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Edited Transcript of WIRE earnings conference call or presentation 31-Jul-19 3:00pm GMT

Q2 2019 Encore Wire Corp Earnings Call

McKinney Aug 22, 2019 (Thomson StreetEvents) -- Edited Transcript of Encore Wire Corp earnings conference call or presentation Wednesday, July 31, 2019 at 3:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Daniel L. Jones

Encore Wire Corporation - Chairman, President & CEO

* Frank J. Bilban

Encore Wire Corporation - VP of Finance, Treasurer, Secretary & CFO

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Conference Call Participants

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* Brent Edward Thielman

D.A. Davidson & Co., Research Division - Senior VP & Senior Research Analyst

* Brian Gibson;Raymond James;Analyst

* Julio Alberto Romero

Sidoti & Company, LLC - Equity Analyst

* Tom Brashear;Preston Capital Management;President

* William Lewis Baldwin

Baldwin Anthony Securities, Inc. - Principal and Co-founder

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Presentation

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Operator [1]

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Welcome to the Encore Wire Second Quarter Earnings Conference Call. My name is Jenny, and I will be your operator for today's call. (Operator Instructions) Please note that this conference is being recorded.

I will now turn the call over to Daniel Jones, Chairman, President and CEO. You may begin.

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Daniel L. Jones, Encore Wire Corporation - Chairman, President & CEO [2]

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Thank you, Jenny, and good morning, ladies and gentlemen, and welcome to the Encore Wire Corporation quarterly conference call. I'm Daniel Jones, the President, CEO and Chairman of the Board of Encore Wire. With me this morning is Frank Bilban, our Chief Financial Officer.

We're pleased with our results in the second quarter and 6 months ended on June 30. There are some key items to note. Unit volumes increased in the second quarter and year-to-date comparisons of 2019 to 2018. Copper unit volumes increased 5.6% in the second quarter of 2019 versus the second quarter of 2018 and increased 9.3% in the 6-month comparison. The unit volume increases -- or increase was achieved, despite severe weather and flooding in parts of the country that slowed the construction projects.

Gross profit margins also held up, despite a drop in copper prices versus last year's second quarter and first 6 months.

One of the key metrics to our earnings is the spread between the price of copper wire sold and the cost of raw copper purchased in any given period. The copper spread decreased only 0.4% in the second quarter of 2019 versus the second quarter of 2018, while increasing 0.9% in the first 6-month comparison. The copper spread did decrease 3.6% on a sequential quarter comparison. The copper spread contracted 0.4% as the average price of copper purchased decreased 8.7% in the second quarter of 2019 versus the second quarter of 2018, while the average selling price of wire sold decreased 6.1%.

Margins, which are highly dependent on competitive market conditions, improved slightly in the second quarter to second quarter comparison. And aluminum wire, which represented 8% of our net sales in the second quarter of 2019, we continue to enforce our rights under the U.S. trade remedy laws. On May 30, 2019, the U.S. Commerce Department imposed a preliminary antidumping ruling on imports of aluminum wire from China at rates ranging from 58% to 63%. The final results of the U.S. government's ongoing antidumping and countervailing duty investigations are not expected until the end of the year.

U.S. economy appears strong as is construction activity. Based on discussions with our distributor customers and their contractor customers, we believe there is a good outlook for construction projects for the next year. We believe our superior order fill rates continue to enhance our competitive position. As orders come in from electrical contractors, the distributors can count on our fill rates to ensure quick deliveries from coast-to-coast.

We believe our performance is impressive, and we thank our employees and associates for their tremendous efforts. We also thank our stockholders for their continued support.

Frank Bilban, our Chief Financial Officer, will now discuss our financial results. Frank?

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Frank J. Bilban, Encore Wire Corporation - VP of Finance, Treasurer, Secretary & CFO [3]

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Thank you, Daniel. In a minute, we'll review Encore's financial results for the quarter. After the review, we'll take any questions you might have. Each of you should have already received a copy of Encore's press release covering Encore's financial results. This release is available on the Internet or you can call Denis McCarthy at (800) 962-9473, and we'll be happy to get you a copy.

Before we review the financials, let me indicate that throughout this conference call, we may make 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 here today. I also 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 the 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 www.encorewire.com.

Now the financials. Net sales for the second quarter ended June 30, 2019, were $336.9 million compared to $336.8 million for the second quarter of 2018.

Copper unit volume, measured in pounds of copper contained in the wire sold, increased 5.6% in the second quarter of 2019 versus the second quarter of 2018.

The average selling price of wire per copper pound sold decreased 6.1% in the second quarter of 2019 versus the second quarter of 2018.

Net income for the second quarter of 2019 decreased 1.7% to $17.8 million versus $18.1 million in the second quarter of 2018.

Fully diluted net earnings per common share was $0.85 in the second quarter of 2019 versus $0.86 in the second quarter of 2018.

Net sales for the 6 months ended June 30, 2019, were $651.6 million compared to $628.2 million during the same period in 2018.

Copper unit volume, measured in pounds of copper contained in the wire sold, increased 9.3% in the 6 months ended June 30, 2019, versus the 6 months ended June 30, 2018.

The average selling price of wire per copper pound sold decreased 5.9% in the 6 months ended June 30, 2019, versus the 6 months ended June 30, 2018, partially offsetting the unit volume impact on sales dollars. Copper wire sales decreased primarily due to the lower price of copper purchased, which decreased 9.1% in the 6 months ended June 30, 2019, versus the same period in 2018.

Net income for the 6 months ended June 30, 2019, increased 5.9% to $31.2 million versus $29.4 million in the same period in 2018.

Fully diluted net earnings per common share were $1.49 in the 6 months ended June 30, 2019, versus $1.41 in the same period of 2018.

On a sequential quarter comparison, net sales for the second quarter of 2019 were $336.9 million versus $313.7 million during the first quarter of 2019. Sales dollars increased primarily due to an 8.4% unit volume increase of copper building wire sold, offset slightly by a 1.5% decrease in the average selling price per pound of copper wire sold on a sequential quarterly comparison. Copper wire sales prices decreased 1.5%, while the price of copper purchased decreased 0.4% of 1%.

Net income for the second quarter of 2019 was $17.8 million versus $13.4 million in the first quarter of 2019.

Fully diluted net income per common share was $0.85 in the second quarter versus $0.64 in the first quarter of 2019.

Our balance sheet is very strong. We have no long-term debt, and our revolving line of credit is paid down to 0. In addition, we had $184.8 million in cash at the end of the quarter. We have plans on the drawing board for significant capital expenditures, but these plans have been delayed by issues arising in connection with the proposed new highway project, which may bisect our property. We also declared a cash dividend during the quarter.

I want to remind you this conference call will be available for replay after the conclusion of this session. If you wish to hear the taped replay, please dial (888) 843-7419 and enter the conference reference number 5053702 and the # sign, or you can visit our website.

I'll now turn the floor back over to Daniel Jones, our Chairman, President and CEO. Daniel?

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Daniel L. Jones, Encore Wire Corporation - Chairman, President & CEO [4]

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Thank you, Frank. As we highlighted, Encore performed well in the past quarter. We believe we're well positioned for the future.

We will now take questions from our listener. Jenny?

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Questions and Answers

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Operator [1]

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(Operator Instructions) And we have a question from Brent Thielman from D.A. Davidson.

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Brent Edward Thielman, D.A. Davidson & Co., Research Division - Senior VP & Senior Research Analyst [2]

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Daniel, I guess, any guess when these issues kind of related to the highway project could get resolved, I guess, in terms of the time line such that you could -- can start to move and plan for that?

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Daniel L. Jones, Encore Wire Corporation - Chairman, President & CEO [3]

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Yes. I mean, there is ongoing discussions in whatever, they're local and state related. I think they're nearing what they want to do and not do top deal. It's narrowed down to just a couple of options. And the time lines, Brent, we should know something, I would think, probably by the end of this year, which direction that they are going to go. But in the meantime, we're still doing the things we've got to do to get teed off. We just -- we're not ready to announce exactly what those specifics are yet, but it's moving in the right direction.

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Brent Edward Thielman, D.A. Davidson & Co., Research Division - Senior VP & Senior Research Analyst [4]

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Okay, okay. Great. And I know you guys -- you obviously don't report a backlog. But as you're talking to customers, any insights on how far out they can see right now in terms of projects? Or are things getting quoted well into 2020 at this point? And I guess, is that unusual?

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Daniel L. Jones, Encore Wire Corporation - Chairman, President & CEO [5]

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I don't see anything that's unusual. There is an increase, though, in the way some of these projects are being quoted. I see that there's a volume increase and things that are out into the future. There's ways for us to handle that internally and what have you, but the jobs that are being planned and quoted and what have you, there seems to be more emphasis or focus on the phases being 1, 2 and 3 going into 5, 6 and 7. So we're carrying, as you mentioned, the backlog that has increased a little bit, 10%, 15%, maybe 20% in volume on those future-looking projects. Specifically to what occurred in Q2, there were some projects pushed out a little bit because of weather in the Midwest and what have you, but the feeling in the market, as we travel around, and as you know the summer months are pretty heavy travel for us, customer-wise, they're really, really, really busy. The contractors are booked, as we've talked about a little. There's labor issues involved. Everybody just seems to be really busy right now. And I think we saw that in the second quarter reflective in -- when you look at the copper prices going in Q1 on a gradual uptick from whatever it was, $2.57 or so up to about $2.90-ish in Q1, you look at Q2, the opposite occurred. We trended down in copper from nearly upper $2.90s, almost $3 down to the $2.60s and had a little stability toward the end there, but -- at the end of June. But all in all, everybody is really busy. And their business, like in our conversations, there's not a lot of time for back and forth and whatever. They're real deliberate on what their needs are and what their expectations are. And we were able to -- weather allowing, we were able to deliver quite well in Q2. And I just -- everyone we talk to and were working towards something, it's not just general conversation. It's specifics, it's detailed. There's a little bit of tension involved, but it's typically on the service side.

So all in all, I mean, everybody's busy, Brent, I mean, it's super busy. Everybody has the same issue finding qualified labor and what have you. But in all of that, folks are doing a good job. Our customers are doing well. Their customers are doing really well. And we're getting paid on time, which is a great indication. So I think business overall is really good.

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Brent Edward Thielman, D.A. Davidson & Co., Research Division - Senior VP & Senior Research Analyst [6]

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Okay. That's good to hear. I guess, last one and I'll turn it over. For Frank, SG&A was up 11% on flat sales growth. Is there any kind of variables within that to be aware of that we should be thinking about going forward?

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Frank J. Bilban, Encore Wire Corporation - VP of Finance, Treasurer, Secretary & CFO [7]

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Only the fact that our stock price has done so well that the stock appreciation rights we give to a lot of our management employees have appreciated, and the accounting treatment with GAAP makes us mark that to market. We talked about in -- that in the first quarter Q and that continued in the second quarter. So especially on a year-to-date basis, that's really the primary driver of that. There are couple of little odds and ends associated with the legal costs with the Chinese aluminum situation, but most of it is the stock.

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Operator [8]

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And our next question comes from Bill Baldwin from Baldwin Anthony.

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William Lewis Baldwin, Baldwin Anthony Securities, Inc. - Principal and Co-founder [9]

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Housekeeping here. What was LIFO impact, if any, in the second quarter, Frank?

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Frank J. Bilban, Encore Wire Corporation - VP of Finance, Treasurer, Secretary & CFO [10]

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For the second quarter, the LIFO impact was pretty small, $3.3 million decrement to cost of sales. And on a 6-month basis, that washed it almost to 0. It's a $500,000 increase to cost of sales on a year-to-date comparison.

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William Lewis Baldwin, Baldwin Anthony Securities, Inc. - Principal and Co-founder [11]

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Okay. So the increase in the second quarter reduced cost of sales a little bit.

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Frank J. Bilban, Encore Wire Corporation - VP of Finance, Treasurer, Secretary & CFO [12]

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A little bit, yes, sir.

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William Lewis Baldwin, Baldwin Anthony Securities, Inc. - Principal and Co-founder [13]

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Okay. And how much of your shipments were residential this quarter percentage-wise of revenues versus a year ago?

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Frank J. Bilban, Encore Wire Corporation - VP of Finance, Treasurer, Secretary & CFO [14]

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This quarter, the residential piece was 22.3% versus 22.8% last year, so it's virtually identical.

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William Lewis Baldwin, Baldwin Anthony Securities, Inc. - Principal and Co-founder [15]

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Flat. And do you all -- give any color or disclosure on what's your aluminum spreads are on a quarterly basis, what they were in the second quarter versus a year ago?

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Daniel L. Jones, Encore Wire Corporation - Chairman, President & CEO [16]

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Bill, this is Daniel. They've improved. They're better, but they're still not where we want them to be. And as mentioned in the earlier comments, we're looking for some positive reaction by the end of this year, hopefully, from the Congress department. That's moving along like it should. We had a little delay because the government shut down early, but it's back on track, and there's a few thresholds to cross. But they've improved. They're not where they need to be. I'm not happy with it at all, but they're getting with -- they're getting there.

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William Lewis Baldwin, Baldwin Anthony Securities, Inc. - Principal and Co-founder [17]

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Daniel, can you offer any color on kind of how far they are "from normalized" or where they were before all this dumping began?

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Daniel L. Jones, Encore Wire Corporation - Chairman, President & CEO [18]

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Not really, specifically, but it was super helpful when it first came out. And then the cheaters, or whatever you want to call them, if you will, started to scramble and make other arrangements. Well, they know what they're doing. I mean, come on.

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William Lewis Baldwin, Baldwin Anthony Securities, Inc. - Principal and Co-founder [19]

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They really know what they are doing, absolutely.

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Daniel L. Jones, Encore Wire Corporation - Chairman, President & CEO [20]

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So they did things to try to skirt the issue and that still continues a little bit. It will continue to get cleaned up by the end of the year and we'll be back to good business activity. That kind of thing and something else have popped up. But right now, it's improving and it's getting better. And I'm confident that it will be cleaned up near the end of the year as what we're being told. So it's all I can go by.

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William Lewis Baldwin, Baldwin Anthony Securities, Inc. - Principal and Co-founder [21]

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That's helpful. I mean, at least it's moving in the right directing, which is obviously a plus. It just needs to keep going.

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Daniel L. Jones, Encore Wire Corporation - Chairman, President & CEO [22]

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Yes. It's moving in the right direction.

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William Lewis Baldwin, Baldwin Anthony Securities, Inc. - Principal and Co-founder [23]

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Can you offer me just a little bit of clarification to the previous purchase question when you were talking about phases 5, 6 and 7? Are you saying that those phases are more visible now than they were in Q2? Is that the way I should interpret what you were saying there, Daniel?

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Daniel L. Jones, Encore Wire Corporation - Chairman, President & CEO [24]

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I can't say they're more visible now because I'm supposed to stick to just Q2. And so what I'm saying is in Q2, there's phases on most of these projects. And as 1, 2 and 3 wrap up, it gives clarity, if you will, on the planning side. And most of the peculiarities of doing that, a particular job or delivery, are in place. And so when you get into the additional phases to one of the jobs are, hospitals, data centers, universities and schools, whatever it is, you can see more clearly as to what the demands are going to be.

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William Lewis Baldwin, Baldwin Anthony Securities, Inc. - Principal and Co-founder [25]

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I see, I see. Okay. Well, congratulations on a job well done in a difficult environment.

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Daniel L. Jones, Encore Wire Corporation - Chairman, President & CEO [26]

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Yes. Thank you, Bill. I really believe that it was a fantastic quarter if you consider the pressure on the downward side from copper. In 30 years, you can look back and see. You get decreases in copper, particularly you get hammered. I think our folks did a fantastic job in Q2 of hanging on to and producing outside of the pressures of copper. So things are pretty clear. Good job.

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William Lewis Baldwin, Baldwin Anthony Securities, Inc. - Principal and Co-founder [27]

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Absolutely, absolutely. If you got just a second here, can you kind of talk in terms of, not specifics, but generally, what causes the change in your cost to copper to vary from what the average COMEX price change has been? Let's say, average COMEX price are down 11% and your average copper cost, you said, were down 9% or something in the quarter. Is that just a function of the numerator? Or are there aspects to your business that would cause your copper cost to vary from what's going on with the overall COMEX price?

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Frank J. Bilban, Encore Wire Corporation - VP of Finance, Treasurer, Secretary & CFO [28]

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Bill, there are several factors that could affect that small difference that you alluded to. One would be the fact that, as you know, having our own rod mill allows us the luxury of buying scrap from various sources and that scrap will not exactly track the same as the COMEX price. The other thing that is always the case is timing. If we buy a little more at a certain price just by accident than at another price at one point in the quarter versus another. Those are the kind of factors that would get you slightly off your calculation.

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William Lewis Baldwin, Baldwin Anthony Securities, Inc. - Principal and Co-founder [29]

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Okay. Does it ever work out, Frank, where scrap cost would be higher than COMEX?

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Frank J. Bilban, Encore Wire Corporation - VP of Finance, Treasurer, Secretary & CFO [30]

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If it is, we generally don't buy at that price.

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William Lewis Baldwin, Baldwin Anthony Securities, Inc. - Principal and Co-founder [31]

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You won't buy it, obviously, right? But I just wonder if that happens just out of curiosity.

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Frank J. Bilban, Encore Wire Corporation - VP of Finance, Treasurer, Secretary & CFO [32]

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They can now, they can.

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Operator [33]

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And our next question comes from Julio Romero from Sidoti & Company.

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Julio Alberto Romero, Sidoti & Company, LLC - Equity Analyst [34]

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Can you talk a little bit about -- on the volume side, shipments are growing better than I expected. I think 9% in the first half, even with that weather headwind. So it would seem, from our view, that you may be growing above market. Can you talk about any share gains or incremental customer orders that may be driving that growth there?

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Daniel L. Jones, Encore Wire Corporation - Chairman, President & CEO [35]

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Yes. There's a few things that happened in Q2. There's buildup coming off of Q1. The projects that we're discussing earlier are -- there's bigger projects, there's more of them, the involvement that we get into -- I won't give too many specifics and look at the rostrum screen here who's on the call, but they can figure it all out. Here's what happens, right? We get pretty good feedback on the peculiarities of operating at one of these job sites. The requirements vary obviously from job to job. But our service levels, our fill rates, a lot of things that we're doing on the delivery side, and there's only 2 things we sell, building wire: it's price and delivery. We like to focus on the delivery side. In Q2, that was significantly important, not that it's less important at other times, but it can be. And so if you have maybe jobs that you weren't able to secure at some point and some of the folks that maybe jumped out there and bid off a little more than they could chew, we're able to come back in and backfill with our folks and whatever. There was quite a bit of that in the second quarter. Not sure what was the motivation for some of those folks to take those jobs and then not perform, but we were able to. And there was a little bit of that. And then the other part of it is, again, you get the peculiarities of the job figured out. You get some routines established and a repeat business shows up, and you don't have to go back in and do the things to really defend yourself on price if you're doing the delivery piece. So I don't want to get too deep into the pricing part of it. I will just tell you that the market in Q2 was good. It was favorable for us and it fit with how we go to market. That's probably the best way I can put it, and we benefited from them.

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Julio Alberto Romero, Sidoti & Company, LLC - Equity Analyst [36]

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Okay. And how should we maybe think about your volume outlook in the back half of this year because, just looking at second half of '18, you had some weather headwinds as well, but you also grew volumes 13% year-over-year last half -- in the second half of last year? So seems like a fairly tough year-over-year comparison. Just any help on how we should think about that aspect.

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Daniel L. Jones, Encore Wire Corporation - Chairman, President & CEO [37]

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Yes. I mean, things are good. Again, as I mentioned earlier, the indicators that we watch are all good. We're getting paid on time, and folks are super busy. And the general discussion, as we're traveling around, and the sales guys are on the road all the time and meeting with folks and talking about of business that's coming and going, that they're going forward with. And we're busy. Things are busy. I guess, that's the best way I can answer, that everybody that we do with the customer was they're busy. Their customers are busy. They're very deliberate and specific in what they're wanting. As long as we continue to deliver and focus and do the things that we're good at and not get too distracted with some of the other things that are going on in the market, I think it's going to be good.

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Julio Alberto Romero, Sidoti & Company, LLC - Equity Analyst [38]

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Okay. Fair enough. And then just last one for me here is on the capital expenditure, obviously, there are some issues there with the highway project. Can you maybe talk about how we should think about what's the potential payback on the project? Obviously, it would be a ways out, but how should we maybe think about potential earnings contribution there in the long term?

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Daniel L. Jones, Encore Wire Corporation - Chairman, President & CEO [39]

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Yes, it's going to be great. That's how it should be.

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Operator [40]

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Our next question comes from Brian Gibson from Raymond James.

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Brian Gibson;Raymond James;Analyst, [41]

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This building project or CapEx is -- I just can't get off my mind. It -- I guess I've never heard something like this before, "Hey, we're going to do cap -- I read last year, we're going to do CapEx, but a new highway might be coming through." And then Frank, you said this morning, a significant CapEx. I mean, are you going to put -- and I've been down there before, so you're going to be putting up a new building. Or I mean, what's -- I mean, can you...

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Daniel L. Jones, Encore Wire Corporation - Chairman, President & CEO [42]

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That's what we're looking at, a little project, no different than what we've done in the past nor the same, 4 walls and a roof and some concrete around it and some dock doors. And we're going to bring in some equipment and do those kind of things. I mean, we're in the middle of figuring out exactly what all of this. But to our North, there's a road between us and 100 acres. And to our East...

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Brian Gibson;Raymond James;Analyst, [43]

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Is this 100 acres, 127 acres, you bought some land here in the last 4 or 5 years, I believe.

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Daniel L. Jones, Encore Wire Corporation - Chairman, President & CEO [44]

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I don't remember the year, but it's 107 acres, yes, to the North and there's 200 acres to the East. And we've got a couple of roads around our property here. And like I said earlier, the municipalities and government agencies and whatever, they're looking at all the growth in this area that's unaffiliated with specifically Encore Wire. But there are some infrastructure projects that are going around in the area. And Texas is growing and Collin County is growing, and city of McKinney is growing. And they're trying to accommodate all that growth. And so we're a pretty decent-sized landowner in McKinney. And there's conversations and drawings and projects on the books, and decisions have been made and all these meetings and what have you, and we're in the middle of all that. So while all that is going on, you've got to be a good neighbor and speak to those folks and make sure that our interest are considered when they're trying to accommodate the growth in the area of traffic and whatever it might be. So we're in the middle of all of that. And it's not a huge delay, but, again, there's some stuff going around this year that's -- and we're involved in, and it's just kind of waiting here and waiting there is not my style. So that's why we've put it in the press release. We're moving forward, though.

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Brian Gibson;Raymond James;Analyst, [45]

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So that -- so when we are going to put up 4 walls and a roof, that means you're going to be hiring more employees also.

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Daniel L. Jones, Encore Wire Corporation - Chairman, President & CEO [46]

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Well, correct. Yes, yes. yes sir. Yes. We'll need some more folks, yes.

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Brian Gibson;Raymond James;Analyst, [47]

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And congratulations on the quarter. And I do think it's significant that since I've been following the company, I've discovered that when copper prices are dropping, people hold off on buying. So you still had positive earnings when prices are falling. So congratulations, and we'll be talking to you again.

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Daniel L. Jones, Encore Wire Corporation - Chairman, President & CEO [48]

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Yes. Our folks did a great job. I appreciate the call. Thanks for asking.

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Operator [49]

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And our next question comes from Tom Brashear from Preston Capital Management.

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Tom Brashear;Preston Capital Management;President, [50]

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Am I reading it properly? You had higher unit volumes, keep growing, which is great. And to me that implies that you're gaining market share. Is that a proper read?

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Daniel L. Jones, Encore Wire Corporation - Chairman, President & CEO [51]

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You can say that. I don't know how certain you can be to specifics. Nobody else -- it is public in our space, but I don't know how to gauge it against the market specifically. But in general, the growth is with the same folks that we've been with. We're not chasing a lot of new anything. So you can say it to what degree. It's hard to measure specifically, but it sounds good when you say it.

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Tom Brashear;Preston Capital Management;President, [52]

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Have you noticed any disruption of any of your competitors and their production lines or other issues?

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Daniel L. Jones, Encore Wire Corporation - Chairman, President & CEO [53]

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To the best of our knowledge, everybody's running their plants. I think everybody is busy. I think the market itself is pretty busy. I don't know of any capacity that's significant changes either way up or down, honestly. I think everybody is running and doing well.

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Operator [54]

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We have no further questions at this time.

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Daniel L. Jones, Encore Wire Corporation - Chairman, President & CEO [55]

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Okay. Jenny, well, thank you. I appreciate your participation on the call and look forward to next quarter.

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Operator [56]

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Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.