Nucor Corporation (NUE) Q1 2013 Earnings Report, Transcript and Summary

Good day, everyone, and welcome to the Nucor Corporation First Quarter of 2013 Earnings Conference Call. As a reminder, today's call is being recorded. [Operator Instructions] Certain statements made during this conference call will be forward-looking statements that involve risks and uncertainties. The words we expect, believe, anticipate and variations of such words and similar expressions are intended to identify those forward-looking statements, which are based on management's current expectations and information that is currently available. Although Nucor believes they are based on reasonable assumptions, there can be no assurance that future events will not affect their accuracy. More information about the risks and uncertainties relating to these forward-looking statements may be found in Nucor's latest 10-K and subsequently filed 10-Qs, which are available on SEC's and Nucor's website. The forward-looking statements made in this conference call speak only as of this date, and Nucor does not assume any obligation to update them, either as a result of new information, future events or otherwise. For opening remarks and introductions, I would like to turn the call over to Mr. John Ferriola, Chief Executive Officer and President of Nucor Corporation. Please go ahead, sir.

Thank you. Good afternoon. This is John Ferriola, Nucor's Chief Executive Officer and President. Thank you for joining us for our conference call. As always, we appreciate your interest in Nucor. With me for today's call are the other members of Nucor's senior leadership team: Jim Frias, our Chief Financial Officer; and our other Executive Vice Presidents: Jim Darsey, Keith Grass, Ladd Hall, Ham Lott and Joe Stratman. First, and most importantly, we want to thank everyone on our Nucor, Harris Steel, David J. Joseph, Duferdofin, NuMit Steel Technologies and Skyline Steel teams for your hard work, taking care of all of our customers in today's very challenging market conditions. As always, you are doing it by working safely, working smart and working together. You are Nucor's greatest asset and our real competitive advantage with the right people doing the right things every day. Thank you all. Last week, Ham Lott announced his plans to retire in early June, and Ray Napolitan has been named as his successor as Executive Vice President, leading the Fabricated Construction Products team. Ham's retirement and Ray's promotion are part of the thoughtful and orderly succession planning process that has been an important strategic initiative throughout Nucor in recent years. Ham began his career in 1975 and has served since 1999 as Executive Vice President responsible for Fabricated Construction Products. Over his 37 years of service with our company, Ham has dedicated himself to Nucor's continual improvement and strengthening our competitive position. Under his leadership, Nucor's downstream businesses have nearly tripled to their current annual capacity of more than 4.6 million tons. On behalf of myself, Dan Dimicco and the entire Nucor family, I want to thank Ham for his many contributions to making Nucor a better company. Ham, thank you for a job extremely well done. And remember, while you may be retiring, you will always be a member of the Nucor family. Ray Napolitan is a 17-year veteran of our company. He is a highly effective Nucor leader with experience in our metal buildings, joist and deck operations. Since 2010, he has served as President of Nucor's Vulcraft/Verco group. Ray and his team are well prepared to build upon our record of long-term profitable growth in downstream and fabricated products. In addition to providing Nucor attractive long-term returns, these businesses enhance the profitability and growth opportunities of our core steelmaking business. I will now ask our CFO, Jim Frias, to discuss our first quarter results and financial position. Following Jim, I will update you on Nucor's growth strategy. Jim?

Thanks, John, and good afternoon. First quarter 2013 earnings of $0.26 per diluted share were modestly above our guidance range of between $0.20 to $0.25 per diluted share. The decline from fourth quarter 2012 earnings of $0.43 per diluted share was due to the swing from a fourth quarter LIFO credit of $0.14 per diluted share to the first quarter's LIFO charge of $0.03 per diluted share. The decline from year-ago first quarter earnings of $0.46 per diluted share was largely the result of weaker operating results from our steel mills as the typical seasonal improvement in the first quarter did not occur. A quick comment about our tax rate since it can be confusing due to the impact of profits from noncontrolling interests. After adjusting out profits belonging to our business partners, the first quarter of 2013 effective tax rate was 33.4%. Balance sheet strength remains an important attribute of Nucor's business model. Our total debt-to-capital ratio was 32%. Cash, short-term investments and restricted cash totaled $1.1 billion at the end of the first quarter of 2013. Further to Nucor's strong liquidity, our $1.5 billion unsecured revolving credit facility is undrawn, and it does not mature until December 2016. We have no commercial paper outstanding. Nucor is the only steel producer in North America to enjoy the extremely important competitive advantage of an investment-grade credit rating. The benefits of our credit rating include a lower cost of capital, financial flexibility and Nucor's position as the lowest risk counterparty for both customers and suppliers. Our natural gas working interest investments to support Nucor's raw material strategy are an excellent example of how financial strength pays off for Nucor. Our strong liquidity and cash flow through the ongoing Great Recession is allowing us to continue Nucor's long tradition of growing stronger…

Thanks, Jim. The magnitude and duration of this ongoing Great Recession is unlike anything we've experienced in our lifetime. We are now 5 years into what remains a depressed and stagnant global economic environment. Here is a statistic that tells the real story. In the United States today, approximately 30 million people are either unemployed, underemployed or have simply given up hope for finding a job and have dropped out of the labor force. On a percentage basis, the true unemployment rate today rivals levels last experienced during the Great Depression of the 1930s. Against this backdrop, steel market fundamentals remain very challenging. Utilization rates for the American steel industry remain mired in the 70% range. At the same time, imports have surged over the past several years to levels totally inconsistent with the stagnant domestic economy. These import levels make no sense whatsoever when you consider the fact that American producers are among the lowest cost producers of steel in the world. But the Nucor team always thinks and acts with a long-term perspective. We are able to do this because of the strength of Nucor's business model. These strengths include our strong balance sheet, our healthy cash flow generation through the cycle, a low and highly variable cost structure, great product diversification, our market leadership positions, a flexible production capacity and most importantly, our culture. Longer term, we are bullish on the profitable growth opportunities for both the American economy and to Nucor. Our team is bullish on the American people and their ability to do the right things over the long run to reinvigorate our economy. Speaking frankly, the time is right for a U.S. economic renaissance, fueled by our country's abundant energy resources and an unrivaled workforce. That is why we are busy building a stronger…

[Operator Instructions] And we'll take our first question from Sal Tharani with Goldman Sachs.

I wanted to ask you about these investments you're making in the growth projects. Is 2013 the peak you think or this will continue on in the next few years? Just to understand the CapEx for the next few years.

Well, in terms of investments, a lot of the projects that we are currently working on will finish out in 2013 or early 2014. We never limit ourselves looking at the future. We're not sure when potential opportunities will come up so we always keep our options open. We have a strong balance sheet, so if we have the right opportunities, we can continue our investments. And that said, we will always be continuing our role in new products on an organic basis in our existing mills. We are always looking for new opportunities to grow our product range and to improve our products and move further up in the value-added markets.

Should we consider a second DRI unit, the second module which you had a little bit postponed sort of something which is going to start sometime in -- at least the construction sometime in '14?

It's too early to comment on that. Our objective right now is to focus on getting the first module up and running and getting the DRI into our facilities. You do know that we have built the infrastructure and support structure at the existing Louisiana facility to support 2 units. So when we move forward with the second unit, the timeline will be a little bit shorter, the investments will be a little bit lower and we can move forward a little quicker. It's [ph] already in place for the second unit, so that's also a timesaver.

One last thing on nonres construction. Are you seeing improvement year-over-year or quarter-over-quarter as it is moving forward from, let's say, sometime middle of last year?

As Jim mentioned in his comments, as we look forward into 2013, we see a slightly better nonresidential construction environment. We use the word cautiously optimistic. We see some signs of improvement. The ABI index has been over 50% for 7 months in a row now. When you look at residential construction, which is sometimes a leading indicator of nonresidential construction, housing starts up over a million units annualized, which is the first time since, I don't know, 2007, 2008, somewhere back then. So there are some encouraging signs that things are getting better in nonresidential construction. Now having said that, when we say that they get marginally better in 2013, that would take them to roughly 60% or 65% of the levels that they peaked out at during 2007.

We'll take our next question from Evan Kurtz with Morgan Stanley.

First question, just on DRI. One thing that I'm curious about is just the value and use issues with using DRI in an electric arc furnace relative to pig iron. I was wondering if you can kind of give us a sense of how that slows down productivity. Does it increase tap-to-tap times? What does it actually do to your operating cost at the mill?

There is a value and use penalty in using DRI. We estimate that to be somewhere in the neighborhood of $15 to $20 a ton. It really isn't a function of productivity. It does slow you down a little bit. It's more of a function of cost on other components, refractory costs and other operating costs similar to that. Now we have done a lot of work on DRI in electric arc furnaces. We've done a lot of testing at our existing furnaces. And to date, we've been able to add -- at our Hickman facility, we ran heats with 40% to 45% -- I'm sorry, that was actually what we did at Decatur. I said Hickman by mistake. But at Decatur, we ran trials using DRI so that we could get a good feel for what the penalties would be, both in productivity and in costs. So we feel we have a real good handle on those estimates.

That's great. And then just something else on non-metal costs. And maybe this is too simple of an analysis, but just looking at the first quarter in 2013, metal margins were $377, roughly the same in first quarter 2012, $379. Volumes were a little lighter this year versus last by a few percent, but operating profit was down about 30% or so. So I was hoping you can just help us understand some of the moving pieces. I assume some of that's mixed, some of that is fixed cost absorption. But just to get a handle on how non-metal costs are tracking year-on-year.

First of all, I think you're comparing the first quarter to the last quarter when you talk about volumes being flat because versus last year, they're down. And then you're looking at profits from last year. Am I mistaken or I misunderstand your question? I think...

Yes, volume down 3.5% year-on-year versus first quarter 2012 and the steel business were up 4.277, down this quarter versus 4.424 from first quarter 2012. And then I'm comparing metal margins from the same quarters as well, they're roughly flat.

I didn't think metal margins were flat from last year's first quarter. I don't have that in my fingertips but I thought they were down.

Okay. Well, are there any kind of mix issues that we should be aware that could be impacting just margins in general going forward, aside from just the headline metal margin number that we should be thinking about?

Mix is always an issue when you look at those numbers. I don't have the specifics in front of me, but I would say that our mix did change pretty significantly first quarter '13 relative to first quarter '12, if that helps answer your question.

Next, we'll go to Curt Woodworth with Nomura.

I was wondering if you could spend a little bit of time on what you're seeing in some of the long product markets, specifically on the bar side. I mean, it seems like volumes are accelerating for you guys and bar up, I think, 7% year-on-year. But what we've been reading on metal margins, they've been pretty static. I think you guys actually lowered NBQ by about $50 a ton earlier this year, and we've seen the import pressure seemed to spike a little bit. So do you think it's a function of just the demand is kind of slowly moving along? Or do you think that the potential for imports is kind of the key issue holding back spreads in bar right now?

Well, let me start by saying imports continue to be an anchor around the neck of the entire industry. Global overcapacity is a major issue, as is domestic overcapacity in all of the steel products, long Products and flat products. Now that said, we do see 2013 to be slightly better in terms of volumes and in pricing in all of our steel products with the exception of sheet. We think sheet will be -- will continue to be very challenged, particularly in the second quarter. We believe the volumes will be similar or maybe a little bit higher, but pricing will be very challenged on our sheet business.

Okay. And just a quick question on DRI. Can you provide any kind of update on your views on metallization rate or reduction costs? I know that it's a relatively widely used technology but I think the process you guys are using, the DRI process, there's only 2 plants globally utilizing that technology right now, if that's correct. So any update there would be appreciated.

Well, there's many more than 2 plants operating globally using the HYL technology. In terms of the metallization rates, clearly, we study both the Midrex and the HYL very carefully before moving forward. We're convinced in looking at some of the HYL facilities that our teams have visited and did a deep dive into -- that they will be able to achieve similar numbers to what we see in Trinidad, perhaps a little bit better. We're looking in the neighborhood of 96.5% to 97% on metallization rates and somewhere in the neighborhood of 3% to 3.5% of carbon levels. Actually, I think, if I'm not mistaken, Ladd, you might be able to help me out here. I believe there's just been 2 large HYL facilities, both of about 2.0 million tons capacity, that have started up in the last year or 1.5 years.

That's correct.

The plant in Egypt?

Yes, there's one in Egypt. There's another one somewhere in the Middle East, Dubai, I think it is.

We'll take our next question from Brian Yu with Citigroup.

John, question on DRI first. Once these plants are up and running, can you just give us a sense as to how much of that capacity will be displacing pig iron versus, say, like prime [ph] scrap that you're buying now?

Well, it'll displace pig iron and it will displace prime scrap. Now how the mix works out, is going to be a function of the cost of the materials at the time while we're making these decisions. We'll have several options in front of us. We can use brands cap, we can use pig iron that we'll continue to purchase and we can use the DRI out of our 2 facilities. One of the great advantages this is going to give us is the flexibility to make good economic decisions on iron units as we move forward.

Okay. And then the second one I've got is on SBQ. It seems like from the data that you were looking at, SBQ shipments haven't quite recovered yet with you and another competitor bringing online more capacity. Like, how are you guys thinking about placing that into the marketplace?

Well, certainly, there have been a lot of announcements on SBQ volume expansions among our competitors. How do we plan to deal with it? Well, we're going to compete fiercely and successfully with the additional SBQ that comes into the marketplace. We have great confidence in our teams, our equipment and in our products. We also believe that, given the continual growth in the automotive markets, that there will be an increased need for SBQ as we move forward. We have automotive. We have energy, which consumes a lot of SBQ, continuing to go strong -- grow strongly. Heavy trucks, although it's come down a little bit this year, we expect it to return in 2014 to higher levels. So although there's been a lot of SBQ that's been announced and will be coming into the market, we anticipate the demand for SBQ to grow also.

Yes, one other thing is I've believe the capital projects we have for SBQ, there's a mix of them. The ones we're doing initially are geared more towards moving up the value-added chains. The ones that add capacity will be later in the sequence of capital projects in SBQ for us.

And maybe just one more point, Jim. That's a good point. Thank you for adding that. Just one additional comment on this. In addition to adding SBQ, this is allowing us to realign our existing mills so that our merchant products are produced more efficiently also by reassigning products to different facilities. We're consolidating our merchant production at some of our facilities, so we're going to gain some efficiencies in that area also. It's important to note, as we always do point out, although we continue to grow into the value-added markets, we do that without surrendering any of the commodity or lower our value-level markets.

We'll take our next question from Shneur Gershuni with UBS Securities.

I figured I would continue the questions on DRI. One thing I was wondering, if you can sort of help me out there a little bit, the economics definitely make sense, love the optionality of choosing where you can go and how you substitute and so forth. In the past, we've sort of recognized and acknowledged natural gas as kind of the risk if it goes up and you've taken steps to mitigate that and so forth. How should we think about the spread between iron ore prices since it is a feedstock versus local scrap pricing, which you're effectively replacing? Or in some respect, is that something that we should be thinking about as a risk or an opportunity? How should we be thinking about that? Is Magnetation, as a feedstock, something that you might look at in the future?

Well, when you look back historically in comparison between iron ore pricing and scrap, there's been a very strong correlation for a period of, as far back as I've looked at it, 20, 25 years. So we expect that to continue. We see a strong correlation between iron ore pricing and scrap pricing. Keith, is there anything you'd like to add to that?

Well, one point, John. There is a correlation and it does continue, especially over a period of time, an extended period of time. The 2 come together as the metallics markets around the world sort of the arbitrage opportunities sort of minimize themselves.

Right. So you're not expecting any -- the potential for any disconnects or anything?

We don't see that in the future. As I said, it's been -- as I look back in history for 20 to 25 years, we haven't seen that and, I guess, I'd never say never, but we don't anticipate seeing anything of that nature.

Okay. And a follow-up question, if I may. The commentary in your press release today sort of suggests a pickup in Q1 from an earnings perspective. I was just wondering if I can get a bit of expanded color around that. Metal margins aren't the greatest at this point right now. Is it just a function of some of the unplanned outages not occurring? Is it today's price announcement that one of the competitors announced? Or is it some volume opportunities unique to Nucor? Just wondering if you can sort of expand what's driving the optimism.

First of all, I assume you meant improvement in Q2?

Yes, sorry, in Q2, yes.

Okay, yes, okay. Well, as we said during the script and during Jim's comments, basically, in all of our products, with the exception of sheet, we see improvement in demand. Again, marginal improvement, slight improvement. I don't want to mislead anyone here. We see it getting better across all of our products with the exception of sheet in terms of volume and pricing to a less extent. Some of our products will see better pricing opportunities in 2013. Some will continue to struggle such as sheet. So across all of our products, we see some improvement with the exception, of course, of sheet, as I've mentioned several times.

We'll go next to David Galison with CIBC World Markets.

Just wanted to touch on the DRI delay. Just wondering if there's any additional costs associated there with the delay. And when do you see it turning -- swinging to a profit now?

Could you repeat that question? I heard the first part of it, but I missed the last thought. You were asking if there were any additional issues other than the ones that we mentioned?

Any additional costs associated with the delay and when you see it turning to a profit?

Oh, there might be some minimal additional costs. The contract is to stay -- have to stay on site longer. We lost the ability to work on those days when there was heavy rain. It's the case of Murphy laws -- Murphy's Law driving us back. During the period of December, January and February, they had record rainfall in St. James Parish. So we'll see a minor increase in the cost of construction, but nothing major at all. It'll just be a case of the inefficiencies for our contractors working during those rainy season -- during those rainy days. And you're asking about turning a profit?

Yes, this is Jim Frias. The business unit is forecasting making money in the fourth quarter, and we expect free operating and start-up costs to go up by about $4 million in the third quarter related to ramping up employment at that facility.

And then you're still looking for a 2- to 4-month ramp-up to full capacity?

Yes, we will be at full capacity -- we anticipate being at full capacity by the end of the year.

And then just on the nonres construction. You've mentioned being cautiously optimistic. I'm just kind of wondering if you could talk about what you would be looking to see before maybe becoming a bit more positive on the overall markets?

Well, we look at -- we have an advantage in a sense that we can look at some of our downstream businesses. We look at the order entry rates, the backlogs, the pricing opportunities in those downstream businesses, Harris company, rebar fabrication, Verco and Vulcraft operations. Now we've seen a little bit of improvement when we look year-over-year on our Vulcraft, Verco backlogs. We see some improvement on new orders and then our margins are up fairly significantly year-over-year in both joist and deck. So those are some of the things that we watch and we see as positive indicators. What would get us to the point where we were more optimistic would be when we saw greater order entry rate, higher prices, a larger backlog. Now there are -- we do have some anecdotal information from time to time that seems to indicate things are getting better. We just recently attended an AISC conference and I had an opportunity to interact with a lot of our customers there in the nonresidential construction area, and they were more positive than we've seen them in a long time. So again, these are all small indicators and that's why we've put the "cautiously optimistic" in the sentence. But as we see more and more of these indicators, we can gain confidence and we'll be happy to be able to share that with you when it occurs.

We'll take our next question from Richard Garchitorena with Credit Suisse. Richard Garchitorena - Crédit Suisse AG, Research Division: So just a couple of questions. One, you have mentioned a few times about the weakness in the sheet market. Can you just expand? Is that really a function of oversupply in the import situation? Or is it demand sort of flattening out here?

Clearly, you have to look at demand when you say you have an oversupply situation. But the amount of overcapacity globally and domestically in the sheet market is phenomenal right now. It's clearly an oversupplied market, clearly, an oversupplied market, and that problem is amplified by the heavy level of imports, the surge of imports that have come in over the last, well, really, over the last year, 1.5 years. So yes, it's an issue of oversupply. Demand certainly is not stellar, but demand has been improving quarter-over-quarter by a small amount. We've mentioned a few times automotive. We've mentioned energy in the form of pipe and tube. So demand is there and demand is growing slowly. Unfortunately, more and more capacity is being brought online and imports continue to come into the country at very, very high levels. So as long as that situation exists, it's going to be a very, very challenging sheet market. Richard Garchitorena - Crédit Suisse AG, Research Division: Okay. And then is it right to assume that on the Long Products side, you are seeing better improvement, especially recently given sort of some of the signs that you've seen on the construction side?

Again, on Long Products, we are seeing some slight improvement and we anticipate that to continue as the year plays out, as 2013 plays out. But again, we're talking about a slight improvement. We haven't seen anything to get very excited about at this point. All the things that we talked about during the call so far; increasing, small increase in the amount of nonresidential construction is helping, introducing new products and moving up the value chain by increasing the breadth of our product offering. For Nucor, that's also certainly helping. So we see a small improvement as the year plays out in Long Products. And frankly, we see the same in some flat products. We believe that plate will be marginally better in 2013 than in '12. We see plate continuing to, both in volume and pricing, increase incrementally as we go throughout the year. Sheet is going to be the challenging product for us, and frankly, all forms of sheet, hot band, cold rolled, galvanized, electrical steels are all going to be very challenged. Richard Garchitorena - Crédit Suisse AG, Research Division: Okay, great. And then just one other question on CapEx. You broke out the maintenance versus the growth. I was just curious; the CapEx for the EnCana JV, is that perhaps captured in the growth CapEx? And how does that ramp up in the coming years?

It is captured in the growth CapEx. We haven't disclosed how it ramps up in the coming years. You can get an idea by looking at the 10-K filing. The contractual obligations table has a separate line for EnCana investments -- or excuse me, for our natural gas investments.

We'll take our next question from Nate Carruthers with Steel Market Intelligence.

I guess a little bit more on the sheet side. There's a new sheet mill being planned in Arkansas. Can you give us your thoughts about the facility and its impact on Nucor and the industry in general?

There's a new sheet mill being built somewhere in Arkansas, being proposed in Arkansas. I haven't heard that. That was a joke. Well, listen, I'll start by making the comment that you've heard me make several times during the call. We have a tremendous overcapacity situation in the United States, in North America. There's absolutely no need for additional capacity. Now having said that, okay, if the plans move forward and it does move forward to getting built, it's going to take some time to get built. The last new mill that was introduced took about 3 years from the time that it was announced until they began production. If I remember correctly, it was about 3 years, maybe 3.5 years. During that time, Nucor's not going to sit idle. We'll continue to grow our product offerings. We'll continue to add to our value-added offerings. And if the mill does start up, we'll compete. We'll compete fiercely, we'll compete successfully. As I think back to the last mill that came online in the United States back in, I think it was around 2007, I remember hearing things about how Nucor would be most negatively impacted by that new operation because it was located in the South, close to our mills. And at that time we said that we would develop a plan and trust in our team to take on that new competition and compete successfully with it. All I want to say is you can see how all of that worked out, and if the new competitor continues to move forward, we'll do the same thing. We'll develop a plan, I can tell you. When they start up, they'll meet fierce resistance, fierce competition. We'll have the plan, we have the capability and most importantly, we have the team. And I've said this many times on many calls, I will put our team up against any team anywhere in the world. And I trust that they will compete and they will compete successfully. Those are my thoughts.

We'll go next to Phil Gibbs with KeyBanc Capital Markets.

John, when you were discussing the SBQ additions, I think you had 2 parts. The first was the upgrade of existing mix and then the second was the new production capability later in the year. Can you remind us of the upgrades to the mix and then what your new capability will be later in 2013 with the investments in Memphis, Nebraska and South Carolina, just from an absolute tonnage standpoint as well?

I'm going to ask our Executive Vice President for the Bar Products, Jim, to handle that. Jim?

Okay, Jim Darsey. As Jim Frias stated earlier, our primary focus early on in our SBQ upgrade was to improve our product quality and to improve the value that we offered to the market, move up the value chain. Now those projects are underway in Memphis. We're installing 2 quality assurance lines there, one is an in-line quality assurance line and one is an off-line quality assurance line. The off-line one will start up in the third quarter of this year, and the in-line quality will start up in the fourth quarter of this year. Also, in Memphis, we're adding a second metallurgy furnace to improve our quality and provide the ability to provide higher grades of material. And we're also adding a second vacuum degasser hood where we'll have 2 complete stations for vacuum degassing. Again, our quality and moving up our ability to participate in higher grades of SBQ steel. At Nebraska, our project that we're focused on this year is updating one of our mills. We're going to add straightening, paneling and sharing and packaging equipment there, primarily focused on improving the quality of our product. The mill work will be completed this year. In 2014, we will be bringing on additional mill capacity at Nebraska. And at Darlington, we're installing a rod block there. Construction is well underway, and the rod block will be co-commissioned and started up in the early third quarter of this year. That is a product expansion there and we'll be producing rods from 7/16 of an inch diameter up to 2 1/8 inch diameter in bar and coil. And again, that project starts up third quarter of this year. So this is phased out. Our press release last year indicated that we will be adding close to 1 million tons of SBQ capacity. That it is still the case, but it's spread out over a couple of year time period.

Okay. So it's 1 million tons of added melt and finished product capability, but you're also enhancing the mix at the same time?

Yes.

We'll take our next question from David Lipschitz with CLSA. David A. Lipschitz - Credit Agricole Securities (USA) Inc., Research Division: So 2 quick questions. How much was the impact of Trinidad in the quarter? Was it meaningful or...

We don't have an exact figure, but it was probably in the $8 million...

In terms of...

No, as we give in terms of VC.

In terms of VC?

Yes, it's probably the $8 million to $10 million range in terms of vision contribution, which means around close to $0.02 per share. David A. Lipschitz - Credit Agricole Securities (USA) Inc., Research Division: And then just more of a theoretical question. You talked about the McGraw-Hill data, up 8%. If you look at that forecast, I think in the next 3 to 5 years, you get back to like a billion square feet or something like that over the next 3-plus years, something like that, which you said is still well below where we were in the mid-2000s. What kind of level of square footage do you think we need to get to where we don't really need to cut capacity or imports need to go away where we can get some -- people can get pricing power or to that effect? I mean, because right now, I mean, you're still -- like you said, even if it's up 8% this year, you're still less than half of what the peak was.

Well, we don't really need to see it get back up to the levels that we have seen it in 2007, 2008. To some extent, that was almost an artificial time period, created on steroids, I don't expect to see again. But if it approached 70%, 75%, 80% of the peak levels of 2007, we'd be pretty pleased with where we are. We think that, that would support a strong market for both our Long Products and for our building products. David A. Lipschitz - Credit Agricole Securities (USA) Inc., Research Division: And one final question. In terms of raw material prices, you're bringing down your raw material costs. Your competitors are trying to do the same thing. If iron ore, in my consensus, said that it is going to be at $100-plus or minus sometime next year, do we end up in a deflationary type of environment for prices for steel?

Well, there's a lot of ifs in that question, that's for sure. Iron ore, I read recently articles that say iron ore will be $80 to $100. And I've seen just as many articles stating that iron ore will be at $150 to $160 a ton. So certainly, what happens with iron ore is going to have an impact on steel, the economics of steel production, but I'm not in a position to be able to say whether it's going to be a bull or a bear. My best guess would be, as we move forward, that you'll see some pressure on iron ore pricing. You'll see it will come down a little bit. I'm not sure it will come down to those levels.

And we'll take our final question from Sal Tharani with Goldman Sachs.

John, you have invested significantly a lot of money in your flat-rolled business to get more and more involved in the OCTG market and you have gotten some share. It was just wondering, if you look at the OCTG landscape, there is a bunch of capacity coming in and one can argue, is it good or bad for the OCTG market, where certainly it will create a significant amount of demand for the flat rolled in the U.S., but most of these guys are going to buy locally. And I was wondering if you have seen improvement in your market share or are you in discussion with any of these new projects and you think there would be an opportunity for you, a significant opportunity for you in there?

Well, a couple of comments to start off. First, we do believe that there's a significant amount of OCTG coming online. We do believe that, that will create an opportunity for our flat-rolled mills, and we are certainly pursuing that very aggressively. There are some challenges, some headwinds that we have to overcome. One is the amount of OCTG imports that are flooding into the country. That's a challenge not only for that industry, but for us. But -- and we are working with that industry to take action to get that corrected [ph] . I was just going to make one more comment and that is this, that we are working with our existing customers and we're very aggressively working with potential customers to be their supplier. And as you mentioned, we have made quite a few investments in that business. We believe that we're very well prepared. The feedback we're getting from our customers and our potential customers are that they also believe we are well prepared to meet their needs in the future. If there's no other questions, I'll make a few closing comments. First of all, I'd like to thank you all for your interest in Nucor. It's always appreciated. Ham, I'd like to take this opportunity to again thank you for all that you have contributed to Nucor and to the Nucor family. So thank you very much for 37 years of outstanding service. And thank you to all of our teammates. Thank you for what you do every day for Nucor, and thank you, most importantly, for doing it safely. Thanks again. Have a great day.

That does conclude today's conference. We appreciate your participation. You may now disconnect.