Core Natural Resources Inc (CNR) 2007 Q1 法說會逐字稿

Good morning, and welcome to this NCI Building Systems conferee call to review the Company's results for the first quarter of fiscal 2007. This call is being recorded, and a telephonic reply may be accessed through March 8th by dialing 719-457-0820 and entering access code 962-0814. The replay will also be available at NCI's web site, which is ncilp.com.

The first-quarter results were issued yesterday in a press release that has been covered by the financial media. The release has also been issued advising of the accessibility of this conferee call on a listen-only basis over the Internet.

Some statements made in this conferee call may be forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that include projections, expectations or beliefs about future events or results or otherwise are not statements of historical fact. Actual performance of the Company may differ from that projected in such statements.

Investors should refer to statements filed by the Company with the Securities and Exchange Commission and in yesterday's news release for a discussion of the factors that could affect NCI's operations in the forward-looking statements made in this call.

To the extent any non-GAAP financial measures are discussed in today's call, you may also find a reconciliation of that measure to the most directly comparable financial measure calculated according to GAAP on the Company's web site by following the news link to see yesterday's news release.

The information being provided today is of this date only, and NCI expressly disclaims any obligation to release publicly any updates or revisions to these forward-looking statements to reflect any changes in expectations.

At this time, I'd like to turn the call over to NCI's President and Chief Executive Officer, Mr. Norm Chambers. Please go ahead, sir.

Thank you, Scott, and good morning, everyone. Welcome to our first-quarter 2007 conference call. I am pleased to have with me this morning A.R. Ginn, our Chairman; Frances Hawes, our Chief Financial Officer; Ken Maddox, our Executive Vice President of Administration, and Mark Johnson, our Vice President of Accounting.

I will provide color to our first-quarter results and more importantly explain the opportunities and challenges we face in the second quarter and the second half of our fiscal year. Then we will be happy to take your questions.

Before I go into detail about results forecasted, it is important for you to know that the non-residential market appears very healthy, even though we are off to a slow start in both our first and part of our second quarters which, falling primarily in the winter months, is the seasonally slowest part of our fiscal year. The most recent architect billing index, published February 21, 2007, states that January reflected the third consecutive month of growth in design services for institutional, commercial and industrial buildings.

The American Institute of Architects further states the strength of the ABI readings could even portend market growth above consensus expectations.

Now, the best evidence for this is that our quoting activity is very strong across all of our businesses and geographic areas, with particular emphasis in the western part of the US. In fact, our backlog in February alone grew by nearly 5%. We would expect to see further evidence of this very encouraging business environment by the end of our second quarter, and reflected in our backlog and guidance at that time.

While we believe that the demand for nonresidential construction products will increase sufficiently to overcome the seasonality of the first and second quarters, we have instituted an overhead reduction plan in January that we believe will provide cost reduction from our original budget that was the basis of our annual guidance. We believe we can achieve a reduction of between 15 and $20 million in this fiscal year.

We remain committed to our capital expenditure plan to improve plant efficiencies through greater automation, a transfer of RCC engineering systems to NCI building operations, and our Northwest U.S. expansion through recently acquired Garco.

In addition to our overhead reduction, we will reduce our overall capital expenditure plan from $60 million to $50 million. This should contribute to our funding of debt reduction and share repurchase, as appropriate.

Turning now to our results for the first quarter, let me start by saying that our results were within our guidance. The seasonally slower market conditions were in line with our expectations, while the winter weather was favorable earlier, January and February storms have had a negative impact on shipments. We saw year-on-year improved margins and earnings in our coating and building group. We are pleased with those improvements.

Our components group faced very difficult market conditions due to excess inventory in their market and severe pricing pressure, while our components group sees improvement in the second quarter, February will certainly reflect a continuation of challenging market conditions they experienced in the first quarter due to excess inventory in their market.

I will now review each of our business segments for third party sales.

Coatings group. Our coatings group earned $222,000 more on 12.6 million lower revenue compared to the first quarter of 2006. Margins improved to 28% compared to 15% to the prior year. Third-party revenue was negatively impacted by a reduction in package sales, which includes steel coils. But we do earn good margins through paint line efficiencies on tolling work, which dominated our third-party sales mix. Overall, coatings tons shipped were up 3.5%.

Third-party tons shipped were down 11%, and intersegment tons largely due to RCC light gauge usage were up 16%. This, as we have said before, is one of the early synergies we expected from the acquisition of RCC. We expect lower revenue from our coatings group as a result of tolling sales mix to continue with solid margins into the second quarter. The mix of third-party revenue will likely shift to greater levels of package sales in the second half of our fiscal year, as demand strips out inventory overhang in the construction market. If that occurs, revenues and income would increase and margin percentage would reduce, somewhat.

Components. Our components group maintained its commercial discipline in terms of holding their margin per ton, but this action in part resulted in shipping 20% fewer tons than the same period last year. This low utilization of their manufacturing facilities at 55% level, greatly affected their overall margins, reducing operating margins on third-party sales to 9% from 14% for the first quarter of 2006.

It should be noted that in retrospect we benefited in Q1, 2006, from both a rapidly expanding nonresidential sector and shipping shade and shelter components to hurricane-affected areas. 43% of the decrease in tons shipped between Q1, 2006 and Q1, 2007 can be pointed to the benefit we received in 2006 from shipments to the hurricane-affected states. We expect to resume increased shipments to these same areas in the second half of the fiscal year, as insurance money is more readily available for the reconstruction effort.

By way of comparison, McGraw-Hill reported nonresidential monthly activity measured in square feet, dropped 18.3% from October, 2006 through January, 2007 -- the period that encompassed our first-quarter results.

Going forward, we expect growth initiatives in retail, small buildings sold through Metal Depots, steelbuilding.com and Heritage to pick up in the second half of our fiscal year, in addition to robust demand for our components products as the construction season gets into full swing in our third and fourth quarters.

While admittedly components is off to a slow start, we expect growth in revenues in 2007 over 2006, and a return to historical margin levels on third-party sales in the 13 to 16% range for the fiscal year.

Buildings group. Our buildings group reported an increase of $98.2 million in revenue over the same quarter last year. RCC had an excellent quarter, and their revenue overcame a shortfall in our same-store sales. Operating income for the buildings group more than doubled, with margin expansion to 10%, which was in part the benefit of synergies resulting from our centralized purchasing and our integrated business model. Our buildings group continues to focus on growing their business through their builder network, while improving their operating margins to return to the 10 to 12% levels on a sustainable basis.

Backlog in the quarter ended at 365 million, up from 185 million at the end of Q1, 2006. This was the result of RCC and growth in our same-store backlog. We believe that a backlog of 365 million provides a good foundation for the next six months. Further, as business activity picks up, as we come out of our seasonally slow second quarter, our backlog should continue to grow, supporting our belief that the second half of our fiscal year will be very strong. And as I've said, we've seen evidence of that in February.

We have observed in past years that when industrial plant utilization is high and the economic growth is positive, as is the case today, we see a disproportionate amount of larger, complex buildings that reflect larger plant expansion and new plant construction. That is the environment we have to date, and is reflected in our backlog.

As we have in the past, we will target lower-complexity buildings as we go forward, to build our backlog.

Finally, at the end of January, we completed the acquisition of Garco, located in Spokane, Washington. This accretive acquisition is a very good company -- of a very good company, positions us well to grow our business in the northwest part of the U.S. and West Canada. We are very pleased to have the men and women of Garco as part of the NCI family.

Corporate. During and following the quarter, we made the decision to purchase lower-cost foreign steel that was available in the market. This raised our inventory to 188 million at the end of Q1 versus 160 million at year-end. We have continued to purchase lower-cost steel, because we believe it will improve our competitive position in the second half of our fiscal year.

Additionally, we will move that inventory into work in-process as we paint steel in preparation for a seasonally strong second half of our fiscal year.

During the second half of our fiscal year, we anticipate plant utilization to approach 90%, up from the 63% levels we achieved in the first quarter.

As a result of purchasing additional inventory, we did not repay debt as planned in the first quarter and in fact we increased our debt by $20 million through our revolving loan facility.

Nonetheless, our debt at the end of the first quarter was a manageable 2.8 times our trailing 12 months adjusted EBITDA. We expect to achieve inventory reduction, cash generation and debt repayment in Q2, 2007 and beyond.

In summary, our first-quarter results were in line with our plan, even though our components group results were below plan, due to lower-than-expected plant utilization resulting from our decision to maintain commercial discipline at the expense of market share in the quarter. We also had a swing in interest income and interest expense, that had a negative $5.2 million effect on earnings in the first quarter compared to the same period last year, of which 4.1 million was the result of purchasing RCC utilizing the $200 million in cash that we had had on the balance sheet in Q1, 2006, and $1.1 million that is the result of purchasing lower-cost steel in the quarter.

Our second quarter is likely to be flat with our first quarter due to conditions in our components market continuing into the second quarter, a shortage of lower-complexity buildings in our backlog mix, and very poor weather conditions. Improvement through the second quarter of these factors would have a beneficial impact on the quarter. But based on the visibility today, our guidance for Q2, 2007 is $0.50 to $0.55.

Based on overall market conditions reflected by the American Institute of Architects and McGraw-Hill, we expect the second half of the fiscal year will have very strong demand for our low-rise nonresidential construction products. Supporting the improvement in market conditions, our backlog increased by nearly 5% by approximately $18 million to $380 million in February. If we add Garco, our backlog is $408 million.

We confirm our guidance of $4.55 to $4.80 because of the steps we are taking to manage our costs, and because of the improvement in market conditions.

Now, we would be happy to take your questions.

Thank you, the question-and-answer session will be conducted electronically. (OPERATOR INSTRUCTIONS). Arnie Ursaner, CJS Securities.

A quick question to ask you. Obviously, to maintain your guidance for the year, it seems to me the biggest delta is the incremental cost reductions of 15 to 20 million. A), I want to make sure that is, in fact, correct, and B), if you could give us a little more feel -- it seems like you would have to cut a heck of a lot of headcount to create a $15 million reduction in G&A. Can you give us a little better feel for some of the components of where you do expect to cut costs?

Sure. You know, again, just so everyone is clear, this is the SG&A level we had, which was the basis for our guidance, our annual guidance, okay? So to some extent we had growth in that, which we will not now experience; we will hold back on that -- new hirings.

But to be sure, there is some rationalization in our backoffice piece between Robertson-Ceco and ourselves, which has gone into effect. We've trimmed headcount in all of our facilities from corporate all the way down and watching our costs very closely on things like advertising.

We instituted this review in December. Each of the presidents of business units in functional areas came in and laid out their plan, took actions immediately in January. So we didn't really see any benefit so to speak in the quarter, because with the reductions in severance costs they about washed. But going forward, we expect that we will capture as I said between 15 and $20 million in this fiscal year.

Okay, and the final comment regarding your guidance, you've now indicated you are including Garco. Can you give us a feel for sort of the revenue and margin contribution we should expect for Garco, and which segment it would be (multiple speakers) --?

It is going to be in our buildings sector, and we are expecting about $0.06 of accretion this year, on something -- probably $30 million-plus in revenue.

Got it. And just a technical question. Your share repurchase authorization, you've had one previously. Is this just an incremental million, or does this re-up you back to 1 million? Just remind us what is the exact status of your repurchase plan?

Yes, I believe we have about 400,000 shares remaining on the previous, and this is an additional 1 million shares on top of that.

Thank you very much.

Michael Cox, Piper Jaffray.

My first question is on in the backlog I was wondering if you could give the amount that would be attributable to RCC, as well as the -- a little more granularity around the growth in the Engineered Building Systems attributable to RCC in the quarter?

Well, we purposely aren't breaking our Robertson-Ceco out to any great extent. But the backlog is about 50-50. We had a little growth earlier in our same-store backlog, and we are seeing some growth most recently from Robertson-Ceco. So it's about 50-50.

Where we are seeing growth -- you know, it's very interesting. In fact, ask to get AR's opinion as well, but we are seeing a pickup in manufacturing buildings and particularly buildings with cranes. And that's a very good spot for us. We are seeing pickup in aviation, we are seeing pickup in commercial, and it's largely driven this time in the Western part of the country. But we are seeing some favorable signs in bidding and quoting in the Central, the Southeast and the Northeast as well.

Norm, I concur with what you're saying there. I don't think I can add much to that. It's just, you know, our backlog has grown like Norm said substantially in the last month.

Okay, that's very helpful. In terms of the customer inventory levels in the component segment, for those to be moving lower is that a function of moving into a seasonally stronger period, and seeing that flow through the system, or is there something structurally that changed?

No, I think that the structural aspects are somewhat similar to 2005, and we started seeing and reported this in the fourth quarter of 2006. We can see it in components. And most people know, our components group doesn't benefit from having a backlog. They are very, very quick turn. They sell the product and ship it in the same week.

So what we have seen is that they experience these market conditions, and there was a lot of over-steel production by the steel producers in the second half of 2006, which was inventory that was lingering for our fourth quarter and our first quarter. But I will say that we've seen that flesh out, we can kind of see it in the daily numbers, and we have a very good feeling for looking at the second part of the second quarter. But clearly February was a continuation of what we've seen in the first quarter and frankly the fourth quarter.

Okay. My last question is on the steel prices. You had mentioned in the press release that you were getting indications that those would be moving higher. I was wondering if you could give us a sense of magnitude of that.

Yes, I mean we clearly are seeing -- and we are seeing it evidently with people like Nucor who are raising their prices and our discussions and negotiations with other steel suppliers. While we have gotten some benefit from purchasing foreign steel and, in fact, our foreign steel purchases are probably going to approach 30% this year, up from what normally is in the 20 to 25% range, but we are expecting to see somewhere between a 4 and 12% rise in steel prices here in our third and fourth quarters.

We traditionally manage that quite well. You know, I certainly am not in favor of steel price increases. But at the end of the day we tend to manage that fairly well.

David Yuschak, Sanders Morris Harris.

A question for you on your program to reduce costs 15 to 25 by the end of the fiscal year. You know, we remain very positive about the outlook for nonresidential construction, yet the guidance point of view, I'm just wondering if you can help us out -- this 15 to 20, if we do see a strong environment for nonres spending like we think is out there, isn't this 15 to 20 incremental to your guidance if operationally you execute on the potential business that could be out there?

I would say, Dave, that's one of the concerns that we had, and I can only answer your question really in two ways. In theory it would be incremental. The issue is going to be as the second half comes up, us holding the discipline to keep our costs in line and not rehire or start to increase our SG&A, and A.R. has had a wonderful expression that the guys around here know, and that's putting 15 pounds in a 5 pound bag, so we're going to try to maintain that level of discipline and not see an increase. But we will manage that through, and one could argue that we've taken this reduction to protect the guidance that we've given and there will be those that argue that say there is upside to the guidance we have given. You know, you'll have to make your own (multiple speakers) --.

Well, that's where I'm coming from. If we are in fact -- the issue you have is, if, in fact, we are in a very positive environment, are we not cutting away some muscle here to take care of that potential because, as you just indicated, there may be that tendency to hire back if business is robust? And that's the confusion I have when you think about where you are today versus the nonresidential business is that, can you have the resources to do that if we get that while you're cutting at the same time?

Well, we have been absolutely clear with our guys, and they with us, that we're still hiring engineering people, okay? Even with these cuts, we are trying to cut in ways that are appropriate. Lots of this is discretionary spending, so we definitely have tried not to cut into the muscle, and I don't think we have.

Okay. Now give us some help, too, on your second-quarter guidance versus what you thought it could be from budget when you had to change your guidance in the second quarter. Could you give us an idea where those variances were? Because the consensus for the quarter is around $0.89, $0.90 for the second quarter. I don't know what you guys may have been looking for, but I'd like to at least get a sense from you where the variances were versus what you actually produced in (inaudible).

Okay. Our first quarter was a percent lower than our budget in terms of bottom line, okay? A little more than a percent.

Our second quarter would be probably closer to 20% below our budget, okay? And that budget again was based on an SG&A level that we now say will be 15 or $20 million less, and that's the variables there.

Plus I would say that if we can continue to see the improvement in margins that we have seen in the building side, then that is moving in a positive direction as well, and I know the men and women there are working very hard on that.

Now, one more question. On the building system side, are your operating margins -- because it was a good quarter from the building system side -- are you're getting positive variances there in the first quarter, and do you look like you can get positive variances there in the second quarter? Because ultimately that's where the leverage is in the business now with Robertson-Ceco in the fold, that's where you business model is moving.

You see it in two areas, Dave. You see it in the coating part of the business, and you see it in the buildings piece. And both A.R. and I were with our metallic builders a week ago, and we are very encouraged with what we heard. The very positive reactions to the improvement in the processes and what's going on on the NCI side of the buildings group. We think the team there is off to a great start, we are very pleased with their focus, and while I can never guarantee anything, I can tell you that their behavior is consistent with good results.

Thank you very much.

Matt McGeary, Sentinel Asset Management.

I wonder, when you made your comments about in the past you've seen pretty strong business environment when the economy is moving forward and capacity utilization is pretty high in the manufacturing sector, I have also heard a lot of manufacturers talk about their hesitancy to increase roof line, trying to use more efficient manufacturing techniques, whether its lean or whatever.

I'm wondering how much of that have you seen. I mean, are you seeing -- you know, you commented that business is good and quotings are strong; are you getting any feel that your customers are holding back a bit and maybe being less aggressive than you might expect, given the macroenvironment?

You know, we are not seeing that. In fact, as I've said, we have looked at this in different periods, and it is kind of interesting because people that have been on these calls for a number of years kind of know we talk about this stuff, and we are well-positioned for any building, manufacturing or warehousing that has a crane. We're in really good position on those kinds of buildings, and the amount of buildings that we're seeing in our backlog that are industrial and commercial is still very strong. In fact, we are at about 72% of our commercial industrial types of buildings. And our institutional is about 20% in the quarter, and our agricultural is about 7.5%.

And what we are seeing in this low-rise construction is it probably lends itself more to growth in the nonresidential piece as we see it now, and this is the five, really three stories and less.

So my answer it is that we are seeing, for the kinds of buildings that we build, very good demand.

John Diffendal, BB&T Capital Markets.

Norm, tell us how -- maybe update us a little bit on the synergies with Robertson-Ceco and especially how the 15 to $20 million cost cuts interplay with that going forward?

Okay, first with the last. You know, we have taken a view that we would proceed through 2006 by trying to look at all the businesses and look for some cost synergies, and frankly, we've never made much about this. Because there really isn't a lot of cost synergies between -- to do with the acquisition. But, we've been able to rationalize some things on the IT side and the backoffice side that we think is just more efficient. So we've taken those steps.

On the positive side, you know we continue to be incredibly pleased with the fact that the builders of Robertson-Ceco are remaining with them and, in fact, the Robertson-Ceco team are adding to their builder list. We on the NCI side are doing the same. So we've seen none of the attrition that we had originally modeled as a potential negative to the deal.

We have definitely seen the evidence of our coating work that we're doing; we have still to get into the heavier-gauge coating work which will occur in the second quarter and moving forward. The procurement side, we are seeing some benefits from. So in terms of the low range of the guidance, I mean we are clearly into achieving those, and as I say, we will see that evidenced both in our margins and our coatings margins.

John, Star just had their builder meeting this last week, and they're really excited about all these different components that MBCI has to offer all the architectural products and different (inaudible) roof systems and so on and so forth. And we've had a project underway since last fall and we're getting all of the Robertson-Ceco builders in the computer system so that they can order directly from MBCI, and we are about 50% through with getting all their builders set up in the computer system.

And so there's a lot of excitement with Star and with Ceco about -- with all the new products that they have available to them.

So, you mentioned the low end, which I seem to remember was 6 million. The upper end of the synergy range was like 25 million. Is there any reason to think that the mid to upper part of that range is still not attainable?

Oh, no, what we are saying is on the engineering side of this and the hub-and-spokers, which is the product rationalization, we continue to work and we haven't cut back on any capital expenditure. You don't get any of that done. That is absolutely full-steam ahead. And, in fact, we now have the engineering systems into just about all of our operation units, doing the latest stages of testing and runs, and we will be rolling that out on schedule, on plan starting in April and then phasing that into our operations carefully during the busiest part of our season. But that's moving very well. The rationalization is moving well. So we believe that we are absolutely still focused on getting the top range or more of that guidance.

And of the 15 to 20 million, you seem to indicate is it all SG&A? Is none of this cost of goods sold or coming in that line? It's pure SG&A?

Pure SG&A.

Okay. And refresh us -- you seem to indicate in the release that you are still targeting debt reduction along the same lines, and you indicated you actually added a little debt in the quarter. But my memory was the goal for this year was still about $100 million debt reduction. Is that still the number even though you have increased the share-repurchase authorization?

I think the way we would answer that is the cash flows that will be free by the end of this year hasn't really changed. As a result, we are looking at the possibility of share repurchase as you saw in the press release and the fact of repaying down debt. So we are going to be studying and doing an analysis of what's the best use of that cash. But the cash we're talking about in the fourth quarter hasn't really been modified at this point in time.

So it's going to be just some sort of mix of the two, along with same sort of number that was available to you?

That's correct.

Michael Corelli, Barry Vogel & Associates.

A question about the cost-cutting and the guidance. The 15 to 20 million, are you saying that this is all-new versus what you are assuming before in your guidance, and that all of it is going to come through in this fiscal year?

Yes to both.

Okay. And I mean, as far as your guidance is concerned, obviously you are sounding like you are seeing some signs of optimism. But you are projecting an increase on an apples-to-apples basis of about 40 to 50% in earnings per share in the back half of the year. It sounds like a very aggressive number. I mean, what has given you such strong confidence as you could achieve those kind of numbers with a relatively disappointing first half of the year?

Just the two things I said. First of all, the level of business activity which will translate into sales increases for the second half, and that's evidenced, in fact, not only by the $383 million that we've taken into backlog, but the addition of Garco, which gets us up to over 400 million, okay? That plus the cost reductions and managing our costs. And if we want to throw in a third piece, it's again expecting to see a return to sustainable levels of margin in our buildings group of 10 to 12%.

Okay. Thank you.

Cliff Walsh, Sidoti.

Norm, can you comment on kind of -- it seems like this inventory situation on the component side maybe is taking a little bit longer than we expected to clear up. You know, what's your confidence level that this will work its way through kind of in the near-term and not be a problem as we head into the seasonal -- seasonally strong construction months?

Well, it is one of the major reasons why our guidance for the second quarter is where it is. We want to -- we know that February has continued seeing the same market conditions that we saw in the first quarter, but all of the nearly 400 people involved in commercial activities in the components group that are out in the marketplace, really do see good opportunities in the short term. So there will be those that argue to say we're being conservative for the second quarter; I won't comment on that. But I will say that we're doing everything we can -- and will -- to ratchet up the activity as demand begins to pick up.

The one thing for those that have been around us, we know that the components business is very well-run. It's like a turbocharger; it can go from 0 to 60 virtually the next day, and that quick turn, that discipline of manufacturing is poised to go, and as soon as they get a chance, they will do well.

Okay. And in terms of kind of use of free cash and looking at share repurchases and debt paydown, are there smaller acquisitions out there that you might be looking at, or are we just kind of focusing more internally at this point?

That's a good question, and I have to be careful how I answer this because I don't want to set off the alarm bells, but we are always -- always being presented opportunities, okay? And we are sticking to our strategy, which A.R. put in place at the beginning of 2004. We have expenditure for our systems, for our engineering systems, but we have and will acquire companies when we think it's the right fit. So it's important for people know that while we don't have anything in the crosshairs now, we continue to look and review. We are very picky.

We took our time to look at what we wanted to do in the Northwest; we compared that to doing a greenfield site, we compared it to other companies that we had a chance to talk with. And we are just incredibly pleased that the people of Garco and that company joined us. It's a great platform for us.

So we look always at opportunities, but that is not at the expense of focusing on the things internally we've got to do, which is managing our costs, improving our margins, and that's the two-sided coin.

(OPERATOR INSTRUCTIONS) Derek Russell, Sprott Securities.

Just wanted to ask a question about the market in general. Norm, I think earlier you touched on the decline in the square footage numbers from McGraw-Hill, and I was just wondering if you could give us your opinion on why you think that decline might be happening and if it's affecting any particular area of the country more so than any other?

Really good question. You know, when we look at Dodge monthly and we go back for years, we will see changes month-to-month. And I would say that the decline we've seen from the end of our fiscal year in 2006 through the first quarter is pretty much what we would expect on a seasonal basis, okay? Maybe a bit weaker.

But what we have found is, in 2005 Dodge was down for the first seven months of the calendar year by 8.3% in square footage, and had a very strong second half of the year which we benefited from in our fourth quarter of 2005 and our first two quarters of 2006. So I think we have to kind of keep this in an annual review and just continue to work with it.

But, at the end of the day, regardless of what the American Institute of Architects say or Dodge and anybody else, what really matters is, what are our buildings seeing? And across the board, our builders are seeing a very good year; some describe it as a record year. And those are the people that are out there responding to quotations and negotiations, and they are a very positive group.

Okay. Great. Thank you very much.

John Diffendal, BB&T Capital Markets.

I want to make sure I didn't miss this, but you did talk about same-store backlog but did not give a number for that, right? I mean --

No, I didn't give a number for that.

But there is some level of same-store NCI, the old NCI Building Systems growth in there?

Yes, and I want to be sure to -- while I said that the sales in our buildings group in the quarter was down a bit, their backlog on the other hand has shown growth. So when we look at the total backlog, it's pretty close to 50-50, John, in the growth we've seen.

And like you say, you point to this growth in February in the backlog; I mean, was that typical or do you all sort of view that growth that developed this month as something that was -- I mean you sound encouraged by it; I just wanted to get a little more expansion on that. It sounds like it was also coming in the big building area, which is also good.

John, it was very good. I mean, it was confirmation of what we had been seeing in quoting activity and frankly didn't see in the first quarter, and that's why we said it because it was outstanding.

Good. Thank you.

(OPERATOR INSTRUCTIONS). It appears there are no further questions at this time. Mr. Chambers, I would like to turn the conference back over to you for any additional or closing remarks.

Well again, thank you very much for the time you've given us today and your continued support of our company and our people, and we look forward to the next conference call.

Thanks very much.

This concludes today's conference. Thank you for your participation. Have a great day.