Universal Stainless & Alloy Products Inc (USAP) 2007 Q3 法說會逐字稿

Good morning. My name is Tamara, and I will be your conference operator today. At this time, I would like to welcome everyone to the Universal Stainless & Alloy Products third-quarter 2007 conference call. (OPERATOR INSTRUCTIONS). As a reminder, ladies and gentlemen, today's conference is being recorded. Thank you. Ms. Filingeri, you may begin your conference.

Good morning, this is June Filingeri of Comm-Partners, and I would also like to welcome you to the Universal Stainless & Alloy Products conference call. We're here to discuss the Company's third-quarter 2007 results and fourth-quarter outlook which were reported this morning.

With us for management are Mac McAninch, Chairman and Chief Executive Officer; Ken Matz, President; Paul McGrath, Vice President of Administration; and Rick Ubinger, Vice President of Finance and Chief Financial Officer.

Before I turn the call over to management, let me quickly review procedures. After management has made formal remarks, we will take your questions. The conference operator will instruct you on procedures at that time. Also please note in this morning's call, management will make forward-looking statements under the Private Securities Litigation and Reform Act of 1995. I would like to remind you of the risks related to these statements, which are more fully described in today's press release, and in the Company's filings with the Securities and Exchange Commission.

With these formalities out of the way, I'd like to turn the call over to Mac McAninch. Mac, you may begin.

Good morning. Thank you for joining us for today's call. As we reported in today's press release, sales for the third quarter of 2007 rose 13% to $62 million, exceeding our forecast. Our net income was $5.5 million, or $0.81 per diluted share, which was within the forecasted range.

This included a $1.4 million increase to our LCM reserve equivalent to $0.14 per share. The increase was necessary because of a further decline in nickel prices from the sharp drop they took at the end of the second quarter. Despite the decline, we estimated a FIFO benefit of $1.5 million in the 2007 third quarter, equivalent to $0.15 per share compared with an estimated FIFO gain of $0.5 million or $0.05 per share in the same quarter of 2006.

Although the lower nickel prices should ultimately encourage service centers to rebuild their inventories, the rapid and volatile decline in nickel in the third quarter kept most of them from entering new orders other than for stockouts. They focused instead on selling their higher surcharge products and reducing all inventory levels.

Fortunately, nickel prices began to firm up and stabilize at the end of September. Nickel is currently trading above $14.50 per pound. While we expect service centers to start placing orders to begin restocking for 2008, I expect them to limit shipments during the last month of this year.

Let me point out what we're not seeing in the marketplace, among service center or anywhere else. We're not seeing any effect from the delay in Boeing's timetable for the delivery of the 787 Dreamliners. Boeing has told its suppliers to ship to the original delivery plan, and the general sentiment is that the delay is a nonevent. It would have been better if they had made their original target date for their sake. But few in the industry actually expected them to meet such an aggressive schedule.

I will begin my review of our third-quarter performance by end market with aerospace, which continues to be our largest end market and represented approximately 44% of our total third-quarter sales.

Our aerospace sales rose 8% from the third quarter of 2006, but were 8% lower than the second quarter of 2007, due to the conservatism of the service centers. In 2008, I expect our sales of aerospace grades of steel to resume their strong growth.

Boeing's backlog remains at record levels, and they continue to win new orders, including one for 20 next-generation 737s from India's Jet Airways announced last week. Airbus just awarded Honeywell a large contract for the A350, and the industry expects to see demand for products to support the A380 as early as this spring. Overall, the level of activity in the aerospace is as healthy as ever.

We're very optimistic about the prospects of the power generation market. Our sales of power generation increased 13% over the third quarter of 2006 and 10% from the 2007 second quarter. We expect our power generation sales to accelerate in 2008.

In GE's recent conference call, Jeff Immelt said that their infrastructure business around the world is strong and growing, and that orders for gas turbines were up 10% in the third quarter. He is expecting to have a real boomer in infrastructure in the fourth quarter.

As to worries about a slowdown in Europe, he said they're not seeing it. In fact, they just received a $750 million order for six advanced technology gas turbines from EDF in France.

There was interesting news on the nuclear power front. Entergy Nuclear announced that it placed a major order for reactor components with GE-Hitachi Nuclear Energy to ensure delivery of critical parts in case they decide to build a new nuclear unit. They took this step because of their concern of a part shortage in coming years due to the growing number of utilities deciding to build new reactors.

Our sales to the petrochemical market were 17% lower than in the third quarter of 2006, but increased 6% sequentially. With the price of oil crossing the $90 mark, we have no doubt of the growing opportunity for us in the petrochemical market, which represented 13% of our total third-quarter sales. We plan to devote more of our sales resources to capture this opportunity.

We experienced a very strong growth in our sales of tool steel in the third quarter, which increased 35% year-over-year and 13% sequentially. Despite the market's reaction to Caterpillar's earnings announcement last week, the service centers are not seeing reduced demand in that heavy equipment market, and neither are we. In fact, the worldwide trends and prospects for the heavy equipment market remain very positive, which you can also see in Caterpillar's results and forecast, if you read their release.

I will now turn the call over to our president, Ken Matz, for a closer look at our operating progress in the third quarter.

Thank you, Mac. On our last call, I discussed three projects that were underway as part of our CapEx program aimed at ensuring the reliability of our equipment, improving our processes and efficiency, and reducing our costs. I'm pleased to report that we have completed the rebuilding of the cranes in our melt shop, which has already increased productivity of that core asset.

We have also completed installation of our seventh large milling machine in Bridgeville, which adds to our current aerospace and power generation product finishing capacity. The new emergent sonic testing equipment I mentioned last time will be installed this quarter in Bridgeville, and the Dunkirk unit is in the process of final testing.

These additions will eliminate the need for us to use outside conversion sources to sonic-test our more sophisticated products. That will reduce our costs and improve our efficiency and on-time delivery.

The largest capital project we have underway is the addition of high-temperature annealing equipment at our Dunkirk facility. The annealing furnace is capable of oil, water and air quenching, which is required for many grades of steel we produce. We will begin booking orders based on equipment availability.

One of the main areas of emphasis is improving customer satisfaction. To do so, we're focused on and making progress in three critical areas -- improving our on-time delivery performance through better production planning, scheduling, and material handling; reducing the cost of manufacturing and improving product quality and yield through our capital investments; and improving our operational excellence through better training, which is essential for the higher value added products we're bringing to the market.

Regarding our sales and marketing effort, we have won new customers, and are seeing increased inquiry activities as the result of hiring the [Westnet] organization last quarter to cover the western United States. Our search for a new vice president of sales and marketing continues, and we expect to have that post filled by year-end.

To briefly recap the performance of our Universal and Dunkirk segments in the third quarter, sales in our Universal segment grew 19% year over year to $55.9 million, reflecting increased sales to forgers, tool steel plate to service centers, and of special shapes to OEMs. There was a shift in product mix compared to 2007 second quarter, with increased sales to rerollers, but lower VAR product sales to service centers, in line with Mac's discussion.

Sales at our Dunkirk segment rose 7% from the 2006 third quarter to $21.3 million, as Dunkirk continued to benefit from the improved flow of VAR remelted feedstock from Bridgeville. Increased sales of VAR products to service centers compared with last year offset lower sales of rod and wire products to redrawers. Looking at Dunkirk sales to service centers sequentially, VAR product sales were down 2% from the 2007 second quarter, but were more than offset by increased sales of rod and wire products.

We noted in today's earnings release that our collective bargaining agreement with the hourly employees at Dunkirk Specialty Steel expires at the end of this month. We're currently in discussions with the union, and will update you when we can.

That completes my review of operations. I would now like to turn the call back to Mac.

Thanks, Ken. As noted in our earnings release, we expect sales for the fourth quarter of 2007 to range from 45 to $50 million, and diluted earnings per share to range from $0.60 to $0.65. That forecast takes into account the reduced order levels from service centers during previous quarters and their typical reluctance to receive shipments in the month of December, the effect of lower nickel on our sales prices, and our expectation that there will be no FIFO gain in Dunkirk segment because of lower nickel. On the plus side, the lower cost of nickel contributed to the substantial improvement in our free cash flow during the third quarter.

We feel very good about our performance in the third quarter, especially given the crosscurrents in our industry, created by the turbulence in nickel and its related effects.

Based on our current fourth quarter forecast, we're anticipating another record year in 2007, and we and I are very optimistic about 2008. We have a great team in place, and are pleased to have added a very high-caliber individual to our Board of Directors, Dennis Oates, as we announced on Friday. Dennis has substantial direct industry experience, and we look forward to his contribution over the coming years.

This concludes my formal remarks, we're now ready to take your questions.

(OPERATOR INSTRUCTIONS). Michael Gallo, CL King.

A couple of questions -- I guess as I look at your gross margins, even excluding the LCM charge, they were still down significantly sequentially. I understand some of that is related to the shift to the reroll business. Did that account for the entire difference? Was it just that mix shift, or was there something else going on there?

Well, there was a mix shift, but the biggest contributor factor was the higher reroll billet sales.

And I guess as you look at the fourth quarter, would you expect the reroll billet sales again to be up significantly, or was there something one time that affected that in the third quarter?

No, I think some or most of our reroll billet customers are anticipating that the service centers were going to -- excuse my French, wake up and start placing orders. So I think that they ordered a little heavier for the third quarter shipments than they will for the fourth quarter. I would expect we might have something like that happen in the first quarter of next year.

Right. I guess as you look at -- you've gone through now the last six months; nickel prices have come down, hit a low of 11; they bounced over 14 now. Are you starting to see some increased service center inquiries? And at what point do you expect those to start to translate into orders? Do you think if nickel prices stay here, is that Q1 when we start to see the orders pick up? Is it Q4? What do you see right now?

If you recall, I don't remember when I made this prediction, but I predicted that nickel was going to fall into the range of $13 to $15. And I thought it was something abnormal whenever it went down to $11 or whatever it was.

My expectations -- and we are seeing some activity out of the service centers now on inquiry and order entry. And I would expect that as we go through November and December, we're going to -- that will continue to increase, because even if they placed orders with us today, it sure as hell isn't going to ship this year. So the receipt of material will be next year.

I would be absolutely surprised if we do not see an uptick in orders from the service centers sector during the month of November and December for 2008.

Great. Could you update us on the opportunity in Europe in 2008 and when you expect to see some shipments over there?

Number one, we still have not concluded on the representative that will represent us in Europe. But I can guarantee you I am enthusiastic as hell about the opportunity for Universal Stainless in 2008 in taking the products that we elect to take into that marketplace. And I think we're going to be successful.

And one of the things that Dennis Oates brings to the party, and I would fully expect -- I haven't told him this yet; it may come as a surprise -- but I fully expect to utilize Dennis in advising us, because he does have a wealth of knowledge about export markets. And we're going to capitalize on that, and solicit as much of his help as we can. I am excited about 2008 and our export business.

Final question is for Rick; I don't know whether or not you'll have the answer to this. I guess as you look at the backlog -- obviously, it was down sequentially. I was wondering how much of the sequential decline you would attribute just to the decline in nickel prices?

The decline in nickel price is going to be about 5% of the decline. The rest of it is going to be associated to volume primarily in the service centers.

Mark Parr, KeyBanc Capital Markets.

I had a couple of questions --

See if I can come up with a couple answers.

(laughter) There is just a tremendous amount of excitement about the '08 outlook. And I guess, Mac, I was wondering if you could talk a little bit about what you would anticipate a reasonable range of volume growth for '08 in the domestic market, and then also what are you thinking preliminarily about the potential for a new distribution momentum into Europe to yield from a volume perspective on top of a domestic volume expectation?

I would be absolutely surprised -- and Mark, we typically do not forecast out beyond the next quarter -- but I would be absolutely amazed and astonished if 2008 is not going to be a better year than 2007 for Universal Stainless & Alloy Products.

And the drivers in that market, I think, will be the aerospace, the power generation, somewhat the oil patch, and those products that we participate in there. And I would expect that tool steel is going to be very good for us as we go into 2008.

As far as our export, I have no clue right now as to what kind of volume that we would expect to ship into Europe next year.

One of the things that I do expect, though, is that once we develop a relationship, however we develop that relationship, with customers in Europe, they will end up doing a significant amount of business with us, because as I said numerous times before, we will work just as hard with those customers in Europe and developing a relationship with them that we have used and developed with our customer base here in North America. And that's the way we're going to approach 2008, and especially our export business -- and potential export customers.

Is there any rule of thumb that you go by? I know, Mac, you've got an awful lot of experience in dealing with both direct sales and also with reps. Could you talk -- give us a little more color about the kind of organizations that you think you could establish a relationship with in Europe? And how many salesmen are we talking about, and what sort of geography could these salesmen be focusing on in the first 12 to 18 months?

The first place that we're going to focus on is Europe. And will we consider moving into Asia? I hope that Dennis Oates is going to help us in the timing of making that decision.

As far as the organization, do you know what drives the organization of Universal Stainless & Alloy Products? Orders entered, shipments made, bottom-line profitability. I really -- personally, I don't give a damn if we have one or 10 sales people in Europe, as long as they are generating the sales and bottom-line profitability that's going to pay for the reason they're on the face of this earth.

Right. I guess I was just curious -- I'm sure you've had discussions with several groups that would be qualified to represent you. And I was trying to get some color on perhaps the scope of these operations and what they might be able to bring to bear from a marketing perspective.

Mark, we have not concluded yet -- now when I was in Helsinki for the sixth annual Markus Moll metals conference, I did interview a couple of organizations over there. And we haven't concluded yet whether we're going to partner with a sales rep organization, or whether we're going to end up possibly hiring an individual as a salesperson for Universal Stainless, and he would be on our payroll. I kind of like that idea, because his butt's in the palm of my hand, and how hard he works and things like that.

All right. So we will look forward to more color on that then as you (multiple speakers)

I would be most happy to address that in our next conference call earlier.

Another thing I was curious about -- we have seen it -- if you look at the service center data, the MSCI data -- we have seen a dramatic reduction in stainless steel inventories. And you could say (multiple speakers)

(multiple speakers) flatroll, wouldn't you agree, Mark?

Yes -- well, that's pretty much the market. And if you look at -- at least the flatrolled stainless service centers have done a pretty good job to of getting rid of excess inventories. But I'm curious how you might be seeing that translate into the service centers that you do business with, and also your customers. And is there any other way that we can track inventories at the customer level -- beyond just kind of looking at broad numbers like the MSCI, is there anything else that you could point us to?

I cannot, Mark. I'll tell you one of the concerns that I have with the service centers and the way they have taken their inventories down. And I think the same thing happened back 18 months, two years ago. They looked at the overall marketplace -- aerospace, power gen, and everything else that was out there -- and there was a hell of a good market.

All of a sudden, they looked at their inventory and started getting orders, and they said, oops, we don't have any inventory. I am concerned a little bit about that during the first quarter -- maybe the first two quarters of next year, that we could get the same kind of panic buying that we did 18 months, two years ago. That's not going to be good for any of us. (multiple speakers) I would much rather see them start placing orders now for delivery in the first half of next year, and do it on a managed basis rather than sitting back waiting until something raps on the door -- you know, hey, you're out of steel.

Do you think -- just along those lines, we could see that the service center industry as a whole is a lot more fragmented than the producer segment is.

I agree with you.

And along those lines, are there opportunities for USAP, for your Company to think about perhaps getting more actively involved in a direct operation of service centers?

That's a loaded question, my friend. (laughter) I think I'm going to pass on that one right now.

All right. Congratulations on the progress, and look forward to talking again with you soon.

Luke Folta, Long Beach Research.

I had a question on the aerospace side regarding the 787 program. Can you talk about -- (multiple speakers)

What, the 787?

Yes. Could you talk about to the extent where you're seeing volumes related to that program, and how those volumes are likely to ramp over the next few quarters?

Number one, if you take a look at Boeing's backlog, their numbers that they produce, their shipments of that aircraft is going to continue to grow as we go into 2009.

And even though there are some of them scheduled for delivery in 2008, it's a fairly small number. But as you get into 2009 and 2010, that number has increased by a substantial amount when you consider the size of that airplane.

How that translates back to pounds shipped, I have no way of knowing, because the bulk of the product that we sell that ends up at Boeing is distributed through service centers. I know that doesn't answer your question, but it's the best answer I can possibly give you.

Okay, so at this point in time, you're not seeing a whole lot related to that program yet.

No.

Okay. And to touch on the service centers, I noticed that in most of your end markets, you're seeing a sequential pickup in volumes in 3Q, except for the aerospace market. Is that just due to the fact that most of the sales are to the service centers?

Yes, that's a pretty good assessment.

Thank you very much.

Wayne Atwell, North Street Capital.

Could you discuss your vision for the Company, and what you would like to look like in five years, how you're going to get there, and maybe capital spending initiatives? And I'm sure you won't give us specific numbers, but maybe you could give us ranges and maybe some adjectives.

Well, I could probably give you some adjectives. Ken Matz is busy right now putting together his capital -- his wish list for 2008.

We have for a long time had the major wish list. I can't discuss those in detail with you. I've had a vision for this company ever since 1994, August 15, when I signed the paperwork with Armco to assume ownership.

That vision really hasn't changed a whole lot. We feel that we know where we're going, but I'd prefer not to talk about the five, 10, 15 year, because every once in a while some of my competitors listen to this. (multiple speakers) not to know.

I guess I hear what you're saying. But investors would sort of like to nowhere you're going to take us (multiple speakers) products (multiple speakers) or will your energy be spent?

I'll answer your question this way. We're going to continue to grow. Complacency is not acceptable. We're not willing to sit here at 200, 200 plus million in sales. We're going to grow the Company. And I think with Dennis Oates coming on board -- and I can tell you, my other two outside directors are excited about this. And I can't wait until we get to the December Board meeting, because I think there's going to be a lot of excitement there. I can tell you one thing -- I'm going to try to bring some excitement to the December Board meeting.

Can you talk in generalities -- aerospace is likely to be strong for quite some time. Oil prices will likely remain high, which would mean there will be a lot of demand for oil country products. Utilities, there's a crying power shortage in Asia, so it's likely you're going to see a lot of demand for power. It's not clear which power facilities are going to be built, but there's a crying need for that. So you're in sort of the hotspot of a lot of exciting markets.

Can you give us generalities in terms of how you plan to grow? Do you want to get bigger in Asia, Europe, Latin America? Can you give us any kind of roadmap?

Really, we have exported a very limited amount of product in our -- this year [and pyre]. My expectations are -- or at least the objective is that we're going to substantially increase our export of the products that we to elect to take to the European and Asian marketplace.

You know, the power generation business is going to be good for a long time. The aerospace business is going to be good for a long time.

Now when you go -- what comes next? If they could install all of the steam, gas and nuclear power plants in the United States that we need to meet the forecasted growth of the demand for electric power in the next 20 years, we do not have enough infrastructure to deliver that power that could be generated.

So I don't care whether it's infrastructure on electric power lines or whether it's infrastructure on gas lines or gasoline lines. There is a potential for this market to be very strong, for a long period of time. And by damn, we need to capitalize on that.

(OPERATOR INSTRUCTIONS). Fritz von Carp, Sage Capital Management.

Fritz von Carp, Sage Asset Management. On your fourth-quarter guidance, does that include your estimate of a FIFO -- the FIFO accounting, or is it sort of neutral to that, or how does the accounting fit in to the (multiple speakers)

We expect it to be neutral.

You mean your guidance is based on neutral and you really think it will be, or your just guidance is based on neutral because you don't know, and it could be something else?

Yes.

That was either/or, like (multiple speakers) (laughter) will be neutral in the fourth quarter --

No, I listened to you. (laughter)

Some companies just say we don't know, and they just zero that out of guidance, and that's what I'm asking. Or (multiple speakers) are you making a forecast?

No, we think we know based on the guidance that we put out there. I don't think -- Rick, and I don't want to speak for you, but I don't think you're expecting any surprises, are you?

No, sir. (multiple speakers) Traditionally, we do not factor in FIFO gains in the guidance that we provide, unless we know at the time of this call that there has been a significant change in the price of nickel. As we sit here today, I can't say that there's been a significant change in the price of nickel. So there's no anticipated benefit or charge as a result of that.

And you have a large FIFO hit in the third quarter. That will just -- I'm always confused on this, that will reverse when nickel prices recover? Is that correct?

That will be -- you're referring to the LCM charge?

Yes. Well -- (multiple speakers)

Okay, that will reverse as the metal ships.

As the metal ships, I see. Okay, thank you.

And then could be replaced by new metal, depending on what happens to the price of nickel as we get closer to the end of December versus the actual input costs of the heats that we're melting.

Thank you.

Nat Kellogg, Next Generation Equity.

Just a couple of quick questions. One is, obviously tons shipped was down year over year pretty materially, but obviously pricing was up. Can you give me a sense of how much of that was due to product mix shift versus just nickel surcharge pricing issues?

No, just product shipped -- mix of product shipped. And I will caution you -- we don't even talk tons.

Okay. You just don't feel like that's a good guide to (multiple speakers) underlying strength in the business?

We have so much excess capacity to put through this facility, we know we can handle what the hell ever comes our way.

Okay. I mean, because you guys are running your capacity right now for the [melt shop] -- that's what, 50%?

A little higher than that.

Okay, but there's obviously not -- okay. And then obviously, I noticed on you guys mentioned sales of special shapes to OEMs was obviously very strong in the quarter. I was just wondering if you could give us a little more color on sort of what that driver was, if it was anything sort of one-quarter specific or there's something going on there that's really helping --?

That was one-quarter specific. We shipped a large order to a particular customer. But you know, that business is going to flow with the aerospace and the power generation business. We're going to have real good months. And it's just the way that orders are entered and the way we receive feedstock and the way it's shipped.

And then if I look at inventory quarter on quarter, can you give us a sense of what the volume side looked like as far as a change from quarter-over-quarter, just versus the total dollar amount?

What's your total tons versus --

We dropped our inventory from a pound perspective in Bridgeville probably 15% during the quarter. The inventory levels in Dunkirk are relatively stable.

15% down in Bridgeville on a ton --

Yes.

-- on a weight perspective. Okay, great. Thanks, guys; nice quarter, and appreciate the time.

Chris Olin, Cleveland Research.

I got on late, so I apologize if you've covered this. But I wanted to know if you're seeing anything different from the Airbus supply chain, and whether or not they are buying any kind of significant material for the A380 or any other platform.

We really don't have that much exposure to what's going on at Airbus. We hope that in 2008 we will be a whole lot smarter than what we are today.

We do know that one of our service center customers has sold product that ultimately ends up at Airbus. But Airbus is their customer, not ours. So I really can't give you an intelligent answer to that question.

(OPERATOR INSTRUCTIONS). [Ralph Marash], First Manhattan.

Mac, you're very optimistic about next year. I know it's coming off of a good year this year. And yet, your major sales channel, the service centers, have been ultra-conservative. And there's concern, as you express, that if they rush to orders, that's going to hurt everybody, including you -- hurt margins and productivity.

Well, not necessarily hurt us, but what it creates for us is that we have to -- and I'm talking we, I'm talking the industry now -- because everyone is going to place orders with all of us. Then we start not necessarily adding capacity, but in order to take care of those demands that are placed on us, we're going to gear up and try to produce as much and get it shipped as possible.

End result, what's going to happen? You're going to have too damn much inventory for the demand out there in the marketplace. And as I mentioned earlier, I would much rather see them start placing orders now so that we start shipping in the first quarter to take care of that demand, when people are not -- their primary interest is reducing inventory.

I hate to see them get overloaded with inventory again. It creates a problem for us, and it really creates a problem for them from a financial perspective, especially with the marketplace that is very volatile from a raw material cost. Hey, there's no guarantees that nickel is -- it's at $14.50 or wherever it is right now -- there's no guarantees is not going to go to $20. I feel confident that it's not going to go to $8 or $10. So I think that we can manage this business better than what we did late in 2006 and early 2007.

I'm just trying to square that -- given all these variables that are not under your control, I'm just trying to square that with your great optimism for '08.

I don't know what more I can --

I guess essentially, what you're saying is that your end markets, particularly aerospace and power generation, are --

Petrochemical and the heavy equipment -- I expect it's going to be fairly good -- no, not fairly good; I'm optimistic about 2008.

And you know, you read about what's going on in the automotive industry. I don't know how many automobiles they're ultimately going to end up building this year, but it's a big number. And I think that they have done a respectable job in reacting to the realities of what is occurring in their markets, and is being driven by the price of oil.

They're not building any more large, heavy-duty pickup trucks and stuff like this. They have converted over to where they're building these smaller, fuel-efficient cars.

The same thing is driving the airline industry. If they expect to make a profit, they have to go to a fuel-efficient airplane. That's what's driving Boeing's business, Airbus's business, and everyone else that's in this business. That's why I'm optimistic about 2008.

Okay, so just maybe to sum up to see if I'm seeing it the way you are, essentially, the end customer pullthrough is going be strong enough in '08 to overcome these hopefully short-term disruptions in terms of the order pattern and the nickel swings, the price --

I firmly believe that. I totally agree with you.

At this time, there are no further questions. Mr. McAninch, are there any closing remarks?

Yes, thank you. If there are no more questions, then I would like to thank you for your interest and time this morning. We are excited as we have ever been about the substantial opportunity we see in our marketplace. I look forward to speaking with you on our next call. Thanks again.

This concludes today's conference call. You may now disconnect.