Kaiser Aluminum Corp (KALU) 2006 Q4 法說會逐字稿

Good day and welcome, everyone to the Kaiser Aluminum Fourth Quarter 2006 Earnings Results Conference Call. Today's call is being recorded. At this time, for opening remarks and introductions, I would like to turn the conference over to Mr. Geoff Mordock. Please go ahead, sir.

Good afternoon and welcome to Kaiser Aluminum's Fourth Quarter Earnings Conference Call. If you have not seen a copy of today's earnings release, please visit the Investor Relation's section on our kaiseraluminum.com Web site. We've also posted a PDF version of the slides that accompany this call in the events and presentations page in the same location.

Joining me today are Chairman, President, and Chief Executive Officer, Jack Hockema; Executive Vice President and Chief Financial Officer, Joe Bellino; Vice President and Treasurer, Dan Rinkenberger; and Vice President and Controller, Dan Maddox.

Before we begin, I'd like to remind the audience that the information contained in this presentation includes statements based on management's current expectations, estimates, and projections that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include statements regarding the Company's anticipated financial and operating performance in 2006, relate to future events and expectations and involve known and unknown risk and uncertainties, including the completion of the audit of Company's financial statements for the year ended December 31, 2006. The Company's actual results or actions may differ materially from those projected.

For a summary of specific risk factors that could cause results to differ materially from those expressed in the forward-looking statements, please refer to the Company's earnings release for the quarter and year ended December 31, 2006, with reports filed with the Securities and Exchange Commission and the registration statement filed in connection with the Company's recently completed secondary offering. All information in this presentation is as of the date of the presentation.

The Company undertakes no duty to update any forward-looking statements to conform with statements of actual results or changes in the Company's expectations.

Non-run rate items to us are items that, while they may reoccur from period-to-period are, number one, particularly material to results; two, impact costs as a result of external market factors; and three, may not reoccur in future periods if the same level of underlying performance would occur. These are certainly part of our business and operating environment, but are worthy of being highlighted for the benefit of the users for other financial statements.

Management's intent is to neutralize the fabricated products business from fluctuations in underlying metal prices. We characterize metal profits and LIFO charges as non-run rate items that eventually offset to a great extent over the course of a full year, but usually in a different time period.

Further presentations including such terms as net income or operating income before non-run rate are not intended to be and should not be relied upon in lieu of the comparable caption under Generally Accepted Accounting Principles or GAAP, to which it is reconciled. Such presentations are solely intended to provide greater clarity of the impact of certain material items on the GAAP measure and are not intended to imply such items should be excluded.

I would now like to turn this time over to Jack Hockema, who will provide overall commentary on Kaiser Aluminum. At the conclusion of the Company's presentation, we will allow for questions and answers. Jack?

Thanks, Geoff. It's a pleasure to once again speak to you for our quarterly earnings call. Before Joe Bellino discusses recent financial results in some detail, I would like to provide some high level context, and to assist you in following our remarks, as Geoff indicated, we have prepared a slide presentation which may be viewed on our Web site at kaiseraluminum.com. For those of you who are following, you can see my remarks beginning on page five of the slide presentation.

We had strong operating income results for both the quarter and full year. The driver for the improved results was our core fabricated products business as year-over-year operating income in fab products improved approximately 40%. Record heat treat plate shipments were the key storyline behind the improved fab products results for both the quarter and for the year. The record shipments were supported by very strong demand for aerospace and defense applications and by an increased throughput enabled by capacity creep and by the Trentwood expansion.

Somewhat offsetting the favorable impact from heat treat plate was second half weakness in demand for extrusions from the automotive and industrial markets. Two key economic indicators illustrate the issue that we have had in the non-aerospace and defense markets. Light vehicle build in North America was down 8% in the fourth quarter compared to the prior year, and the U.S. Index of Industrial Production, which as we have told many of you, is a key surrogate for overall demand in non-industrial markets was down in the fourth quarter following 13 consecutive quarters of economic expansion. And then, the slowing in industrial demand was exacerbated in our -- from our point of view of year-end destocking at the service centers as a consequence of the slowing demand. Given the weakened demand in the extrusion markets, the fourth quarter fab products results are especially encouraging.

Turning to other matters on page six, the Trentwood heat treat plate expansion remains on schedule, and the first two furnaces are now fully operational. Our liquidity has remained strong even while we fund the Trentwood expansion, as well as emergence related costs. When we publish the 10-K, we will define the size of our tax attributes, but we expect that figure will be in the high-end of the range that we have stated before, $555 million to $900 million. And as many of you are aware, we completed a successful secondary offering in January. The process enabled us to tell our story to a broader audience and we significantly diversified the shareholder base and increased the float in the stock.

With that, I will turn over to Joe Bellino, who will review the financial results in more detail. Joe?

Thanks, Jack. Turning to slide eight, our net sales on a consolidated basis in the fourth quarter were up 23% and our full year sales of $1.4 billion were up 25%. Both periods benefited from the pass-through to customers of higher underlying metal prices. Our core fabricated production shipments were up 5% in the quarter and 8% for the full year.

On slide nine, we discuss our income results. Strong underlying performance in fabricated products resulted in net income of $12 million in the fourth quarter. We booked an effective tax rate of approximately 56% as a result of tax treatment of our Anglesey joint venture. However, we expect that our actual effective cash tax rate will be approximately 6% to 12% of pretax income. We believe that operating income provided more meaningful comparison.

On the slides, which will follow, we will discuss the reporting segments in more detail. Our core fabricated products business segment is the engine that drives the Company's improved results. From the results that you see on slide ten, our fourth quarter operating income increased 52% to $32 million from the prior year, as we benefited from both higher volumes and a richer product mix. Fab products full year operating income increased 40% over 2005 to $122 million and benefited from the combination of higher volume, stronger conversion prices and favorable scrap spread. Due to the adoption of fresh start accounting, operating income in the fourth quarter and in the second half benefited from lower depreciation of approximately $2.5 million per quarter.

A summary of the primary products business segment is shown on slide 11. Our previously filed 10-Q, as well as our forthcoming 10-K will provide additional details. 2006 results have been negatively impacted through the years by higher power and aluminum costs, and firm price commitments to our fabricated products segment.

Anglesey's power contract expires in late 2009 and alternatives are already being reviewed to allow it to operate beyond the expansion -- excuse me, beyond the expiration of this contract. This review includes identifying the potential costs of a partial or permanent shutdown. In the fourth quarter, dividend from Anglesey has been temporarily suspended, while Anglesey studied future cash requirement.

On slide 12, we break out key components of corporate expenses, which were not allocated specifically to the business units. Our full year 2006 expenses include approximately $8 million of higher accrued incentive compensation, and are breaking it down to two components, $4 million, which is due to better operating performance and approximately $4 million is a non-cash expense that's associated with restricted stock grants upon emergence. Additionally, approximately $3 million of the year-to-date charges included costs related to Sarb-Ox and other transition costs related to the emergence. We believe that these costs will be reduced significantly by 2008.

Next, I would like to ask Jack to provide some concluding remarks.

Thanks, Joe. Just looking forward here and looking at our current business conditions, we continue to enjoy strong aerospace demand and we expect to set another new shipments record for heat treat plate in the first quarter, as now two of the new heat treat furnaces are fully operational. Automotive and industrial demand for extruded products remain soft relative to prior year. Current first quarter outlook is for light vehicle builds to be down approximately 6% from prior year, and the index of industrial production, which I indicated in my earlier remarks, which was down in the fourth quarter for the first time in 14 quarters. January, again, was down from that level. So, we have seen continuing weakness as we have moved into the first quarter here. We expect our capital spending for 2007 to be in the range of $60 to $80 million as we complete the Trentwood expansion and as we pursue other organic growth opportunities in the business. And last but not least, our liquidity, we expect will remain robust even as we fund these growth initiatives going forward.

That concludes our formal remarks. We are now ready to accept questions.

Thank you. [OPERATOR INSTRUCTIONS] Our first question comes from Tony Rizzuto, Bear Stearns.

Hi, good morning gentlemen.

Hi, Tony.

I have got a couple of questions, Jack and Joe. First of all, can you give us an idea of what the year-over-year percentage increase in your heat treat volume was?

No, we don't disclose that, Tony, but it was a significant increase year-over-year.

You can't say anything else about that then. What about in terms of the mix, how did that change in the quarter?

In the quarter?

Right.

The mix was richer in the fourth quarter and we are expecting a very rich mix in the first quarter here, both increased shipments in the first quarter and a rich mix. So, we really benefited both in our rich mix and heat treat plate and because of the decline in some of our lower value added products, the impact on the mix in the total portfolio of shipments was also rich in the fourth quarter and will be very rich in the first quarter.

All right, understood. So, you would expect that as we model the Company that realized price per pound probably will pick up even more in Q1?

Yes, the first quarter looks rich, but I would say we have some unusual business, some of that was in the fourth quarter more in the first quarter. So, we are expecting the first quarter is going to be rich but not necessarily sustainable for the long term. There is some very good short-term business in there.

All right, Jack. And then, if I may, you also mentioned in the past that a very large portion of your plate and sheet capacity is already committed. Does the latest supply agreement that you have announced with Bombardier imply that a further expansion initiative might be announced sooner rather than later?

No, we -- Tony, we actually were planning on that in our analysis. But, I will say that our order book has strengthened. I think when we were on the road show, we typically said that our capacity was committed through 2009 and was heavily committed in 2010 and 2011. Now, as we look at our order book, we are basically fully committed through 2011.

That's great news, excellent. And I was wondering if you could talk about -- you have talked a little bit about the year-on-year decline in extrusion volumes. I wonder if we can maybe look a little bit further into that and maybe talk a little bit about what's being done right now in terms of [inaudible] try to improve the extrusion business? I see a lot of restructuring activity beginning to occur. I know you have put a new person in charge of that business. Can you give us some of the dynamics that you are looking at right now?

Sure. The person you referred to is Martin Carter, who was formerly President of Hydro North America extruded products for the past five years or so. Martin has joined us and is responsible for what we have characterized as common alloy products, which is basically our soft alloy extrusion plants and our forging plant in Greenwood, South Carolina.

When we look at that business in total, that business has been a very good business for Kaiser in the long-term and has been a key holding in our fabricated products portfolio, actually for decades. We are not happy with the extrusion business right now, but we don't think many of our competitors are very happy with it as well. We are going through one of those cycles where the extrusion business is a little bit soft and that's unlike in the latter part of the '90s. No one wanted to be in the heat treat plate business and everyone wanted to be in the extrusion business. So, we are going through cycles. But, our view is that this is a good strategic long-term business for us, so witness the fact we brought Martin on board. But, as we look at it in more depth in terms of the business and why we think it's a good business, we generally in almost all cases have a very, very strong market position and the ability to capitalize on strong market position. So, the volume and revenue and market share side of the business is not really a concern to us. The one area that we are not totally satisfied with is our cost structure. We have some inefficient operations and we have some inefficient value stream that relate to the operations and the manufacturing strategy that we are currently employing. And as we told some of you, who asked follow-up questions on the road show, about organic growth beyond sheet and plate, we indicated that when we talk about organic growth, our focus is on the bottom line, and sometimes you get that from the top line and sometimes you get it from cost improvements. And in fact, we are looking at improvements in the value stream and in fact we have got a couple of projects combined that are in the $20 million range that we are near to launching here that would address some cost and would also address some commercial opportunities and have a very attractive return. So, summing that all up, we have a very good market position. The markets are kind of weak right now and have been for a few years, the supply/demand balances. But we don't think that will continue for another decade. So, we think we are well positioned and we think we can improve our profitability by improving our cost position and we have some good opportunities to do that.

All right.

I think that addressed your question, Tony.

It did. I appreciate that, Jack. Thank you.

Our next question comes from Timothy Hayes, Davenport.

This is Lloyd. The first question is, given the new furnaces coming up on Phase II, can you give us some feel or color as to how fast your capacity may ramp up, say, from Q4 level over the next year?

Well, we had the second furnace fully operational relatively soon in the first quarter here. So, the first quarter is going to include most of the capacity that we have from the first two furnaces and then the third furnace is scheduled to come on stream late this year to be fully operational by early 2008. So, -- and we expect the first quarter to be very, very strong. I mean, it's -- there are a lot of work days in the first quarter and we are really running very strong right now in the first quarter.

Okay. On the extrusion side, the -- has there been a strategic review of Bellwood and where are you in sort of that process of thinking about what the future of Bellwood within Kaiser?

Certainly, we look at Bellwood and what I talk about inefficient value streams, one of the least efficient value streams we have, Bellwood is a part of that, it's not the total Bellwood -- a part of a total manufacturing strategy. So, yes, we are continuing to study that situation and I would expect that we will make a decision sometime this year, hopefully earlier in the year than later, but I don't want to pin myself down right now in terms of where we'll go there.

Okay. And the quarter -- these are the numbers and hopefully you can continue to do that. And I will see you guys next week.

Okay. Thanks, Lloyd.

Our next question will come from Brett Levy, Jefferies and Company.

Hi. Guys, most of my questions have been asked. I'm just -- I'm trying to get a sense, I mean, you guys have got an awful lot of your profitability rolling into the next couple of quarters. If you look at the Trentwood piece of it alone, I don't know if this is the way of doing this, but how much of the total Trentwood benefit is in the most recently posted numbers as a total percentage? And then, as you get to this sort of the first quarter almost fully ramped up, I guess what I'm asking is, when do you get to that full number and what's the approximate ramp from current levels in your numbers?

Let me repeat a little bit what I said in answer to Tony's question to try to put some context that I think addresses your question, if not I'm sure you will address me with a second question. The fourth quarter had an unsustainably rich mix and the mix in the first quarter is going to be even richer than that. So, from a mix standpoint, it's going to be about as good as it gets for a few quarters in our view in the first quarter. In terms of volume, the first two furnaces -- the first furnace was fully operational in the fourth quarter, during the fourth quarter and the second one came on early in the first quarter. So, in terms of throughput from Trentwood plate, the first quarter is going to be pretty much as much as we will see. There may be a little bit more there, but it will be pretty much what we are capable of doing for the rest of the year until the third furnace comes on, and that's assuming we don't find some more capacity creep, and obviously with the strong demand, we got a lot of people up there working to squeeze every pound through that equipment that they can and they continue to find ways to get a little bit more here than there. But, the first quarter should be relatively close to steady stated volume, but again, a warning, it's a rich mix that we don't think will be sustainable for the longer term.

Okay. And then, maybe to refine that a little bit, once you guys are fully up with the third furnace and that sort of thing, do you think the profitability could have the capability to exceed the first quarter's numbers?

Sure. When we could -- because we will have another big income and a capacity coming on late next year, and as well -- I mean in early 2008 and as well, we will have the heavy stretcher coming on stream which significantly expands our product offering. So, yes, there should be the opportunity for additional profitability in 2008 when the expansion is complete.

All right. And then, can you talk a little bit around the stretcher project and what that would add incrementally?

Well, what we have said previously and that holds true is that the full project roughly doubles the plate capacity at Trentwood.

Got it.

Full $105 million expansion.

So, what we have done Brett is, after we announced the additional expansion to the third heat treat furnace in August and then we followed up with a variety of several long-term contract announcements, some of those are continuing the heavy gage product that we produce now but the new stretcher will allow us that additional product offerings that Jack spoke about, which is heavy gage plates, which were not able to participate in that segment currently. So, tying that in with the longer term contract and increased capabilities, that's why we feel very strongly that we have the opportunity to have a step change beginning in '08.

Got it. All right, thanks very much guys.

We will now go to Ken Silver, CRT Capital.

Hi, good afternoon. Just a couple of questions. On the corporate expense line, could you talk about why it's not going to decline until 2008?

Yes, Ken, one of the reasons is we are still incurring a lot of costs, professional fees, from -- we currently outsource all of our tax work and we are ramping up for Section 404 of Sarb-Ox. This year, we are going to be compliant -- at the end of this year. And there's a lot of work in internal controls and also taxes from this year, that those expenses -- we will charge those as they are incurred. So, after that drops off and the Sarb-Ox compliance goes into a more maintenance mode and then we in-source really more of our tax work, it's pretty easy for us to predict that those professional fees will go down. And in addition, we still during the second half of the year continue to incur some transition costs related to emergence. And again, the accounting merger requires that we expense those as incurred, so in the third and fourth quarter, we continued to clean up some things that were related to that.

Okay. Thanks. So, longer term, where should we expect the corporate expense line?

I think in the longer term, we ought to be able to reduce it by somewhere between $2 million and $4 million.

A year?

Per year.

Okay. Thanks. And then, I have a question about Anglesey and I don't know how much you have been talking about this, I mean, is there another source of power geographically near this smelter besides the nuclear plant?

No, there is not another source of power. We continue to pursue additional power there that would enable us to run past the end of the contract, but at this point, we have not come up with anything promising.

Okay. And you have not quantified -- you mentioned that -- you mentioned potential shutdown costs, so you haven't quantified that, right?

No, we haven't quantified that. Again, our investment in Anglesey is we have a 49% interest in that. We are -- other than the integration with our internal fab business to use as a natural hedge, we are really a passive investor in that and so, any shutdown cost in all those things would be treated -- there wouldn't be any additional cash requirements on our part, and just really the accounting treatment of it.

Okay.

But, in our evaluations, we look at the fab business less corporate expenses as one piece and then we look at the Anglesey operation as a separate entity and we have referred to it as the melting ice cube. And in our modeling, we look at that as if, after '09, it doesn't produce any more income or cash.

Okay, great. And then, just one last item, can you give us some balance sheet information, cash, any debt, any inventory?

Yes, as footnoted in our -- Ken, it's footnoted in our release today. Our cash, as of December 31, was $50 million and our long-term debt, which is a five-year piece, is $50 million also. So, essentially, we have no net debt. And we have liquidity, we have a $200 million revolver that's only tied up $15 million of letters of credit. So, our liquidity is about $225 million to $230 million currently.

Okay. Thank you.

[OPERATOR INSTRUCTIONS] We will go next to Stefan Mykytiuk, Pike Place Capital.

Hi, good afternoon.

Good afternoon.

A question, how much was extruded product volume down in the fourth quarter?

I don't have extruded products in total, but let me just say, in the fourth quarter, everything other than heat treat plate was down a little less than 10%, not quite 10%.

Okay. And do you think -- I mean, obviously, some of this is due to the big three auto companies have really slashed production.

Well, it's two components. The auto production affected us in the third quarter and the fourth quarter. But, the bigger impact in the fourth quarter was soft industrial demand and normal seasonality, I should put that in. The fourth quarter is always a weak quarter because of the holidays, November and December holidays, both short workday months and a lot of customers close their plants and won't accept shipment. So, there is a lot of seasonality baked in there in the first place. But then there was very soft industrial demand and the other thing that we saw was pretty significant destocking and roughly 50% of our business goes to distributors. But, in the extrusion part of the business going to distributors, we saw significant destocking and just to put some color on their numbers, distributor shipments of rod and bar in the fourth quarter, what they shipped to their customers were down only 3% or 4%, but what they received from the mills was down almost 17%. So, there was a significant destocking in the fourth quarter. And what we see of their inventories, they really took inventories down to the lowest level they have been since early 2004. So, these were the lowest inventories in almost three years that we got to. So, it's pretty much -- or I should say that's where they were at the end of January. There was a little destocking in January as well. So, inventories are pretty much in balance there, but it really exacerbated the weak demand in the fourth quarter, the magnitude of destocking. And again, just explaining how our business works, destocking especially by the service centers in the fourth quarter is pretty routine. So, we expected some destocking, but it was a little bit more significant than what we expected and that's really because the total industrial economy was so weak in the fourth quarter. Like I said, it was the first time in more than three years that we have seen a down-quarter in the index of industrial production. So, it was a pretty weak fourth quarter and frankly, had not the aerospace segment been so strong, we wouldn't have smiles on our faces about the fourth quarter right now. Aerospace and heat treat plate really propped us up in the fourth quarter.

Okay. So, as we look into '07, I guess aerospace and heat treat remained strong. Is that the --

Absolutely. I mean we are not unlike all other industry observers who expect that this sold-out position, which has been in place for well over two years, maybe even three years by now that we expect that will continue through 2007 as well as 2008. So, we expect that's going to be very strong and we have put a lot of focus on Trentwood because of the expansion there and because heat treat plate is hard as well. But, we have got three or four other plants in our system, "extruded products" plants that are also in that arena, who are also doing extremely well. So, really the whole aerospace and defense side of our business both extruded products and related products, as well as sheet plate, are doing very, very well. It's the automotive and general industrial sides that are tepid right now, but January again was very weak, uncharacteristically and unseasonally weak, but we have seen that pick up in February and we see some strength in bookings in March. So, we think we are going to be back to a reasonable level here in the late first quarter and second quarter although first half vehicle builds are still going to be soft year-over-year.

Okay. That's where I was going. In the back, do you have some visibility for better auto and truck demand in the back half of the year?

Yes, our forecast and our business plans anticipate that the vehicle builds are going to pick up in the second half of the year and in fact that the second half of this year would be stronger than the second half last year, because our current projections are for vehicle builds relatively close in '07 to what they were in '06. So, it's a flip side. '06 was a strong first half, weak second half. And our view is this year is a weak first half and a stronger second half. But, frankly, the dealer inventories coming out of January were really, really large for what they should be at the end of January. So, we haven't changed our forecast, but we are a little bit concerned about how much the vehicle build is going to bounce back in the second half at this point.

Okay. And on the general industrial side, I guess it's probably hard to get any visibility there, but at least if there is a --

Well, it is, but again, I can't overstate the fact that and this is what happens to the mills. Unfortunately, we are so far upstream in the food chain here that when there are slight changes in demand, it ripples through the full inventory chain before it gets to us. So, I will just state those numbers again. Distributors in the fourth quarter, their shipments were down year-over-year by only 3%, but what they bought from the mills was down more than 15%. So, our -- we were six times as much change in our demand as what the real demand was. But, we believe that destocking is done, as I said by the end of January, their stocks of our products were pretty much at a low for the last three years. So, we think we are going to see the destocking cease here and what we will see now going forward is the true demand from the industrial marketplace.

Right. And then, if there is a pickup, it's going come through back to you pretty quick with this inventory?

Exactly. It goes the other way because when it starts to pick up, they start rebuilding their inventories and so we will get a three to six times multiplier on the real demand when it goes up as well.

Okay, great. Thank you very much.

[OPERATOR INSTRUCTIONS] We will go next to [Lee Lidnus], Lakeway Capital.

Yes, thanks. Just to clarify on the corporate expense, Joe, you mentioned that it's going to significantly come down kind of from the $40 million run rate now, and just to clarify you said it's -- you think kind of on a normalized basis, it's going to be $2 million to $4 million less per year or per quarter?

That's an annual number, Lee, and that's beginning in '08.

So, can -- is it safe to assume then that 40 would kind of trend down to around $35 million, $36 million?

Well, I gave a range of $2 million to $4 million. We think that's -- how that shakes down.

Okay.

I think we will give more visibility as we report each number quarterly.

Okay. And then, I guess looking at the 30 [inaudible] million, how much of that is really non-cash in nature, i.e., stock comp and [grants]?

Well, because of the stock, restricted stock grants upon emergence, that's being -- generally has been amortized over 12 quarters or 36 months, and that's about $2 million a quarter of non-cash expenses. It will be part of the corporate expenses, and that's why on the slide presentation, we break those numbers out.

Okay. Okay, thanks.

Thank you.

And our next question comes from Evan Steen, EOS.

Hi there guys, very nice quarter. I just had a quick question on the auto. What type of business when you say the inventories are too high, obviously, GM, Ford and Chrysler are different than Toyota? How much exposure do you have to the transplants and what is your strategy with regard to that?

Yes, good questions. Let me start with the transplant question first. It's difficult for us to get it precisely because we go through tier ones and system integrators, but we believe that in the high teens -- of our automotive shipments in 2006, we believe the high teens went to the transplants and we are continuing to penetrate that areas through systems integrators as well as working directly with some of the transplants. And we expect that our penetration will be in the low-20s this year and that compares, if you look at the foreign manufacturers in the U.S., they are roughly 30% of the build. So, we are slightly underrepresented in the -- other than the Detroit Three and overrepresented with the Detroit Three. In terms of the dealer inventories, unfortunately, from our standpoint, because we have heavier participation in terms of our shipments on large vehicles rather than small vehicles, and because of the run-up in gas prices as everyone knows on this call I am sure, SUVs and light trucks, those sales have suffered more than general sales and what we are seeing is a lot more of those vehicles on the lots and a lot larger production cutbacks there. And so, that exacerbates the situation from our standpoint. If that answers your question.

Okay, yes. Then with regards to the service centers, one of the questions I have is -- obviously, much of the business with them [inaudible] Reliance Steel, they are expanding dramatically. They made a lot of acquisitions. And I am curious if you are aligned, forget about the market just with -- there is a consolidation, obviously, in steel industry, it's seemingly starting to happen in the service centers. If you have strategic alignments with certain people who, whether market is growing or not, are growing in and of themselves because they are acquiring other people and therefore your business there can grow in excess whatever the industrial production number might be, because your end users are in fact growing themselves above the market rate?

Yes. Yes to all of that, but let me put a little color on that. As I indicated in one of my answers earlier, roughly 50% of our shipments go through distributors and we think we are unique in that regard. And again, this goes back decades. We have always had a very strong relationship with service centers and have viewed them as extensions of our customers, of our marketing rather than as someone we need to avoid. So, our partnerships with these people are long-standing and they are very, very deep. But, beyond that, we believe that we have the broadest product offering in the industry in our space. And so that also creates opportunities, much broader opportunities for us to deal with the service centers because we are close to a one-stop shopping from their standpoint when it comes to their aluminum needs, and enables us to deal with them on a number of fronts. And especially when you get to the big distributors like Reliance and others that you didn't mention, but especially when you get to them, when they are a major aluminum distributor that Kaiser's red label is a key component of their supply chain. And so, we feel that we are very, very well positioned with all of the majors from the distribution standpoint, and from that standpoint, the consolidation is beneficial to us rather than being a decrement to us.

Okay, great. Okay, thanks very much. And do you think that 10-K gets filed by --?

Joe?

The 10-K will be filed by March 30.

Okay, another couple of weeks. Okay, thanks very much. Congratulations.

And at this time, we have no further questions. I would like to turn the call back over to Mr. Mordock for any additional or closing remarks.

Thank you everyone for joining us today. A replay of this conference call will be available for 30 days on the Investor Relations page at the kaiseraluminum.com Web site. Have a good afternoon.

Once again, ladies and gentlemen, that does conclude today's conference. You may now disconnect.