Commercial Metals Co (CMC) 2005 Q3 法說會逐字稿

Good afternoon, ladies and gentlemen.

My name is Derek, and I will be your conference facilitator.

At this time I would like to welcome everyone to the Commercial Metals Company third quarter 2005 earnings conference call. [OPERATOR INSTRUCTIONS.] Thank you.

I would now like to turn the conference over to Mr. Stan Rabin, Chairman, President, and Chief Executive Officer.

Please go ahead, sir.

Good afternoon, everyone.

I'll, as usual, make some preliminary comments.

Bill Larson will then give you a more detailed analysis of what happened during the quarter.

And then I'll talk about the outlook.

And also with us is Murray McClean, our Chief Operating Officer, who will be happy to answer any questions as well when we get into the Q&A.

Let me start by saying we earned $1.14 per diluted share.

It was our best third quarter ever, and our second best quarter in history.

I think I need to repeat, we earned $1.14 per diluted share.

It was our best third quarter ever, and our second best quarter in history.

The effect of the change in the effective tax rate was roughly equivalent to the swing in LIFO.

We believe that there's clearly a failure to differentiate among steel and metals companies.

Our mix of business is unique, and our diversification is extensive.

We don't manufacture any flat-rolled, and we have essentially no exposure to the auto industry.

The end use markets for our products are relatively strong.

Our downstream operations are long cycle and, to a degree, counter cyclical.

They can account for a high proportion of our profits.

Varying types of non-residential construction are the principal markets for our downstream businesses.

The impact of the most recent share repurchase is not yet felt in terms of calculating the number of shares.

In general, the steel market has been characterized this last quarter by further inventory reductions and more guarded buying patterns within consuming markets.

And we believe this is true across the whole supply chain.

It's just very cautious buying.

Nonferrous markets, overall, were quite strong.

The near-term impact of the various moves by the Chinese Central Government on the steel market and raw materials supplied to steel makers has been negative, but we can't overemphasize that the medium term and long-term impact should be quite positive.

In other words, to get the Chinese production in line with its consumption and reduce investment in the steel industry.

The fundamental keys to mill profitability are metal margins and operating levels, not scrap costs per se.

Again, it's the metal margins and the operating levels.

Spot copper is close to $1.60 a pound, and recently hit a 16-year price high.

We remain in excellent financial condition.

Year-to-date our annualized return on equity is 41%.

Year-to-date, our annualized return on equity is 41%.

Bill?

Well, good afternoon.

Let me call your attention to the detailed Safe Harbor statement that's included in our press release and in our August 31st, 2004 10-K.

That, in summary, says that in spite of management's good faith, current opinions on various forward-looking matters, circumstances can change, and not everything that we think will happen always happens.

In addition, we've given guidance regarding our outlook for the fourth quarter of fiscal 2005 in our press release.

Subsequent to this call in our meetings in New York City, Chicago, and San Francisco over the next couple of weeks, we'll not be commenting further and we'll not be under any obligation to update our outlook.

In accordance with Regulation G of the Securities and Exchange Commission, you're aware of certain non-GAAP financial measures.

Some of these, if derived fairly straight forward from our financial statements or are in common business use can be the subject of our discussions today and in our visits.

Our website has additional information at www.commercialmetals.com.

But there are other items that may be outside of our ability for discussion.

You may need to be patient with us if we defer comment.

Well, I have a special feature on Word on my computer that checks for profanity, it deleted 90% of my original draft, so I'm having to use this one.

The efficient market theory is taking a beating today.

The valuation of CMC stock is wholly inconsistent with our results, our outlook, and our financial strength.

We reported earnings within the range of our own guidance and we are getting pounded.

Yes, we were off a dime from The Street estimates, and, hey, no, reflection on Goldman or JP Morgan.

I mean, I have their highest regard for Aldo and Sal and Mike and Jeff and the gang, and with a break in Poland, we would have easily met their consensus.

But I tell you, with the information in front of them, I think they made a good call in the quarter.

What's lost on the market is that the earnings were still extraordinary in their own absolute right.

So the challenge for CMC is that there's a fundamental ignorance or disregard on the part of investors on how to differentiate us from the rest of the lot.

The multiple we've been accorded, less than a 6 PE on estimated fiscal 2005 earnings, this is a joke.

It's not the result of a careful analysis of the Company versus alternative investments, but rather it strikes me as an indiscriminate steel industry or commodities stereotyping.

So we redouble our efforts to educate and inform the market.

We consistently perform.

We are on target, as Stan said, for a 40% return, on beginning equity.

We are a dividend payer.

We are strengthening the balance sheet every quarter.

We have investment-grade ratings.

And what do I conclude?

I think it's what a close friend of mine so often tells me, that no good deed goes unpunished.

So for the sake of all those computer programmers out there readying their sell stops, let's review the landscape and reaffirm what Stan just noted.

We are a long products producer.

What happens in the flat-rolled market has only a peripheral effect on us.

We have no significant exposure to the auto or white goods industries.

I wish both of them well, but those sectors are not important to us.

The end use markets for our products are strong versus other steel outlets.

Construction is strong.

And at whatever level the Transportation Bill will be passed will be favorable for us.

Hey, opinions on China are plentiful and they're cheap.

We are on the ground there, and we tell you what we see and hear and not what others have second-hand.

We may be wrong, but we are at least informed wrong.

Scrap costs are important, but the fundamental key, as Stan said, is the metal margin.

Let's focus on the difference between average selling prices and the mill's scrap cost, and not one factor to the exclusion of the other.

Now, if you look at the numbers, there was obvious weakness in Poland in what was otherwise an excellent quarter.

Our domestic steel mills are performing admirably.

And fabrication happily has more up side.

I thought recycling's performance was particularly noteworthy, in light of the irrational kind of ferrous markets that we're in right now.

And marketing distribution continues its very consistent run.

Our LIFO reserve dropped a little bit.

The gross reserve right now is at 128 million.

We increased net earnings 1.5 million, or $0.02 per share this third quarter.

And if you track it month by month, what happened is that we had expense in March, we had expense in April, the turn around was all in May.

It was all in May as prices plunged.

So our $0.02 per share earnings increase compares to last year's third quarter, where we had a decrease of 16.3 million, or $0.27 per share.

Year-to-date, though, we still have a net expense of 23.4 million, or $0.38 per share versus last year's expense of 23.3 million or $0.39 per share.

If you look at gross margins, the domestic steel mill margins are pushing all-time highs.

The fabrication margins have expanded in each of the last four quarters as the finished goods compression has turned to expansion.

Copper tube is treading water.

There's an interesting article in the AMM today regarding high copper prices and plastic substitution.

I think it is consistent with what we have been saying over the last couple of quarters.

Ferrous scrap still is accounting for 65% of the recycling segment's profits.

And marketing and distribution margins are almost even with the prior quarter.

The depreciation and amortization for this third quarter was 18.9 million.

That means year-to-date, we're now at 56.8 million, and I would expect depreciation of about 77 million for the year.

During the quarter we had a very significant and very positive financing arrangement.

We re-did our revolver that backs our commercial paper.

We have increased it now to 400 million.

The term went from three to five years.

The covenant ratios are less restrictive.

We went from 3 to 2.5 interest coverage, and from 55 to 60% debt ratios.

All in, there were lower fees.

All together, our treasurer, Lou Federle, did a super job on that one.

If you look at the profit and loss statement, our SG&A has kind of an unusual twist.

It went down year to year.

The explanation is fairly straight forward, if you look at last year's operating profits quarter by quarter, you'll see that the third quarter of last year had a rather significant increase over the first two.

And in reaction to that, the discretionary items of bonuses and profit sharing went up.

You didn't have that same spike this year, and that's why one is actually lower than the other.

Same explanation as far as items are concerned.

If you look at SG&A, year-to-date we've increased about $60 million.

About 10 of that is attributable to Poland and Lofland being in our first quarter this year, when they weren't last year.

The remainder of it, substantially, again, is discretionary items of annual incentive compensation and profit sharing.

We expensed interest of about 7.6 million during this quarter.

I would anticipate about the same for the fourth quarter.

If you look at our EBITDA-to-interest coverage ratios, we're at 19 times coverage.

I think our bondholders are pretty safe.

Our networking capital is 787 million, that results in a current ratio of 1.9.

Our long-term debt-to-cap ratio is at barely over 30%.

We're in excellent shape.

Book value is at 14.33 a share.

Just a couple of quick share numbers -- our average diluted shares for the third quarter were 62,735,824.

That's 62,735,824.

Year-to-date for the nine months, that means it's 62,021,496.

That's 62,021,496.

And the actual shares outstanding, and this is what Stan mentioned regarding the fact that they have not yet been entered completely into the weighted average calculation for the diluted shares, the actual shares outstanding are only 58,748,644.

That's 58,748,644.

So all things being equal, of course, things are never equal, but if things kept the same, you would expect that the diluted shares would drop because of our stock buyback.

Capital expenditures for the third quarter were 27.7 million.

So that means year-to-date we're at 67.9.

Our budget for the year had been 130 million.

It's not likely we may hit quite that much.

I would target, perhaps, 100 million, plus or minus, right now for the year.

You did see in an earlier press release our stock repurchase information for the quarter, but just to go back over it, we bought back 1,944,610 shares.

That's 1,944,610.

Average price of 26.06.

That represented about 3% of the shares outstanding.

We bought that back over a four-week period of time.

In fact, that exhausted the authorization that was outstanding, but the Board gave us a new authorization of 2 million shares, all of which are now available as we sit here today.

Okay.

Thank you, Bill.

Just a few comments on the quarterly outlook.

I believe we covered it quite well in the press release, so I won't -- won't go over that.

My first point is while the global economic growth has moderated, it remains notably positive.

Our outlook for the fourth quarter of this year, as we said, remains quite positive.

However, the profit mix will vary by segment, and will vary from -- some from the third quarter.

The major market uncertainty is the price level of steel scrap.

Barring a further strengthening of the U.S. dollar, it's quite possible that the bottom has been hit for the ferrous scrap market.

And for the last several days, there seems to have been increasing public comments, including by consumers of steel scrap, that there's a likelihood that steel scrap has hit a bottom in this part of the cycle.

I might remind you, too, last year, at around this same time, we had a substantial -- when the steel market was as hot as I've ever seen it, we had a substantial price drop in the price of steel scrap.

So we've been at this a long time.

We don't know whether there's now some seasonal factor that in April, May, June, there's going to be a drop in the price of ferrous scrap, but the reality is it happened last year in the face of a very strong steel market, and it happened again this year, in what, clearly, is a less strong steel market.

In the short run China will continue to be a negative factor because its increased production is excessive compared with its steel consumption, but falling prices should lead many small Chinese producers to scale down production.

I might observe that even considering the stronger U.S. dollar recently, there is a disconnect that's hard to explain, and that's a disconnect between this increased Chinese production -- in fact, increased global production, but mainly in Asia -- increase -- still increased imports of iron ore into China and decreased prices for raw materials and supplies to the steel -- the Chinese steel industry.

And there are these occasions, I think, where we periodically see certain things going on there where we're just not quite sure that we can explain all of the price movements that are going on, some of which seem to contradict others.

Also, we have an unprecedented dichotomy between ferrous and nonferrous markets.

And our view would be that these will have to somehow correct to some extent over time, and that could easily happen by both moving -- by one going up and one going down, but it's an unusual dichotomy.

Be that as it may, and with whatever uncertainties there are, I will emphasize again, our outlook remains very positive, and we'll be happy to take your questions.

[OPERATOR INSTRUCTIONS.] Your first question comes from Chad McCurdy with Institutional Equity.

Stan, Bill, congratulations on an excellent quarter.

Thank you.

Thanks, Chad.

I'm curious, Stan, you mentioned that your business is typically counter cyclical.

What type of events would typically have an impact on your business?

You said that GM and the auto industry has no impact.

What types of events do impact you?

Well, yes, let me -- directly, they have no impact.

Certainly peripherally, if -- to the extent that they weaken the economy, that does have some impact on us.

But more important -- much more important markets for us would be the non-residential construction markets, both private and public -- office building; apartment building, which is now actually a fairly hot market; commercial construction; low-rise, medium-rise construction.

In the public sector, we all think of the highway and bridge program which is quite major for us, but also educational construction of educational buildings.

So these are all important markets for us.

Our fence post business would be -- agricultural and ranching -- indirectly.

Again, like the oil and gas, would be much more indirect than direct.

I mean, globally, of course, with our marketing and distribution business, we, in general, depend on how the global economy is doing and how specific parts of it are doing, particularly Asia and Europe.

Okay.

Well, and specifically focusing on the Asia market, I note -- you mentioned China a couple times, I was just curious, are you seeing any signs that we're going to start seeing steel exports coming out of China or India?

Murray, you want to -- I'll let --

You mean to the U.S. market?

If you mean to the U.S. market, I mean, there's some products coming from China, like wire rod.

We believe that will be subject to anti-dumping shortly because of the quantities coming here.

With rebar, which we're strong in, there's 133% dumping duty on that from some years ago, so you won't see any rebar.

We haven't seen, obviously, any rebar into this market.

India, we're not seeing very much here.

We are in flat products trading in Asia, and we're buying some galvanized product from India for the Australian market, and also back into Europe, but not into the U.S. at this stage.

And I would say, in general, based on the statistics we've seen, and what we're hearing, just in general, I think, out of China, while they probably still are a net exporter, these are not major -- it's not a major, major swing, and they do seem to be consuming a lot of the steel within China that they're producing.

The Chinese economy remains quite strong.

The last number I saw in industrial production was an increase of 16%.

I mean, these are pretty extraordinary numbers still.

The big -- the issue, as I said, there's no question that Chinese production has increased, again, very rapidly year-to-year, and there's -- they are going into the summer months, where they typically have major power issues, so that tends to slow their production.

And the point I think we're trying to make is that steps taken by the Chinese government, as it's playing out, are having a more -- more short-term impact is negative because it's slowed certain consuming areas more rapidly than the increase in production, because a lot of these projects were underway.

But it's pretty clear as we've been pointing out in recent quarters that the Central Government is moving to consolidate the Chinese steel industry will favor the big steel producers in China, will encourage mergers, and consolidation of the industry in China.

Okay.

My last question is about the Poland operation.

When do you think we're going to see the full impact of that operation on earnings?

Well, we saw it right -- right out of the get-go.

I think we commented last quarter, maybe the start in Poland was too good for our own benefit.

We didn't realize certain things, like how severe the winters can be.

But the first three-quarters that we operated Poland were just phenomenal, and then we had, what, a mediocre quarter, Murray, and then a more difficult quarter.

But, so we've already seen some of the impact, and we've taken steps, particularly in areas like scrap procurement to improve our position there, and, Murray, you want to -- ?

Certainly this fourth quarter will be much better in Poland.

We were there last week.

The volumes are well up.

Bear in mind, finished goods prices, rebar, et cetera, have dropped off.

And, certainly, the construction industry in Germany is very weak.

And Germany is right next to Poland, and so there's some carry-over there.

But we expect this fourth quarter to be much better.

Okay.

Thank you.

Your next question comes from John Tumazos with Prudential.

Congratulations on the results.

And if it's any consolation, the market seems to disbelieve copper, nickel, or molybdenum even more than steel.

Thank you, John.

I've noticed that, too.

Two questions.

First, based on what you've procured to date or bid on, what range might the cost of scrap used in your mills be in the current August quarter?

Let me -- let me check a number before I answer that, John.

I -- I think it's probably going to be -- would be more like $130 a short ton.

Depending -- that would assume there's no major change in July and August from June.

So when we read American Metal Market, Number 1 Heavy Melt in St. Louis at $35, I shouldn't be renting a U-Haul and driving west?

Correct.

I don't know, yes, they come out with some numbers that just boggles the mind.

The regional differentials are bigger than freight differentials.

Right -- well, I don't know about that.

The composite, as you know, is around a hundred -- Number -- for Number --

125.

Well, about 120, actually, I think.

Again, with that number I gave you would be more like a short ton.

Not more like, that would be a short ton.

And that's including freight to your mills?

Yes.

Second question.

You opine that ferrous and nonferrous dynamics should equalize, and Chinese steel output is up 27% year-to-date, and the IISI estimates their consumption rise is 10.6.

And it seems like they've built too many steel mills.

And I guess I'm comfortable with the idea of 2 or $300 hot-rolled or rebar because they make too much steel.

The Chilean copper output unexpectedly fell 6.5% in April.

And there have been a wide array -- I can only identify two large copper mines that produced normally so far this year.

And Chinese moly output fell 20% or so, or by maybe 5% of world supply.

And there's some other tightness in particular nonferrous metals.

Are you essentially expecting a supply response in the nonferrous upward and some steel output cuts much further to balance the two markets?

Because it seems to me like the -- just the -- the Chinese don't have copper and nickel, and are producing less moly, and they're making too much steel, and it's distorting the markets.

They don't, John, but they also don't have enough iron ore, and they don't have enough scrap.

But, I don't think --

At these prices, you're going to give them some.

Well, I don't -- I don't think I said they would equalize.

I think I said -- or, certainly, my own feeling is they'll move back closer together, the nonferrous and the ferrous, because some of the same factors are still involved, particular with the Chinese.

And there's no question that Chinese periodically do crazy things.

For example, importing very high priced manganese ore and exporting ferromanganese at low prices.

It's just so -- it's not always rational, but, yes, I think the supply factors respond in both.

And I think, obviously, I'm a [expletive] of a lot less bearish than you are on what's going to happen with the steel market.

And the Chinese have built too many mills, but we're -- our bet's with the Central Government of China to get that under control.

As well as the fact that China, as I said, it got tremendous -- continues with tremendous growth, and tremendous consumption.

And, yes, I do think on the nonferrous, there will be some -- I'm bullish on nonferrous.

It's not that I'm bearish on nonferrous, I'm just saying that this is quite an extraordinary difference now.

Thank you.

Sure.

Your next question comes Samil Vetarder from Bramwell Capital Management.

Hi.

Good numbers.

Good quarter.

In terms of on the end market that you supply, you said that the markets are strong, but one of the comments that was in the press release, that there would be some down time at the mills during the quarter to control inventories.

Could you give us a sense what you're thinking in this respect?

Where, why you want to control inventories here?

Well, we still -- as I said, there -- and this is -- I'd have to call another dichotomy, that I think all the steel producers are looking at right now, to different degrees, depending on what your end use markets are, but the fact is, in anticipation of lower prices, we've got the buyers holding off as late as they can.

My point would be if the end use markets continued to be good, where ours are, eventually that comes to an end.

And then the buyers come back in the market, and they can come back in fairly quickly if they, in fact, then have gone from having too much inventory to too little inventory, which we never know until after the fact.

And they, in this case, being largely where distributors in the U.S., it'd be principally service centers are involved with -- if they're involved with a certain product.

So it's -- there's an -- because of the anticipation of lower prices, there's more cautious buying.

At some point that reverses.

We've seen this before.

We'll -- you see it in both directions.

We're -- where you're then in a rising market, get overbuying, which leads to excessive inventories.

But that's why -- I mean, the scrap market, for sure, is at a point where it can revert -- we've seen this, it can reverse very, very quickly.

And where we -- what seems to have disappeared almost, particularly in the ferrous scrap market, is we used to sort of get an intervening month, where there'd be a kind of a lull, and then it would either, depending which direction it's going, up or down, it would then move in that direction.

Now it's just gyrates.

It can just suddenly reverse course and go up dramatically.

And follow-up on that is do you like to place a time frame on this?

Or do you have a sense of time frame when this may reverse itself, or it's still an unknown factor here?

No, I don't know, Murray, you want to -- ?

We think there could be a modest rebound around September, October period, possibly earlier here in the U.S., but internationally, around September-October, certainly in Europe with their summer holidays, we don't see anything happening before September.

Okay.

Just a simple housekeeping question.

This time you did not release the average selling price for finished goods, but, could just I get that number, please?

Yes, we didn't do -- we just gave the average selling price.

We don't have that right here.

Okay.

Thanks.

Sure.

Your next question comes from Jonathan Goldberg with Highline Capital Management.

Hey, guys.

Congrats on the quarter.

Thank you.

Are you still out on the ledge?

I'm back -- I'm back just for the conference call.

All right.

Just two quick questions.

Maybe you could speak to your sense of distributor inventory levels for your product, specifically, for rebar and for structurals?

And if you see that as at all different from where your sense of their stocks of sheet is?

Yes, we think we're in much better shape.

On rebar they're not really a factor.

Of course, you have the fab shops would have certain inventory, but not much.

I mean, fab shops tend to buy what they need, and then there can be some unsold imports, but that's not likely to be very much.

On merchant bar, the service centers are much more of a factor.

But we think those numbers are much more under control.

One thing, again, to keep in mind, in terms of excesses, if you will, when this cycle started, our products were roughly about $250 a short ton, went up to, let's say, 500, in some cases, certain products above -- somewhat above 500, but not -- but hot-rolled coil, by contrast, I think the low point was probably as low as $185 a short ton, went up to, I don't know, maybe 800, or [expletive] close to it.

So it just was more vulnerable in that sense, for having -- having made a much, much greater move than the long products did.

But we think the -- there still is some -- and our product theory, is there's still some excess inventories, but those are being worked down.

Okay.

No, I mean, your metal spread in Q3 was actually -- at least domestic -- for the domestic mills, was up versus Q2.

Given how much scrap has fallen off and relative to kind of to what extent pricing is coming off, would you expect the metal spread to be higher in Q4 than in Q3?

Yes.

Okay.

Great.

And then just last question on working capital.

Do you anticipate with some of the declines in scrap that you're going to get some working capital relief?

And maybe can just talk about timing and magnitude.

Yes, in fact, Jonathan, that has already occurred.

You'd have to do the subtraction, but I went ahead I'll give you the highlights.

If you look at the third quarter cash flow statement standing by itself, which, of course is not in the press release, but if you do the mathematics, you'll see that our net cash from operating activities -- so after changes in working capital -- was over 60 million this quarter.

So you are seeing with the effect of the lower pricing inventory coming down, our payables increased.

Anyway, good earnings depreciation.

You know what goes into it.

But all together, the cash generated from operating activities was over 60 million.

Okay.

And just -- would you expect that to kind of continue or even get bigger going forward?

All things being equal, if pricing stays where it is, yes, I would say that we could probably look at that same level.

I really haven't given it enough detailed thought, but you know the earnings are going to be there, so, I've given you a depreciation.

You know what the outlook for the quarter is going to be, so you can probably figure there's pushing 90-million-plus just from depreciation and net earnings.

And so we ought to get a little bit more out of working capital as well.

Okay.

Great.

Thanks a lot.

Okay.

[OPERATOR INSTRUCTIONS.] Your next question comes from Barry Vogel with Barry Vogel & Associates.

Good afternoon, gentlemen.

Barry.

How are you?

You weren't first.

You're not as quick on the --

I just wanted to see what you were going to say.

Okay.

I have three questions.

You answered -- well, I had four questions, but one was answered.

Stan, did I get that right, that you expect a higher metal margin fourth quarter versus third quarter?

Yes.

Okay.

Seasonally the fab profits -- and correct me if I'm wrong -- do they get better in the fourth quarter historically than the third quarter?

They should, yes, but in particular, in this quarter, the answer ought to be yes.

So you're expecting higher fab products in the fourth quarter versus third quarter?

That would be our anticipation.

Stan mentioned in his comments that there are always shifts in segment profitability.

That would be one of them, that we would think that the fabricators should do better.

Okay.

And in terms of the part -- I'm sorry, as far as highway lettings, and I guess Texas is the most important state for that -- for you guys?

Yes.

It looks to me like the Transportation Bill is a done deal, one way or the other.

Should that -- when they actually sign it, do you think it will help you, or you think it's just assumed by the buyers that this will be signed?

It's not assumed at all.

It will definitely help us, but, realistically, that impact will be fiscal 2006, 2007.

Also, depending on this -- part of the hold-up is this -- is the states arguing with each other over a revised allocation or distribution to each state, which one way or another also should be the states in which we're active should do better.

Okay.

They include California.

There are a number of states that are important to us.

Right.

Now, as far as overall non-residential demand, which is the driver for a lot of your business, again, the same type of question.

Should non-residential demand be higher seasonally in the fourth quarter than the third?

And do you think that that will happen this year?

Yes, but that's -- unlike the highway -- the highway bill is an event that to some degree transforms the market.

The others are a lot of -- composed of many, many projects.

Well, the highway probably is, too, but I'm saying it's -- with non -- with the other non-residential construction, there's no single event that has quite that impact.

Okay.

Now, as far as your share buyback program, I must congratulate you on stepping up aggressively last quarter, even though you had these periods where you couldn't do anything, and so you spent $50 million.

Given the fact that the markets, generally speaking, are not enthralled with steel-related companies, notwithstanding the fact you're not a sheet producer, if the stock stays at or below where it is today, and there's still a lot of skepticism about the future profitability of the steel industry -- of course, I don't think it has anything to do with what's happening today.

I think it's fears about tomorrow.

Is it conceivable that the volume is there and the price is below where you've bought before it?

And I know you have the money to do it.

That would you take the whole authorization and do it in the fourth quarter, the current authorization of 2 million shares?

Barry, I think anything is possible.

No, we know that, Bill.

No, I mean, you stepped up before, you got a new authorization.

Your CapEx is going to be less than you had projected.

You're generating excess cash.

You haven't made an acquisition recently, and they don't happen every night.

So why wouldn't you, if the opportunity presented itself to step up again?

What would stop you from stepping up?

Barry, that's obviously a question that we're not going to go into any detail on.

I mean, this is a strategic call on behalf of the Company, and we've always been opportunistic, and we will do the right thing.

I'm sure you will.

See you tomorrow morning, God willing.

All right.

And will you please be first this time?

I was a little concerned.

Okay.

Hey, this wasn't Barry's question, but Samil had asked about average prices on finished goods.

Merchants were -- this is the third quarter -- were around 515, give or take some, and rebar was around 440, give or take some.

Obviously, the number in the press release includes some billets in it and is a mix of the two combined.

Thank you.

Okay, Barry.

At this time, there are no further questions.

Mr. Rabin, are there any closing remarks?

Just that we will be in New York the next couple of days, then Chicago.

We apologize to Boston.

We'll get to you next to go around.

And we will be in San Francisco early next week, and look forward to seeing those of you whom we will.

And we thank all of you for being part of this conference call.

That concludes today's Commercial Metals Company third quarter 2005 earnings conference call.

You may now disconnect.