Encore Wire Corporation

Thank you for holding and welcome everyone to the Encore Wire Corporation third quarter 2023 earnings 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'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you'd like to withdraw your question, again, press the star one. Thank you. We'll now turn the call over to Brett Eckert. Mr. Eckert. Please go ahead.

Thank you, Jack. Good morning and welcome to the Encore Wire Corporation quarterly conference call. I'm Brett Eckert, Executive Vice President and Chief Financial Officer of Encore Wire. With me this morning is Daniel Jones, President, CEO, and Chairman of the Board. Before we begin our comments, we'd like to remind everyone that today's earnings release and certain of our comments on the call include forward-looking statements. and actual results may differ materially from such forward-looking statements. I'd like to refer everyone to the cautionary language included in our earnings release and to the risk factors described in our SEC filings. I'll now turn the call over to Daniel for some opening remarks. Daniel?

Thank you, Brett, and thank you, Jack. 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. This quarter marked our 10th consecutive quarter of elevated margins despite our continued belief that we're in the midst of a period of gradual margin abatement. As we have discussed at length on prior earnings calls, copper margins began to gradually abate in mid-2021, and aluminum margins peaked in the fourth quarter of 2022. Since then, we have invested heavily and continue to invest in improving our service model and efficiency levels to reduce cost, increase capacity, and deepen vertical integration, which we believe should contribute to achieving sustained higher gross margin levels when compared to pre-COVID baselines. With respect to volume, I'm pleased to have shipped a record number of copper and aluminum pounds in the third quarter. These results demonstrate a dynamic shift in volume shipped when compared to a pre-COVID baseline. Copper and aluminum pounds shipped in the third quarter of 2023 increased by 21% and 96% respectively when compared to the third quarter of 2019. We captured the incremental market share by leveraging our single-site vertically integrated campus, deep supplier relationships, and strong workforce to quickly manufacture and ship finished goods to our customers despite the broader macro challenges facing the sector. The strong performance is also a reflection of our steadfast commitment to outstanding customer service and our intense focus on shipping complete orders quickly. Combined with our expanded reinvestment initiatives such as the XLP compounding facility, which was substantially complete at the end of the third quarter of this year, Since our inception, we have grown organically under the same value proposition that we were founded on. Manufacturing innovative products while providing exceptional customer service focused on quickly shipping complete orders coast to coast. We believe our industry-leading fill rates continue to give us a strategic competitive advantage in the marketplace. Our one location business model also affords us a higher level of agility in adapting to changing market conditions, structuring our operations to quickly service areas of new and growing demand, such as data centers and renewable energy markets. Demand for our products has remained strong, and our build-to-ship model, combined with the throughput of our modern service center, positions us well to satisfy increases in future demand. We believe that we have made and are making the appropriate sustainable investments to take advantage of future incremental demand for current and new product offerings that will help to facilitate the broad electrification of our economy. We expect that the current legislation in place to help fund the infrastructure needed for broad electrification will bolster long-term demand for many of our product categories. We also expect that this demand will raise the floor for the price of many raw material inputs for years to come. We firmly believe that our historical, recent, and future success is a direct reflection of our unique culture and the strength of our experienced team. We also believe that our one campus location, increasing verticals, deep vendor and customer relationships, and our ability to quickly shift complete orders will remain vital differentiators in our future success. We continue to believe that our stock is undervalued at current market prices and what we believe are historically low forward valuation multiples as evidenced by our continued share repurchases in Q3 2023 and remaining repurchase authorization. Since Q1 of 2020, our share repurchase program has returned $686.6 million in capital to shareholders, and our continued purchasing demonstrates our confidence in the long-term value creation potential of our company. With that, I'll now turn the call to Brett to cover the financial performance in the third quarter. Brett?