If you look at the other inputs, diesel, which is a big contributor to our freight, which is a consideration in our quotes daily, you saw it go the other way. Diesel is much more expensive than where we started. So there’s a lot of back and forth in the market. Part of it is science, part of it is art. We’re really good at both. And most of the conversations, again, on these large jobs, they’re trying to smooth out the volatility that you see in copper in the market. So building wire pricing is not as quick to react as it’s been in the past. I was looking through some numbers this morning, and you can almost lay the same volatility pattern of copper over aluminum, and it’s almost an exact duplicate if you take the aluminum number and up it 3x and that’s not happened in the past.
There’s a lot of volatility, Eric, a lot of jerking back and forth. We’re really focused right now on the service piece, on the delivery piece, and less reactive to the noise that we’re hearing in the market from competitors that just don’t have the product to deliver on time. That’s a great question.
Eric Marshall: I guess I was just looking at like the average copper price over the course of the third quarter. If you take July, August, September it was I think around $3.80.
Daniel Jones: $3.70.
Eric Marshall: Okay. Have building wire – to me, it looks like spreads ought to be at least stable in the first month of the quarter. Just looking at what’s happened in building wire prices and what’s happened with the commodity, not just Encore, but across the industry? Is that a fair statement?
Daniel Jones: It’s fair. As we’ve said in the past, I can only give you a color for September, end of September. What’s happening in October there’s no surprises at this point.
Eric Marshall: Okay. Well, thanks a lot, guys. Anything you can say about the current CapEx as far as any new markets or anything like that that could create opportunities for growth next year?
Bret Eckert: Well, we wouldn’t be making the investments, Eric, if we weren’t confident in them, right? But we will give more color around it. Typically with our pattern, as we get closer to completion, we’ll lean in. I expect to lean in when we come out with year-end earnings with a little more detail on our existing project that we have going on that’s been referred to, I think in Brent Thielman’s report earlier this year. And so we’ll lean in on that, and then we’ll update CapEx ranges through 2025 and 2026 at that point. And so we’ll get some more color as we get closer. We just don’t want to get too much information out there from a competitive purpose until we’re closer to getting our certificate of occupancy.
Eric Marshall: All right. Well, thanks a lot, guys, and we appreciate everything you’ve been doing for the shareholders.
Daniel Jones: Come see us, Eric.
Operator: Julio Romero with Sidoti & Company. Your line is open.
Julio Romero: Good morning, Daniel. Good morning, Bret. Thanks for taking the questions.
Daniel Jones: Yes, sir.
Julio Romero: Maybe to start just kind of a broader question. What are you seeing on the overall non-residential demand side? Some of the macro indicators are signaling a bit of a slowdown in planning of new projects. And I wanted to see if you’re seeing or hearing that at all from your customers, especially since the areas of non-res that you sell into data centers you talked about earlier have a little bit better secular drivers than maybe the broader overall non-residential.
Bret Eckert: Yes. If you rank the three categories, industrial had the best positive numbers. Commercial also is positive, and the residential piece, regionally, there’s ups and there’s downs. But for the most part, net-net the residential is about flat slightly up with what we’ve been running the last few quarters.
Julio Romero: Okay. Got it. And this was asked earlier a little bit, but maybe if I can ask it a little bit differently. Just if we kind of think about – if we’re on the fourth quarter earnings call and we see the spread number that ends up there, just how should we think about that spread number when you consider everything, right? The gradual abatement that should normally continue, but then also the broader uncertainty and the less than ideal copper environment, if you sum all that up, just how should we interpret, I guess, the fourth quarter spread?
Daniel Jones: Well, I mean, that’s a tough one, Julio, right? You don’t have a crystal ball, right? I think as we look at this, we talk about it a lot, it’s cliche, but it’s one order at a time, right? And those one orders at a time service at the highest level is what’s helping us sustain or slow the abatement that we saw on the copper side. We’ve talked about the fact that copper margins peaked in June of 2021, and we’re over two years and three months past that. We’ve talked about how aluminum margins peaked in October 2022 and have abated. And obviously you’ve got a bigger influx still that we talked about earlier this year of aluminum coming from imports. And so you have to kind of put all that together.
You have to always look at the fourth quarter. October is always a big month in the fourth quarter. And then you start to land things as people start to try to close out the year. I think the typical destockings at times you would see from a distributor that may not want to carry the inventory into the new year kind of occurred earlier this year. We saw a heavy destocking in March and those levels have kind of stayed at that lower level, which, again plays very well into our service model. And so we may not see that as big impact from that, but you always have people that start to push volume to finish out year. And you know we’re going to put margin over volume. And so it’s hard to say how do I take it. I think you look at it as far as overall, what the margin has done and what volume is tracking.
And the federal funding, as those programs start to get closer to really getting entrenched a little bit more, when is the uplift going to come from those.
Julio Romero: Understood. And then maybe just on the capital spending that you guys talked about, congratulations, by the way, on completing the XLPE facility. And I appreciate the comment earlier, Bret about some more color next quarter, I guess as we talk about go forward plans. But on the press release, you talked about some capital spending through 2025 should further expand vertical integration. So I guess should that – should I interpret that as kind of the return for the go forward CapEx should come from cost reductions and efficiencies more so than incremental volumes or product lines?
