Steel Dynamics, Inc.
Q4 2020 Earnings Call Transcript

Published: 26 Jan 2021

[Operator:]

Good day, and welcome to the Steel Dynamics Fourth Quarter and Full Year 2020 Earnings Conference Call. . Please be advised this call is being recorded today, January 26, 2021, and your participation implies consent to a recording of this call. . At this time, I'd like to turn the conference over to Tricia Meyers, Investor Relations Manager. Please go ahead.

[Tricia Meyers:]

Thank you, Kevin. Good morning, and welcome to Steel Dynamics' Fourth Quarter and Full Year 2020 Earnings Conference Call. As a reminder, today's call is being recorded and will be available on our website for replay later today. Leading today's call are Mark Millett, President and Chief Executive Officer of Steel Dynamics; and Theresa Wagler, Executive Vice President and Chief Financial Officer. The other members of our senior leadership team are joining us on the call individually as we are following appropriate social distancing guidelines. Some of today's statements, which speak only as of this date may be forward-looking and predictive, typically preceded by believe, expect, anticipate or words of similar meaning. They are intended to be protected by the Private Securities Litigation Reform Act of 1995 should actual results turn out differently. Such statements involve risks and uncertainties related to our steel, metals recycling and fabrication businesses as well as to general business and economic conditions. Examples of these are described in the related press release as well as in our annually filed SEC Form 10-K under the headings forward-looking statements and risk factors found on the Internet at www.sec.gov, and if applicable, in any later SEC Form 10-Q. You will also find any referenced non-GAAP financial measures reconciled in the most directly comparable GAAP measures in the press release issued yesterday entitled Steel Dynamics Reports Fourth Quarter and Annual 2020 Results. And now I'm pleased to turn the call over to Mark.

[Mark Millett:]

Well, thank you, Tricia. Good morning, everybody. Thank you for joining our fourth quarter and full Year 2020 earnings call. I apologize for the early hour, particularly for those that may be on the - coming in from the West Coast, but hopefully, you're going to enjoy the results, nonetheless. Because 2020 was a year of unprecedented health and economic challenge as we navigated the impacts from the coronavirus pandemic. Yet through the extraordinary dedication and passion of the Steel Dynamics team, we took care of one another, while also providing for our families and serving our customers. Protecting the health and welfare of our people is our highest priority. And I want to thank each of them for their continued commitment to each other. I am proud to work alongside each of them. They're a special team, and they continue to do incredible things. Despite the challenges, we achieved best-in-class performance, with a record fabrication volume, strong earnings and steel shipments that were only 1% less than our record year, simply a phenomenal performance, given the conditions. We accomplished these milestones while remembering that none of it matters unless everyone goes home safely at the end of each day. Our safety performance improved in the fourth quarter and notably, our annual 2020 injury severity rate was the lowest in our history. Again, nothing is more important than the health and safety of our people. Safety is and always will be our #1 value. Our safety performance is significantly better than industry statistics, but our aim is to have no injuries, and we will work tirelessly to get there.

[Theresa Wagler:]

Thank you, Mark. Good morning, everyone. I'd like to add my sincere appreciation and congratulations to our entire Steel Dynamics team. As Mark mentioned, we achieved numerous milestones despite the social and economic impacts from the coronavirus. We achieved revenues of $9.6 billion derived from record fabrication shipments and our second highest annual steel shipments. Operating income of $847 million and net income of $551 million or $2.59 per diluted share, and cash flow from operations of $987 million and adjusted EBITDA of $1.2 billion, a truly extraordinary performance considering all the peripheral challenges. Regarding our fourth quarter 2020 performance specifically, net income was $188 million or $0.89 per diluted share, which includes financing costs related to our October 2020 refinancing activities of $0.04 per diluted share. Costs net of capitalized interest associated with the construction of our Sinton, Texas flat-rolled steel mill of $0.05 per diluted share, a noncash asset impairment charge related to noncore oil and gas investments of $17 million or $0.06 per diluted share net of noncontrolling interest; and finally, a tax benefit related to the reduction of a valuation allowance of $13 million or $0.06 per diluted share net of noncontrolling interest. Excluding these items, fourth quarter 2020 adjusted net income was $0.97 per diluted share, above our adjusted guidance of $0.80 to $0.84 per share due to stronger-than-anticipated December flat-rolled steel shipments as order activity remains very strong. Our fourth quarter 2020 revenues were $2.6 billion, 12% higher than sequential third quarter results as steel and metals recycling pricing improved. Our fourth quarter 2020 operating income was $259 million, $103 million or 66% higher than sequential third quarter results. Due to higher realized flat-rolled steel pricing more than offsetting increased scrap costs. As we discuss our business this morning, you'll find that we are positive heading into 2021, considering underlying steel fundamentals and confident in our unique earnings catalyst. All 3 of our operating platforms performed well in 2020 and in the fourth quarter, with the steel metals recycling teams achieving their best quarterly performance of the year. Our steel operations generated $298 million of operating income in the fourth quarter, more than double third quarter sequential earnings as flat-rolled steel selling values increased significantly throughout the fourth quarter driving expanded metal margins.

[Mark Millett:]

Well, thanks, Theresa. As you were talking there, it's a great recap, I think, of our financial performance for sure. But the startling metric there, I think you have a team that produced almost $1 billion in free cash flow during a pandemic in an incredible economic downturn. This speaks remarkably for the team that we have. But as you also mentioned, the steel fabrication platform delivered an outstanding performance, achieving record annual earnings and shipments. The nonresidential construction markets remained resilient throughout 2020, especially in areas that support online retail and computing activities, such as warehouses for the retail distribution and cloud computing functions. This continues to be a strong area for our fabrication projects. We ended the year with a record fabrication customer backlog, which is atypical for this time of year as seasonality tends to impact order activity. So I think it bodes well for the future.

[Operator:]

. Our first question today is coming from Seth Rosenfeld from Exane BNP Paribas.

[Seth Rosenfeld:]

If I can kick off please with the question on kind of how we're seeing the market develop in the near term. I think everyone on the line's, at this point, quite excited by the strength of the market right now, but skittish on the outlook going into 2021 with prices where they are. Wondering if you can comment on how you're seeing your order book develop in recent weeks? Has there been any slowdown in order intake due to high prices and some concern about price moment and maybe inflecting in the coming months, are we still seeing the same strength you've already talked through that benefited your Q4 performance?

[Mark Millett:]

Well, certainly, I think it's intrigued that one keeps hearing about the issues with the market because - I'm sorry, I don't know whether you heard that. I may have been on mute. But it's intriguing to me that there's concern about the strength of the market because right now, it is absolutely incredible. I know the supply side tightness, but demand is very, very, very, strong. Automotive recovered, and it's going to be 16 million units or so this year and probably more. And that's very, very strong and for us, we continue to gain market share, both at flat roll and engineered bar. We see residential construction is very, very strong. We can't supply enough steel currently to appliance, HVAC. Garage - metal garage door panels are incredibly strong. So that's a very a good sector. And although people are a little concerned about perhaps ABI numbers coming off a little bit, we certainly don't see that in our order book. As both Theresa and I have said, we have record sort of booking in the backlog at our fabrication platform. The retail shift to online sort of purchasing is really driving massive expansion of the warehouses - distribution warehouses. And cloud computing, likewise, is increasing dramatically and has a considerable build-out, too. And if you look at just the momentum, the Steel Joist Institute bookings for last year was 17% up year-over-year at 1.36 million tons. That's a considerable market. Just below their previous record back in 2007. 2020 shipments were up 7%, and we're seeing that momentum carry into this year, and we are very, very happy with where we are from a backlog perspective.

[Theresa Wagler:]

I think, Jim Anderson, this morning told me the market is "red hot."

[Mark Millett:]

Yes. So they're a pretty excited team. Let me tell you. And then you get further down into the demand, you look at the truck trailer material handling. Again, they were anticipating a little bit of a flat to down year, but they are - actually changed that. We're anticipating they're going to be up 20% or more. Yellow goods, green goods, we're seeing very, very, very strong demand, and they're telling us at least the, again we don't know what they're doing with other customer - suppliers. But our order book is going to be substantially up throughout this year. Solar is a growing marketplace and a surprisingly large marketplace. And the only real sort of weak area is the oil patch, and we're seeing glimpses of light even there. But they - typically, even in a strong market, they're only 8% of the total marketplace. So it's not a massive, massive impact. So just generally, we see a very, very positive perspective out there. Our order books are incredibly strong. I wish we could make a lot more steel today because we could certainly sell a lot more steel. And we see it sustaining or persisting through the year.

[Operator:]

Our next question is coming from Curt Woodworth from Crédit Suisse.

[Curt Woodworth:]

Mark, just had a couple of questions around - you talked about the paint line starting up before the mill. At this point, when do you expect first coil production at Sinton? And is the plan to light both EAFs at the same time? Because I know it's kind of a different configuration with dual EAFs but a single caster. So just curious what the time line is looking like?

[Mark Millett:]

Well, the second question, absolutely. We'll be starting both furnaces up at the same time because we're expecting a strong ramp. And I think it's exciting. Again, even through the challenges of last year, that the project still remains on schedule for a summer start-up. And as Theresa said, it's still remaining on a $1.9 billion budget. And if you have seen the - you get on our website and take a look at the drone video that we continually update each year - I don't know, once a month or - not each year. Once a month...

[Theresa Wagler:]

Not each year. Applicable .

[Mark Millett:]

Yes, you see a big difference each year. But it's - they're making remarkable progress, and it's a massive project. So they've done incredibly well. That doesn't mean to say there haven't been some zigs and zags along the way and likely have some more to come. But the team has done an outstanding job, I think, overcoming the challenges. We have had a few COVID-related delays in equipment and actually more impactful was ocean freight, getting ships to bring it here. But that's no longer an issue. And fortunately, none of that was on the critical path for the project. So again, timing for the project is still on time for a summer start. As I said, the coating lines, the paint line, the galvanizing line and likely the pickle line should be in good shape for the second quarter. Likely as kind of a May-June start there. And we'll be supplying substrate from Columbus likely and purchasing some substrate from third parties.

[Operator:]

Next question is coming from Timna Tanners from Bank of America.

[Timna Tanners:]

I wanted to just ask a little bit about the CapEx. It looks like maybe you're a little light in 2020, and that's the explanation for the higher value for 2021, but wanted to get a little bit more color on how that's progressing. And had heard that Sinton was starting a little later because of COVID delays, but sounds like that's not the case. So if you could clarify those items, please?

[Theresa Wagler:]

Yes, no problem, Timna. From a CapEx perspective, you're actually exactly correct. Simply had about $100 million that shifted from the fourth quarter of 2020 into the first half of 2021. So wherein, as last quarter, I would have suggested CapEx for 2021 would be about $850 million. It's now about $950 million. Unlikely, about $600 million to $700 million of the $950 million will be spent in the first half of the year. As it relates to the time line of Sinton, Mark?

[Mark Millett:]

Yes. I think, Timna, we've always advertised sort of a summer start-up, and that's not changed. Internally, we may have had some more aggressive goals as we typically do within SDI, and if the sun and moon aligned, maybe we could have started up 6 weeks or so earlier. But again, I've got absolutely no problems, no concerns there right now. Everything is progressing well, and the team is doing a phenomenal job.

[Operator:]

Our next question today is coming from Chris Terry from Deutsche Bank.

[Christopher Terry:]

Mark and Theresa. I had a question just around working capital. As we think about 2021 and the higher price environment and then also the integration of Sinton. I just wondered if you could talk through maybe a first half and second half '21 expectations on working capital.

[Theresa Wagler:]

Yes, absolutely. Chris. From the perspective of Sinton stand-alone, Sinton is likely to have a working capital ramp of somewhere around $130 million to $150 million, including all of the inventory and receivables. That will be a ramp. So in the second half of the year. You might get some of the raw materials, so maybe $50 million to $60 million in the first half. But most of that will come second half of 2021 and then into the first half of 2022. As it relates to company-wide working capital, you would have seen that we did have a draw of about $200 million in the fourth quarter related to primarily pricing of raw materials and of finished goods that would be in inventory at that point in time. You're likely to see a bit more of a draw as we're expecting to have higher prices and volumes sustained into the first quarter, but not as much of a draw as you saw in the fourth quarter. So I would say the first half, you're going to see a draw more than you typically would see. Second half, you'd see that moderate.

[Christopher Terry:]

And then just in terms of the overall capital structure and the buyback, how are you thinking about that in terms of Sinton in the middle of the year and maybe second half?

[Theresa Wagler:]

So from a capital allocation perspective, obviously, we're still focused on a big capital investment year in 2021. That being said, the cash flow generation that we've been having is quite strong, and we would expect to see that continue in 2021. So from a capital allocation perspective, we would expect to see the positive dividend profile continue. Once Sinton is up and running, that's likely going to be an opportunity for another kind of step function increase in our dividend policy as we like to grow the dividend with sustainable free cash flow. As we have excess cash flow along the way, that's with the share buyback programs for it's to complement the dividend profile because we see the dividends as forever. So you're likely to see us start to look for opportunities potentially from time to time in the market from a share buyback once we get past more of the larger spend for Sinton in the first half of the year. Mark, is that...

[Mark Millett:]

Yes.

[Theresa Wagler:]

Okay.

[Operator:]

Our next question is coming from Carlos De Alba from Morgan Stanley.

[Carlos De Alba:]

Mark and Theresa. Just in terms of the potential infrastructure package, there are comments about $1.5 billion potential stimulus in the second half of the year. How do you see that benefit still demand in the U.S. and steel dynamics in particular? I don't know if you can - you have a sense of the volumes or - yes, that you could benefit from it.

[Mark Millett:]

I think the - it's certainly more than likely that we will see an infrastructure package, as you know, which is going to be a great sort of general benefit. But right now, it's difficult to discern where those dollars are going to be spent specifically and hence, where the impact will be from a volume perspective. Certainly, just the upward momentum that it will provide the economy in general will certainly help us. And any actual infrastructure, steel consuming infrastructure projects will be to our benefit. But to actually try to estimate, calculate a volume when you don't really know where the dollars are going to be spent, I think that it would be disingenuous for us to suggest.

[Operator:]

Our next question is coming from David Gagliano from BMO Capital Markets.

[David Gagliano:]

I just want to ask a little bit about the scrap market and how scrap costs are flowing through the results? Just obviously, historically, steel dynamics has - typically reports quarter-over-quarter changes in scrap costs that are typically less than the change that we've seen in the public market or domain. But this quarter was a pretty big spread. And I'm just wondering, is any of that timing related? Should we be thinking about - how should we be thinking about the first quarter in terms of the scrap input costs? And also if you could just also share your views on the near-term outlook on scrap beyond what looks to be down in February?

[Theresa Wagler:]

Yes. I'm going to let Mark talk about the scrap markets. But as it relates to the scrap flows, there really hasn't been any change. We're still turning inventories on a monthly basis, both at the mills recycling operations, and we tend to keep somewhere between 3 to 4 weeks on the ground at the steel mills. So I can't really address why it may have been greater than you typically see, but there hasn't been a change in how we're using or accounting for the scrap.

[Mark Millett:]

Yes. Well, I guess, the only impact would be it's such a rapid increase in a short period of time, and you're seeing the difference between the market and our inventory. But just in the scrap market as a whole, obviously, it's gone up some the last month or two, quite considerably. We would imagine that we'll retreat from the current highs or moderate somewhat. It's not going to take all a couple of hundred dollars back, but it's going to retreat, we believe, because the strong pricing is driven a substantial increase in the flow, particularly the obsolete grades. People are out there collecting it's flowing in dramatically, and the industry has actually dropped the scale prices. And so I would expect the market prices to drop over the next couple of months. For prime scrap, flows are fully reestablished in connectivity with the automotive business coming back. We expect prices there to soften, but not quite as much as obsolete grades. So the shred to prime spread will likely expand a little more than it is today. And we think the export market will remain relatively soft. And so there's - again, we feel pricing is going to moderate. I think despite China listing its import restrictions, it's not going to impact the ferrous market dramatically, not in the U.S. anyway. But it is going to give us - or has given us significant upside on nonferrous. Obviously, as many of you know the nonferrous, the copper, aluminum absorber, those sorts of grades, really didn't have much of a home for the last year or so. With them opening up, they're able to increase the margins there. So I think that's a positive for us.

[Operator:]

Our next question is coming from Andreas Bokkenheuser from UBS.

[Andreas Bokkenheuser:]

Just a follow-up on scrap actually and something we've talked to you about before as well about availability of scrap in the U.S. market. I think you guys have always maintained your view that there is plenty of scrap in the U.S. market for everyone to go around. Does that change now given the new import rules in China? I mean, China obviously reopening that goes for seaborne scrap. And it's obviously not a large seaborne market. So do you think do you think that could go in and kind of tighten the market and maybe even lead to some consolidation of mills in the U.S. they're buying more scrap yards in the same way you guys did in Mexico recently? Or do you still see the U.S. scrap market pretty well supplied? That's my question.

[Mark Millett:]

Well, I can't speak for other companies. I would suggest that, as we've said in the past, we will expand or grow to support our steel mills regionally. So we did that. We bought some Sims yards around our Columbus facility, just to baseload that mill. And Zimmer, obviously, is destined to supply some scrap to Sinton quite cost effectively. So you may see us, again, just add smaller opportunities, but we're not going to be in consolidating the whole scrap market or anything like that, for sure. Regarding scrap supply, I think you're seeing what has been typical in the past. Scrap is incredibly elastic. Certainly, the obsolete grades are incredibly elastic and has - as scrap pricing has increased dramatically in the last month or 2, it's amazing how folks get out there and that flow increases dramatically. And so I don't see a long-term issue with scrap supply in any way shape or form.

[Theresa Wagler:]

I think one just has to - so as we look at scrap generation, we see it continuing to increase. We see it increasing even more quickly than potentially some of the additional demand that will be derived from some of the new EAF capacity coming online domestically. But one also has to look at the additional HBI, DRI and other projects that are either coming online, have been announced or being contemplated by even the blast furnace participants. So I think there should be ample raw material as Mark's said.

[Mark Millett:]

And with the rationalization of the integrated side of the industry, it's quite possible that you just start to see them actually produce pig iron, which would help the supply balance - supply-demand balance as well.

[Operator:]

Our next question is coming from Phil Gibbs from KeyBanc Capital Markets.

[Philip Gibbs:]

Theresa, the question I had was just on the flat-rolled shipments by grade, if you had that handy?

[Theresa Wagler:]

Yes. I'm sorry, I made you ask, I skipped over. I didn't mean to. So hot-rolled and P&O for the quarter was 749,000 tons, cold rolled, 139,000 tons, and coated products were 973,000 tons for a total of about 1.9 million tons of flat roll.

[Philip Gibbs:]

And the coated number again, I'm sorry?

[Theresa Wagler:]

The coated number was 973,000 tons.

[Operator:]

Next question is coming from John Tumazos from John Tumazos Very Independent.

[John Tumazos:]

The forward curve for the hot-rolled sheet contract is over 6 months, down $367. I'm not sure I understand that. But do you think the forward curve reflects new supply, so let's just say 1 million tons more flat rolled, 1 million tons more long products? Or do you think the forward curve reflects a fall in the price of iron units? Your mill is only going to be 0.25 million tons a month. Not 1 million or 2 million tons a month and you'll probably just be striking an arc by August where the forward curve is down $367. It seems to me that market's anticipating a lot of supply. I'm not sure where it is, but I appreciate your view, Mark?

[Mark Millett:]

Well, John, simply, I don't understand it either. Again, as I tried to suggest earlier, this isn't just a supply side tightness. Demand, the markets are incredibly strong and robust right now. And we see that persisting. Certainly very, very, very strong first half, and I think it's going to continue into the second half. And I don't see any appreciable change or driver out there to change that. To your point, okay, we're out a few tons here, incremental tons relatively to the market anyway, the second half of the year. Big River reportedly is running. We don't see them in the marketplace necessarily, but they have got their capacity up and running pretty strong from all reports. So there's not that additional capacity there. So I don't see where the relief is going to be. I don't see, to be honest, the Biden administration changing the trade environment materially, at least not near term. I think they recognize that China is a massive threat. Their approach to them might be different than the Trump administration. They will likely ally with our friends in Europe and in places. But they're not - they will likely change 2.32, but I think they will be very cognizant that there needs to be trade controls there. And there are underlying legislative trade constraints in place that aren't just an executive order, they're legislated, and they're going to be there for years to come, Section 201 countervailing duties and . So I don't see necessarily the - an import flood. The arbitrage certainly has grown to China. But nonetheless, lead times are months and months out. And you see some specialty items coming in, but I don't see any dramatic change in the import profile. So I don't see where the pressure comes off the accelerator to drop $370 here in the next, whatever it is, 6 months. So I agree. I don't understand it either. We don't see - we certainly don't see it within the fundamental drivers of the marketplace.

[Operator:]

Our next question today is coming from Tyler Kenyon from Cowen and Company.

[Tyler Kenyon:]

Mark and Theresa. Certainly as you've addressed some potential tailwinds for coming from infrastructure spending. But I was just curious if you had any thoughts on how the suspension of border wall construction and the cancellation of the XL pipeline, how that could maybe impact the steel demand and/or scrap supply. I mean, I think we were reading through the Department of Homeland Security that pretty close to 700,000 tons of steel has been consumed since 2008 on the border wall. So yes, the question is, how do you see that impacting the market? And has steel dynamics been participating in supplying steel to any of these projects?

[Mark Millett:]

Well, I think the border wall, to be honest, was relatively incremental. We didn't see much of that product. And that tends to be at the low end, commodity hot band side of the business that we tend not to play in, to any great extent anyway. So - but I don't see that as a massive impact to demand.

[Theresa Wagler:]

The XL pipeline is hard to tell how much that may have an influence and what the Biden administration may do going forward with additional kind of oil and gas, obviously, is not going to help. From that perspective as Mark said, at least in the fourth quarter, which was prior to some of these things happening, we were starting to see some orders come in from those customers, both at Columbus and at our Engineered Bar Products Division, where we would have the most impact. But I just think it's a little too early to tell.

[Mark Millett:]

Well, and that pipeline - actually, our pipeline, to be honest, a massive amount of that pipe has already been made and is laying on the ground. So it's not going to have a massive impact.

[Tyler Kenyon:]

Got it. And then just, Theresa, just 1 last one, just on cash taxes, if your, I think in the last call, you guided to a pretty, pretty low cash tax rate. Just curious if that's changed significantly? And maybe how we should be thinking about that rate moving even into 2022?

[Theresa Wagler:]

Well, in 2021, the provisions that allow us to expense the fixed asset investment once we start-up Sinton are still in place. So as long as those provisions are still in place, we'll be able to basically pay maybe 3% state cash taxes in 2020 and likely remain very low - I'm sorry, in 2021 and likely remain very low in 2022 as well. But obviously, we need to watch the administration and things that may change according to that. But right now, we're still planning on the benefit in total being somewhere around $300 million to $350 million of cash tax savings between 2021 and 2022.

[Operator:]

Our next question today is a follow-up from David Gagliano from BMO Capital Markets.

[David Gagliano:]

Just to circle back on the scrap question, sorry to ask another scrap question. Just on the near term, it's to help calibrate expectations on our side. If we start with the assumption that scrap prices actually don't change for the remainder of the quarter. I realize that's not the view, but if we assume that they don't change, just from a timing perspective, what should we expect for the scrap cost change quarter-over-quarter in the first quarter?

[Theresa Wagler:]

Well, again, for us, David, from a scrap mix perspective, the mills keep 3 to 4 months on hand. So whatever your estimation would be from - I'm sorry, weeks on hand. So whatever your estimation would be from an index perspective, you can just apply that, and you're going to get very close to what will actually happen.

[Operator:]

We've reached end of our question-and-answer session. I'd like to turn the floor back for any further or closing comments.

[Mark Millett:]

Well, to those on the phone still, we certainly appreciate you're listening in and you're supportive of your company. And I think it's just one last comment that, I guess, didn't really come out clearly. People are focused on price, and it's not price that matters, we're a margin. We're a metal spread business. And again, we anticipate a very strong demand year that's going to support pricing on the price side on the market side. Supply side, inventories remain very, very low. We expect import activity to remain very moderate. A significant portion of the idled blast furnace capacity, we expect to remain down, and lead times are extended. So you couple that with a moderating scrap environment, we see that metal spreads themselves are going to persist sort of higher than the normal through-cycle levels and should be very, very helpful for us, and we're anticipating a remarkable year, in all honesty. That being said, to our customers out there, folks, we had an absolutely phenomenal year - last year, and we couldn't do it without you. So thank you for your support. Similarly for our vendors and service providers. Thank you. And most importantly, thank you to each and every employee out there. It was an absolutely tremendous year. I think it vulcanizes or just affirms our business model, that we are a differentiated company. To make $1 billion of free cash in a year like that, I think just spells out clearly that we're a different company today. And with Sinton coming online, it's going to add 25% to our steelmaking capability. That's going to be a significant step function increase in our through-cycle cash generation. So we've done a phenomenal job, and we're going to keep doing it, and we can't do it without each and every one of you. So thank you. Go ahead, have a great day. Be safe, stay healthy.

[Operator:]

Thank you. That does conclude today's teleconference. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.