Schnitzer Steel Industries, Inc.
Q4 2013 Earnings Call Transcript

Published: 29 Oct 2013

[Operator:]

Good day, ladies and gentlemen, and thank you for standing by. And welcome to the Schnitzer Steel Industries Inc. Fourth Quarter Earnings Release Conference Call. [Operator Instructions] As a reminder, today's conference is being recorded. It's now my pleasure to turn the floor over to Alexandra Deignan. Please go ahead, ma'am.

[Alexandra Deignan:]

Thank you, Yuri. Good morning. I'm Alexandra Deignan, the company's Vice President of Investor Relations. Welcome to Schnitzer Steel's Fourth Quarter Fiscal 2013 Earnings Presentation. In addition to today's audio comments, we've prepared a set of slides that you can access on our website at www.schnitzersteel.com or www.schn.com. Before we get started, let me call your attention to the detailed Safe Harbor statements on Slide 2, which are also included in our press release of today and in the company's most recent Form 10-K, which will be filed later today. These statements, in summary, say that in spite of management's good faith, current opinions on various forward-looking matters, circumstances can change, and not everything we think will happen always happens. Please note that we will be discussing some non-GAAP measures during our presentation today. We've included a reconciliation of those metrics to GAAP in the appendix of our slide presentation. Now, let me turn the call over to Tamara Lundgren, our Chief Executive Officer. She will host the call today with Richard Peach, our Chief Financial Officer.

[Tamara Adler L. Lundgren:]

Thank you, Ally. Good morning, everyone, and thank you, as always, for joining our call and for your interest in Schnitzer Steel. On our call this morning, we'll take you through a review of our fourth quarter and full year results. I'll begin with some highlights, and then discuss some of the initiatives we're implementing in fiscal 2014 that should provide a significant catalyst to earnings. Richard will then provide you with further financial details. After that, we'll open up the call for questions. But before we get started, I'd like to take a moment to recognize the Schnitzer team. I'm very gratified that in light of the market environment that the company has been facing, our team has continued to do an excellent job in serving our customers and our communities with unwavering dedication, integrity and quality. It is this commitment to excellence, their commitment to excellence, that was reflected in our selection as Scrap Company of the Year by AMM. Thank you to the entire Schnitzer team. So now, let's turn to Slide 4 to get started. Our reported fourth quarter loss of $10.82 per share was negatively impacted by a noncash goodwill charge, other asset impairments and a deferred tax valuation allowance. Together, these items impacted our reported results by $10.31, giving us an adjusted loss per share of $0.51. Our results were further adversely impacted by average inventory cost in both MRB and APB and by a number of other operating items. Together, these impacted MRB's operating results by an estimated $12 per ton, and APB's operating margin by approximately 400 basis points. In total, the impact was an estimated $0.43 per share. Amid these challenging conditions, we've generated positive operating cash flow of $38 million, maintained a healthy balance sheet and continued to return capital to our shareholders through our quarterly dividend. At the start of our 2013 fiscal year, we announced a restructuring plan, which targeted $25 million of savings in annual operating costs. We achieved this goal ahead of schedule, and we are undertaking additional cost reductions and a productivity improvement program, which should deliver an additional $30 million of annual savings. We expect approximately 70% of these savings to be achieved this year, with the balance to be achieved in fiscal 2015. Each of our businesses is well positioned to take advantage of the upturn in the market when it occurs. And in each of our businesses, we have organic growth opportunities that should deliver benefits in fiscal '14 in addition to the $30 million of cost savings, assuming no further deterioration in the market. We are not just waiting for the markets to improve. We are continually focused on the things that we can control

[Richard D. Peach:]

Thank you, Tamara. Before I go over business performance in more detail, I'd like to start on Slide 10 with a review of the significant items impacting the fourth quarter. Our reported results included a goodwill impairment in the Metals Recycling Business of $321 million, which reflects both the current industry cycle and trends in our market capitalization. The impairment is noncash, does not impact our debt level, and after the adjustment, we remain in compliance with the terms of our credit agreement. We also remain positive about the long-term health of our Metals Recycling Business, given the cyclical nature of the industry, our history of higher returns during the last mid-cycle and the year-to-year trend of producing positive cash flows. We also recorded other asset impairments in our Metals Recycling Business, which amounted to $30 million before tax. This included $8 million from the impairment of a contractual receivable and $5 million on a combination of impairments on assets held for sale, joint venture investments and other long-lived assets. In addition, our consolidated results included $3 million of restructuring charges, primarily for contract termination costs, and valuation allowances on deferred tax assets totaling $29 million. The majority of this amount was associated with the goodwill impairment, but it also included allowances against deferred tax assets at our foreign subsidiary, and to a lesser extent, against other tax assets on our balance sheet. Subject to future unusual tax items, we anticipate the fiscal '14 tax rate will revert to more historical levels. In summary, after adjusting for the goodwill and other impairment charges, and for restructuring and the deferred tax valuation allowances, our adjusted net loss for the fourth quarter was $0.51. As Tamara mentioned, these adjusted results include a variety of other cost items which, together, amount to an estimated impact of $0.43 on the quarter, and which I will describe in more detail during my review of business trends on the following slides. Now turning to Slide 11, I'll cover performance trends in our Metals Recycling Business. The soft demand and constrained supply of raw materials led to lower sales volumes in fiscal '13 compared to prior year. Ferrous sales volumes were down 16%, and nonferrous volumes were down by a similar level due to the knock-on impact of lower scrap flows and amounts of material available for processing through our sorting technology. In the fourth quarter, the sequential decline in ferrous shipments was 7%, with exports on domestic volumes down by similar levels. Historically, the fourth quarter for ferrous sales has been one of our strongest. But with the weakness in demand and supply conditions remaining tight, we have not seen that same pattern over the past 2 fiscal years. However, in contrast with ferrous, our fourth quarter nonferrous sales volumes were up sequentially by 4% due to higher production from sorting technologies and increased shipments in August. Our investments in nonferrous technology continue to enable us to meet customer quality requirements, which we believe differentiates us from any of our competitors. Besides the impact of lower volumes and prices, MRB's results in the fourth quarter were also adversely impacted by an estimated $12 per ton from a roughly equal combination of average inventory costs and other cost items. The other cost items were in 3 categories

[Tamara Adler L. Lundgren:]

Thank you, Richard. There is no doubt that fiscal '13 was one of the most challenging years in our company's history. Our focus was on completing our major capital projects, growing our Auto Parts platform and optimizing our businesses to adjust for the softening market conditions. In fiscal '14, we are focused on driving organic growth through generating returns from our capital investments and acquisitions and achieving full year benefits from productivity improvements implemented in fiscal '13. In addition, we expect to lower our annual operating costs by $30 million. We will continue to invest in our supply network by growing our Auto Parts Business, while maintaining a healthy balance sheet and returning capital to our shareholders. All 3 of our businesses are well positioned to benefit as the markets improve. And in the meantime, we're focused on delivering earnings improvement through the levers over which we have control. In closing, I'd like to thank everyone on the Schnitzer team for their commitment and dedication to working safely and working together, to serve our customers, our communities and our shareholders. Operator, let's open up the call for questions.

[Operator:]

[Operator Instructions] And it looks like our first question here on the phone lines will come from the line of Brent Thielman with D.A. Davidson.

[Brent Thielman:]

Yes, just a few clarifications. Did you say you think Q1 ferrous volumes would be similar to FY '13? And then MRB was around breakeven for the first quarter?

[Tamara Adler L. Lundgren:]

Yes.

[Brent Thielman:]

Okay. And then on the $12-per-ton adverse impact in the quarter, could you maybe separate out a little more how much was inventory accounting versus the fires versus the bad debt expense?

[Richard D. Peach:]

It was roughly equal proportions, Brent. Just about half of it was the average inventory accounting, and the other half was a combination of the other 3 items.

[Brent Thielman:]

Okay, got it. And then any reason that customer bankruptcy should have a material impact on volumes going forward, I guess, all else equal?

[Richard D. Peach:]

No.

[Tamara Adler L. Lundgren:]

No.

[Brent Thielman:]

Okay. And then lastly, I'll turn it over. But some other industry participants have talked about starting to see some rationalization in the competitive landscape in the scrap industry. Are you starting to see some of that in any of the markets you're in?

[Tamara Adler L. Lundgren:]

On the margins, we are. Large-scale consolidation, we haven't seen yet, but on the margins.

[Operator:]

Our next question in queue will come from the line of Timna Tanners with Bank of America Merrill Lynch.

[Timna Tanners:]

I just want to take a step back. And if I look at where we were with SG&A savings, for example, into 2013 we're supposed to see about $18 million, and now we're talking about another $30 million of cost savings programs, and I'm just wondering -- and similarly, if we look at the nonferrous sorting technology, it seems like pretty much everyone in the industry has adopted it by now. Is this a cost of doing business? Is this kind of the standard thing that's necessary to do -- to be a scrap processor? Or is this really something that can be incremental and specific to Schnitzer?

[Tamara Adler L. Lundgren:]

Okay. So there's 2 questions, I think, embedded in your comments, if I understand. Right. Let me start with the second one on the technology. I think the different types of technology have been adopted by larger players in the market and some medium-sized players as well. And I do think that, that the ability to extract nonferrous from ferrous is a critical feature of generating profitability in the market these days. So you saw us be early adopters of that. And I think you see the players who can afford it do the same. But I think that what happens is, that there is a capital investment associated with that and you need to maintain volumes in order to keep that running. And I think that, that's where you're seeing some pressure now on smaller volume players in terms of rationalization in the market. Your first question on SG&A, can you repeat it?

[Timna Tanners:]

Yes, sure. Now if we are looking at savings that you had talked about into 2013, we have noted about $18 million expected from 2012 and what showed up was a little over, what, 12? So that partially showed up. So if we see that $30 million into 2014, is that going to show up all in SG&A? Is that a good final number? Or is there offsetting factors that we should think about into cost side for 2014?

[Richard D. Peach:]

Timna, it's Richard. In fiscal '13, we said we were looking for $25 million of savings and $18 million in SG&A, $7 million in cost of good solds. As far as SG&A is concerned, and the absolute level of SG&A came down by $12 million from $205 million in fiscal '12 to $193 million in fiscal '13. However, fiscal '13 included $5 million of new SG&A cost associated with the acquisition and opening of the 11 new Pick-n-Pull stores. So when you back that back out, we did achieve our savings target in fiscal '13 on SG&A, which was ahead of schedule as far as we were concerned. Looking ahead, we've announced today a further round of savings of $30 million of annualized expenses, mainly in Metals Recycling. Of that amount, we expect 70% to be delivered in fiscal '14. And additionally, I would add that it is mainly focused on the production areas and operations which are reported within our cost of goods sold, so we will see our SG&A in fiscal '14 be roughly flat with the levels that we reported in fiscal '13. However, we should see a significant benefit come through in fiscal '14. And a good way to think about that, as 70% of it has been through fiscal '14, that's roughly $20 million. Based on our existing volumes, it's about $5 per ton of operating income in the MRB business. So that's how I would think about that.

[Timna Tanners:]

Okay, that's helpful. If I could -- one last one, and a bigger picture one. If we think -- and we take a step back, it really is kind of shocking to think about how shipments in your fiscal 2013 fell in -- on Page 6, right? Exports year-to-date. And I'm not picking on you, we know that this is a phenomenon across the industry. But I'm just wondering what your take is on why we would have fewer exports to the Asian market in particular, I think, is what you're saying, when China, of course, had a monster year for steel production, not lining up perfectly with your fiscal year but really big upside to steel production in China. So how do we understand the discrepancy there?

[Tamara Adler L. Lundgren:]

Well, I think that there are a couple of things to look at. Clearly, yes, China is more iron ore than scrap. But more importantly, I think that there was scrap that was bought by China out of Japan, driven by a lot of surplus scrap in Japan last year that we are not seeing occurring now. And the yen, the currency benefit, in terms of being able to buy from Japan. So I think that you see the volatility come through a little bit more apparently these days when you see the slower growth rates. But I see that -- we see that coming back right now. In, as I mentioned, in November, we're seeing strengthening in all 3 regions. In the West Coast, we're seeing Japan use more strength -- more scrap, sorry, and we're seeing the yen strengthening. And that's drawing more demand out of the U.S. And we're seeing similar dynamics in both the East Coast markets, as well as a strengthening demand in the domestic market. I think the -- so I would leave it there.

[Operator:]

Our next phone question will come from Martin Englert with Jefferies.

[Martin Englert:]

I guess, so just to dig-in on the cost cutting a little bit more, I just wanted to -- it's always tough to model these things and to understand them when you think of them on a total absolute-dollar basis when you've got sales moving around, and things. So just to see if we can cut it up in a different way. It sounds like, Rich, did you say that you expect SG&A overall to be flat next year? Which would imply that most of this stuff would come in cost of goods sold?

[Richard D. Peach:]

Yes, that's correct.

[Martin Englert:]

Okay. And then within that COGS bucket, I mean, can you break out, in rough terms, how much of it comes from fixed cost reductions in terms of like a headcount reduction or facility consolidations or something like that, or in terms of a processing-type improvements, more variable cost reductions?

[Richard D. Peach:]

Well, yes. It's a good question. It's going to come from a combination of salary and nonsalary savings. We will have headcount reductions in most of our major facilities around the regions. But in addition, there are significant components of these savings that are related to our procurement activities. That would include things like transportation, logistics, rationalizing our supplier base and more national contracts for supplies. And furthermore, productivity improvement is a major focus for us, because we are looking to do things differently, and not just better. So -- and throughout our operations, we're looking at reducing our costs for every ton produced as part of our processes, which we believe will help to increase our operating income per ton in the Metals Recycling Business. So these are some of the main components. But you, in terms of seeing this come through visibly in our numbers, will need to look to come through in the operating income per ton coming out the Metals Recycling Business. And as I've said, the 70% of the $30 million targeted for fiscal '14, that's just over $20 million which, based on just over 4 million tons run rate, is roughly $5 per ton of operating income.

[Martin Englert:]

Okay. And I guess, on that point, when you said supplier -- I think you said supplier rationalization and national accounts, can you just talk about what those things are and how those work?

[Richard D. Peach:]

Well, I mean, in a business the size of ours, we obviously have hundreds of suppliers and in terms of supplies, maintenance...

[Tamara Adler L. Lundgren:]

We're talking national procurement.

[Richard D. Peach:]

Yes, we're talking nontrade here. We're not talking about scrap procurement. Look, it's nontrade and we're talking about here. So, we're looking to consolidate and reduce the number of suppliers we use, get better deals, do more national contracts, focus on the efficiency of our logistics, and really, in general, improve our productivity across the board.

[Martin Englert:]

Okay. And I guess just, if you could, back on that point, did you say how much or can you say how much of it comes from things like that versus headcount or salary reduction? Is it half-and-half or is it more weighted towards one of the other? Because I just want to understand how this is all going to move in different sales scenarios, fixed versus variable.

[Tamara Adler L. Lundgren:]

So the -- if your concern is that if volumes increased, will the savings disappear? Is that fundamentally putting a point on your question?

[Martin Englert:]

So I'm just -- I guess I'm just trying to look at the sensitivity. If sales just continue on from where they are now, how much are you reducing the overall fixed cost structure of your business as opposed to doing things that may result in earnings leverage if things get better?

[Tamara Adler L. Lundgren:]

It's a combination. And I think that it's difficult for us to break down, because it is -- some -- it's difficult for us to break down in terms of proportion. What we do -- what we can say is that they will be sustainable and real throughout what we anticipate to be a recovering market. And so part of it is clearly fixed cost. Part of it is, as Richard pointed out, in nontrade procurement savings, savings in transportation, logistics, more efficiencies across divisions. And so these are savings that we consider to be permanent savings within the organization that will generate even better savings in a market that improves, and significant savings, and clearly, a strong catalyst to earnings, assuming the market stays flat.

[Martin Englert:]

Okay, okay. I guess, just lastly on Auto Parts. Can you just talk about -- I think you're going to lose -- you're going to have headwinds still from the new facility ramps next quarter. When is your target on when you reach a breakeven level in aggregate for those new facilities?

[Richard D. Peach:]

Yes, that's a good question. We should see the run rate of startup and losses begin to reduce. And during fiscal '14, later in fiscal '14, we will reach a level of profitability on those stores. And what -- because we've acquired 11 or added 11 new stores here, look, we have got some of them that are easier integrations that are already making profits. And we've put some of them where it's a bit more complex, where there's a bigger infrastructure improvement or that the conversion into the type of business we do, or indeed as a greenfield who we're building up from scratch, and they take longer. So in the rounds, they're making those operating losses at the moment. But it's gradually working its way out of the system and in the back half of fiscal '14 they'll achieve profitable levels, which is good news, because it will give us an additional financial contribution to the overall Auto Parts operating income for the year.

[Operator:]

Our next question in our queue will come from the line of Evan Kurtz with Morgan Stanley.

[Evan L. Kurtz:]

Just wanted to touch on freight rates. We saw a little bit of life in the freight market recently. Is that a major concern for you going forward? And how should we think about your competitiveness on the freight market? How much does it cost, I guess, to ship scrap from the West Coast to Asia versus from Japan to, say, Korea? Or maybe on the East Coast, are there similar kind of metrics? How should we think about U.S. to Turkey versus maybe Northern Europe and Turkey?

[Tamara Adler L. Lundgren:]

So both freight levels are generally stable, they're moving a few dollars either way. And as you know, they're essentially a pass-through. I think for this quarter, Richard, they were about $29?

[Richard D. Peach:]

That's right, an average of $29 per ton.

[Tamara Adler L. Lundgren:]

And that's on average. Obviously, it differs between West Coast and East Coast. But on average, it was $29. This quarter, I think it came down from the last quarter it was around $33. And they're hovering in that range. We -- yes, I was going to say, I think you'd asked us how competitive we are in that market. And this is an area that we've focused on and developed a core competency in over decades, and so we're comfortable that we are quite competitive in this market.

[Evan L. Kurtz:]

Got you. And versus Japan and maybe some of the closer exporting markets for scrap. If you're at $29 right now, do you have any idea what it costs to move scrap now from Japan to, say, South Korea or China?

[Tamara Adler L. Lundgren:]

Yes. It's probably 2/3 of what it costs to move from off the West Coast.

[Evan L. Kurtz:]

Got you. And then maybe just one more on rebar trade case underway. I believe most rebar comes into the U.S. through Galveston, but just wanted to get some color, perhaps, on the Pacific Northwest market. Is there a real potential here if we see imports maybe coming off a little bit for the markets tightening up in that region of the country?

[Tamara Adler L. Lundgren:]

Well, these freight cases are not new developments. And typically when cases are filed, we see some volumes adjust. So it's really relatively standard. Most of the impact on the West Coast is really into California.

[Operator:]

Our next question in queue will come from the line of Sal Tharani with Goldman Sachs.

[Sohail Tharani:]

Just wanted to -- taken through the MRB guidance of breakeven next quarter from $6 per ton loss, is that all coming from the second part of your cost rituals incurred like the bad debt reserve and fire damages and inventory valuation adjustment? But, I mean, is the performance going to be flat here quarter-over-quarter, and you'll get benefit from those things not recurring again?

[Richard D. Peach:]

That's correct, Sal. That's correct.

[Sohail Tharani:]

Okay. Now if I look at your chart -- at your Slide 5, I just want to understand these prices you have, the green and the blue lines, are these stock prices -- are the market prices of this based on lag you have used? And these are the actual spot price of the quarter, is that correct?

[Richard D. Peach:]

Yes, these are our actual shipped prices, the average shipped prices in the quarter, net of freight cost.

[Sohail Tharani:]

Okay. So we can -- we look at it in a way that domestic prices, what your -- most of the scrap you're buying at, of course, you're selling also some of it, 19% you mentioned. But most of it, you're buying it, and export is what you are -- your revenue comes from.

[Richard D. Peach:]

Well, we're getting revenue from both export and domestic sales. But the level of the domestic market does have an impact, especially in the east side of the country, on what we are having to pay for scrap and for processing and to make available for sale.

[Sohail Tharani:]

If I look at September and October, domestic prices remain pretty flat, export has moved up. So has that been a negative impact for you or positive impact for the first 2 months?

[Tamara Adler L. Lundgren:]

Well, it's interesting, Sal, that you asked that question. Because right now what we're seeing is that domestic and export prices are about in parity. And as you know, normally, export is above, has -- takes a premium to domestic. But for the last 6, almost 7 months, I think, we've seen domestic have a premium to export. So we're starting to see the market come back into what I would consider the historical balance where, right now, they're in parity.

[Sohail Tharani:]

Got you. And this impacts more on the East Coast or the West Coast? Or it impacts both side of your business?

[Tamara Adler L. Lundgren:]

It fundamentally impacts both sides. It's just a question of when it impacts. So you can kind of see it rolling, where it may start with domestic, go to the East Coast, and then follow into the West Coast. Because fundamentally, the steel market is a global market.

[Sohail Tharani:]

Got you. And also, you always had this lag between sales and buy. I'm just wondering, is lag more in the West Coast or East Coast, or it's the same?

[Tamara Adler L. Lundgren:]

It's about the same. It's about the same.

[Sohail Tharani:]

And what is it? About a month nowadays or...

[Tamara Adler L. Lundgren:]

Yes, probably between 3 to 5 weeks. Somewhere in that range.

[Operator:]

Our next phone question will come from the line of Tyler Kenyon with KeyBanc Capital.

[Tyler Kenyon:]

Tyler Kenyon in for Phil Gibbs. First, I guess, I'll -- and sorry if they've already been answered. I've been switching back and forth on a couple of calls here. But with respect to the incremental $30 million in cost restructuring that you've announced this morning, can you talk about any areas specifically, geographically speaking, where this would apply to? And how can we -- how should we think about the West Canadian shredder expansion? Any update there would be helpful. And should we expect any longer-term consolidation of West Coast export facilities?

[Richard D. Peach:]

Well, on the cost savings, Tyler, it's affecting all regions. So it's all parts of the Metals Recycling Business, mainly. And as you know, we have facilities up and down the West and the East Coast. So there's no one part of the country being targeted more than any other. It's across the board. And the savings are a mixture of -- coming from headcount and from a number of nonsalary areas, such as nontrade procurement in terms of -- and savings around the supplier base and consolidating suppliers and contractual savings, and also transportation and logistics, where we see a big opportunity there. And then furthermore, productivity improvements in our production processes, mainly in our major export facilities, but also in our [indiscernible].

[Tamara Adler L. Lundgren:]

And I think, with respect to your question on Canada, I think that what you'll see are some of many of the benefits that we are pursuing in productivity, organizational structure, transportation logistics will all benefit our projects in -- our new projects in Canada, where the construction is now complete.

[Tyler Kenyon:]

Okay. And one follow-up, if I may. What's really changing with the procurement practices? And where would you feel confident enough to drive kind of the structural cost change in the tough environment like you're currently experiencing?

[Tamara Adler L. Lundgren:]

Well, on the trade -- on the nontrade procurement, let's be -- on the nontrade procurement, it's really implementing a system-wide structure to get the benefit of the volumes of materials and services that we generate across our company. So I wouldn't call it rocket science in terms of structure, it's just disciplined execution and bottom line savings.

[Operator:]

And we do have time for one final questioner. Our final question will come from the line of Andrew Lane with Morningstar.

[Andrew Lane:]

I just wanted to jump in with 1 broader industry-related question. To what degree do you anticipate increased onshore DRI production within the U.S. to impact ferrous scrap demand, maybe, particularly, high grade scrap? And how should we think about the impact this is going to have on your business model?

[Tamara Adler L. Lundgren:]

Well, the DRI impact, we do not anticipate to have a significant impact on our business model. And any impact we actually think might be a positive impact. Recognize that DRI doesn't travel, it's not a merchant product. So you've got to look at where is the DRI plant being built. It's being built in the Southeast. We don't have a shredder in the Southeast. Second, it will probably replace purchases of pig iron first. Secondly, purchases of prime scrap. And those are 2 areas in the Southeast where, fundamentally, obsolete scrap for the most part. But the positive takeaway is that the constrained supply scrap that we're all experiencing should get some relief. By that, less pressure in that particular region, where DRI will replace scrap. And in the larger sense, DRI is predicated on low and stable natural gas prices. And if that assumption holds true, then there should be a big step up in demand for steel, generally, because low and steady natural gas prices will change the cost base for many industries across the country. And that should attract new manufacturing. You're seeing some of that stronger economic growth. Stronger economic growth improves GDP and increases the overall demand for steel and concrete. So it becomes a virtuous cycle from our perspective. And so from a larger perspective, we see it as positive. And from a narrow perspective, we see it as relieving pressure on a constrained supply of scrap.

[Andrew Lane:]

And if I could just follow up on that as well. Do you think increased DRI application will change the historical spread between high-grade scrap and obsolete scrap, as maybe it's paired with higher quantities of obsolete and producers use less high-grade scrap?

[Tamara Adler L. Lundgren:]

I think that's going to be very difficult to tell until you see significantly more use of DRI beyond the one company that is putting in the plant right now. I think it's too early to tell that.

[Operator:]

And presenters, that does conclude our time for questions. I'd like to turn the program back over to Tamara Lundgren for any additional or closing remarks.

[Tamara Adler L. Lundgren:]

Thank you, operator. And thank you all for joining us on our call today and for your interest in our company. We look forward to speaking with you again in January, when we will announce our fiscal '14 first quarter results. Thank you.

[Operator:]

Thank you, presenters. And again, thank you, ladies and gentlemen. This does conclude today's call. Thank you for your participation and have a wonderful day.