Encore Wire Corporation

Welcome to the Encore Wire Report second quarter 2022 results conference call. My name is Richard, and I'll 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 01 on your touchstone phone. As a reminder, this conference is being recorded. I will now turn the call over to Brett Eckert. Mr. Eckert, you may begin.

Thanks, Richard. Good morning and welcome to the Encore Wire Corporation quarterly conference call. My name is Brett 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 second quarter ended June 30, 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 that 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 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 results for the second quarter of 2022 established another high watermark, both financially and operationally, for Encore Water. Our continued strong earnings in 2022 validate that our single-site campus model is a strategic competitive advantage in the market today, giving us unmatched flexibility to quickly pivot and adapt to ever-changing market dynamics Our manufacturing scale and flexibility, coupled with our value-added services, continue to drive job site efficiency. Stable demand, coupled with global uncertainties, persistent tightness in the availability of certain raw materials, and the general inability of the sector to meet demand for the timely delivery of finished goods kept spreads strong throughout the first half of 2022. By continuing to execute on our core values of providing unbeatable customer service and high order fill rates, we were able to increase both copper and aluminum volumes shipped in the second quarter and year date periods in 2022 over 2021 levels. Volumes shipped were also up over first quarter 2022 levels. This marks the third consecutive quarter of volume growth, driven by continued increased demand for data center, health care, and renewable product solutions. We believe existing market conditions and the current outlook support existing volume levels, as well as support gross margin abatement continuing at a gradual pace. Copper unit volumes increased 2.7% on a comparative quarter basis in 5.5% on a year-to-date basis. COMEX prices decreased gradually throughout the second quarter, while other raw material costs and inputs continued to rise. Copper spreads increased 22% on a year-to-date basis, but decreased 4.4% on a comparative basis. Aluminum spreads increased for both the quarter and year-to-date periods, in 2022 compared to 2021. With the new capacity coming online this year, we believe Encore Wire remains well positioned to capture incremental market share and 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 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 Brett to cover our financial results.