A lot of these federal programs are still just trickling in. When the wave of that really hits, I have to believe the basic fundamentals of supply and demand take over and you start to see it in the price.
Christopher Moore: Perfect. I will leave it there. Really appreciate it, guys.
Daniel Jones: Great question. Thank you.
Bret Eckert: Yes, welcome to call.
Operator: Brent Thielman with D.A. Davidson. Your line is open.
Brent Thielman: Hey, thanks. Good morning, Daniel, Bret, the volume increase 7% sequentially 6% year-on-year off. A pretty tough comp was notable. I guess, Daniel, were there some uniquely sized orders embedded in that or do you think customer destocking sort of went too far in the first half? Just be interested in kind of how we should interpret the strength there and I guess, kind of further to that your overall capacity to support the sort of volume going forward.
Daniel Jones: Yes. Great catch, Brent, as usual. Most of our distributor customers that we have met with, and I think we hit probably 60% to 70% of them in the last few weeks in person. Their destocking programs are either complete or very close to complete. And it appears that they’re back to focusing on other cost cutting ideas, which typically is labor, where we can offer some of our additional services here from the new service center to kind of meet that demand. And then to your other piece of the question, the big orders are definitely bigger, currently with the data center demand still doing very well. As far as the commercial and industrial piece you tack onto that the AI interest and investment and the big orders are just getting bigger.
Our average order size is up. It was up in the quarter. That’s always a very positive sign. They’re a little more complicated orders to handle, which fits our one location, heavy service focused business model. So it looks like it fits pretty well. I’m bullish on that side of the market, a lot of quote activity, lot of convenience type add-on value for the installer that we’re capable of providing at a premium. There’s a lot of things happening on that side, as I mentioned early in the call that are picking up and in that quote to order phase is pretty good. It’s pretty tight on the timing. You quote it one day and they’re ready to go within a day or two. You can write the purchase order and start to build it and ship it. So that side of the market is performing pretty well.
Brent Thielman: That’s really helpful, Daniel. And as a function of these average order sizes going up, more complicated orders, is that the reason why you’re seeing this sort of slowing abatement relative to the second quarter and spreads and I guess overall average selling prices, or is there more to it?
Daniel Jones: No, that’s part of it. It definitely contributes. As Bret mentioned, I’ve got a long track record. I’m not interested in getting larger and poorer. So when we go after some of these things, we’re going to charge for it. We’ve got a phenomenal group of sales reps, we’ve got a fantastic team in house operationally and sales perspective to manage our capabilities. And that’s really what it comes down to. If there’s an order that’s substantial that we cannot handle, I’d rather pass on it than mess it up. But the reality is, you ask the question, why can’t we handle it? And I think you’ve seen with our CapEx the last couple of years that we’re in a really good spot to handle these going forward. It really is a – there’s some technical expertise that’s involved, but again, the speed to market piece is where we’re winning.
Bret Eckert: And I’ll just jump on that, Brent. I think that service model really is resonating. Our service model is absolutely humming right now. Fill rate is back where it needs to be. You’re getting these calls and you’re getting a call on a Wednesday and they need you to ship it tomorrow and we’re able to service that order and that is what’s also helping us sustain or seeing a slowing of the margin like we talked about on the copper side.
Brent Thielman: Okay. And then – it looked to me like spot commodity prices for copper were up around 8%, at least the way I calculated it in the quarter, whereas your cost purchase was less than 5%. Is there anything to read from that? Or is that just an anomaly based upon when you bought the metal in the quarter?
Daniel Jones: Listen, I make our purchases every single day, all day, Brent. Obviously, I can’t say it’s an anomaly, but based on kind of how the average plays out, does the price run up to start the month or end the month, or is it mid month? Are there opportunities with regard to that? How much scrap is available that we have that we can sprinkle in as you go through it? So the shape is a big and critical piece of that. And so all that kind of comes together to come back with kind of the average cost. I mean, overall, when you look at the quarter, prices down slightly, obviously in the quarter, it’s not moved a whole lot after the peak kind of the start of the year. It’s just been bouncing around for the last three to four months at a pretty consistent level.
Brent Thielman: Okay. All right. And just last one. Bret, is it still your view you’d like to sort of maintain around $200 million in cash on the balance sheet for sort of working capital purposes?
Daniel Jones: Yes, I think 200 to 250 is the right number. That’s if copper hits $2 or $6, you need the cash on the fringes. And that’s a comfortable number. Obviously, we have our line that’s out there that obviously remains untapped, but 200 to 250 is the right cash number, in my opinion.
Brent Thielman: Got it. So $300 million to $350 million deployable. It will.
Bret Eckert: I’m trying.
Brent Thielman: I’ll get back to you. Thanks, guys.
Bret Eckert: Thanks, Brent.
Daniel Jones: Thanks, Brent.
Operator: [Operator Instructions] Our next question comes from Eric Marshall with Hodges Capital. Your line is open.
Eric Marshall: Hey, congratulations on another great quarter, guys.
Daniel Jones: Thanks, Eric.
Eric Marshall: Just curious, I don’t know how much you guys could elaborate on this. But with copper prices since the quarter ended here in the month of October have come down closer to the $3.50 area. Has wire prices in general, not just for you, but the industry, have they declined as much as the commodity in the last 30 days?
Daniel Jones: Yes. We ended the low in September was around $3.60, and I think that’s right where we’re operating in October, $3.61, $3.62 somewhere in there. When you have that quarter of July, it ran up from the beginning from the high to low to about – it was about $0.27 a pound. August went the other way about $0.24, and then recovered toward the end of $0.14 a pound. When you get this type of volatility, timing of the purchase by our customers is obviously important. The way that we price our product to the distributor is immediate. If they hang up the phone, essentially we re-quote it when they call back. So we’re live as live and as hot, if you will, as you can be with copper. We are not the first nor are we very quick to go down with building wire prices based solely on the price of copper.
