creeps back up or stabilizes, it forces discipline in the marketplace, and at some point, the product has to be actually delivered. We were able to perform very well and hang on to, you know, margins and deflect some of those threats from, you know, just the overall outside noise that you run into in that aluminum market. The volumes are still good. The demand is still good. I've been very clear in the past, as you know, and I'm still clear today, I prefer to sell and ship copper. In this market, the aluminum is very important for us to go forward, and we're actually pretty good at what we do on the aluminum side. Just on the XLPE plant startup, any reason to think the ramp up of that facility could be dilutive at all the margins in a meaningful way, just as you try and get that to sort of a steady pace? You know, going forward, that plant is to, as you know, bring some of our costs in-house, the control of those costs in-house. It's a very important piece of the industrial cable market, and it's a very important piece of that commercial market cable that we make, being the higher temperature insulation ratings and a little more durable cable overall. So, we will benefit, and we'll treat it the same. And, as our history has shown, when we're able to lower our cost and increase our service model in a particular segment, we can really, you know, do some things. And having the control really of the input side of that raw material is gonna be a big win for us. Okay. Last one, guys, I gotta ask. I mean, you haven't been shy about buybacks. You know, obviously substantial activity here the last couple years. As you look at your stock, you know, sub 1.5 times book value, anything you can tell us today about how you're thinking about repurchases here? Well, I guess, Brent, it's Bret again. I mean, I think as you look at this, I mean, the board came out after, you know, a pretty significant purchase level last year of almost $2.1 million, with a reauthorization of up to another 2 million shares. You know, you can look back since February of 2020, and we've been active in the market for repurchases. You know, again, I think you gotta interpret that from your perspective. You know, we do, as we said before, through the first quarter, we've seen that as a good use of cash. Yep. Very good. Okay. Thanks for taking all the questions, guys. I appreciate it. Great question. Yeah. Thanks, Brent. Your next question comes from the line of Andrew Shirley with S Capital. Your line is now open. Hi. Thanks for taking the question. You touched on this earlier, but I didn't quite get the net response. I was just curious, was the copper price spike in early January a headwind at all to realized spreads during the quarter? You know, It's a great question, Andrew. I mean, listen, It's kind of normal course in managing the purchases we do within a quarter, right? You know, copper moves up, copper moves down, and it's the same thing with all other raw materials. We are really good at capturing those costs and passing those on, right? When we've talked about abatement, right, that abatement, you know, has been more on the top end and not on the bottom end, right? That's where you're seeing. We try to just maybe decipher or put it out there even clearer when you talk about abatement. You may see some erosion at the top end as the broader sector starts to catch up a little bit. That's really where it's hitting. You know, fluctuations in copper and the like, you know, we're looking at that price at every single order, whether or not it's average or spot, whatever is higher. That's where our service model really is such a competitive advantage. We talk about shipping orders quick, 24 hours, 48 hours, 100% complete. It's fantastic customer service, but it's extremely defensive, right? Because if I take an order and I know my margin and I ship it that day or the next day, it doesn't matter what copper does. I just locked in my margin. That's why that service model, it's the best hedge out there. When you turn inventory 12 to 14 times a year of finished goods, you're capturing everything within that month, and so there's a great match in those revenues and costs. Good, good catch, though, Andrew. It was about a $0.50, I think, if I'm correct, from the beginning of January through the end, I think it was, close to a $0.50 run. It sounds like you're suggesting it didn't specifically present a headwind during the quarter. Not specifically. I mean, there's more things that go into it. You know, the timing of it, the timing of the price increases, the timing of posting the price sheet increase, where you stand with quotes, where you stand with, you know, production runs by the end of the month, what have you. You know, we typically ship out and bring in the same amount of... We try to match up the pounds to the month. You know, spreading that $0.50 over, you know, 22 trading days, and pulling prices from one day to the next, you know, it definitely maybe speeds a few things up. Folks that are gonna wait to see if copper's gonna go up or down, you get a bias or a trend on the upside, it'll shake some things loose during the during the week or during the month for sure. Okay, great. Then just one more. Not asking about this current quarter specifically, but historically, what is the typical sequential volume pickup from 1Q to 2Q due to seasonal factors? Yeah, that's a tough one. We don't give any future guidance. It's tough. You know, you go back to 2019 and then you rolled into 2020, you had the pandemic and with everything that was out there. As you know, we stayed fully operational. Things really started to pick up from that standpoint. You had periods in there where there was some pent-up demand. You saw a big catch up on that. You looked at residential when it got meteoric a year ago, it was really driven by, you know, folks moving out of more, populated areas and into more rural areas. Whenever that happens and you see a residential boom, light commercial always follows 12, 18, 24 months later because you have to build the infrastructure around this much larger influx of population in a more rural area. You still need gas stations and Starbucks and supermarkets and care homes and churches and schools. You know, that is gonna. You should see that tail as you go into this next year. You see some of that already that we saw in the fourth quarter and first quarter. It's hard to peg it. I will tell you typically, the first quarter and fourth quarter are kind of the shoulder quarters, and the second and third quarter are typically a little bit stronger as far as the. That kind of aligns well with the build timing. Okay, great. Thank you very much. Thank you, Andrew. Your next question comes from the line of Alfred Funai with Barga Your line is now open. Thank you. Good morning. I'm curious about the wholesale electrical distributor customers that you have. Are they very forthcoming with information about their inventory levels of wire products? Yeah, I think so. We're pretty close with those distributor customers. There's long-term relationships with those people. We have, you know, field reps that get to know on a relational level, families and whatever it might be. We also are very active visiting with and bringing in and visiting our place back and forth with those distributor customers. We can put eyes on their inventory, and we have folks in the field constantly doing that, providing the feedback. With that type of information available, do you think the distribution customers have more embraced your concept of how to have almost just-in-time delivery? Are some of them still tending to go back to the, let's say, the historical practices that they may have had in the past, where they stock larger quantities just so they can have the inventory on their side? Yeah. That's a great question, Alfred. The current state is nearer to the front end of your question, more just in time levels. As the speed of the volatility of the raw materials moves from a value perspective, you do see those inventory holdings fluctuate. If you can get some type of specific bias or trend, you might see it build a little bit ahead of time, but it's usually related to a specific job or anticipated job that they have in their market area. If I had to choose today versus, you know, historical levels, I would tell you today distributors run extremely on the extreme end of the lean side. If I could ask just one final follow-up question. For your distributor customers that might be closer to Canada or to, Mexico, do you think you get any business that they would have from selling to their customers in either of those countries? You know, over the years there may be some residual business, if you will, but as far as direct, product crossing the border, the electrical specifications in those two countries don't match up with our country, specifically on our building wire product. I would say no. Okay. Thank you very much. Yes, sir. Thanks for the questions. Your next question comes from the line of Taylor Merritt with Forge First Asset Management. Your line is now open. Good morning. Bret and Daniel. Good morning. Wanted to ask on the XLPE facility. You've already spoken to it a few times. Is that solely a cost initiative, or will the XLPE insulation let you access markets or sales channels that you're not currently able to or in a capacity you'd like to? It's a great question, Taylor. I mean, if you're listening, a couple of years back, I talked about during the pandemic, right? When raw materials across the board got tight, and as you know, we never ran out, but we went from, or at least I went from spending 1 hour a day to 12 hours a day chasing them. As you go through that, I said that there were certain aspects of our supply chain that maybe raised their head from a risk or availability or cost standpoint that I didn't like as much as some of our others. That was really one of the relationships. In the heat of the pandemic, when there was a lot of build going on, the XLPE or cross-polymer capacity domestically was very strained. There was a lot of companies on quotas. You could only get so much, and it was a limiting factor at that time as to how much product we could put out. When we looked at that, it was just a natural extension. You know, we vertically integrated since our inception. You looked at when you get to a certain point from a volume standpoint, you could say, "Listen, we'd benefit if we made our own versus relying on someone else to buy it." I also then control the labor aspect, the access to the other raw materials. That really came to bear when we saw the opportunity in XLPE, particularly with the ability to de-risk some of that supply. Our ability to build a facility, right? You don't build it for what we need today. You build it as to where you think the market will be. We always build an incremental capacity that can serve all the markets we talked about and the type of insulation that demand that as that group expands. Got it. Fair to say then, as that facility comes online later this year, and we're still presumably at the front end of the, you know, some of these larger infrastructure government DOTs CapEx programs, residential will become a structurally smaller part of the business? I don't know if I can say just on that. I would tell you that, our ability to serve, you know, the availability of that type of insulation will not be a limiting factor for us once that facility is online. Right. Okay. Residential as a percentage of sales is, like you say, probably hit the high water mark in the second quarter of 2021. No, what I was saying in the second. Yeah, what I was saying, Taylor, in the second quarter of 2021 is that we felt that the price, the copper margin peaked in June of 2021, right? You know, residential, you know, if you look at the residential percentage today, you know, it was about 27.9% of our business for the first quarter. You know, if you compare that to the fourth quarter, right, and see a trend there, it was 29.3%, so it was 1.4% different, right? Not a big move. You know, so, you know, residential is still running a little higher than it was pre-pandemic levels, but that's not related to my comment from June of 2021, and it's not directly related or comparable to, you know, XLPE coming online. To the extent that the uses of that insulation grow and we start to ship more product associated with it, that could impact the% of residential, but again, that doesn't mean it impacts the pounds per se. Yeah. No, got it. Yeah. Totally understood. Thank you very much. That's, that's it from me. Thank you. There are no further questions at this time, and this concludes today's conference call. Thank you for attending. You may now disconnect.