Encore Wire Corporation

Ladies and gentlemen, thank you for standing by. I would like to welcome everyone to the fourth quarter of full year 2023 earnings conference call. At this time, 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 the star followed by the number one on your telephone keypad. If you would like to withdraw your question, please press the star followed by the one once again. Thank you. I will now hand the call over to Mr. Brett Eckhart. Executive Vice President and Chief Financial Officer, you may begin your conference.

Thanks, Bhavesh. 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. Thank you, Bhavesh. Good morning, everyone. Thank you for joining us on the call and for your interest in Encore Wire. We appreciate your continued investment, confidence, and support. Over the past several years, we have invested and continue to invest in improving our service model and efficiency levels to reduce costs, increase capacity, and deepen our vertical integration. We believe these investments have strengthened our ability to compete today and should contribute to higher gross margin levels when compared to pre-COVID baselines. We experienced increased copper wire and cable demand from mid-2023, which continued through the fourth quarter. This resulted in us shipping a record number of copper pounds in the fourth quarter, representing the strongest volume quarter over the course of the full year. Specifically, copper pounds shipped in the fourth quarter grew by 5.9% over the third quarter of 2023 and grew by 18.8% over the fourth quarter of 2022. These results represent a positive shift shift in volume shipped when compared to a pre-COVID baseline. Copper and aluminum pounds shipped in 2023 increased by 21% and 74%, respectively, when compared to 2019 levels. We captured this demand by leveraging our single-site, vertically integrated campus, deep supply relationships and motivated workforce, to quickly manufacture and ship finished goods to our customers despite the macro challenges facing the sector. The strong performance is also a reflection of our steadfast commitment to outstanding customer service and our constant focus on quickly shipping complete orders combined with our expanded reinvestment initiatives such as the XLPE compounding facility that was substantially completed 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 centered on quickly shipping complete orders coast to coast. We believe our focus on fill rates continues to provide a competitive advantage in the marketplace. We also believe that our one location business model 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, while servicing our core market segments. As noted above, demand for our copper wire and cable products remained strong in 2023, and our build-to-ship model, combined with the throughput of our modern service center, positions us well to compete for future demand. We believe that we have made and will continue to make appropriate sustainable investments to meet future demand that will facilitate the broad electrification of our economy. Additionally, we believe that the current federal legislation providing funds for the infrastructure needed for broad electrification should bolster demand for our products. 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, deep vertical integration, strong supplier and customer relationships, and our ability to quickly shift complete orders will remain critical differentiators in our future success. With that, I'll now turn the call over to Brett to cover our financial performance in the fourth quarter.

Brett. Thank you, Daniel. Fourth quarter and full year 2023 highlights include fourth quarter earnings per diluted share of $4.10, full year 2023 earnings per diluted share of $21.62, fourth quarter net income of $66.1 million, full year 2023 net income of $372.4 million, fourth quarter gross profit of 21.5%, and full-year 2023 gross profit of 25.5%. Fourth quarter corporate unit volumes were up 5.9% over the third quarter of 2023. Fourth quarter corporate unit volumes were up 18.8% over the fourth quarter of 2022. And on a full-year basis, it was up 6.7%. We had $516.6 million of cash on hand at the end of December of 2023, compared to $730.6 million as of the end of December 2022. Capital expenditures of $164.5 million in 2023. We repurchased 476,300 shares in the fourth quarter of 2023. We purchased 2.661,792,000 shares for the full year of 2023. Total cash outlay for share repurchases of $85.1 million in the fourth quarter of 2023, and $460.2 million in the full year of 2023. There is a share repurchase reauthorization that was approved by our board for the repurchase of up to 2 million shares of the company's common stock through March 31st, 2025. As Daniel mentioned, we experienced increased copper wire and cable demand from mid-2023, which continued through the fourth quarter. This resulted in us shipping a record number of copper pounds in the fourth quarter, representing the strongest volume quarter over the course of the full year. In addition, for the first time in at least our recent history, every quarter of 2023 showed copper volume growth over the sequential quarter in the current year. The decrease in net sales dollars in both the fourth quarter and year-ended 2023 was driven by an anticipated decrease in the average selling prices in the current year period compared to the prior year period, which is consistent with the gradual margin abatement we have been discussing since mid-2021. That was offset by increased copper volume shift in the current year that was just highlighted above. Gross profit percentage for the fourth quarter of 2023 was 21.5% compared to 23.3% in the third quarter of 2023. The average selling price of wire per copper pound sold decreased 3.2% in the fourth quarter of 2023 versus the third quarter of 2023, while the average cost of copper per pound purchased decreased 1.2%. This resulted in a continued gradual, albeit slowing, abatement of copper spreads during the quarter, primarily driven by the decrease in average selling prices noted above, partially offset by a decrease in the average cost per copper pound purchased, which resulted in the decreased gross profit margin in the fourth quarter of 2003 compared to the third quarter of 2023. Aluminum wire represented 9.9% of net sales in the fourth quarter of 2023 and 12.9% of sales on a full-year basis. Aluminum volumes in the current quarter were effectively flat compared to the prior year quarter and down slightly on a full-year basis in 2023 compared to 2022. We believe the earnings in the first quarter and for the full year ended 2023 were strong and remain significantly above historic levels. This is a testament to our organic growth strategy, one location business model, historic and recent reinvestments in the business, and our hardworking employees, all driven by a culture of constant attention to detail and continuous improvement. At a macro level, persistent tightness in the availability of certain raw materials, ongoing global uncertainties, and the continued suppressed availability of skilled labor kept overall margins elevated in the fourth quarter of 2023. Our balance sheet and cash flow generation remained strong. During the quarter, we repurchased 476,300 shares of our common stock for a total cash outlay of $85.1 million. Since the first quarter of 2020, we have repurchased 5,634,069 shares of our common stock. and have returned almost $785 million in capital to shareholders through shareholder purchases and dividends. Incremental investments to deep and vertical integration in our manufacturing processes, as well as other projects focused on driving efficiency and increasing capacity, should continue to improve our service model. These types of organic investments have fueled our growth since inception and position us favorably to continue to compete in the future. In 2022, we began construction on a crosslinked polyethylene 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. As Daniel mentioned, the new facility was substantially completed in the third quarter of 2023. Capital spending in 2024 through 2026 will further expand vertical integration in our manufacturing processes to reduce costs as well as monetize select wire manufacturing facilities to increase capacity and efficiency and improve our position as a sustainable and environmentally responsible company. Total capital expenditures were $164.5 million in 2023. We expect total capital expenditures to range from $130 million to $150 million in 2024, $130 million to $150 million in 2025, and $100 million to $120 million in 2026. 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, Brett.

Our ability to capture the demand we experienced in 2023 and deliver unmatched speed and agility in servicing our customers is a testament to our single-site, build-a-ship model, an important competitive advantage. It also positions us well for the future. The opening of the new service center in May of 2021, the opening of Plant 7 in third quarter of 2022, the new XLPE facility It opened in the third quarter of 2023, and the other capital projects under construction or planned should provide us the capacity and efficiency to remain competitive in the future. Our unique business model continues to serve us well in current market conditions and remains a competitive advantage, giving us unmatched operational agility and speed to market in serving our customers' evolving needs. Despite persistent tightness, and the availability of certain raw materials, our supplier partners continue to uphold their commitments to Encore. We wouldn't have this level of success without the consistent, exceptional performance of our suppliers. Looking ahead, we remain focused on executing upon the core values of our 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 line 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 have happened 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. We also want to thank our dedicated independent reps and our value distribution partners for their continued support. Lastly, thank you to our shareholders for their confidence and investment. We'll now take questions from our listeners above us.

Thank you very much, sir. At this time, I would like to remind our teleconference participants, in order to ask a question, please press the star followed by the number one on your telephone keypad. We kindly request that analysts limit their questions to one As time permits, you may poll for a second question. Our first question comes from the line of Julio Romero from Sidoti and Company, LLC.

Please go ahead. Good morning, Daniel. Good morning, Brett. How are you guys? Great. Excellent. I guess I'll stick to the operator instructions. I guess the one question I'll toss here is this on volumes, really impressive volume output here in the fourth quarter. Can you maybe speak to what product lines drove the increased volumes, where you are with regards to capacity utilization?

Yeah, the commercial market was pretty strong. We saw some healthy increases in individual jobs like hotels government office buildings, data centers, you know, that particular product category is somewhat broad. It also, you know, comparatively speaking to residential or industrial is our biggest piece. Pretty strong overall geographically with that product category as well. We are expecting and seeing a you know, or saw some positive signs on the residential side. And then the industrial piece also was doing very well for us.

Yeah, Julio, the only thing I'd jump on on that is I think a lot of the strength you saw in the volume does align well with our service model. You know, we really got back to our swagger early in 2023, quick order to ship, very high, high, high order fill rates. And that service level is allowing us to continue to be competitive with those orders, but also to get some incremental demand during the year.

Okay, excellent. I'll hop back in queue. Thanks very much. Thank you. Our next question comes from Chris Moore from CPS Securities.

Please go ahead.

Hey, good morning, guys. Great quarter. If my math is right, I think the SARS impact was probably in the $0.20 range, so it would have been even better. Maybe just a little bit on market share. Obviously, you guys picked up share over the last few years. Your lead times are shorter. Manage the supply chain is better. Not that supply chain issues have gone away, but let's talk about there. It still looks like you're picking up share because of the quick-turn model. Big competitors are private, so don't see their numbers, but given your volumes are up 19% year-over-year on Q4, fair to assume that industry volumes were not up that level in Q4?

It's a great question, Chris, and you alluded to it the right way. I mean, everyone's private but us, right? So it's really all anecdotal, right? I do think, as I mentioned to Julio's question, our service level today is has never been better. And we're able to turn these orders very, very, very quickly. You know, given the continued shortages of skilled labor, you know, it's very disruptive of a job site if you have to get your load in four or five or six different deliveries. The last delivery may be the one reel you need to start the process. And so being able to ship these orders complete very quickly is a differentiator. You know, I think it's a good assumption on your part. You know, I think There's clearly some growth, I think, in the sector, and I think there's some piece of that that likely is taking share because of our service level. But keep in mind, it's always one order at a time, right? It continues to be a very price sensitive. Service is making a difference from our side of the fence, and that's really what allowed us to take on orders. From a capacity standpoint, we definitely have the capacity to continue to serve orders at these levels. And, you know, from that standpoint, you know, 23 was a fantastic year, consistent from a volume perspective.

Got it. Maybe I'll just try to sneak one more in here. Obviously, the big question, or one of the big questions continues to be, you know, where gross margins will normalize. I guess the question is, what are the puts and takes that you could reach a bottom in gross margins in 24?

It's a tough one. You tell me the price of copper, and I can tell you how much we're going to make this, right? And that really is why we don't give guidance, right? I think, as Daniel stated, we've seen, you know, slowing abatement. I mean, if you just look at the fact that we talked about from the fourth quarter to the third quarter, a 3.2% decrease in the average sales price and a 1.2% decrease in the cost of copper pound purchase. If you look at the third quarter compared to the second quarter, ASP was down 4.3, and the cost was down 2. So you can see that gap is kind of closed. The abatement still is on the ASP level, right? Copper plays a big piece of it, right? We had a pretty supportive environment at copper in the fourth quarter, right? We hit a low, I think, for the year at about 354, 355 early in October. And it steadily rose as you kind of went through the quarter, right? And it peaked at 394, I think, on the 28th of December. And so he had a building environment of copper, which is always an environment, you know, that we like. And so that kind of plays a role in it. You know, we've made a lot of investments over the last several years, right? And those investments, I do think, are paying dividends. And obviously, that impacts margin. Some of the other material costs that were up in the pandemic – you know, navigated down somewhat as you went throughout the year, and so that has a benefit to it. So, you know, there's so many things that go into it. Everyone's looking for where the bottom is. We're competing one order at a time, and if we do a great job all day, put five of those together, we've got a good week, and four of those make a good month, and that's really what this business is. It's still going to be very competitive one order at a time, and it's going to be a penny's business as far as making sure you run your operations as tight as you can.

All right. I appreciate it. I'll leave it there. Thanks, guys. Thanks, Chris.

Thank you, Chris.

Thank you. Our next question comes from the line of Brent Tillman of DA Davidson. Please go ahead.

Hey, thanks. Yeah, obviously, at standing volume this quarter, you've had a lot of initiatives the last few years to enhance the capacity. I guess, Daniel, is there a Is there a way for us to think about capacity utilization as the fourth quarter goes? Is that as good as it can get from a volume perspective, or is there still a lot of excess capacity in place right now that you could deliver over and above if the conditions were obviously there?

Yeah, you know, the team has done a fantastic – I appreciate the question, too, Brent, and the call. The team has done a fantastic job of evaluating bottleneck as the market demand kind of ebbs and flows a little bit from one product category to the other. But also, without getting too deep, within those product categories, there's also ups and downs on the demand side. Some of the customization at these data center jobs with the additional AI demand tacked on, quite a bit of an increase in the volume piece at those specific job sites. The team sorted those things out. We built in flexibility, and that's a long answer to your question of we have quite a bit of space left. We are using quite a bit of the equipment super efficiently. We designed it to stop and start and to react and kind of have a build-to-ship model Because, again, a lot of this demand is one-off custom-type, you know, specific products, with the core being aluminum and copper boats, you know, more copper than aluminum. And, you know, as Brett mentioned, it moves constantly. But we've built this place, you know, on speed and agility over the years and grown with it. I'm never comfortable moving. taking the order that we can't ship, but that's a comma, not a period. Why can't we ship it? So we're constantly addressing the capacity question. I'd rather have the equipment come in and sit and use it when we need it rather than coming up short and missing that service mark. As you know, you've heard the story enough, but we've got plenty of space on the capacity side to continue to grow in those categories that we mentioned earlier in the prepared remarks.

Okay. If I could just sneak one more in, sorry.

Daniel, how would you evaluate sort of spreads in pricing through the course of the quarter just from the standpoint that you did ultimately see some volatility in copper prices through the quarter? In any even qualitative analysis, comments you can offer in terms of how yourselves and the industry have reacted to that.

Yeah, very fortunate in the quarter for the most part. The low for copper in the quarter on COMEX was pretty early on in October, around 350-something, 354-ish, I think it was. And then, you know, it grew in November and it increased a little bit more in December, which is a good you know, rhythm to have going into the end of the year. There was about a 40 cent per pound increase from the low in the quarter to the high. With that type of volatility, which is significant, I'm glad that you brought it up, as long as the timing meets the end of the month and the start of the next month and it flows from low to high through the quarter, we're able to have success with price increases in the markets. And again, the timing of being able to turn the inventory every month, if you will, maybe every three and a half weeks today, allows us that flexibility. And then when we have that agility to take in those ebbs and flows and the ups and the downs and the special orders that come in and still be able to ship the way that we ship through the quarter, You know, we're able to sustain, if you will, that spread rather than reacting to, you know, maybe a competitor's idea of attracting attention by cutting the price. I know I'm not supposed to go too deep into, you know, price. And I can see on the list on the screen we've got most of our competitors on here, so I should probably just leave it at that. Okay.

Fair enough. Thank you, guys. I'll get back into it. Thanks, Brad.

Thank you, Brad. Appreciate the help.

Thank you. Our next question comes from the line of Alfred Pooni of Barger LLC. Please go ahead.

Good morning, gentlemen, and thank you for this call this morning. You noted that the crosslink polyethylene compounding facility was substantially completed in the Q3, and then now it's moved into a startup and optimization phase. Can you share your expectations for 2024 in terms of potential cost savings or other benefits that will be coming from this new facility?

Yeah, Alfred, that's smart. I appreciate the question. This is Brett. You know, we completed the facility at the end of the third quarter. You then move right into, like you said, kind of commissioning and startup. And that's a process, right? It's a process, and you're still utilizing some of your purchased cross-thin polymer as you get the facility up and running. And then once you get it fully up and running, the optimization phase comes in. And I've talked a little bit about that, right? You know, right now it's a one-size-fits-all, but not every one of our XLPE insulated products are going to require, like, a fire retardant, for instance. And so as you start to optimize, you can create different grades of XLPEs. to make sure you're not putting in something within that that's not necessary or called for, and that's not inexpensive. And that's the optimization piece. As I said before, I think it's a nine to 12-month kind of startup and optimization. I think so as you get into maybe the third quarter of 2024, we'll be going through that process. And then at that point, you're going to start to see those benefits trickle in. So it's not going to be like flipping a switch, right? You're going to be gaining a little bit as you go through, but it's going to be in the second half of 24, I think, before you start to see the full benefit of that investment.

Okay, thank you. Thank you, Alfred.

Thank you. We have a follow-up question from Julio Romero from Sudoti and company LLC. Please go ahead.

Hey, guys. Thanks for taking the follow-up. You know, as we look to 24, Kind of how do we see the cadence of volumes trending? I know you saw this kind of sequential quarter over quarter ramp in 23. Does 24 follow the same path or do you kind of more expect a more traditional seasonality of construction kind of cadence?

No, I can't touch that, Julio. I mean, it's an interesting, you know, you can see the trend in 23. We've never had that trend before. I think if you unpack 23 a little bit, right, you went into the year with a lot of pontificators and a lot of doom and gloom, right? And so as people entered in, we did see, and we talked about this in our first quarter earnings call, you know, a destocking at the distributor level in March and it trickled into April, right? And we talked about in the call that at the end of the day, we're glad we got that piece behind us. And then once you do that, you know, a distributor really has to align with us. with a supplier that they can count on. And that plays right into our service model. You know, when you typically see the distributors build back up their inventories or build up inventories into the summer months, second and third quarter, they then have to go through a level of destocking and they'll take those down by the end of the year. And that has some effect on the ebb and flow between the quarters that you typically see. Because they took them down and never really built them back up significantly, We weren't as impacted by that drawdown of those inventories in the fourth quarter. I think our service model is still a differentiator, right? We had a somewhat supporting copper price in the fourth quarter. As Daniel talked about, a 40-cent move within the quarter is significant, and that helps a ton with regard to our ability to service the market very quickly. So, I think it's everything you talked about. Now, what you can look to for 24, it's very difficult to see. You know, you've got an election this year. You had inflation day that came out a little hot in December, and everyone's trying to digest the rate cuts. Again, tell me what copper is going to do, and I'll give you a better sense. But it's hard to take one from the other. I think you just look at the trend and and what was accomplished in 23, and we'll see where it takes us as we get into 24.

Fair enough there. And then, Daniel, you talked about the success the team has had in terms of kind of evaluating bottlenecks and alleviating those bottlenecks, and you also mentioned you got plenty of machine capacity, I guess, if you will. I guess what would be the biggest bottleneck kind of left on the table, would it be labor or would there be another kind of factor there?

Yeah, good question. You know, the labor piece is still a challenge. It was certainly significantly better in 23 toward the back end versus the way we started the year. When we look at numbers specifically related to 23 in the hiring and the onboarding piece, and the expense that goes into all the pre-employment testing and what have you in training versus 22. Huge improvement. The quality of the candidates significantly better. We've had 30 some odd years of hiring folks with never having a layoff. In that process, as long as we're doing the things that we think we learned coming through COVID, they seem to be working in our favor at this point. The labor piece is manageable. It's not as severe and as bad as it was. It's certainly a lot better. Freight came in quite a bit better. A lot of the bottlenecks that we were maybe whining a little bit about have kind of cleared up. On the construction process itself, great team members, Hill Wilkinson, uh, Potter Concrete, Humphreys Electric, uh, Hinden Plumbing, Coal Services, Anchor, Sterling, those guys really did a fantastic job for us on getting these buildings, uh, up and, uh, you know, ready to run from a quality perspective. And, you know, it's the A-team, um, which we, we, we like to wait on and require in our projects, but, um, couldn't be happier with, with all of it. Don't really know of a significant bottleneck that's in front of us right now. Um, other than all the hype and the talk that goes into the political atmosphere, we have no control over whatsoever. Um, the things that we have a say in, uh, right now, Julio, I think we've got a pretty good handle on. We've got the right guy or the right girl, uh, with backups in each spot. And, um, The momentum that you were talking about in 23, for us anyway, certainly has not been a let-up starting off this year. We're just anxious to see where this copper thing ends up. Super tight, around three days' supply above ground in the world. It's an incredibly tight situation. It's fun. It's a robust market. We're having a lot of success. with our partners, and, you know, we've got a great team around us in all aspects, and we'll see where this takes us.

Understood.

I appreciate you guys taking the follow-up questions, and best of luck in the first quarter.

Thanks, Leo. Thank you. Our next question comes from Brendan Tillman of DA Davidson. Please go ahead.

Hey, thanks for taking a follow-up. Daniel, I mean, tough results for aluminum. I guess anything to point to for that product line that makes you guess we're seeing some stabilization?

Yeah. You know, aluminum is a – it's an odd product, comparatively speaking, to copper. You know, copper is mined and aluminum is manufactured. And it's no secret we've always, you know, focused on copper. We do a very good job in aluminum. It's a tight market, no question. There's a big influence from a pricing perspective, not to the positive. When the importers have inventory, I don't think it's any secret that they lead with price. We pick and choose our spots. We've got fantastic partners in the market that we do great with on aluminum. but we're not going to, you know, chase our tail on some of those projects that, fringe projects a lot of times that end up, you know, going to the discounters. And not my style to cut price. Our model is about service. It's, you know, it comes and goes, ebbs and flows, but it's a product that we do very well in. We have to have it. It's still very profitable for us. And, you know, It's just a little bit more volatile than it has been in the past. And, you know, the government's looking into things as they have in the past. And it's just a constant, you know, fist fight on that product category. But, you know, the XLP plant, in addition to that, will give us a little bit more strength, a little bit more control over where we go with that product and direct that market a little bit better.

Okay. And just on the CapEx, maybe Brett, did you differentiate the sort of maintenance-sustaining CapEx versus growth CapEx and that outlook here for 24?

Yeah, I'll just – and appreciate that because I appreciate the angle you're taking with that. And it's one that, you know, again, you've got to say, give me your definition of maintenance CapEx, right? Because, you know, we spend – you know, 40 to 60 million, you know, in any given year, right, that I would call maintenance capex. But I'm going to tell you that's vastly new machinery and equipment, right? We don't like to retire equipment. We like to find a spot on the floor and bolt another line next to it, right, as you go through it. So, you know, you're always evaluating your current machinery and equipment. You're working closely with our maintenance times to manage any sort of downtime or You're looking at line speeds and the new equipment versus the old equipment. You're looking at how much energy it draws and can something be more efficient on a go-forward basis or safer. And those are the decisions we look at as we look for repair or replace. That's what I include in that $40 million to $60 million. I think some folks would say just pure maintenance capex. you know, it's much lower than that. But we consistently, if you look back in our capital, it would be anywhere from that $40, $50, $60 million, and it's consistently new machinery and equipment over the years.

Okay. Very good. Thanks, guys. Thanks, Brad. Thanks, Brad.

As a reminder, if you'd like to ask a question today, please press the star followed by the one on your telephone. The star will want to ask a question. Our next question comes from Matt Jackson of Scorpio Capital.

Please go ahead.

Hey, how's it going? I was just hoping you could give the LIFO impact in the quarter. Was that a negative or a positive? Thank you.

Well, yeah, in the quarter, keep in mind, you had an environment where copper was rising throughout the quarter. And so in the fourth quarter, it was a pickup of about just under $2 million. It was pretty significant. If you compare it to the third quarter, it was a pickup of about $5 million. That's just a product. It really is more of a balance sheet effect because you're costing your orders at your beginning of month price. Depending on what copper does up or down, you're just adjusting to match your revenue with your expenses within that month. It was a small pickup, but again, it's Because we turn our finished goods inventory over 12 times, it's the perfect hedge out there. Buy the material, change the shape, and ship it in the same month. You cannot beat that business model.

Thank you.

Thank you. There appear to be no further questions at this time. Mr. Brett Adcock, I turn the call back over to you.

Vivest, thank you so much. I appreciate everyone's participation today. Thank you for your investment and your interest in Encore Wire. Enjoy your day.

Happy Valentine's Day.

Thank you very much.

This concludes today's conference call. We thank you for participating and you may now disconnect.