Steel Dynamics Inc (STLD) 2009 Q1 法說會逐字稿

Good day, everyone, and welcome to today's Steel Dynamics first quarter 2008 earnings call.

Today's conference is being recorded.

Joining us today are Keith Busse, Chairman and Chief Executive Officer; Richard Teets, President and Chief Operating Officer, Steel Operations; Mark Millett, President and Chief Operating Officer, OmniSource Corporation; Gary Heasley, Executive Vice President; Theresa Wagler, Chief Financial Officer; and Fred Warner, Manager of Investor Relations.

For opening remarks, I will now turn the call over to Fred Warner.

Please go ahead, sir.

Thank you, and welcome to today's Steel Dynamics conference call being webcast April 23rd, 2009, from Fort Wayne, Indiana.

A replay of this call can be heard and downloaded as a podcast from our website, www.steeldynamics.com.

Today's management discussion may include various forward-looking statements.

All statements regarding anticipated results or expectations are intended to be forward-looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

Such statements which by their nature are predictive and are not statements of historical fact are often preceded by such words as believe, anticipate, estimate, expect, or other conditional words, and are not intended as guarantees of future performance.

We caution that actual future results and events may differ materially from such forward-looking statements or projections that we may be making today.

Some factors that could cause actual results to differ include general economic conditions, government monetary or fiscal policy, industrial production levels, changes in market supply and demand, foreign imports, conditions in the credit markets, price and availability of scrap and other raw materials, litigation outcomes, and equipment failures.

You may obtain additional information concerning a variety of other factors and risks that could cause actual results to differ materially from today's forward-looking statements by referring to the Forward-Looking Statements and Risk Factors section of our most recent annual report on Form 10-K or in our quarterly reports on Form 10-Q as filed with the Securities and Exchange Commission as well as in other reports we file from time to time with the commission.

These reports are publicly available in the SEC website, www.sec.gov, and on our Steel Dynamics website.

After today's management discussion, we'll open the call for questions from participants who have informed us they may wish to ask questions.

Please keep your questions short and limit to one question per caller on the first round.

We should have time for follow-up questions.

We will now begin today's call with introductory remarks by our Chairman and Chief Executive Officer, Keith Busse.

Good morning, everyone.

Thank you for joining us this morning.

Obviously, the results reported were dismal, but nonetheless, I think there's really room for optimism.

I noted in one of the early First Call or first take outlooks that one of the analysts was quoted saying the Company took a more -- the Company's position was more sober -- add more sober tone to it, or somber tone, and why wouldn't it be somber in this kind of an economy.

Yet I just wanted to offer a few positive comments.

I think today I can say with great confidence that our mills are in super shape.

They're in good condition, and ready for any recovery that we might experience on a go forward basis.

I think the mental attitude of our employees is very positive, and in spite of the fact that their earnings are down significantly in this kind of economic climate.

And let me say our cost position has never been better.

I think we were very pleased with where our cost structure is.

Obviously that comes at the expense of an $83 million adjustment to inventories in the first quarter, principally realized through significant write-downs of resource costs at our flat-rolled steel making division.

And there was further deterioration quarter over quarter, as our net sales were down 33%, and our shipments were down 21% in the first quarter versus the fourth quarter.

So it is a very somber tone.

Yet at the same time, I wanted to reflect on the fact that our mills are in excellent, excellent shape, and employee morale and esprit de corps is good, and the cost structure is world-class, second to no operator in the US, or abroad in my opinion.

One of the more significant impacts to our earnings was the inventory charge.

It was $83 million.

It was about $13 million greater than we had contemplated, and that really was a result of not receiving as much material in the quarter at greatly reduced pricing from the past quarters.

We didn't receive as much as we had contemplated.

Obviously we didn't ship as much as we internally had contemplated.

You might have had our shipments at more or less, but we thought we'd ship a little more and did not.

Thus you use up a little less of that scrap pile, which at the end of the quarter was adjusted in terms of its valuation.

And I think I noted in one of the -- or I saw in one of the early morning comments that the inventory valuation adjustments are largely behind us.

That was their belief, and it's my belief as well they are behind us, and will not play a material role in future results.

So when you look at our results ex the $83 million noncash adjustment to inventories, and the noncash additional amortization charge related to Recycle South in the final valuation of intangibles and goodwill at Recycle South, which was worth, on the bottom line, net income about $0.02, the inventory's $0.27, if you back that away from our results, we were within the range that we had forecast late in the first quarter, but in early March of this year.

Unfortunately, the call we had in March was a very necessary update, as business conditions continue to deteriorate in the quarter.

Specifically, deteriorated significantly from heightened levels you might say in December and early January, to more dismal business conditions in late January and throughout February and early March, and our visibility in March told us nothing was about to change.

So significant deterioration in selling values was imminent.

And so we updated our earnings in March and -- it's very difficult -- came fairly close to hitting our prognostication, but it's very difficult to have any visibility when order entry is really just hand to mouth.

It's weekly, it's monthly.

It's steady, and I might add that it's been increasing recommend in the flat rolled arena.

It's pretty steady in small shapes, it's fairly steady in SBQ bar arena, and order entry has gotten worse in large long products, specifically structurals.

Which -- and I think the third paragraph of our press release spoke to all of that, when you look at the operating rate at the mills, was about 46%, and for those of you who might want to know how that breaks down, it was -- we probably operated at close to 50% flat-rolled, something under.

We shipped in flat rolled in the low 40s, 40% to 45%.

We actually built a little inventory, actually produced a little more than we sold, but the operating rate was sub 50%.

In structural, it really depends on whether you look at it through the eyes of our capacity a year or so ago, prior to the construction in the new mill, new medium section mill -- if you looked at it through that set of binoculars, we probably operated closer to 40%.

When you consider our new found capability capacity, we operated probably closer to 30% during the quarter.

We operated at about 50% of our capacity at Roanoke and Steel West Virginia as well.

So on a production basis.

On a shipping basis, as I said, on a consolidated basis, it was about 46%, and the recycling arena, we operated at about 42% of our current capability there as well, and things didn't really change in fabrication.

We were operating at about 45% there.

I think it's important to note that prices declined, and if you look at the second page of our press release at the bottom, we talk about the first quarter's average selling price per ton for steel operations was $720, a decrease of $193 from $913 in the fourth quarter, and a decrease of $62 per ton from a year ago quarter, which I don't think is very relevant at this point in time.

We talk about the fact that the average scrap cost per net ton charged decreased $78 a ton compared to the fourth quarter.

As I went on to say, this data speaks volumes about cost reductions or cost control achieved in recent quarters by our employees.

They've done a phenomenal job.

Think about that.

The selling values go down $193, your principal input, scrap, or your -- which is scrap, goes down $78.

So there were significant cost reductions achieved to achieve what are fairly unchanged results, slightly positively changed results from an operating income perspective.

Might also note that without the noncash charge, our steel operating units actually had an operating profit of about $17 million or $22 a ton versus an operating profit of only $3 a ton in the fourth quarter.

So actually positive total change in that regard, which I think is significant.

I think most of you know on an operating basis, corporate overhead is not included, nor is amortization and profit sharing.

And I think in the statement we made, we added corporate overhead just for clarity.

The corporate overhead is not considered when we talk about operating profit.

Hasn't been in the past and is not in these statistics, so they are very comparable -- it is very comparable data.

Even if you allocate corporate overhead, and of course there was no profit sharing expense -- if you allocate corporate overhead to the steel division, it would have still had a bottom line operating profit inclusive of corporate overhead.

So just wanted to note that, because I think the progress our employees have made in this very dire environment has been extraordinary, and we salute them.

I think they are indeed the best steel makers in the world today.

Recycling.

Well, you saw that our average scrap costs per net ton charge continued to decline.

Scrap costs during the quarter continued to fall.

There was a slight strengthening early in the quarter, but obviously deliveries of material in the month of March were down, and certainly deliveries going into April were down maybe $30 a ton, $40 a ton in some cases.

Now people are talking about a rebound in that arena.

But any rebound, as you can see, given the operating rates of Steel Dynamics and many of our peers out there, all being sub 50%, any rebound in scrap is probably short-lived, I would guess, as we move into the spring and summer months where the flows increase.

I think the spark, if there is any, has been export activity, which has caused scrap on the East Coast to move up slightly month over month now, or mid-month.

And I think the big question is will that continue into the Midwest?

And it's not likely to impact the Midwest to the same degree on the up side as it has the East Coast, because obviously to get material to the East Coast there's a considerable freight build associated with it.

So the net-net to the provider may not quite be as attractive.

So again, not having a crystal ball, and Mark will speak to that issue, and Mark's opinion may well differ from mine, but I think as we look at delivery of materials in May and June, it could be anywhere from up very slightly to sideways to down slightly.

I don't think it's going to materially move from the arena where we are today.

I know a lot of you from time to time, look for a little guidance, and it's something we haven't done, but I'll just tell you where we are from a scrap perspective.

We talk about how we're moving up and down quarter over quarter.

We were down $78.

I noted a competitor was down $102.

Very good progress for both entities, but our cost per net ton charged you should know is in the mid [200s].

Sub $300.

Again, I repeat, in the mid 200s.

So that's about where we were in the quarter in terms of the cost per net ton charged.

Again, very good position, I think, relative to most, and obviously with the inventory adjustment being behind us, I think the Company, from a cost perspective, is well positioned in what is today a rather dismal marketplace.

There is no visibility out there right now, and there's no light at the end of the tunnel that I can share with you.

As I said, order entry is steady.

Every week, it seems to come in and go out at about the same rate.

We're running one caster at Butler, and from time to time, when we get a little bit of a surge, we can run two, but that's about where we are today.

Relative to fabrication, you might have noticed that in fabrication, we made about same amount of money in this quarter as we did a year ago, and about same amount of money as we did in the last several quarters in the $3 million to $4 million to $5 million net profit range.

We remain profitable in fabrication, and we're better positioned there than we've ever, ever been.

With the closure of the facility in Florence, South Carolina, which will not likely ever reopen, the Florence facility was in the backyard of some fairly strong competition, and wedged right in between other Virginia operation and our Florida operation, which were much better cost positioned facilities from a cost of raw materials and a conversion cost perspective.

Our Continental plant, which was closed during the quarter, could reopen some day.

That's a possibility should the business climate in nonresidential construction improve.

We're not forecasting it is going to.

We're just better positioned there than we have been.

And I think the three remaining fab facilities and [roll forming] facilities are the finest in the world.

So we have a very strong cost position, and -- but we see the operating rates not changing a heck of a lot, as the nonresidential construction market is clearly still in the tank.

So I think that's just -- that's a brief recap of where we are in steel and where we are in processing and in fabrication.

I would like to turn it over now to -- and we'll save any discussion on the balance sheet and I know there were comments this morning on First Outlooks about covenants, and we'll talk about that at the time Theresa speaks to the audience, but I'd like to turn it over now to Dick Teets for his more specific comments about what's going on inside the steel fort.

Thank you, Keith.

Good morning.

As Keith said, the flat rolled division is operating around the 50% level, and that is achieved by the operations of one caster continuously and the intermittent use of the second caster as orders demand, while still taking the appropriate maintenance downtime.

The teams at Butler and Jeffersonville have finished the commissioning of the closed loops coating weight control systems at all three galvanizing lines for their [air nice] for a more accurate coating profile.

We also commissioned our surface inspection system at Jeffersonville to help assure the highest quality product are being shipped to customers.

At The Techs, remaining on flat-rolled, congratulations are in order for achieving a zero lost workday performance at all three of the facilities.

The focus there has really been on maintaining our quality and customer service while managing our inventory positions, all of the inventories, to lower than historical levels.

At Columbia City Structural & Rail division, it also is operating, as Keith mentioned, between 35% and 40% levels compared to the first quarter of '08.

The backlog suggests a continuation of that level.

The team continues to put effort into rail production.

Over 15,000 tons of rail were produced in the first quarter, and at the new mill, efforts are continuing to increase the selection of product made available as the 12-inch M beam and the 12-inch C channels were successfully commissioned in the first quarter.

We have slowed the installation of the second caster, but we continue to work on the assembly utilizing our skilled employees.

We will use contractors only when safety precludes us from the undertaking.

If we look at Pittsboro, the SBQ production and shipments were also in the 50% range.

Production of small sizes, which are 4.25 and smaller, and medium sizes, which are between 4.25 and 6.5, have been an area of focus as the competitive landscape has changed in the marketplace with competitors cutting production or scaling back operations.

The grades that are holding up the best are alloy class 1's and 2's.

Those are for transmission tower legs and tool steel, as well as for seamless tube, small tubes, and forgings.

Congratulations are deserved by the Pittsboro team for becoming certified to produce mooring steels by the American Bureau of Shipping.

This requires incredibly detailed testing and visitations by surveyors from ABS.

This is the product that is used to form the links on the mooring chains for ocean based oil well platforms.

It's a very interesting product, a huge links, greater than four-inch diameter steel bars.

Pittsboro continues to develop more advanced metallurgical options for our customers where quality is the first priority.

Congratulations are also in order for the Roanoke bar division team for their safety results for both the fourth quarter of 2008 and first quarter of 2009 as they had only one recordable in each period and zero lost time acts.

That was really a great job.

At Roanoke, the melt shop operated at about 40% of capacity while the rolling mill operated at close to 60%.

The difference is due to the lack of billet sales, both internally and externally, internally meaning to Steel of West Virginia, externally being to our other customers.

At Steel of West Virginia, they continue to deal with significant downturn in the special sections OEM markets that they serve.

With a downturn in the economy, there has been a significant reduction in the manufacturing of forklifts, truck trailers, and the like.

Steel of West Virginia has responded in several ways.

In the near term, unfortunately, significant layoffs have occurred, but they are controlling their spending to new lows.

On a positive note, they are currently adding new sections to their mills, which will hopefully provide new opportunities.

We anticipate a start-up of the new straightener for the number one mill in the third quarter.

The straightener will improve product quality and yield while lowering our fabricating cost.

It's needless to say all the facilities are paying close attention to all inventories, both raw materials and finished goods, and cost reduction opportunities that have no adverse effect on safety, quality, or customer service.

And finally I would like to state that my hat is off to the employees of our subsidiary, Dynamic Composites.

They are in the business of making composite railroad ties and highway sound barrier systems from steel, rubber, and plastics.

They just recently shipped their largest order to date of 4,000 ties to the Burlington Northern Santa Fe Railroad.

Congratulations to the folks.

Keith.

Thanks, Dick.

Mark.

Thanks, Keith.

Good morning, everybody.

Hope all are well.

Relative to our recycling business, I think although tempered relative to the precipitous decline we saw in the second half of last year, the ferrous markets remained difficult through the quarter.

Domestic steel mill utilization remained at 40% to 43% through the quarter.

(inaudible) capacity a little higher at 45%, maybe 50%, with the iron foundry business certainly continuing to decline.

So demand was subsequently constrained, resulting in scrap shipments of 730,000 net tons for the quarter and 19% decline over the Q4 of 2008.

Concurrently, market pricing decreased through the quarter, thereby compressing margins as higher priced inventory flowed through the system.

In slight contrast, our nonferrous business showed improvement through the quarter with volumes increasing 7% quarter over quarter to 190 million pounds.

Copper was a particular highlight, having somewhat of a bull run on strong buying pressure from China in a tight domestic market.

Albeit a tough quarter, and prior to the Omni team's performance, we lost about $15.5 million, but generated about $9 million in cash flow, yet a far cry from the $120 million to $122 million we lost last Obviously the tempered market helped.

Credit should be given to the significant effort and creativity demonstrated in cost reduction.

Total operating costs were reduced by $24 million per quarter from a level perhaps in a normal operating environment, Q3 of 2008, and we feel that this further improvement is expected.

In fact with the benefit of the strong copper markets, we were actually profitable in March.

Again, proud of our team.

They reacted well in a tough market.

They have courage to make tough decisions, and are committed to making Omni more competitive in the future.

Relative to the markets in general, I think the ferrous markets remain tenuous, but it would appear that there is some price support at current levels for preventing further deterioration.

I agree with Keith, I do believe a somewhat [range bound] until this material increase or improved electric [ferrous] utilization.

Demand is soft, but the supply side is equally soft.

Inbound scrap flows are extremely limited.

Industrial flow is dramatically reduced due to an anemic manufacturing base.

Wholesale and absolute flow is also weak.

This particular sector was very profitable last year, and yards and dealers are reluctant to let material flow at today's low prices as compared to the highs seen last year, and particularly as their inventory values are relatively high at this moment in time.

They're willing to wait out the cycle and capitalize on the normal and expected uptick in pricing that they have seen in the past.

Additionally, the economy is forcing people to keep cars longer.

They are fixing up their old cars, giving a tremendous boost to the pick apart industry which is seeing a twofold or threefold increase in sales.

Car hulks are thus greater value, reducing the flow of the shredders and supporting NCO transaction prices.

As Keith suggested, further support is manifest through increasing export interest at the current low market prices.

Nonferrous -- copper has had a bull run of late, with China buying at large premiums.

Domestic consumers, even while operating at probably 50% rate, are having difficulty fulfilling their raw material needs, thus having to pay up for the material.

Aluminum is less volatile and seemingly range bound at a level that probably matches sort of a global production cost, and certainly global production in this metal -- cuts have not been similar or to the extent we've seen in other commodities.

So again, that's probably going to be a range bound material for some time.

Change in Iron Dynamics, the plant is running extremely consistently.

It's got a capability now of 15,000 to 16,000 metric tons of liquid iron per month.

Shipments in this first quarter were limited somewhat as our input rate was reduced in concert with a reduction in operating rate at the flat-rolled division.

Again, the team has executed well.

We've made some dramatic improvements in cost structure with further improvements expected as our natural gas contracts draw down to spot values, and team has continued their excellent safety record for their improvement last year by having only one minor recordable incident in the quarter.

Mesabi Nugget, even given the tough winter conditions up there, construction progress is excellent, and we anticipated a start-up in September.

We've delayed that by a couple of months, pushed into it the fourth quarter to balance CapEx expenditures.

CapEx for the project is on track for the adjusted $265 million that we've been suggesting for the last six to seven months.

So in the recycle business, it's challenging, but it's a lot of fun.

Keith.

Thank you, mark.

Just another quick comment about Mesabi Nugget.

Given our inventory position on iron, there's no rush to get there, and by effecting a small delay in the project, we can actually shove back some CapEx from quarter to quarter and not take on operating losses earlier in the year, but rather later in the year.

So that's the decision we made.

We didn't really want that to extend any deeper into the winter, as there may well be impairment to refractory linings on the furnaces, et cetera, but things are coming along fairly well there, and as you said, at Iron Dynamics, steady state progress there.

They're probably in a better position, Iron Dynamics, to run record tonnages now than they've ever been.

Obviously we just don't need the material at this point in time.

As we told everyone, we thought we would be profitable perhaps in the recycling arena in the first quarter, and we were not.

We made significant improvement.

As Mark noted, did turn a small profit in the month of March.

That's not likely going to continue into April, as selling values deteriorated on a delivered basis, but could well return to profitability in the May and June timeframe.

So that's just our outlook from a recycling perspective, and my perspective, as it would regard recycling.

I want to turn it over to Gary Easley to tell you about the changes in the fabricating arena.

Shipments in fabrication were about 45,000 tons, which is two-thirds of the shipments we saw a year ago.

Given the two-thirds shipment level, holding income relatively flat was quite an achievement for the team.

As reflected in the decline in shipments, our plants are operating at lower levels of utilization.

That puts pressure on per ton production cost.

The New Millennium team has been pursuing every opportunity they can find to reduce costs.

We achieved significant cost savings as Keith mentioned due to the impact of shipping production from our idle Florence, South Carolina facility to our larger and more efficient facilities in Salem, Virginia, and Lake City, Florida.

Congratulations to the team for taking the initiative to respond aggressively to the rapid decline in market conditions that we've seen here in recent quarters.

In March, early March, we announced the closure of our joist facility in Continental, Ohio.

That will be effective in May.

We will be consolidating that production at our facility -- at our larger, more efficient joist and deck plant in Butler, Indiana.

After the closure of Continental, as Keith mentioned earlier, we'll be very well positioned with three large, very efficient facilities in Butler, Indiana; Salem, Virginia, and Lake City, Florida.

With regard to market conditions, we've seen order entry and shipments continue to fall as end demand has continued to pull back.

We've also seen in recent months unusual levels of cancellations from orders in our order book.

We don't normally see much in the way of cancellations.

We've seen some of that.

We think that at this point we've seen the last of any significant cancellations.

We think we've seen stabilization there.

On a positive note, our quote activity here in the last eight weeks or so has remained very robust.

That's a very good sign for us.

And we believe that we're seeing some quote activity coming in as projects that have been put on hold are shelved are revisiting their pricing and coming back to the market in anticipation of receiving financing.

We're also seeing increased quote activity in new projects, specifically in schools, hospital, and military projects that may benefit from government supported financing.

So we're seeing spots of light out there, and as the team continues to aggressively go after every opportunity, it's going to be a challenging market, but a great performance on the part of the New Millennium folks.

So thanks to all of them.

And Keith?

I might note that if you look at first quarter results in fabrication versus first quarter results a year earlier, 2008, that we actually achieved the same net income on roughly two-thirds the shipping volume, which again speaks volumes to cost reduction and cost control.

I think we're really in terrific shape there.

Just some other comments, recently had an opportunity to dialogue and talk with a couple of large architectural engineering firms, and both of these firms indicated that they are extraordinarily extremely busy, so they were very pleased.

Firms as big as people like MSKTD.

So that activity, we certainly welcome that news.

As you talk to fabricators out there, many of these guys have a lot of activity pent up, and these are engineered projects, and what they're really waiting on is financing.

Can't get the financing.

Can't newspaper the schools forward without being able to float the bond issues, et cetera, et cetera.

So we continue in this economy to have our challenges from a lending perspective, which could have an extraordinarily positive impact on economic momentum.

Theresa.

Thank you.

Good morning, everyone.

A few quick comments.

Regarding working capital, we decreased working capital $225 million during the quarter.

$141 million of that reduction was due to our receivables reduction, and they still are in what we believe to be outstanding condition.

Our days outstanding remain flat at 44 days, and we continue to monitor the creditworthiness of our customer base.

Inventories decreased $190 million during the quarter.

It was $107 million if you exclude the valuation loss.

About two-thirds of that decrease was actually in scrap inventories at the steel operations, and that reduction was both in volume and in cost.

We currently anticipate further reductions in scrap inventory volumes at our steel operations.

Most specifically, as stated earlier, at the flat-rolled division.

Finished goods and WIP inventory volumes actually remained relatively flat during the quarter.

From a capital investment perspective, we spent $74 million in the quarter.

About $31 million of that was from steel operations, most notably $13 million at the structural mill, which was for the second caster, and about $5 million was for the purchase of a substation down at Pittsboro, which will actually after very quick payback period for us.

The significant remainder was due to our Mesabi Nugget project.

We spent $30 million on that project during the first quarter.

For the remainder of 2009, we can see capital expenditures somewhere between $200 million to $250 million, but it's still very flexible.

The most significant portion of that would be about $130 million related to the Mesabi Nugget project for the start-up, potentially in the fall, and $30 million for the completion of the second caster at the structural and [oiled] division.

The remainder of that amount, anywhere between $40 million to $80 million, is very flexible, and an improvement in maintenance type projects.

Depreciation and amortization for the quarter was $57 million.

$5 million of that again was due to the additional valuation amortization regarding recycle south.

You will notice that goodwill changed for us, and it actually increased by $42 million.

That was due to that reevaluation or final valuation of Recycle South.

The effective tax rate for the quarter was 40.3%.

On a go forward basis, we would expect that to be 39.3%, and that was due to a credit that we took in the first quarter.

That would have been a one-time credit.

Regarding interest expense, the gross interest expense was $39 million, and we had an overall effective rate of approximately 6%.

The capitalized interest was $3 million during the quarter.

Our shares outstanding at the end of March were 182.1 million shares.

Regarding liquidity, we've had a lot of questions and comments regarding our covenant structures, et cetera, so I would like to address that.

During the quarter, as we noted, we reduced our outstanding debt by $136 million, and we increased availability of funds to over $625 million, and that's predominantly through a small amount of cash and available borrowing capacity on our $874 million revolver.

Again, that revolver doesn't mature until July 2012.

Until 2012, the only meaningful payments that we have are $65 million a year on our term A loan.

The covenant structures are such that our maximum leverage is five times debt to trailing EBITDA.

The EBITDA is actually on the adjusted basis, and those adjustments will add back to actual EBITDA in the unrealized mark to market adjustments, lower of cost of [mark] inventory adjustments, and equity based compensation costs.

At the end of the quarter, our adjusted EBITDA to total debt was 2.8 times compared to 2.4 times at the end of the year.

The adjustments -- I think this will be helpful to you -- that we made to EBITDA during 2008 were -- we added $6 million in the second quarter 2008, $25 million in the third quarter, and $75 million in the fourth quarter.

The adjustments for the first quarter of 2009 will be $69 million.

As many of you have commented, there is a possibility that we may exceed our maximum leverage threshold of five times during 2009.

If this were to occur, we would ask for a waiver from our longstanding bank group regarding compliance with these financial covenants for a specific period of time.

We would anticipate ready cooperation from this group with a one-time fee for the waiver itself and some small adjustment to the interest spread related to our revolver and term A loan.

Currently we're borrowing at LIBOR plus 125 basis points on the combination of our revolver and term loan A, between $800 million to $850 million, at less than 3%, so it's a very attractive rate.

Again, just to conclude, we want to maximize our availability of funds, and we want to reemphasize that the prioritization of our free cash used during 2009 is first to maximize liquidity and reduce leverage, second to provide for critical capital investments, and third to continue to provide cash dividends to our shareholder base.

Keith.

Thank you, Theresa.

Just to comment about the covenant, obviously we are forecasting that business conditions will remain fairly flat and dismal on a go forward basis, and any breach of covenant that might materialize is likely to be a third quarter event and -- but as we continue at these operating levels, the likelihood of breaching becomes greater because the timeframe in which you have to cure it, even if there's a surge, is just reduced.

So I think we've talked enough about that at this point in time.

As Theresa said, we have a very great group, and we'll get a waiver.

We're pretty positive of that.

It's going to cost us a little more, and we'll move on.

So, I think that really concludes our comments.

Again, wanted to note that steel operations ex noncash adjustments were operating in the black.

We'll continue to operate in the black, and hopefully we'll be on the road to recovery in the economy, and it will have a positive effect on our results.

I actually feel better about our position relative to others.

I don't feel very good about the economy.

But I think our position relative to others is excellent.

And I do think we're going see some signs of life.

We're not going to return to running our facilities at 100% of capability this year, and may not even next year.

But I think the economy is -- various sectors of it have good health.

Other sectors are rather dismal.

The home construction segment of our economy, the nonresidential construction, autos, tractors, trucks, trailers, those things are on their back.

But there's even some signs of life there, and I'm sure the road to recovery will be a long road, but I think we're going see improved activities as inventories continue to work off and be more in line with the current shipping rates that are out there today.

So again, I like our position in the world, feel very good about it, feel bad about the hardships that everyone endures in this kind of a climate, including our employees who have just been excellent stewards of shareholder money.

So that concludes my comments today, and Corrine, we'll turn it over to you for Q&A.

Thank you, sir.

The question-and-answer session will be conducted electronically.

(Operator Instructions).

We'll take our first question from Mike Parr with KeyBanc.

Thanks, good morning.

Good morning, Mark.

Keith, I had a question for you regarding the flat rolled business.

You had said you had seen a modest pickup in orders last -- I guess the last month or so.

And do you think that's easing off of de-stocking at the service center level, or is there perhaps a pickup in automotive or some other end market that might be affecting that?

I think that it probably is a result of de-stocking getting near a bottom in that arena.

Clearly if the operating rate -- or if the economy is moving forward at two-thirds of its former capability or 60%, yet the mills are running sub 50%, eventually there's going to be a change in the outlook, and a change in order entry activity, however modest it is.

It is modest.

I don't think we want to forecast that there's a major recovery underway, but there's an improvement.

And I think it probably has largely to do with de-stocking, especially in flat-rolled.

I don't know that we're at the bottom yet in large structurals.

We may still be in a destocking arena there that is going to cause operating rates in that universe to be rather dismal for another month or two.

Along those lines, I think Gary had commented that as joist activity or quote activity was beginning to show some signs of life and part of that related to the -- I guess the resumption of financing availability, how much of the slowdown in the structural side do you think is related to this financing or lack of financing?

And is there a potential for that to perhaps shift a little bit as you move into the height of the construction season in the third quarter?

I think -- this is Teets.

Hey, Dick.

Good morning, Mark.

Financing is an issue.

You talk to the fabricators, and they do have backlogs or engineered products, but owners are reluctant to pull the trigger on it, either for financing and/or the true business return on it, as you watch the vacancy rates in the inner cities and so forth with the downturn occurring.

When office complexes have 12% vacancy rates, nobody is going to really put their neck out, unless they already have a presold position, and that's pretty tough these days.

All I was going to say -- to me, the structural is almost like a trailing product.

It was the last to fall off, because of project continuation, the magnitude of projects to see through completion, and with vacancies and so forth, I think it will be potentially the last to pick up without some kind of artificial spark through stimulus or some project like that.

Mark, in the public arena, people just couldn't fund school projects.

People are a little nervous about the viability of state and local government and the ability to repay debt, and there was a lot of crying, wailing, and gnashing of teeth in that area.

But the bond market has a little bit of momentum.

Some of the school projects, municipal projects, may get financed and come off the drawing boards, and that could be very good for New Millennium as well as the long products arena, Columbia City.

Let me ask one more question.

Keith, you talked about this covenant thing.

I guess the only question I would have around it is if you -- what would be your anticipation of timing of a waiver announcement?

Is it something would you do after the third quarter is released, or is it something you would consider doing in front of an actual violation occurring?

What's your thought process around the timing of any conclusion to this process?

I clearly think it needs to be in front of, not after, and so we'll probably be engaging shortly in that dialogue with the providers.

Theresa.

I would agree with Keith that we would be in front of it as soon as we know that it would be an actuality, Mark.

We would communicate obviously to the investor base at that time.

Terrific.

Thanks very much, guys.

Thank you.

We'll move on to our next question from John Tumazos with Very Independent.

Good morning.

You have a very talented team that's built and operated great plants and made some great decisions.

It looks like the auto business in the upper Midwest and private nonres construction for the next several years are going to be very quiet markets.

Would a corporate makeover interest you to try to focus your attention where it's easier to make hay, like the electric furnace industry in India is not as well developed.

There's a very fine electric furnace plant in Mississippi that's a little closer to the locus of new auto plants.

I don't know if that would be a merger candidate.

In terms of the big picture, do you think there's better ways to make hay given the many talents of your fine team?

We're always looking at new opportunities in the marketplace, and I think the energy subject will provide many new opportunities to us, whether it's redoing the energy grid and transmission towers, or whether it's windmills and the blades associated with those builds, or the steel superstructures that are going to be associated with them, we're always looking at new markets to enter.

We certainly don't want to exit our established positions in other markets, but I couldn't agree with you more, though, that I think in the next few years automobile production will not return to 15 million units.

So it's important for us to be on the right platforms, and continue to participate in that arena.

I would note that the number of cars in inventory has declined notably recently.

I hope that it continues to adjust, and if it does, we see some resurgence of activity from the 10 million unit arena, hopefully in time, into the 11 million to 12 million to 13 million, but none of us are thinking this is going back to 15 million units tomorrow morning.

So we're all out there looking at different opportunities.

We've also been very heavily invested in the processing community, service center community.

They will remain our key clients.

And they're searching for new outlets all the time and bringing us new ideas.

At the same time, a lot of our teams are looking at new OEM opportunities that might suit us on a direct basis better than going through processing.

So we're always looking for new homes for our product.

As it regards foreign ventures, the one foreign venture we had in Thailand is probably still keen within our minds, and we're probably not too interested in going abroad at this point in time.

Moving on to Sal Tharani with Goldman Sachs.

Morning.

Keith, on the guidance, give us some more color.

You are going to close to break even, perhaps slightly positive.

Your mills continue to probably make positive profit.

Is it true to say they will be positive even with the corporate expense included, so is that still coming from the scrap there, you may have some concern that you may still lose some money?

We may have some early quarter losses there followed by recovery later in the quarter in recycling, but you can earn more per ton -- notably not $3, but $22 on an operating basis, yet when you -- when you multiply that by far fewer tons, you don't have a positive result.

I think -- I don't know that could I give you any -- and we've said we wouldn't give you any quantitative color on the second quarter outlook.

As we said, we'll stay with it.

Could be a small loss, could be break even, could be a small profit.

That's about as good of visibility as we have.

I think we will be, as the tech said, profitable going forward in the second half specifically.

I think we'll have some decent quarters there as we -- as the economy continues to move forward ever so slightly, and our position, relative to costs, delivers a perhaps better opportunity for margins.

So I think we'll have a profitable second half.

Obviously a breakeven quarter isn't going to cure the first half, given the large losses we had in Q1.

And I will refrain from making any comment about where the year might be quantitatively, but certainly there's an opportunity for us to eke out a small profit, but I'm not going to give you any quantitative guidance at this time.

Perhaps we'll be able to do that later in the quarter as we get better visibility.

We'll take our next question from Luke Folta with Longbow Research.

Good morning, everybody.

My first question was regarding -- I get the impression from your comments that the structural market isn't going to see improvement in the near term, but in a rebounding economic scenario, do you think there would be more upside for the flat-rolled product offering or more on the bar side?

Well, I think the margins are going to be better on the bar side multiplied times fewer tons.

We would agree with you.

Not seeing a major recovery taking place in -- at least in the next 90 days, anyway.

The margins could be expanding slightly on sheet goods, but again, the volume, it's probably going to move up the hill slightly.

But then again, prices have deteriorated recently, and just the last couple months they've come down significantly again, so the margins are going to be contracting probably a little bit, multiplied by the same tons, or, well, maybe they won't contract.

They may expand, but again, not very exciting progress in volume.

I think the one thing that's noteworthy, and I know you all know it, but our markets are affected by the type of competitors we have.

To complement what Keith says, from a flat rolled perspective, I don't know that the margins, the sales price is going to improve on the flat-rolled in the short term.

But the fact that they're mostly integrated competitors from a percentage of market share -- I think that small starts and improvements will be met through the mini mill sector that aren't big enough improvements that will warrant bringing back glass furnace or such.

But in the structural arena, everyone is a mini mill, and in some of our bars, it's a mixture.

So I think who the competitors are and what style of mill they are will affect the go forward in the short term.

We'll take our next question from Michael Gambardella with JPMorgan.

Good morning.

Have a question on the scrap side, ferrous scrap.

Could you give us an idea of where your ferrous scrap inventories are on a tonnage basis at both the scrap recycling business and the steel mills and how that has transpired since the beginning of the year?

Yes, Mike, inventories in flat-rolled have not materially changed.

They're still very high.

We bought into a declining price environment while shipments were weak, so they haven't changed.

Obviously the value of those inventories have now at the end of the quarter dramatically changed.

So I guess we have a lot of material at fairly economical values.

We have an excellent cost structure and -- but we see that inventory declining sharply in the ensuing months, and as prices just get into this malaise arena, certainly the opportunity to flush out cash and pare back inventory at specifically Butler.

The inventories aren't in bad shape at Columbia City.

I would tell you that they only have a couple months, and that's at a dismal operating rate.

If we could return to any semblance of capacity there, they wouldn't even have a month's supply on hand.

So it's really tied to the operating rate, but not in bad shape there.

Actually went down, and will probably continue to decline somewhat as they have at the other long products locations.

So the biggest volume of tonnage, biggest block of tons in inventory is clearly steel at Butler.

We have a very specific plan to have far fewer tons on the ground by June 30th and September 30th.

Which means we're not going to be big buyers out there in a rather dismal environment, and that's bad news for the resource community.

But as Mark said, the flows there in that arena are pretty dismal as well being buoyed only or mostly by offshore activity -- Turkey had been out of the market, China had been out of the market, they came back into the market.

Attractive pricing.

I don't know that that will continue forever, either, but it certainly was -- I think it sort of caused the resource universe to bottom out in this area.

Like I said earlier, it could go down $10, up $10.

I don't think it's going to materially move, but it could.

Buying activity abroad disappeared, and operating rates remained at these levels.

Scrap could further decline.

That's a possibility.

But in terms of volume and tonnage, again, we still have a lot of Butler, and be working that off in the ensuing months.

Our next question comes from Evan Kurtz with Morgan Stanley.

Good morning.

A quick three parter on scrap as well.

First I was hoping could you share with us of the 730,000 ferrous shipments, how many of those were into the export market?

Second, given that demand is starting to show some signs of life now in Turkey and in Asia, does it make any sense for you at all to ship into the export market even if net of freight you are selling a slightly lower price, if you can boost volumes and throughput to the yards?

And finally just wanted to get your thoughts on how potential cash for clunkers legislation might affect profitability in the scrap unit?

Thanks.

The answer to your first question, from an export standpoint, we dabbled in that market but didn't have any real material volumes going in there.

We did have some material going from our Omni Southeast division.

And we are continuing to look at export opportunities where ever it makes economic sense.

It may give you some contribution margin, but the numbers aren't tremendous even today.

But we are looking at that arena.

From a standpoint of cash for clunkers, obviously there's legislation that is yet to pass.

All we can see is view that the European market obviously, it certainly has impacted their market, whereby many cars are coming to the scrap yards to the point where they can't dispose of them.

At least, they don't have a market to dispose of them, and customers are actually paying the scrap yards to take the cars, which is an anomaly compared to where we see ourselves today.

But ordinarily I think cash for clunkers would certainly help recycling business.

It would increase the flow for sure and also stabilize the market pricing.

I might add to that I think cash for clunkers is probably a good stimulus.

It's probably a good idea.

It gets more environmentally unfriendly gas guzzlers off the road rather than the cycle we're in where people are trying to make the clunkers last longer -- and therefore the pick apart business has been robust, and these guys are sitting on bodies longer, not liking today's prices and not wanting to bring the bodies to the shredders.

In Europe, it clearly had a positive impact, in talking to one of our directors, who has been associated with the steel industry for the last 40 or 50 years and lives in Germany, and one of the problems they had with it is that the processing community wanted to seize upon an opportunity, and they were really afraid that this volume would drive prices down materially.

So they started charging people part of the euro rebate on the car to process the car.

So they were getting in on the action, and I don't know where they are with that today.

I think one of the dangers that we have with cash for clunkers is making sure the clunker gets to the shredder.

And so I think it would be legislation that I'd be interested in reading, because it's not going to do us -- it might do us good from a new car production, if it just makes it to the pick apart yard.

But it's not going to do our industry a lot of good if they all pile up in the pick apart yard.

So I don't think they will.

I think it will increase flow.

I think it's probably a fairly positive stimulus that could help move the economy forward.

Our next question comes from Brett Levy with Jefferies & Company.

Hey, guys.

Can you talk about 2010 CapEx and maintenance CapEx based on some of the revisions with respect to Mesabi and the second caster?

As far as 2010, we really haven't done a lot of studying related to that.

There would be some CapEx pushed out in the fourth quarter.

The second caster, we expect to finish in the fourth quarter currently.

It's -- if not there might be as much as $10 million to $15 million.

Carryover.

And from Mesabi Nugget, it could be as much as $15 million to $30 million pushback.

Brett, we have not really delayed maintenance CapEx.

You specifically said maintenance.

We don't have any projects of major magnitude that are maintenance oriented that we have not continued to pursue.

Plus the -- thus the comment, our mills are in great shape.

We continue to spend in that arena.

We don't anticipate at this time given the protracted nature of the recession, that we would have a significant CapEx load in 2010.

As Theresa said, mostly carryover in nature, but things have a way of changing rather dramatically within a six to nine-month period of time.

I think we're not going to see -- we're probably at the bottom of this cycle right now.

How long we move across, how long we are at the bottom of the L, if you will, is anybody's best guess.

I don't think anyone really knows.

A lot of people say, well, we're going to see a pickup by the end of the year.

I think that's just wishful thinking.

There are some bright spots in the economy.

Hopefully that will be infectious in nature.

Hopefully we'll work down the automobile -- the days in inventory.

Hopefully financing will loosen up and will move some of these projects forward.

It's very encouraging that there are signs of life on the drawing boards at the architectural engineering firms.

That's a very positive sign.

From a CapEx standpoint, again, just that we had some good projects that under current operating conditions don't have the payback that were initially calculated, and so those are the projects that got delayed.

They have efficiency, yield improvements, so forth -- and those, as operating rates increase and we return to some more normal margins, those will be the ones that come back and justify themselves from a payback perspective.

Our next question will be coming from Timna Tanners with UBS.

Good morning.

I wanted to follow up.

I think Dick was answering it a little before, but explicitly, you and the other mills are all kind of saying we're ready to restart as soon as we're able to.

What leading indicators will you look for to know whether or not to restart?

And like you said, some of the blast furnaces on the sheet side in particular may be a little bit slower.

Do you think you can take market share?

Do you think that -- how does that proceed in an orderly manner where everybody wants to restart capacity?

I don't think -- we're all looking for signs of life, and for us comes in the form of news about various segments of the economy, and the form of order entry.

But restarting for us is not a long event.

It's about eight hours long, if you will.

And so it's not really an issue, and we don't produce to stock.

So until we have a backlog, there won't be a sea change in how we operate the mills.

I'm just wondering, not just your own facilities, but some of the other facilities that are larger and clunkier -- is there a risk that when everybody wants to restart, they could overdo it, I guess?

I think that Dick addressed that earlier when he said, gee, if there are small surges here and there, there's not going to -- right now there's no joy in Mudville, and I don't think these guys are going to relight blast furnace activity for a small surge.

I think they want to see backlogs and demand and order entry levels wholesale different level before you crank a lot of those tools up.

It's not like an electric car furnace.

There may be more caution there.

You don't want to get involved in any economic head fakes that are out there.

Real quick, on the debate over carbon emissions and how we proceed with that, can you give us a quick summary of why mini mills may be better positioned and integrated if at all on the carbon admissions debate?

Well, I think the emissions at an -- most well positioned EAF facilities are far less onerous in terms of physical content in the environment than they would be at older facilities, especially integrated in nature.

But we're all -- none of us want to see jobs go offshore because we impose in some manner a carbon tax in our own environment which takes capacity offshore, eliminates jobs, and further damages the environment.

I think everyone, and Mr.

D'Amico has been very vocal in that regard, and I applaud him.

That's the last thing we need from a planetary perspective is more pollution and fewer jobs here.

So we need to play on a level playing field.

And I think there's more heightened awareness of that in the halls of Congress today than there has been in the past.

The steel industry is less than 1% of any perceived CO problem.

And that's pretty small.

From a global warming and CO content perspective, there's much more concern about what we're doing with livestock and farming and certainly the tailpipe itself.

We haven't solved the problems of the tailpipe.

Making smaller cars and plugging them into your electrical outlet is -- because most of the energy generation in this country is coal-fired, doesn't resolve the environmental crisis.

So we've got to be careful how we're moving around -- how the pieces are moving around here.

But we're opposed to any cap and trade legislation.

I don't think there are -- it's like putting a rule in place before there's science there to support it.

Show me a technology that's going to allow to us emit less for a reasonable modest investment.

We'll invest in it tomorrow.

But the technology isn't out there.

So making a lot of rules without the science to support it or the technology to support it is just going to create job losses and move jobs offshore.

So we're very concerned about thinking on the Hill in this rush to judgment in this regard, but I do think there's a lot more interest in our industry's position on that subject today than there has been in awhile.

I can't predict outcomes, though.

We'll move on to the next question from Michelle Applebaum with Michelle Applebaum Research.

Hi.

Thanks for a really thorough discussion and particularly in terms of the upcoming covenant issues.

I mean, up, I think I take for granted that covenant breaches are 90% of the time opportunities for banks to come in and get more money from you, not liquidity crisis triggering events.

We'd agree with you.

Right.

Well, I just have -- I think I've seen two or three dozen steel companies file bankruptcy, so I have a little bit of experience in that, sadly.

I thought that was a skill set I could flush, guys.

Anyway, Omni, there's been a lot of press about these issues, police things.

Mark, can you kind of talk about it?

Yes, and I will try not to get incensed by the whole issue, but I would suggest that back in February, we had a very heavyhanded closure of our Indianapolis yards.

I would suggest wasn't even a closure more, it was an absolute police raid, and to say we were surprised by these actions certainly is an understatement.

Our employees actually felt violated by the actions, and I think our reputation certainly has been tarnished or besmirched.

But despite the heavyhandedness of the investigation, you should know that no employee nor the Company so far has been charged with any civil or criminal wrongdoing.

But to put it in perspective, Michelle, there were about 25 incidents over a two-year -- roughly two-year period in which we actually had about 550,000 transactions take place over that time.

And the incidents range from about $3 of transacted material up to about $83 in material, for a total transactional value of about $875.

But as people know, in the industry, they recognize that the identification of stolen material can be a very, very difficult task.

And although we constantly train and retrain our employees, I believe some of them used poor judgment in executing our own internal policies.

But it's our belief, our strong belief that no individual broke the law or knowingly purchased any stolen property whatsoever.

We've been cooperating fully in their investigation.

In fact, and perhaps ironically, there's been a longstanding strategic working partnership with the Indianapolis police department, and that's gone on for several years, in an attempt to identify, question stolen material and to eradicate scrap theft in general.

Today that partnership has resulted in 1,900 investigations and 40 arrests in the Indianapolis area alone, and we have similar partnerships in our other communities.

For instance, Fort Wayne, we've helped in arresting 200 individuals for scrap metal theft.

So I think our integrity and our training in our programs are second to none.

Unfortunately the situation was further aggravated by discovery recently of some operating licenses that unknowingly expired.

They expired during the time SDI was acquiring OmniSource, so perhaps they expired through some confusion.

But know that 13 out of 189 scrap yards in the Indianapolis area share the same dilemma at this moment in time, but there's no excuses on our part.

We should have reapplied for them.

That reapplication process is underway, and we anticipate getting licenses here in the next hopefully 10 to 14 days.

Michelle, this is Keith.

I would tell that you based on what you heard from Mark, this was dramatic overkill at $875 worth of identified transactions that perhaps shouldn't have taken place, just poor judgment was used by an individual at the scale.

The fact that we have worked with these agencies, both in Fort Wayne, in Toledo, in Indianapolis, to prevent this kind of activity ought to be a very positive testimony to our attempt to eradicate activity like that.

But you almost to have wonder whether or not there isn't some politics involved here.

Just didn't smell right for $800.

Something else was going on here.

It was crazy, but I think in the end you will find that the Company, other than allowing a license to expire at a time when we were buying Omni, and probably just was overlooked, was this whole thing was much ado about nothing.

Does that answer your question?

Our next question comes from Kuni Chen with Bank of America.

Good morning, everybody.

Just to start, Theresa, can you please give us the shipment breakdown for flat rolled?

The hot rolled, cold rolled, galled, et cetera?

Absolutely.

Very similar to the fourth quarter.

Hot rolled was 105,000 tons.

Pickled and oiled was 20,000 tons.

Cold rolled was 34,000 tons.

Hot rolled galvanized was 53,000 tons.

Cold rolled galvanized was 47,000 tons.

Painted was 36,000 tons.

And galvalume was 9,000 tons.

Great, thanks.

Keith, you had mentioned that you think we're near the bottom of the cycle and that things can certainly change quickly in the industry, as you look out a couple months.

Can you guys just talk a bit about your -- how you look at your capital structure and your degree of comfort that you have sufficient financial flexibility to really participate fully when industry conditions do start to recover?

Working capital is down $800 million since the middle of last year, but obviously as things start to turn back to the upside, there's going to be pretty substantial working capital draw.

So just hoping you could flush that out a bit for us.

We have modeled four cases.

An upside case, which we just put on the shelf, and three downside cases.

So we're modeling very conservatively I think going forward.

And so any comments are in the context of fairly conservative prognostications.

But I actually see our revolver staying in the same arena for a quarter or two, being cut in half by year end from where we are today potentially, maybe even less than that.

So there's really no -- there are no liquidity issues, because we are modeling at very, very low levels of business activity.

So I don't see that as a problem.

As to gee, if business picks up, you're going to build some -- your receivables are going to go up sharply, yes they are.

But we have a very specific program in place yet to drive value out of our inventories, and by inventories we don't carry a lot of finished goods, as you know.

As a Company, have virtually no work in process.

So really talking about scrap, and I take any surge in accounts receivable activity, as welcome as it would be, would be dealt with by a declining inventory valuations, not valuations, but values based on less volume in stock, if you will.

So I don't really see our revolver going up throughout the year -- if anything, just going down.

Kuni, I would just add to that that even in an extreme upside scenario, you're not going to see working capital at the [key point] get back to the high levels that is was, probably we saw in the third quarter of last year, in part because it's just a high [dilation] of those scale prices and scrap prices, and I don't think anyone currently is paying those levels.

And in addition to that, Keith's point was that the actual volumes of specifically scrap inventory I think will be dealt with differently on a go forward basis, that OmniSource may go with different levels of volumes versus that [in] all of the steel mills.

So we're not seeing a problem with that.

Kuni, I don't think we're going back to $1,100 a ton anytime soon, which would really drive the working capital aspect of the equation to a greater degree, but certainly would love to see some recovery in pricing from these very low levels, but again I think that can all be dealt with within our capital structure, so we're not -- I don't know that there's any need to change the capital structure at this point in time.

This does conclude the question and answer session for today.

If your question was not answered, please contact Fred Warner, Investor Relations Manager, with questions at 260-969-3564, or email him at fred.warner@steeldynamics.com.

Corrine, thank you, I don't really have many concluding comments other than to thank everyone for their continued interest in the Company, their continued support of the Company, and to say to all of our employees, to give them a sincere pat on the back and a thank you for the cost containment accomplishments of the recent past.

You truly are the best at what you do.

Thank you.

Ladies and gentlemen, that does conclude today's conference.

Thank you for your participation and have a wonderful day.