Steel Dynamics, Inc. (STLD) Q3 2014 Earnings Report, Transcript and Summary

Marlene Owen - Director of Investor Relations Mark D. Millett - Co-Founder, Chief Executive Officer, President and Executive Director Theresa E. Wagler - Chief Financial Officer, Chief Accounting Officer and Executive Vice President Richard P. Teets - Co-Founder, Executive Vice President of Steelmaking, Executive Director, President of Steel Operations and Chief Operating Officer of Steel Operations Russel B. Rinn - Executive Vice President of Metals Recycling, President of Omnisource Corporation and Chief Operating Officer of Omnisource Corporation Christopher A. Graham - Vice President and President of New Millennium Building Systems

Luke Folta - Jefferies LLC, Research Division Evan L. Kurtz - Morgan Stanley, Research Division Anthony B. Rizzuto - Cowen and Company, LLC, Research Division Sohail Tharani - Goldman Sachs Group Inc., Research Division Jorge M. Beristain - Deutsche Bank AG, Research Division Timna Tanners - BofA Merrill Lynch, Research Division Matthew Murphy - UBS Investment Bank, Research Division Philip Ross Gibbs - KeyBanc Capital Markets Inc., Research Division Andrew Lane - Morningstar Inc., Research Division Brian Yu - Citigroup Inc, Research Division Aldo J. Mazzaferro - Macquarie Research Nicholas Jarmoszuk - RBC Capital Markets, LLC, Research Division Sam Dubinsky - Wells Fargo Securities, LLC, Research Division Charles A. Bradford - Bradford Research, Inc. Nathan Littlewood - Crédit Suisse AG, Research Division

Good day, and welcome to the Steel Dynamics Third Quarter 2014 Earnings Conference Call. [Operator Instructions] Please be advised this call is being recorded today, October 21, 2014, and your participation implies consent to our recording this call. If you do not agree to these terms, please disconnect. At this time, I would like to turn the conference over to Ms. Marlene Owen, Director of Investor Relations. Please go ahead, Ms. Owen.

Thank you, Manny. Good morning, everyone, and welcome to Steel Dynamics' Third Quarter 2014 Financial Results Conference Call. As a reminder, today's call is being recorded and will be available on the company's website for a 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. We also have our leaders for the company's operating platform, including: Dick Teets, President and Chief Operating Officer for our Steel Operations; Russ Rinn, President and Chief Executive Officer for our Metals Recycling Operations; and Chris Graham, President of our Fabrication Operations. Please be advised that certain comments made today may involve forward-looking statements, that by their nature are predictive. These are intended to be covered by the Safe Harbor protection of the Private Securities Litigation Reform Act of 1995. Such statements, however, speak only as of this date, today, October 21, 2014, and involve risks and uncertainties related to our metals business or to general business and economic conditions, which may cause actual results to turn out differently. More detailed information about such risks and uncertainties may be found at the Investor Center Advisory Information page on our Steel Dynamics website and our Form 10-K Annual Report under the caption Forward-looking Statements and Risk Factors or as applicable in subsequently filed Form 10-Q filed with the Securities and Exchange Commission. And now, I'm pleased to turn the call over to Mark.

Well, thank you, Marlene, and good morning, everybody. We hope you -- hopefully, you're having a good fall. We certainly appreciate you taking the time to join us today to discuss our third quarter results, which we believe are pretty terrific, under the circumstances, and to share with you exciting opportunities ahead for Steel Dynamics. Once again, a full-hearted SDI welcome to our new Columbus employees. As the new private owner of Columbus Mississippi Flat Roll mill, we are pleased with the progress of integration. I had the opportunity actually to attend the company picnic this past weekend, and it gave me an opportunity -- a chance to meet a lot of our employees and their families and their kids. And I've got to tell you, they were a phenomenal group of people, and they're going to fit in perfectly with the SDI family. The teams themselves, integration teams, are doing a phenomenal job. The acquisition represents a transformational step in the continuation of our growth strategy and allows us to leverage our core strengths. It's meaningful to our business and delivers significant additional value to all our stakeholders. In short, the Columbus addition brings us significant growth and exceptional financial returns, all while maintaining a good credit profile, with the capacity for additional investment opportunity. In addition to closing the acquisition mid-month, our existing SDI operations saw meaningful growth and profitability during the third quarter. The results are indicative of the strength of our business model and our culture. Those are significantly important for maintaining our best-in-class performance. I'd like to turn the call over to Theresa for comments about our financial results this quarter, and then I'll follow with additional market commentary and where I see both near- and longer-term additional growth and performance opportunities. So Theresa?

Thank you, Mark. Good morning, everyone. We're quite pleased with our third quarter operating and financial results. Third quarter 2014 net income was $91 million, or $0.38 per diluted share, including the negative impact of $0.09 per diluted share related to Columbus acquisition costs, financing fees and purchase accounting adjustments. Excluding these charges of approximately $40 million, third quarter diluted earnings per share would have been $0.47, above the upper range of our adjusted guidance of between $0.42 and $0.46 for the quarter. The acquisition and financing costs are reflected in our income statement as other expense. You'll notice the elevated model. The purchase accounting adjustments reflect our initial purchase price allocation estimates, which resulted in a preliminary step-up of inventory and fixed asset values. The associated negative impact of approximately $14.5 million from additional depreciation and margin reduction are reflected as an increase to our cost of goods sold. Based on our early estimates, it appears that our purchase price is very close to the book value of the assets. The operational results for Columbus are included in our results as of the acquisition closing date of September 16, 2014, basically about 15 days. Our third quarter net sales of $2.3 billion were 13% higher than the second quarter of this year and 22% higher than the prior year third quarter. The improvement in earnings is driven by increased margins based on both metal spread expansion and volume-related cost compression. Third quarter operating income was $189 million, an increase of 43% compared to the second quarter. Regarding our steel operations, record quarterly shipments were achieved again in the third quarter, and metal spread expanded across the business. Scrap raw material prices decreased, as overall average steel product pricing improved $7 per ton. Quarter-over-quarter pricing improvements were more pronounced in our Flat Roll and Structural Divisions. Total shipments increased 13% over the second quarter, hitting a quarterly record 1.9 million tons, driven by improved long product shipments. We even would've achieved record volumes without the 175,000 tons of shipment from Columbus. These operating results led to operating income from our steel operations of $202 million, or $110 per ton shipped, an increase of 28% compared to the second quarter. Excluding the Columbus purchase accounting adjustments, operating income would've improved 37%. Metals Recycling continued to be in a challenging environment. Shipments improved and ferrous metal spread remained relatively steady. However, nonferrous metal spread contracted over 20%, primarily due to falling copper prices. From July 3 to the end of the quarter, copper pricing reported on COMEX fell over 14%. Third quarter 2014 operating income decreased $5 million compared to the second quarter. Ferrous shipments increased 2% and nonferrous shipments increased 13% based on improved copper and aluminum volume. Moving on, our fabrication operations continue to shine. The third quarter 2014 benefited from another record quarterly shipment level of 144,000 tons, surpassing second quarter's record by 37%. Increasing volumes continue to compress costs, and both margins and market share continue to expand. During the quarter, increased average product pricing achieved higher raw material steel pricing, expanding profitability. Additionally, volume is a powerful influence for our fabrication operations. It allows the team to fully lever the technology and performance-based incentive system, resulting in a dramatic compression of conversion costs. Third quarter 2014 operating income increased to $19 million, more than doubling second quarter's performance. We continue to see improvements in the underlying nonresidential demand, good news all around. During the third quarter 2014, we generated $249 million of cash from operations, compared to $76 million in the second quarter of this year. Working capital reductions contributed $86 million to the quarter. Year-to-date working capital has increased $102 million, excluding the Columbus acquisition. This is really related to accounts receivable. The key drivers are positive factors based on the demand environment and our organic growth ramp, which are increasing aggregate customer account balances. However, while the quantity of our receivables have increased, the quality has not deteriorated, and days outstanding, along with our aged accounts, are in good stead. Regarding our capital structure, we funded the Columbus acquisition through the issuance of $1.2 billion of senior unsecured notes. The remainder of the $1.6 billion purchase price was paid through a combination of available cash and borrowings on our revolving credit facility. Rick and the team did a great job and accessed the high-yield bond market at an opportune time, raising $1.2 billion at an attractive long-term average interest rate of 5.3%. Although our debt maturity -- excuse me, additionally, our debt maturity outlook is incredibly flexible. We don't have any near-term meaningful maturities, yet our callability profile allows for prepayment if warranted. Even with our recent acquisition, our liquidity and credit metrics remain strong. At September 30, our liquidity totaled $1.2 billion. This includes available cash of $160 million and available funding under our revolving credit facility of $1 billion. We had outstanding borrowings on our revolver of $60 million at the end of the quarter. However, we've since repaid that outstanding balance, and we again have our full revolver available at $1.1 billion. Our total debt was $3.1 billion, with minimal secured borrowings, less than 10% after repaying the revolver. Our net debt was $2.9 billion, with trailing 12-month adjusted EBITDA of $1.048 billion. That includes pro forma historical Columbus EBITDA. This results in net debt to trailing adjusted EBITDA of 2.8x. So on a pro forma basis, we're already back in line with our preferred through cycle net leverage of less than 3x, a great accomplishment. Looking ahead, we believe that our capital structure and credit profile have the flexibility to both sustain current operations and to support additional growth investments. Thank you. Mark?

Super. Thanks, Theresa. Well, once again, safety is first for us. It's the absolute highest priority for me, for each employee and our families, and simply said, our goal is to work each day incident-free. Even though our performance is better than industry averages, I know there is more work to be done, and we are moving in that direction. Toward that goal, 85 out of our 121 locations achieved 0 recordable incidents during the quarter, third quarter. Many of these locations haven't incurred a single incident this year, so my personal congratulations and thanks to those specific teams for demonstrating that our goal to reach 0 accidents is both achievable and sustainable over the longer term. Turning to business. I think understandably, recent geopolitical events, coupled with concerns regarding stalled international growth, have decreased consumer optimism and wreaked havoc on the equity markets. However, the strength of our third quarter financial performance, recent conversations with our customers and the current profile of our order books do not reflect a structural shift from the continued positive growth we have seen all year. Durable goods and nonresidential construction, 2 components of the non-services GDP, accounted for roughly 47% of the improvement in overall GDP in the second quarter. This supports our view that non-service-related GDP continues to be an important contributor to our overall domestic economy, which is good for steel consumption. Although consumer spending decreased slightly exiting third quarter, sales of our steel-consuming products such as appliances increased. Forecast for key steel-consuming end markets remain positive. Automotive continues to be strong at 16.5 million units, growing to almost 18 million over the next few years. Overall construction spending continues to trend favorably, increasing 5% through August as compared to the same period in 2013, while nonresidential construction increased 6%. Additionally, growth in the domestic shale arena continues to require infrastructure investment, which we believe will positively affect demand for steel. Recent concerns regarding stalled growth in international markets have caused large energy companies to redirect their investments to North America, so midstream to end stream investments will be required to support projects stemming from that redirected capital. Our steel operations delivered another strong quarter both financially and operationally. They shipped a record 1.9 million tons, and I believe it's worth emphasizing that our pre-existing steelmaking facilities surpassed our prior record even without the inclusion of the Columbus volumes. Our Structural Rail and Engineered Bar Divisions each achieved record quarterly shipments. Although the majority of the volume increase stemmed from structural products and special bar quality steel shipments, we also increased rail shipments by 12%. We continue to make considerable progress with the Class I railroads through the qualification process for our premium rail, which we began producing early this year. We're already qualified with 5 of the 7 Class I customers. Our quality and customer service standards are receiving exemplary commentary. This product addition positions us to become the preeminent rail supplier in North America. Currently, we're the only North American manufacturer that welds quarter-mile length strings, using 320-foot rail versus the conventional 80-foot rail. This is a strong competitive advantage. It reduces the rail's foot string by more than 75%, a significant advantage for our customers, as it dramatically reduces the potential for railment [ph] failures, there's an obvious safety benefit for them, as well as reducing track maintenance costs. We believe domestic rail consumption will continue to increase during the next 3 to 5 years, as both replacement and new rail are acquired, as suggested by railroad investment forecasts, driven in large part by the U.S. Energy Sector. We plan to increase our rail shipments in parallel with this growth and have told our rail customers that we are committed to this market, and will supply up to 350,000 tons annually to meet their needs, which enhances our profitability through both product margin expansion and provides cost compression through increased volume. We shipped just over 200,000 tons of standard rail in 2013. We expect to increase that amount by 10% or more this year, with further improvements in both volume and mix in 2015. Our Engineered Bar capacity and product offering expansion is also progressing well. We've commissioned over 75% of the entire new smaller size range, and we're receiving positive customer feedback. We've been balancing commissioning with providing our customers the on-time delivery that they've come to expect from us, and we certainly appreciate their support during this time frame. We are confident that our trusted customer relationships built on quality and on-time delivery will allow us to increase our market share to fully utilize the added 325,000 tons of annualized rate in the coming year. The annual domestic SBQ market is generally between 8 million and 10 million tons, and of that, the 3, 5/8 [ph], or smaller diameter bars, which is the area of our expansion, represents about 55% of that, so we don't believe our market share expectations are unreasonable. We shipped 480,000 tons from Engineered Bar division in 2013. We expect to increase that amount by 30% in 2014, with obvious further improvements in both volume and product mix in 2015. From the closing date of September 16 to the end of the month, our shipments include 175,000 tons contributed by Columbus. Acquiring the Columbus mill was an incredible opportunity for Steel Dynamics, creating a single Flat Roll group, which provides us a platform to fully utilize our core competencies. It allows us to develop stronger relationships with our existing and new customers, maximizing logistical benefits to create further value for them; broadens our steel sheet product capabilities through width, gauge and strength diversity; complements on our current product portfolio with further exposure in the growth areas of energy and automotive; and it fully diversifies us geographically into the high-growth Southern U.S. and Mexican regions; leveraging synergies across 2 highly efficient flat-rolled steel mills and 8 coating lines provides us a unique opportunity to significantly increase value for all our stakeholders. Collectively, production utilization for our steel operations was 90% in the third quarter, compared to 95% last year. However, the rate though is not a reflection of decreased demand but rather it's a function of increased capacity from our SBQ expansion, the 350,000 tons or so, adding to the denominator, obviously, and a 4-day scheduled outage at the Butler Flat Roll mill. Excluding the impact from these items, utilization would've been slightly above the second quarter. There obviously remains general concern regarding the recent level of steel imports and associated headwinds to pricing and industry utilization. While we obviously monitor the activity closely, we continue to see relative strength in our order backlogs. We've had 2 consecutive quarters of record shipments. Part of our strategy is to not only develop the strong customer relationships, but to also manufacture market niche products that are more difficult to compete with on a global basis, such as our painted flat roll steel, highly engineered SBQ steels and longer-length rail. This helps us insulate us somewhat from the import threat. We believe the current growth expectations in both Europe and China, combined with global production overcapacity, will be a headwind to steel pricing for the foreseeable future, but I continue to believe that historic levels of imports as a percentage of domestic consumption will return, and that we will not see an import consequence on a sustained long-term basis. We continue to understand the design and dynamics of a competitive market as long as it's fair and equitable. As an American steel producer, we must remain vigilant, and our administration must enforce world trade laws in order for all of us to compete on a level playing field. In Metals Recycling business, we continue to work through another challenging quarter, reporting lower profitability. Both ferrous volume and nonferrous volumes improved, notably in copper and aluminum. However, ferrous metal spread was flat quarter-over-quarter, as decreased selling values were somewhat offset by cost compression from the volume improvement. Nonferrous metals spread was negatively impacted by weaker copper and nickel commodity markets, resulting in decreased profitability for our nonferrous segment. Year-to-date, July 1 scrap exports were 19% lower than the same period 2013, and both years being significantly lower than recent historical norms. The continued significant overcapacity of shredders, particularly in the Southeast and U.S., continues to compound volatility and continues to constrain margin, as processes are all competing for the same material. Regarding our Minnesota operations, as discussed on last quarter's call, we plan to ramp up volume while improving yield, quality and cost on a consistent basis during the third quarter. I'm pleased to report that our team achieved all of those things, and we expect further improvement in these areas as we continue to operate and make some enhancements to the iron ore retrieval process. We will be installing equipment that Magnetation has already utilized in other operations to bring our cost structure for iron concentrate back to the levels established in 2013 of under $50 per metric ton. Lately, the cost has been elevated higher than that due to lower yield recovery emanating from finer size tailings that we found in the current basin. Had we been at that cost level during the third quarter, our net losses would've been reduced from $5 million to just less than $3 million. We still hold the view that these operations have the potential to achieve a $340 to $350 per metric ton cash prices, but in order to do this, volumes must reach about 32,000 metric tons per month, or a 360,000 metric ton annualized rate. During the third quarter, our average monthly production rate was just over 27,500 metric tons per month, a significant improvement over months past, and a solid footing to ramp-up to the required volume. Our Fabrication Operations also achieved another quarterly shipment record, for both joist and deck products. The team is certainly positioned at that sector incredibly well for the returning construction markets. Industry utilization continues to improve, and it's certainly true for us. Based on sustainable increased demand and market share improvement, we have added production shifts at several of our plants, employing additional people in our communities. According to the Steel Joist Institute, as of August, year-over-year domestic joist shipments have increased 21%. Our joist shipments have increased over 35%. The team continues, as I say, to perform exceedingly well, both in market share advancement and leveraging our national footprint. Driven to maintain a sustainable differentiated business, we are focusing on opportunities to maximize our financial performance. We're focused on providing exceptional value to our customers, committing to the highest levels of quality and timeliness, partnering with them to deliver what they need today and anticipating what they'll need for tomorrow. As we look ahead, we're optimistic concerning the industry and even more so for Steel Dynamics. Columbus is one aspect of our story, and our organic growth projects that are beginning to benefit our operations now and others. We have great leverage to recovering construction markets and are fully equipped to take advantage of new opportunities that lay ahead. Our resolve to maintain a differentiated growth company that effectively and efficiently perform through all market environments is unwavering. We believe our superior operating and financial performance clearly demonstrates the sustainability of our business model throughout the market cycle. The strong character and fortitude of our employees are unmatched. Their dedication to customers and passion for excellence compel us to achieve high standards of performance. I thank each and every one of them for their hard work and dedication, and remind them, safety is always the first priority. Again, thank you, everyone, for your time today. And Manny, we'd like to open up the call for questions, please.

[Operator Instructions] And the first question comes from Luke Folta of Jefferies.

A number of questions. So first question, I guess, during the past, you've been able to kind of go around the horn and give us some color in terms of what the order book looks like across the divisions. How are things comparing now versus sort of the way you exited the third quarter?

Well, let me take a quick shot, and Dick, I'm sure will -- can chime in. But just looking across our steel platform, Structural Rail division, continuing to see a steady growth in structural, structural beams, and I think the team has done a good job increasing market share there. We experienced a growth of about 16% compared to year-over-year market growth of 6%, 7% or so. And as I said, premium rail product continues to be well received. We likely shipped 40,000, 50,000 tons of premium rail this year, Dick, I think, yes?

Yes.

Which obviously adds to our value-added product mix there, and I think that -- the rail arena is shifting to a more premium rail sort of percentage of the market, and so we're in good position there to capture some of that. I think the nonresidential markets remain strong, as indicated by the uptick in the MSCI structural shipment data and recent construction starts. And I think nonresidential strength is also evident from occupations, New Millennium inquiry booking rate. That's seen a little seasonal adjustment, but still remains very, very strong. So I would say Structural Rail is still continuing to build momentum, and the order book is very solid. The Engineered Bar, that market continues to be strong. The backlogs were at a pretty high level compared to the last couple of years, so we're excited there. Roanoke -- the Roanoke team, even in a tough market, they reported the best results in Q3 since 2008, and their backlog remains pretty decent, at about 4 weeks or so, 35,000, 40,000 tons, and I think pricing has remained somewhat firm in the merchant arena. Steel of West Virginia, it sells primarily to the truck, trailer and material handling sector, and that has seen a little softness the last month or 2, and they're expecting a little softer, probably around 5% next year. But actually, that's 5% off of a very, very, very strong market, so their business continues to be pretty solid. In sheet or Flat Roll, the order rate, I think, continues to be -- backlog continues to be strong -- better across all sectors. I think there's a little softening on the coated products, which is likely, I think, seasonal in one aspect, but also, we're seeing some burning product imports, I think, that is impacting our volume in Jeffersonville [ph] business. And I think that's also impacting our Columbus backlog a little bit, but lead times continue to be 4-plus weeks out there. So Luke, generally, I think our order books are very, very solid. And a couple of tweaks in, so a little bit -- Dick, any thoughts?

Yes, I guess I can only add to what you said, that as a structural mill, that we do have some time on the medium section, though, because we've never gotten to a fourth crew. We've filled out the third crew, so medium section products, we're out selling and selling hard. And so filling that up, the third crew. And we've developed that market down in Pittsboro. We've added new products. That's what we're doing across the board. We've added threaded bar with our customer there. We're now making #8, 9, 10 and 11 threaded bars, and we're going to get this month, #18. We've done #20 bars and so that's an exciting product for very high rise buildings and for bridges being used across the country, and so these are new products that are coming on. Also, you mentioned Steel of West Virginia, we had some weakness in a little bit of their product line, and so therefore, we're developing bulb flats and 7-inch channels and so forth, so we're adding new sections all the time down there. And so -- and again, down at the Roanoke, we're running 100% of capacity, so no weakness showing there. So you mentioned the flat roll, nothing more to add other than we are watching the imports. We watch coated product imports. There's an extension agreement now, getting the 60-day notification there and going back to the way things were in 1998, '99, much higher duties are going to be applied to it, and things are going to clean up there, I believe. And so I think it'll tighten itself up in the first quarter. So yes, things are good.

Thanks, Dick.

I guess, secondly, it seems like a weird point in the cycle to be asking this question, but you're breaking shipment records across the construction divisions, both at the beam business at Columbus and in the fab space. Just as we think of -- it seems like we're just in the beginning of a recovery in construction, as we think of what a full construction recovery could look like, how would you sort of handicap how much more shipment upside you may have?

Again, not to publish our 2014's results, but 2013, we shipped a record for a 6.1 million tons. Obviously, we're headed above that this year. And that was 6.1 million tons, where our capacity today, excluding Columbus, was around 7.8 million tons. So as we said, we had about 1.5 million tons of latent capacity from 2013. So we've got, I think, great leverage going forward on the returning residential and nonresidential. And obviously, we've got a new Columbus mill that is absolutely revved up and rearing to go.

The next question is from Evan Kurtz of Morgan Stanley.

I just had a question on trade cases, and I saw the Russian suspension elimination this morning, that was a nice positive for the industry. But also, one thing we've heard a lot about towards the end of the summer was that there's a potential for a trade case to be filed on Chinese cold-rolled and coated products, and I'm sure you guys probably were involved in that, but we haven't seen anything yet. I just wondered if you could perhaps provide an update on that. What's going on with that one?

Well, I will just tell you that we are constantly monitoring the imports. We've done investigations. A number of our competitors along with ourselves have worked together through our attorneys to do the investigations, both domestically and in the foreign countries, to determine what the domestic pricing are of those countries that we believe are guilty of dumping and shutting our shores. But we don't believe, along with our legal counsel, that the timing is correct at this moment for a successful case, but that may change as the markets change, and so we're constantly vigilant and ready to go at -- upon a discussion and enough agreement amongst our parties that we're ready to do it, so we're vigilant, is, I guess, the best way to say it.

Right. I think the general sentiment of the Trade Commission, I think, is turned positive toward our industry. If you look at the, obviously, the recent ruling on the Russian suspension of duty issue, that obviously helps us, helps the industry, and I think, in particular, it helps Columbus in the Southeast markets. You've seen the industry won the Korean OCTG ruling and they are filing for -- oil industry is filing a sort of a [indiscernible] line pipe case against Korea and Turkey, and I think this bodes well for us. It supports, I think, our sentiment that in the next year or 2, the countries will be constrained on hot-rolled coil and give some very, very positive market dynamics.

Great. And then, one other question on imports. One thing we've been hearing is that because of the rail issues and higher trucking rates and higher barge rates, that there's been a lot more regionalization of pricing in the past several months, and I was wondering if you could kind of confirm that, I mean, now that you're actually both in the South and the Midwest. Are you seeing a big discrepancy in hot-rolled pricing in, I'm going to say in the Chicago area versus some of the more coastal regions in the South?

I think it -- given -- steel is a freight-sensitive commodity. Obviously, closer to the supply, you're going to get better pricing. And right now, where you've had a lot of Russian material come into Houston, and so the supply's down there, and you're definitely going to get that freight differential. Fortunately, I've got the facility. It's Midwest. It's a reasonable distance from the coast and we're not impacted quite as much as many of our customers -- competitors, I would say.

The next question is from Tony Rizzuto of Cowen and Company.

Got a lot of questions here. First of all, the ferrous scrap market seems to be in a bit of a free fall. Obviously, a lot of factors driving that following a period of stability. Raw materials are down, strong dollar affecting Turkish purchases, and we're hearing more about Chinese semi-finished billets moving into other countries. What are your thoughts? And how do you see prices directionally over the near term and longer term playing out?

Russ?

You've answered most of your question with the currencies and exports, and the lack of exports, and currently, the crash in, or current crash and very low levels of iron ore pricing, I think certainly bodes that things are going to be down in the scrap market. I think there's an abundance of supply due to lack of exports, so there's nothing that I can see that's going to put a real solid floor underneath the scrap market until we see some room in the iron ore pricing to compete on the international basis or the dollar weakens to the point where exports are attractive.

So Russ, that pressure is going to help re-establish the iron concentrate scrap ratio, that's been kind of at a little bit of a high the last 6 to 8 months.

Absolutely.

Which is in my mind, a huge plus for the electric arc furnace produced and hopefully, put us back in the billets from a hot metal cost perspective again.

What about you -- When you guys mentioned the Russian suspension, obviously, we've seen that come out, obviously, a positive for the industry. I guess, I was little bit surprised how quickly the discussion kind of came together. There was a lot of talk about a review process that was not expected to be completed until maybe even the first quarter of next year. Wondering how you feel about that, and obviously, this should be helpful. Particularly, should be helpful to you guys as you increase your exposure in the Southeast? How do you tend to look at that?

Well, given Russia is one of the largest importers of hot-rolled coil, constraining them is, obviously, I think, a big benefit to our industry. As I said earlier, strong, huge benefit for our Columbus facility that trades in the Southeast arena, and I'm not so sure we know what happened behind the scenes. Obviously, American-Russian relationship's aren't the best, and maybe that accelerated it.

Well, just for the record, we've been petitioning the Commerce Department for months. We've been signing documents and submitting records to them since midsummer, and so we were disappointed with how slow it was going midyear, and so the signals we were getting were disappointing. So this unexpected year-end movement is basically a catch-up to me, so I'm pleased with the performance of the Department of Commerce, and so it appeared to be fast, but it's been in the works for quite a while. Petitions have been in the works.

It's interesting, because I was in Australia recently. I was talking to some of the big iron ore miners over there, and I was asking the questions about how they felt about possible trade laws against the Chinese in steel, and they seemed to hint that there was much greater sensitivity to that by steelmakers in other countries and this whole thing obviously, Russia and the sentiment against what's going on for obvious reasons. I think that's a key point here. Can you make any comments about is there some increased sensitivity on the Chinese front? Is that why you made the comment earlier that it's just not the right time? And maybe you can elaborate on that a little bit more, because we haven't seen obviously those trade cases filed, much rumored, but it's not the right timing. Maybe a little bit further expansion on that might be helpful.

I would just tell you that we have to look at all the possible participants in any trade case. We have to look at our -- the government looks at a lot of parameters, including your financial performance and order intake, what your sales prices have been. Again, the documents as to what the local prices have been, both in their originating countries as well as here. And so when you take a broad brush approach to it, all that has to be considered, and then you start gleaning out of the whole field as to which countries may or may not be suitable for a case. And if you have to eliminate too many of those countries and too many of the tons, it sort of plays against you, and you want to make sure that you have a -- you don't want to keep going back to the well for small pickings, let's say. So we want to make sure that you have a deliverable, number 1; and then number 2, that it's a worthy one. So we're watching it, and we're -- we have our data, and we will continue every quarter to refresh that data.

The next question is from Sohail Tharani of Goldman Sachs.

Just some housekeeping questions. What is the -- so Theresa, what is the interest expense depreciation, CapEx, et cetera, to think of over the coming quarters?

The interest expense on a quarterly basis with the new cap structure is probably going to be just less than $45 million per quarter. Depreciation this quarter was $58 million, but that -- with the estimated purchase price allocation, these numbers could change, but it's more likely to be closer to maybe $75 million per quarter going forward. But that will -- we'll have to give you a better number on the January call. And then CapEx for this year, we expect it to be somewhere between $120 million and $130 million for the year. And moving into 2015, the early estimates would be somewhere between $150 million and $175 million, but that's without specific projects or anything like that.

Okay. Great. I want to ask a question on the fabrication side. Your shipments, revenue, operating profit, operating profit per ton, everything, every one of those metrics was highest we've ever seen, even before the 2008 or late 2008 downturn. I was just wondering was there any specific projects you got this quarter? Or is this something like a trend we should think about going forward? Or something, especially in this quarter, which drove this significant upside?

Well, you talk about a little housekeeping, let's just -- I'd make a few comments on fabrication. Our joist-and-deck backlog remained strong entering the fourth quarter, and I want to just mention specifically our teams and our customers who have executed very well year-to-date. Together, they've worked on a lot of mutually beneficial projects, but to your point, nothing out of the ordinary. Look forward to continuing to do so going forward. We'd like to thank our joist-and-deck customers for continuing to afford us the opportunity to earn their business each and every day. The biggest impact on -- the biggest outside factor was probably with the capacity in the industry, more matches the demand better than it has in the last 30 years. So we'd like to believe that it's kind of a new paradigm, and we stand prepared to service current levels or even higher levels. The question earlier about fabrication capacity and how that affects things, to achieve our current output, 90% of our production occurs during daylight hours, 5, maybe, 6 days a week. This leaves an awful lot of room for continued growth, and it's a matter of adding a crew here or there, as Mark mentioned earlier, to respond rather quickly to larger demand. So we don't see New Millennium up against any kind of ceiling in almost -- virtually any scenario.

And so one thing I would just point out is in 2008, we're configured much differently today with the national footprint, with 6 basically operating facilities, so we're structured much differently than we were in 2008 as well.

Yes, that's a good point. Also, on the rail side. Mark or Dick, what is the market? And where do you think you will be in the next couple of years, once the premium rail qualifications are done? And what percentage you think of your mix will be premium or head hardened by -- let's say in the next few years?

Well, I think, the -- in general, the mix in the industry -- well, first off, the market. The market continues to strengthen, as Mark pointed out, in the growth of maintenance track, as well as new track, it's probably over 1 million tons, 1.1 million. It's a good, steady market. In general, I'd tell you that head-hardened or premium product is greater than 50%, and it continues to move in the upper direction as a percentage year-over-year, and that's for 2 reasons: number one, it's a reduction in the spread between premium rail and standard rail; and number two, the higher utilization rates of the various tracks give the railroads less time to take the tracks down for replacement, so therefore, they're willing to spend a higher amount of money on the track itself when it's being installed. And so our own attempt to take advantage of that, as Mark pointed out, we're committed to pursue about 350,000 tons of railroad products, and our production will mimic the national percentages as best our equipment can handle. And of course, the Structural and Rail division is always asking for, like any division, more money to expand, and we will watch what they do and how they utilize it, and make those decisions appropriately.

The next question is from Jorge Beristain of Deutsche Bank.

It's Jorge with DB. My question is really on the steel fab side as well, not to beat a dead horse, but if you could just really talk about what's driving that sequential uptick in EBIT performance. We saw very strong gain in volumes there, and you've been telling you're not capacity constrained. Could you just talk about what is the demand driver? What's pulling that product? And do you believe that those products are import defensive, as you flagged earlier?

I think, obviously, the demand is picking up across the industry. I think the team has done a phenomenal job building a national footprint there. And so they're getting into the, what we call the big-box consumers, the Wal-Marts, the Home Depots, people that want a national supply and not a regional supply. So the market has picked up. I think the team has done a phenomenal job picking up market share because of that. And with the financial or the, sort of, step function improvement in the financials is volume driven. It's a business that, when Chris puts on a new shift at one of his plants, I mean, the profitability of that plant shoots up dramatically. With increased demand today, and we still got -- it's still very elastic, our capability, but when we need more tons, it's not a matter of spending capital. The lines are there. It's just a matter of recruiting our crews.

Okay. But is it just -- you said that you're now accessing these big-box retailers. Is that something new? Or can you point to any kind of specific end use that would be driving those kinds of product demand in U.S.?

No, I think Mark just makes the point that we are more diverse in our approach to the market, not just auction markets, but national accounts, metal building accounts and things like that. So we've not only expanded our physical footprint, we've also had a different approach to market and continued then leveraging the volume, compresses all of our costs across the board. And this is not something that was unexpected at these levels, this is what the team's been planning. And we're poised to continue to capitalize on these opportunities.

And as I said earlier, if you look at the Steel Joist Institute numbers, year-over-year joist shipments have increased 21%. So that's sort of general demand and it supports our view that's continued, that nonresidential construction continues to grow. The national footprint, I would say, has allowed us to surpass the overall industry growth in our markets, and our joist shipments increased 35%.

And the projects are not -- I'm sorry, the projects are not limited to just the big box. We're into a good healthy mode where if you're just doing institutional private work, it's never a good sign. If you're just doing the big box, it's not as healthy. But we're doing a good mix and our industry is seeing a good mix across the board.

The next question is from Timna Tanners of Bank of America Merrill Lynch.

Two questions. One was now that you've gotten into the Columbus facility and gotten to look around, anything that's surprising or new? And any thoughts on ramping up volume? Is there enough market appetite to bring it to full speed in terms of both value-add and volume?

Well, we were pretty excited when we were the fortunate winner. Just the basic value without synergies, without anything, it was an incredible opportunity for us. I think we've only become more and more excited as the teams -- and again, this is not a top-down, where we're injecting and forcing SDI stuff. It's a 2-way street. You've got 2 incredibly talented teams. And it's a case of 1 plus 1 is going to be at least 3, 4, if not 5. So we remain incredibly excited about the bricks and the mortar and the technology there and the product diversification that it's going to provide us and provide our customers. We're incredibly excited about the geographic diversity it gives us. It's got access into the Southern markets. But as importantly or more importantly, access to the Mexican market, which is a -- that's growing from an automotive standpoint almost exponentially in Monterrey and to the south. The capacity, or if you look at, or just do a little bit of back calculation, we did ship, as we said, about 175,000 tons. So the 175,000 tons of shipments accrued to us for the couple of weeks we owned Columbus, you got to be a little careful there. There's about 30,000, 31,000 tons of that which is coil sales that Severstal had already in the works. So a real number from the mill is about 144,000 tons. And you extrapolate that out, it comes out to roughly the 3.4 million tons of hot-band capacity that's been advertised. Was there a production record last month?

We had a CSP, a [indiscernible] record, 30-day, month record, and we also had [indiscernible] mill, pull mill record and we also had galvanizing pipe [indiscernible]. And again, that's not just -- that's not because of SDI, that's because of cooperation and integration, communications. It's a lot of things. And so, everyone's excited. So it's small things, small tweaks, and it's -- there's just a lot of potential. Again, not overnight, but a lot of upside opportunities.

I think we already stated that the purchase price was pretty conservative, 6x the expected 2015 EBITDA. Obviously, our expectation was that the markets remain as they are today or strengthening to achieve that. And in all honestly, I think it should allow for higher than 3-year cycle metal spreads. I think we stated at some point that synergies over the longer term are going to be about $30 million; $10 million, $15 million of that perhaps last year -- not last year, 2015, next year. As Dick said, over the longer term, we expect, from what we see, to garner a lot more than that. So it's an incredibly exciting opportunity for us. And again, just being down there with the guys and girls and their families and their kids on Saturday, they are pumped.

Okay. And if we could get over to the uses of free cash flow. So I think you've been really clear that even with this transaction, you're pretty excited about your ability to pay down quickly and have a lot of extra liquidity for other alternatives. Can you just remind us of some of the options that you're looking at other priorities of free cash flow use?

Well, I think as we look post-acquisition, our capital profile, our balance sheet remains incredibly strong. As you said, I think we -- we currently plan to pay down some debt next year, to allow us to get more comfortably within our sort of preferred net leverage of 3x or less. CapEx is, as Theresa suggested, it looks to be in the $150 million, $160 million range. I mean, that's clearly -- We're still looking at and still analyzing some organic growth opportunities for us. Earlier this year, even without the Columbus addition, we increased dividend by 5% and we would like to continue at a positive profile there. And as we already said, we will continue to remain committed to prudent growth, wherever that growth may take us.

The next question is from Matt Murphy of UBS.

On the prudent growth, I mean, we saw the Gallatin mill sell. Are you still looking to go in the direction of actual capacity? Or is it sort of downstream value-add? Are you focusing in any one area right now?

I would say, our focus would be downstream value-add more than anything.

Okay. Maybe just another housekeeping one. Can you give any guidance on go-forward levels of SG&A?

There's really nothing in particular that we think will change dramatically. We kind of tend to look at it on a percentage of sales basis and it tends to be pretty steady. And with the addition of Columbus, we'd expect it to still stay kind of in that range of the percentage of sales.

Okay. That's great. And then maybe just one on Minnesota ops. So outside, I guess, of the iron recovery, how do you feel about the process? You commented last quarter that you expected some significant improvement. Is this still something where you could see it profitable in 2015? Or what's the outlook?

Well, I think, we're pretty excited with what we're seeing and at least from our perspective. The guys had a step-function improvement across the board, not the least being a positive financial impact to us. Albeit still a loss, it's still a lot less loss than we've had in years past. We're pretty confident. And again, it depends where transfer pricing takes us. It's somewhat market dependent. But we'll certainly be, we believe, cash positive going in early 2015, and we'll see where the markets take us from there.

The next question is from Phil Gibbs of KeyBanc.

Theresa, I had a question on the sheet mix, if you had that available.

Certainly. So I have the Butler Flat Roll mill mix. For the third quarter, they had shipments of hot-rolled of 299,000 tons; P&O of 92,000 tons; cold-rolled of 60,000 tons; hot-rolled galvanized was 120,000 tons; cold-rolled galvanized was 43,000 tons; painted products were 114,000 tons; and Galvalume was 10,000 tons, for a total of 738,000.

Okay. And should we assume that Columbus was mostly HRC?

Yes.

Okay. And you had talked about the D&A being $58 million, going to $75 million, in your release, you had $66 million. And I realize some of that probably had purchase price accounting. I'm just trying to bridge that into the fourth quarter.

It was $66 million actually. What was reported in the cash flow, Phil, was both amortization and depreciation. So the number that I gave you earlier was just the depreciation amount. And again, it's still early on the purchase accounting side, but our thinking is that depreciation is going to be closer to probably $75 million per quarter.

So out of that $14.5 million that you gave for the purchase price accounting this quarter, was there a lot of that D&A stuff up there, that was just all inventory?

It was very little D&A, it was almost all inventory.

Okay. And then as far as the other expenses, was that about $20 million in there that you had for the acquisition?

It was slightly more than that. Again, the total adjustments were about $40 million. So we had $14.5 million going through COGS. You had about $25.5 million going through other expense.

Terrific. And then just one quick one. As far as your nonresidential construction exposure overall in the steel business, any way, Mark, to categorize how much of your steel shipment is either going into the nonres market or infrastructure markets? How you think about that?

What is going in today or what leverage that we have going forward?

No, I'm just trying to think about how much of your steel business is tied to nonres right now, just on the finished steel side, not on fabrication.

[indiscernible]

[indiscernible]

I guess the simple answer is -- just we're [indiscernible] .

The next question is from Andrew Lane of Morningstar.

So we view the use of hot liquid pig iron charge at Butler as a real differentiator for your Flat Roll division. How does the Columbus mill currently obtain iron units? And do you plan on making any changes as to how you'll supply iron units to that operation? Would you be shipping HBI there from Butler? Or maybe just any details you can provide on that?

Historically, Columbus has consumed roughly in the 20% to 25% range for pig iron and HBI, principally pig iron, imported in. Obviously, we had a relationship with Russia, so I'm sure they had some Russian coming in and some Brazilian. The line dynamics with the Minnesota operation and without Columbus, we actually became pig iron long, and there obviously, the Columbus operations on a consolidated basis, pig iron short. So there's no doubt, I'm sure that some of that, the [indiscernible] will find its way down to Columbus.

Okay. So the freight cost wouldn't be prohibitive across that distance?

Not really. No.

The next question is from Brian Yu of Citi.

Mark, I've got a markets-related question and it's tied in a little bit to what Tony asked earlier in that if I look at where the scrap markets are, heavy melt and shredded, it's about the same as where we were last year. Hot-rolled coil prices did come down, and it's about the same. But in the international markets, you've got iron ore that's down about $50, met coal that's down $40. So that means like blast furnace input costs, again, the international markets are down about a $100. And I'm just trying to figure out why is it that scrap prices are still resilient here. Do you see enough of the move in scrap price so that the U.S., mini mills can regain some of this cost differential that we've seen basically flare out?

Well, we believe so. In fact, we've seen it the last month or so, and quite likely in November, given the -- where the export market pricing is today, there's a likelihood that scrap is going move down for sure. December, who knows? Maybe -- we don't have a crystal ball that clear or that far ahead. But we do feel that -- and as you say, scrap has been very, very sticky compared to iron ore here. Iron ore earlier has some incredibly weak fundamentals given the Chinese produced growth. So it's come off a lot stronger than scrap, but I think longer term, we'll see scrap move toward that historical basis.

Okay. What would you attribute the strength in scrap to? And then more specifically, I guess, for November, any guess on what you think prices could go down by?

I think we refrain from putting numbers other than directionality. As you know, it's an incredibly tough market, and I'm not sure Russ and I are any better than anyone else.

Got it. All right. Next question just on Magnetation. You guys mentioned that you're going to bring in some equipment to try to fix some of the fine-up line. Is this some minor -- like you're putting in additional screens? And then, you also, can give us a sense of where Magnetation -- or not Magnetation, but just Mesabi Nuggets costs are today relative to that $340 to $350 target?

Well, the -- firstly, the equipment we're putting in -- and just to add color, as we mine the basin, it went from a coarse tailing to a very fine tailing, and our equipment just don't get the yield recovery off finer material. The actual amount of material flying through is far greater than the rate of capacity of the line, which is not recovering the finer stuff. And the equipment going in, again, it's already been operational. I do believe on ongoing basis, Magnetation, we should retrieve that recovery and get the cost back down. That's the intent and expectation. Relative to the current cost, again, we refrain from sharing that. We are still confident in the $340, $350 cash number going forward, which will allow us, given the current market, to the transfer price, to be cash positive in '15, early '15.

The next question is from Aldo Mazzaferro of Macquarie.

I just wanted to ask a question on the pricing, Theresa, for the quarter. It came in at around $840. Can you comment whether there was an impact of mix from the Severstal material in that number?

Aldo, they only had 175,000 tons of our total 1.9 million tons shipped. So any influence they would have had would have really been minimal. The drivers of the average price improvement really were, as I mentioned, from the Flat Roll division and from the Structural and Rail division.

Right. So going forward, Theresa, if you did about, say 800,000 tons a quarter, that would be a bigger chunk, about 30%, 35% of your mix. Would you -- I mean, am I far off base if I were to assume something like about a $100 a ton differential in pricing versus your average versus the Columbus mill?

We're not -- I probably am not going to go there, Aldo.

Okay. All right. Well, I would note that the productivity of that place seems amazingly good, it had something like 0.4 man-hours, so congratulations on a great deal. And Dick, can I ask you one quick question on the suspension agreement with the Russians? About 3/4 of what they import to the U.S. is in the form of semifinished slabs and stuff. Would you say that these large tariffs they're talking about, are those going to cover the slabs or are those just on flat rolled -- hot-rolled coil, you think?

No. It actually only covers hot-band plate and coil. So it's only those 2 products.

Great. So not the slab. There's no tariffs or quotas on slab, right, as far as I know.

No. You're correct.

Okay. One final thing, did you say you lost some tonnage in the quarter at Butler due to an outage? Can you say how much that was about?

We just had a regular scheduled outage of 4-day...

4-day maintenance outage.

The next question is from Nick Jarmoszuk of Royal Bank of Canada.

I had a question on Columbus. Given the production figures that you guys have seen in the past month, how are you guys thinking about debottlenecking opportunities and what would the capital be involved to expand the capacity there?

I think it's already demonstrating an incredible capability through the hot mill, 3.4 is, I think, is its rated capacity.

Well, that's its desired capacity, it's rated only by our own wishes.

And it's likely, if the team does what the Butler team did, there may be some, a little upside on the hot-band production. Obviously, our intent is to increase the value-add output there. So the actual shipping volume may actually come off a little bit as -- because of the unit lost through pickling and cold reduction. There's not a huge amount of capital, at least I see it, to unbottleneck. It's more a market opportunity, getting in the right markets and just fully utilizing the capabilities that they have today.

The next question is from Sam Dubinsky of Wells Fargo.

Just a couple of quick ones. Can you discuss what percent of your business next year will be contract-based or will you still mostly be a spot-selling market?

The latter. We'll be principally spot-based. Any contractual business we do is just on a volume commitment basis with some form of index pricing. We don't have any contracted, fixed-priced, long-term deals.

Okay. And then another housekeeping one. Just last one, steel fabrications, did the quarter include any benefit or synergies from Columbus? Or is that really just a clean quarter on improved construction demand?

It's just an absolute clean phenomenal team job.

Okay. And given how high the business is running and given your commentary on improved fundamentals, do you think this division can buck typical seasonality? Or should we model profit down in coming quarters just due to weather?

Well, it has bucked seasonality to some extent as it's recovered from the 400,000-ton annualized rate in the market to over 800,000 or 900,000 this year. As you get up closer to the historical norms, we would expect seasonality to rear its head, again, some degree. But our backlogs are still at historically higher numbers going into the fourth quarter.

The next question is from Charles Bradford of Bradford Research.

In looking at the purchase price of Columbus, have you made any kind of calculation of what the replacement cost would be for the asset?

Well, CapEx, that's part of the many-pronged methods of which you look at valuation. So that's something that's kind of contemplated. I'm not sure it's something that we'd want to....

So the question really gets down to, I guess, Big River, which is likely to be -- looks likely to be built. Where would the differences be? Because they're talking about electrical steels and a few other things, yet it has the same parents as Columbus. Any idea on where the differences could be?

Well, what we found interestingly is during our due diligence that there were quite a few items at Columbus that were off balance sheet, let's say, from an asset perspective. So I can't tell you what -- how they're going to do their accounting there. So when they announced how much the cost is, that's a question for them. I would tell you replacement cost is higher than what we paid for it. We got, I think, a very fair deal for it, because they had 2 galvanizing lines, 2 pickle lines. They have a reinspect line and so forth. They also spent quite a bit of money in building that line up. They put a lot of concrete into it. They used different construction techniques than we would have utilized. And so we got a good value, a very good value for the assets. And then they're also in a very high seismic zone area. So they're going to spend even more money building a steel mill in that location than others have traditionally built. So whatever, so good luck.

There was some talk when you were looking at Columbus that the location wasn't ideal because it's not exactly on the river. Is there some kind of a transportation cost penalty?

Charles, there is, but not to the extent that we kind of presumed or assumed over the years, and there are other benefits that offsets that.

Thank you very much.

And Charles, going back to the commentary on Big River, [indiscernible] Columbus, as I said, and I was starting to get a little bit insulted by any connotation that those folks are going to compete with us. You've got 2 of the best, most efficient sheet steelmaking teams in the damn world between Butler and Columbus. And you saw the same team is building Big River, and the financial results were not necessarily phenomenal, in the early stages of Severstal. And to use the steelmaker vernacular, the Columbus guys are ready to kick ass.

The next question is from Nathan Littlewood of Crédit Suisse. Nathan Littlewood - Crédit Suisse AG, Research Division: I just had a question on the fabrication business capacity. You mentioned that it was quite possible to add additional shifts there and increase the throughput. Could you just clarify how many shifts are there now? How many could you conceptually add if you were go, whatever, double or triple time? And how should we think about the potential for that business on a volume basis, if the demand were to exist for it?

Well, there's a minimum arrangement that most of us have found in the industry that you need to hit to a certain point to be able to make a fair return in this world. And much times, that is a 3-line configuration that gives you the ability to cover most products required in an efficient manner in any given project. We are basically at that configuration. And beyond that, it's simply just adjusting to the market conditions. It's very hard to explain. You have to make a minimal investment to build joist in the first place, and that typically enables you to satisfy the market and a huge surge opportunities at times, with more folks on the team. So I'm at a loss to really explain it any better, other than we have a lot of latent capacity that doesn't cost us a lot in the big picture, because we have to build what we have to build to build a minimum amount of joist. So I hate to promise that we could do, run around the clock, but we've never seen a market call for that. Theresa?

So is it fair to say, Chris, that our market share today is between around 35% to 40%. And it's hard to see a market for joist and deck where we would not be able to increase our volume to match that market share.

The way we're positioned today, and there's never been a market in the history, if we look back, that would tax our ability to help to service at those levels or maybe somewhat higher. Nathan Littlewood - Crédit Suisse AG, Research Division: Okay. So if we could look at the historic maximum size of the market, keep the market share relatively constant and say, that's potentially the blue sky scenario then. Is that fair?

It's fair.

Yes. It's fair.

I wish I had said that. Nathan Littlewood - Crédit Suisse AG, Research Division: The other question I have for you, and apologies if this is a little naive, my U.S. geography is perhaps not as good as some of the other people on this call, but the imports that you guys are competing with in the sort of Indiana region, where would they be physically coming from? Would they be coming from down in Texas or somewhere further up the coast?

Well, there's a couple of points of entry, but it's not necessarily competing with a physical ton. It's competing with the, sort of the pricing pressure that the selective imports are putting on the market. Nathan Littlewood - Crédit Suisse AG, Research Division: Okay. I guess where I was wanting to go with the question is I'm trying to understand this sort of freight differential between the coast and inland at the moment. I mean, you guys are very more focused in the inland parts of the country as I understand it. And as previous, someone else was asking about, we've obviously seen rail and trucking rates go up a lot. So I'd just like to understand if we could, what is that sort of freight barrier at the moment, maybe in dollars per ton? And where do you see it as having been historically?

Well, if you're coming up, obviously, a massive amount comes from the Houston area, to bring material up to the Midwest is probably today, and this would be a combination barge. And it depends where you are. If you are on the river, it's going to be less, but to a land bound Midwest arena, such as Butler, it's probably $50-plus per ton. Nathan Littlewood - Crédit Suisse AG, Research Division: Okay. And where do you suppose that might have been, say a year ago?

Not much, probably $10 off that. Nathan Littlewood - Crédit Suisse AG, Research Division: Okay. That's not so bad. Cool. The final question I had was just on Minnesota. We did do some math on this a little while ago, and based on the longer-term targets that you guys have talked about in reaching the 360-kiloton per annum, it seems to me that if everything goes as planned, the potential earnings opportunity here is about $16 million per annum. And I guess, obviously, that's come down over the last couple of years as the project targets aren't quite as ambitious as they once were. But when I think about a $16 million opportunity in the context of earnings losses, which have been kind of $5 million or $10 million a quarter, it's going to take a lot of years to recover in earnings the losses that you guys have been making. Is there something that might not be apparent to us in terms of exit costs for this business? I guess I'm just a little confused at your apparent commitment and dedication to the thing. And with all due respect, I mean, it seems like a relatively small earnings opportunity at this point, a relatively small upside in the context of other things, which potentially much bigger earnings, it seems to be taking up equal amounts of your time.

Well, I think the -- it's easy to be the Monday morning quarterback. I guess it wasn't too long ago, I think 2012, that people thought that pig iron was going to be $500 a ton or more. So and that was the original investment premise. To your point, obviously, raw material and commodities are off. And today, with pig iron in that $400, $410 range on a NOLA basis, the project can be cash breakeven and eventually make a little bit of money. It certainly gives us a hedge, though, against scrap markets and a very secure supply of very, very high-quality material that can facilitate for further productivity and [indiscernible] some capital there, and I think we're looking at perhaps more on a incremental basis, than looking at the project in full scope. Nathan Littlewood - Crédit Suisse AG, Research Division: Okay. And if we were to get to a point where for whatever reasons, things don't work out, and you said, you know what, we had enough, we're going to walk away from here. What sort of closure and exit and rehab costs might be associated with that decision?

We have not even studied that.

The next question is from Sohail Tharani of Goldman Sachs.

Mark, in one of the remarks, you mentioned that of the 175,000-ton shipments from Columbus, there was something which belonged to Severstal Russia, I think you said?

Well, the Severstal were using the American organization to bring coil in and resell, just kind on a brokerage basis. As we acquired, in the transition, we obviously took ownership of the remaining coils, sort of en route. And that's about 30,000, 31,000 tons of that Russian coil that we acquired. It was already presold, so there's no risk there to it, but that just went through the volume.

Got you. Was that on the balance sheet of Severstal -- of Columbus? Or was it on the balance sheet -- entirety of purchase, was it on the Columbus balance sheet or on the Severstal Russia balance sheet?

It was on the Columbus balance sheet.

Okay. I'm just wondering that the Columbus profitability, was it -- before you purchased, was it a little bit augmented by this Russian steel coming in?

They took a flat $20-a-ton fee for the handling of it. And they did that so that they basically then had somebody else out marketing the Severstal Russian steel. They wanted to know what was going on in the marketplace, so there wasn't any other wild pricing going on. They wanted to have some control of it. So they took a fee for the handling of those transactions. As soon as we purchased it, we said no more sales, we didn't want any more transactions going down. And then when we closed it, those ships were already en route and those hit the dock and cleared through all the sales and they were behind us. Yes, that's it. And they are all behind us.

Okay. Great. I understand. And also one more thing, on the content you mentioned of pig iron/HBI you put in your Butler facility, 25% to 30%, is that going to remain? Because there's a lot of talk with this DRI coming up in a couple of other places that people think of using as much as 70%, 80% or 60% DRI. I was just wondering in your experience, what is the limit you can go, because pig iron apparently is even better than DRI in terms of melting capability and so forth. And I think Mesabi product is also supposed to be very good content of iron. I'm just wondering what is your view, how far you want to go with this thing in terms of how much you want to use as a percentage of total input mix.

Okay. Firstly, so the percentage I mentioned, the 20%, 25% was at Columbus, not Butler. Butler has historically been, I think, around 12%, and that's been the combination of the liquid cast iron plus the nuggets. If you look at -- and honestly, it's a value proposition in the most part. It's just what is the cheapest balance of raw material, at the end of the day, in your ladle of molten steel. DRI, you can -- there are people out there that are running almost 100% of DRI. You've got to have enough shop fully equipped. And obviously, on the pig iron side, you tend to be limited because pig iron has a higher carbon content, and you get to a point where you get much more than about 25%, 30%, you slow down the operation because, yes, you've melted it, but you have to remove and decarburize the material. So there is kind of a practical limit of around about 25%, 30%, in the most part, for pig iron.

That concludes our question-and-answer session. I'd like to turn the call back over back to Mr. Millet for any final and closing remarks.

Well, thanks, Ryan. And I guess just quite briefly, if you look at SDI as a company today, I do believe our sole headwind is just the import pressure. Beside that, I'm extremely optimistic for our industry, and again, really optimistic for SDI as a company. We continue to see solid U.S. GDP momentum, particularly on the non-service steel consumer sector. Residential construction, we believe, albeit choppy and noisy, it's upward. Nonres construction is truly growing and is a positive trend. Energy markets are growing, and those will constrain hot-band coil availability, I think, in America in the next couple of years. So I think that will bode very well for us. Automotive space strong and there's been very positive structural changes in our domestic steel industry in the last year or 2. Scrap pricing, as we suggested, we feel is on a downward trend, and I'm not so sure the historic ratio will be totally established, but certainly, it's headed toward that level. And I think that gives us margin expansion opportunities as an electric-arc furnace producer. And I think it sets a stage, an incredible stage, for SDI. We can leverage our latent steel capacity. Even before Columbus, we still got a lot of volume related to residential and nonresidential construction that we can exploit. We're starting to capitalize now on our organic growth projects of premium rail and also for Engineered Bar. And we're going to gain incredible value combining the teams of Butler and Columbus and truly optimizing the margin, the value we can get from that. And as we've discussed, Chris and the teams have done a phenomenal job on the clarification side. So we've got all engines or all cylinders are kind pumping out. You combine that, you've got incredibly strong cash flow, great balance sheet, allows us to consider future growth opportunities. We truly have terrific customers. And most importantly, we've got a phenomenal team. And so I think, everyone around this table, we get up every day, we're in the steel industry, but we're pretty damned excited to come to work and work with all our employees. So to each and every one of them, I would say, hey, thank you, and work safely each and every day. Thank you for your support, folks. Bye bye.

Thank you. Once again, ladies and gentlemen, that concludes today's call. Thank you for your participation and have a great day.