Core Natural Resources, Inc. (CNR) Q3 2013 Earnings Report, Transcript and Summary

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the NCI Building Systems Third Quarter Earnings Conference Call. [Operator Instructions] Today's conference is being recorded, Wednesday, September 4, 2013. And at this time, I would like to turn the conference over to Layne de Alvarez, Director, Investor Relations. Please go ahead, ma'am.

Thank you. Good afternoon and welcome to NCI Building Systems call to review the company's results for the third quarter of fiscal 2013. To access the taped replay, please dial 1 (800) 406-7325 and enter the pass code 4636317 and the # sign when prompted. The replay will be available approximately 2 hours after this call and will remain accessible through September 18, 2013. The replay will also be available at the company's website at ncigroup.com. The company's third quarter results were issued earlier today in a press release that was covered by the financial media. A separate release was also issued advising of the accessibility of this conference call on a listen-only basis over the Internet. Some statements made on the call may be forward-looking statements within the meaning of applicable securities laws. These statements are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995 and generally include words such as potential, expect, should, will and similar expressions. These statements reflect the company's current expectations and/or beliefs concerning future events. The company has made every reasonable effort to ensure that the information, estimates, forecasts and assumptions upon which these statements are based are current, reasonable and complete. However, forward-looking statements may be subject to a number of risks and uncertainties that may cause the company's actual performance to differ materially from the projection in such statements. Investors should refer to reports filed by the company with the Securities and Exchange Commission and in today's news release for a discussion of factors that could cause actual results to differ. To the extent of any non-GAAP financial measures are discussed, you may also find a reconciliation of that measure to the most directly comparable financial measure calculated according to GAAP in today's press release, which can be located on the company's website by following the media link. Information being provided today is as of this date only, and NCI expressly disclaims any obligation to release publicly any updates or revisions to these forward-looking statements, whether as a result of new information, future events or otherwise. At this time, I would like to turn the call over to NCI's Chairman, President and Chief Executive Officer, Norm Chambers.

Thank you, Layne. Good evening, everyone, and welcome to our third quarter 2013 conference call. Joining me this evening are Mark Johnson, our Chief Financial Officer; Todd Moore, our General Counsel; and Layne de Alvarez, our Director of Investor Relations. I will make some initial comments, followed by Mark, and then we'll be open the call -- we'll open the call to your questions. To summarize our third quarter, the market volume for low-rise nonresidential construction starts was down 10.7% on a year-over-year basis. Our consolidated volume was up 9.6% and 5.8% on a pro forma basis over the third quarter of last year. However, pricing pressure eroded the benefits of the growth in volume. Therefore, our third quarter was below our expectations to deliver year-over-year growth and earnings and EBITDA. We have instituted price increases in mid-August across our businesses. As expected, third quarter performance improved sequentially with an 8% increase in revenue, 10% increase in gross profit and a 61% increase in EBITDA from the second quarter. Clearly, the nonresidential construction market has not recovered as quickly as we had anticipated. But we're not waiting on the sidelines for this recovery to gain traction. We are investing substantial resources to upgrade our level of customer service, improve the efficiencies of our manufacturing processes, and further integrate our operating systems. I've spoken in the past about being well positioned to take advantage of the recovery, and I am confident that the investment being made at every level of our business this year will lead to significant performance improvements when the recovery finally gains traction. Leading the industry in performance and customer service will create greater value for our customers and us. In the third quarter, we continue to benefit from a solid performance of our Coatings group and the growth of nonconstruction customers, especially in the HVAC, appliance, lighting fixture end markets. While we decreased the volume of lower value embossing and slitting activities, third-party shipments of painted light gauge tons increased 22%, while shipments of heavy gauge packages increased 26% over last year's third quarter. The addition of our Middletown, Ohio facility this year has been instrumental in our ability to be one of the most responsive suppliers in the industry and is on schedule to be profitable during the fourth quarter. Fortunately, we suffered no injuries from the fire at our Jackson, Mississippi light gauge paint line. Disruption to our customers was minimized as a result of temporarily moving production to our plants in Marietta, Georgia, and Middletown, Ohio, until repairs at Jackson are completed. The Components group successfully responded to market demand for differentiated product offerings and experienced a meaningful expansion of their customer base this quarter. With the full quarter contribution of Metl-Span, our insulated metal panel sales continued to outperform the market in part due to strong growth in commercial and industrial end markets. Coating activity remains steady throughout the quarter, which reinforces our belief that the commercial industrial end markets provide excellent growth opportunities for our insulated metal panel business, given our manufacturing footprint, breadth of product offering, and established distribution channels. The self storage and commercial roll up door divisions experienced very strong demand across the country and early beneficiary of the residential construction recovery. However, our core roofing sidewall secondary structural steel and agricultural business remain challenged by weak demand and excessive pricing pressure. The Buildings group continues to see opportunities to bid on projects, which we can add value through our sophisticated engineering and drafting capabilities. Although our Buildings backlog remain flat year-over-year, we are seeing an increase in our medium complexity backlog, another indication of a pickup in the broader economy. The average size of our medium complexity projects has also increased year-over-year. And most important, a greater percentage of our backlog as we go into Q4 is now for production. However, similar to our Components group, the Buildings group experienced considerable pricing pressure in certain end markets, including a significant falloff in demand in the manufacturing building segment. According to McGraw-Hill Dodge report, the manufacturing building segment was down 21.5% calendar year-to-date through July. However, the Buildings group increased volumes shipped by 3.7% during our third quarter. Forward-looking indicators point to a recovery in the manufacturing segment. While we were disappointed in the continued lethargy of the nonresidential recovery during the third quarter, we continue to improve processes and efficiencies and service to our goal of leading the industry in quality and performance. Since our first quarter call, I've been speaking about the investments we are making across the business. And during our third quarter, we invested approximately $2.3 million to focus on improvements in our distribution channels, manufacturing capabilities and customer responsiveness. Our objective is to improve quality, reduce lead times and consistently exceed the customer expectations. Our investments are already beginning to pay off. 2014 capital expenditures will be reduced due to the productivity gains made through our manufacturing initiatives. Going forward, as volumes increase, the benefit of our investment will be apparent with improved margins. Now a few words about Q4. For the last 2 fiscal years, we have been in a more normalized, seasonal pattern in which our third quarter has been better than our first 2 quarters, and our fourth quarter has been better than our third quarter. While we expect continued normal seasonality, the nonresidential activity has not been as strong as last year. Therefore, we are somewhat cautious in our short term expectations. I have previously indicated that our coating activity, bookings and backlog must reflect year-over-year improvement to substantiate meaningful economic recovery. We have recorded 3 consecutive months of improved bookings. And in August, the first month of our fiscal fourth quarter, we recorded year-over-year improvement. Continued year-over-year improvement is the best evidence of an economic-driven recovery in the nonresidential markets. Before I hand over to Mark, I'd like to make a few additional comments about nonresidential construction leading indicators. Leading indicators remained positive. The residential recovery we are seeing historically precedes nonresidential recovery. The latest Fed Senior Loan Officer Survey showed the demand for nonresidential loans strengthening in combination of the continued easing of lending standards. This favorable environment supports the improved growth in real investment in nonresidential structures that for the last calendar quarter grew 4.6% on a year-over-year basis. Additionally, the Architectural Billings Commercial and Industrial Index saw its 10th straight month of growth, indicating the acceleration of design activity across the United States. Importantly, the United States manufacturing sector expanded at its quickest pace in more than 2 years. The Institute of Supply Management Index rose to 55.7% in August, reflecting healthy growth over the last 3 months compared to weaker first half calendar year -- first half of the calendar year. We remain optimistic that with the leading indicators pointing to growth, we will see the recovery gain traction with increase in demand for the products we manufacture. We'll continue to invest in our efforts to continuously improve. And we believe due to these investments we have made to streamline, enhance, integrate our operations, we will be able to gain substantial operating leverage as nonresidential construction activity picks up and returns to the 40-year trend of 1.3 billion square feet of new construction starts. Now Mark will provide some additional clarity about the quarter.

Thank you, Norm. As Norm already elaborated, construction activity did not rebound to the levels we had anticipated, putting pressure on our results. However, we continue to invest substantial resources into making our organization stronger and more responsive to our customers. So this afternoon, I would like to quickly review our operating results, focusing my remarks on what we are doing to continually improve our operations. I'll start with a general overview and then dig into each of our segments. Revenue for the quarter was $317.2 million, up 6% from last year's fiscal third quarter, primarily as a result of the inclusion of Metl-Span for the entire period. On a sequential basis, revenues grew 8.1% from $293.4 million in the second quarter. Although our overall third-party volumes were up 9.6%, we continue to experience lower pricing levels in the prior year due to both competitive market pressure and lower steel input cost. We estimate that the pass-through of lower steel cost to our customers reduced our revenue by approximately $16 million as compared to the prior year period. We generated adjusted EBITDA of $17 million for the quarter, down from $18.9 million in last year's third quarter. Sequentially, our EBITDA increased 61% from the $10.6 million in the second quarter driven primarily by the seasonal increase in activity. Now I'll discuss some highlights from our segment results. Let's start with our largest revenue and earnings contributor, the metal Components group. Compared to the prior year's third quarter, it posted a 13% increase in total sales and a 17% increase in third-party sales, largely due to the acquisition of Metl-Span in late June of 2012. Last year's results included 6 weeks of Metl-Span versus the full 13 this year. We experienced volume growth in each of the underlying business units comprising the Components group. While the entire group's volume, measured in tons, increased 11%, we generated the strongest growth rate in the commercial and industrial application of insulated metal panels and commercial roll-up doors, but saw only muted growth in the larger metal components businesses. While this group also experienced lower sales price in many product lines as a result of competitive market pressure and passing through lower steel cost, it was mitigated by increasing the mix of higher value insulated metal panels. Despite the revenue growth, operating income was $8.1 million compared to $9.4 million in the 2012 period. The lower earnings resulted from higher operating cost as compared to the prior year related to several factors. First, this division incurred $1.2 million of nonroutine costs related to the integration of Metl-Span's operations with our existing operations and the finalization of certain purchase accounting matters. We have completed the vast majority of our integration efforts and do not anticipate similar costs moving forward. Second, this division invested $1.6 million in specific growth initiatives that we believe will lead to expanding our distribution channels, marketing effectiveness, and customer responsiveness. We believe that the benefits of these investments will be meaningful. Over the next several quarters, we will continue to devote resources in those areas with the objective of generating returns that will quickly offset the costs with improvements in our sales and operating margins. And third, we incurred $700,000 in incremental fixed cost associated with the ramp-up of the Mattoon, Illinois insulated metal panel plant. As panel sales maintain their strong growth and we balance the production across the combined facility, these incremental costs will become increasingly leveraged. Our Coatings division was able to grow operating earnings despite the continued ramping up of the Middletown, Ohio facility. The Coatings group total sales grew 4% while third-party sales grew 19%, which included production from our Middletown, Ohio plant. Internal sales were 4% lower due to variations in the timing of our internal supply chain. Operating income increased to $5.5 million compared to $5.1 million in last year's third quarter. Our new Middletown facility is now capable of producing all of the products required to supply its intended end markets and remains on track to begin contributing to earnings in our fiscal fourth quarter. During our third quarter, the Ohio facility produced an operating loss of $1.1 million. On August 6, 2013, a fire occurred at our Jackson, Mississippi coatings facility damaging 2 ovens. No one was injured and there was no damage to any of the high-value assets in the plant or inventory. We were able to resume shipping from the facility within a few days and quickly shifted production to other facilities, minimizing any disruption for our customers, both internally and externally. We anticipate that repairs will take between 45 and 60 days. During that time, we will service demand from our other plants. As a result in the fourth quarter, we anticipate incurring incremental operating cost of between $500,000 to $1 million to ensure our customers' needs are met despite higher logistical costs. Subsequently, over the next year, we anticipate recouping the majority of the incremental interruption costs from our insurance carrier, though we may not be able to recognize recoveries until the claims are fully resolved. The Buildings group performance was impacted by the combination of weak demand, continued competitive pricing pressure and declining steel prices. Total sales were down 3.6% compared with last year. However, the underlying tonnage volumes were up over the prior year by 3%. These increased volumes did not translate into higher revenue dollars due primarily to the pass-through of lower material cost to our customers and competitive pricing pressure. Sequentially, total sales rose 6.9% and third-party sales grew 8%. Operating income declined to $6.1 million in the third quarter compared to $9.1 million in the comparable quarter last year, and rose from $4.2 million in the second quarter. The reduction in earnings is primarily the result of lower margins on the pricing levels in the weak market environment. The performance was also impacted by the incurrence of an incremental $400,000 of specific costs designed to increase our sales effectiveness in manufacturing efficiency. We expect some of these cost to continue over the next several quarters as they begin to be offset by improving operating margins and higher business levels. Notably, the Buildings group completed an important system integration project during the quarter, which is the first phase of a multiphase project designed to significantly improve the responsiveness, quality and overall value of the products and services to our customers. While the initial phase was foundational in nature, it is an essential platform to us -- for us to facilitate the operational improvements we have been working on in 2013 and those we have planned for 2014. Turning back to the consolidated results, our consolidated gross margin was 21.1%, up slightly from the 20.7% from the second quarter on increased volumes leading to better fixed cost leverage but down compared to 22% in last year's third quarter. About 1/2 of the 90 basis point margin decline from the prior year is due to lower competitive pricing, particularly in the Buildings group. In addition, the margins were impacted by higher fixed cost for our new coating facility and insulated metal panel plants, which are now -- which are not yet fully leveraged, and a large portion of the Metl-Span integration costs were included in cost of goods sold. Engineering, selling and G&A costs were $62.8 million, flat with the second quarter and up compared to $55.6 million in last year's third quarter. The inclusion of Metl-Span added approximately $3.9 million, and it's the primary driver of the increase in cost. Additionally, we incurred $2.3 million in incremental specific cost, which I previously mentioned in the segment results, designed to improve our distribution channels, manufacturing capability, and marketing and sales effectiveness. Also as we have noted in the past, our quarterly noncash stock compensation amortization was $1.3 million higher than the prior year, as we have now reached the mature annual run rate for our plan. We anticipate that ESG&A expenses would run between $66 million and $68 million in the fourth quarter. ESG&A as a percentage of revenues fell to 19.8% compared to 21.4% in the second quarter, and increased from 18.6% compared to last year. As you know, we refinanced our existing $240 million term loan during the quarter. The new term loan extended the maturity of the loan to 2019, eliminated financial maintenance covenants, and generates annual interest cost savings of nearly $12 million, bringing our effective interest rate to approximately 4.5%. In connection with the refinancing, we incurred debt extinguishment charges of $21.5 million in the third quarter, which included the noncash write-off of existing debt, deferred debt issue cost and initial issue discounts, as well as a 1% cash payment for early termination. On an after-tax basis, the charges were $13.2 million or $0.21 per diluted common share. These charges are predominantly noncash items and are not significant compared to the true economic savings the company is gaining under the new structure. Our interest expense of $5.2 million in the third quarter, which is down sequentially from $6.2 million in the second quarter, partially reflects the lower interest cost and is anticipated to fall to between $3.3 million and $3.5 million starting in the fourth quarter. This amount includes all ancillary costs related to amortizing deferred debt costs and fees and costs associated with our ABL revolver. For the third quarter of 2013, we reported a net loss of $12.2 million or $0.19 per share. Excluding the impact of the debt extinguishment cost, we generated an adjusted net income of $1 million or $0.02 per diluted share. As a reminder, during the quarter, we converted all the outstanding convertible preferred shares into 54.1 million shares of common stock. This conversion simplified our capital structure and the calculation of our earnings per share by eliminating the preferred class of stock. All of this is reflected in our fiscal third quarter results and on our balance sheet. At the end of the third quarter, we had approximately 74.8 million shares outstanding. In the fourth quarter, we anticipate that our fully diluted share count using calculating our earnings per share will be approximately 75.7 million. And for the full fiscal year 2013, our weighted average number of diluted shares will be about 44.8 million. We reported an effective tax benefit rate of 44.9% for the quarter, which reflected discrete benefits related to utilizing a portion of our Canadian net operating loss and other discrete true-up. We would expect our tax rate for the fourth quarter to range between 38% and 40%. However, due to the debt extinguishment charge, which significantly reduced our taxable income, our effective tax rate will continue to be volatile as slight changes in earnings will have an outsized impact on the effective tax rate. Now a few comments on our balance sheet. We ended the third quarter with cash and cash equivalents of $16.1 million, down from $27.5 million at the end of our second quarter due to increases in working capital, capital expenditures and costs associated with refinancing of our term loan. Our inventories increased by 19% over the same period of the prior year, primarily as the result of higher purchases ahead of announced steel price increases, but also due to lower-than-anticipated volumes during the third quarter. Our annualized inventory turnover rate is 7.5x for the quarter compared to 8.3x last June. Now on to our capital expenditures. Year-to-date, we have invested approximately $17.5 million. As previously announced, our 2013 full year capital expenditures are expected to range between $27 million and $30 million, which includes the integration, enhancement and expansion of our product lines and operations across all 3 of our business segments. With that, I'll now turn the call back over to Norm.

Great, Mark. We're ready to take your questions and provide you with some answers. Operator, please?

[Operator Instructions] Our first question is from the line of Robert Marshall with Davenport & Co. Robert R. Marshall - Davenport & Company, LLC, Research Division: Can you give us a little bit of insight in terms of what you're hearing from the engineered building customer level? Are things kind of -- still a lack of confidence out there? And are things getting worse, or do you think people are kind of getting their sea legs here slowly but surely?

Well, I think it does fall into a slowly but surely. But I think to really set the context on the question, we benefited and our competitors benefited in the engineered building space from 25 consecutive annual month-on-month improvements from October of 2010 to October of 2012. And that really helped the improvement, the movements that we found in terms of engineered buildings group. And it definitely helped -- it didn't bring about a lot of price competition. But since November 2012, that has really slowed. And by that I mean that it's not like going back to 2010 or '11, but it was clear that on a year-over-year basis, we really struggled to see improvement in the -- in particularly in the engineered buildings group in terms of market opportunities. When I look at what McGraw-Hill Dodge is forecasting for actual -- not forecast, but reporting for actual new construction starts in our third quarter, I have to tell you, down 10.7% with the manufacturing piece being down 25% is pretty damn drastic. I mean, that's a pretty good fall. I will tell you that we are encouraged that even in that actual downturn, which did affect us, we were seeing at the same time the beginning of what we think could be some recovery. We had 3 consecutive months through to August of improvement, and August was a nice year-over-year improvement. But as I said in my script and I mean sincerely that until we can stack up because demand is improving, number of months in improvement, then that is really what will dictate whether or not that we're seeing a recovery. But to give you the short answer of the question, I think we are seeing some activity levels that are more encouraging across all of our businesses right now. Robert R. Marshall - Davenport & Company, LLC, Research Division: All right. And can you kind of give us any -- or explain the disconnect between the AIA data and what you're seeing in the order environment?

Well, the AIA data has been 10 months, and it's been above 50, and that's a good thing. We know there's normally about a 6-month lag to affecting our business. And it is clear that we haven't quite seen, certainly up till the end of our third quarter, that materializing into a big improvement. And as I said, we also saw this industrial piece, which had been strong for -- improving for a couple of years, really kind of slow down. So where I think we are is when I look across all of our businesses, I am -- we believe we're starting to see some meaningful improvement. Now I must caveat that by saying that we have put a price increase through, whether that's driven a little more activity, trying to get ahead of the price increase remains to be seen. But nevertheless, I think it's -- I think I am correct to say that we have definitely seen a bit of a pickup across our businesses. Robert R. Marshall - Davenport & Company, LLC, Research Division: Last quick question. What is the backlog data look like without Metl-Span?

Without Metl-Span, reported on the same way we reported before we had Metl-Span, last year, backlog was about $281 million. This year, backlog is about $282 million. Robert R. Marshall - Davenport & Company, LLC, Research Division: Yes, so flat?

Flat.

Your next question is from the line of Alex Rygiel with FBR Capital Markets. Alexander J. Rygiel - FBR Capital Markets & Co., Research Division: Norm, you talked a little bit about price increases, but yet it sounds like demand is a little bit soft. Can you expand upon sort of your confidence level of price increases can stick in the demand environment that we're in right now?

Well, that's always a test. I will say that we believe that the price increases, in the way we went about them, are beneficial to our customers to enable them to in fact increase their prices. I suggest to you that it is a case that there is, I think, always opportunity to add value. And that's fundamentally why we are investing so much to try to build a distinguished offering that enables our customers -- our builders and customers to frankly compete more favorably against our competitors. So at the end of the day, we are encouraged. We're a ways into this. We're not quite a month into the price increases, but we're encouraged with what we see. Alexander J. Rygiel - FBR Capital Markets & Co., Research Division: Okay. And then could you clarify whether or not the ESG&A guidance for the upcoming quarter is $66 million to $68 million, or $56 million to $58 million?

$66 million to $68 million. Alexander J. Rygiel - FBR Capital Markets & Co., Research Division: Perfect. And any thoughts on a tax rate that we should be using for 2014?

Our longer-term tax rate is about 38.5%, statutorily. And it will vary from that just depending on the level of nondeductible expenses we have relative to our ordinary income. So I would use that as a longer-term tax rate.

Our next question comes from the line of Robert Kelly with Sidoti & Company. Robert J. Kelly - Sidoti & Company, LLC: Question on the backlog. The drag from lower steel prices, was that about 5% as well?

Yes. So the lowest steel prices definitely brought the backlog down. Yes. And 5% would that be...

In backlog, that's probably a good estimate.

Yes. That's pretty good, Bob. Robert J. Kelly - Sidoti & Company, LLC: Units are up about 5%, is that the way to think about it?

Yes. Robert J. Kelly - Sidoti & Company, LLC: All right. There's a lot of noise between the Middletown facility integration driven [ph] from Metl-Span. If you could kind of give us the total drag that you expect for F '13 from some of these nonrecurring things and then maybe think about what may spill over into F '14, just to give us a sense like if volume weren't to grow at all in F '14, what would you get just from some of these items going away? What kind of savings or benefits to the bottom line?

So I think -- I'm not sure if you've seen, but we have posted kind of a CFOs report, which will shed some light on that. But I think that in the press release as well, we try to indicate in the SG&A side, those things that are -- really fall as kind of a more one-off -- I don't want to get my accounting terms kind of misconstrued here, so I -- some of it, a little bit will reoccur in the fourth quarter as we continue to expend money. But when I think about drag, I'm not thinking, Mark Johnson, about a whole lot of drag going in.

Yes. So the items that I mentioned this period are in total about $2.3 million in ESG&A costs that are really focused on some growth initiatives that we have. And of those items, about $1.6 million of that go into the Components group. And each of those items is something that we are pursuing because there is a payoff at the end. Those are items that could be turned off. We would expect to see a similar level of spending in our fourth quarter and probably about 1/2 of those amounts falling into our first quarter of next year before you actually see some significant benefit. Robert J. Kelly - Sidoti & Company, LLC: 1/2 of that $1.6 million?

That's right. Yes. I'm sorry 1/2 of the $2.3 million. Robert J. Kelly - Sidoti & Company, LLC: 1/2 of the $2.3 million. So what's the total going to be for F '13 of incremental spend or operating drag from these price increases?

We're going to have to go off-line to figure that out for you, Bob. Robert J. Kelly - Sidoti & Company, LLC: That's a number that will help. As far as the pricing story, you talked about Components being pretty competitive. I think this is the first we're hearing about engineered building. Is that just a function of lower steel prices? Is it the lack of demand, people are getting antsy and dropping prices trying to get demand volumes out the door?

Antsy, antsy, antsy. When you have a follow-up on starts, like McGraw-Hill said, of 10.7% in the third -- fiscal third quarter, when you have within that a serious drop in the manufacturing sector new buildings, which we and our competitors all covet, then it doesn't surprise me a whole hell of a lot that we've seen some folks hustling around to get some price. But by the same token, I am encouraged that we have been able to put a price increase through in a way that is -- that enables our customers to work with it. And we think it's an important thing to do, and we'll continue to try to drive the price up as our quality and service continues to improve. Robert J. Kelly - Sidoti & Company, LLC: Is the -- are the price pressures, the concessions related to quality and service or just lack of demand?

Well, I would put it the other way around. With quality and service, we have greater justification for pricing increases.

Our next question is from the line of Brent Thielman with D.A. Davidson and Company. Brent Thielman - D.A. Davidson & Co., Research Division: Yes, Norm, the weakness in the manufacturing piece, obviously, there's this economic backdrop, which acts under decisions to move forward. But is there anything more granular you're seeing there in the sectors of manufacturing that you serve that may be particularly soft and were stronger for you last year, or is this sort of across-the-board in terms of that market?

No, I could be a bit more specific. And I spent most of my life on oil and gas, and I know how efficient they are at turning on and turning off. And I will tell you that we benefited last year in retrospect from an oversized demand particularly driven by gas, and that falls into the McGraw-Hill manufacturing sector, right? And it certainly is something that has been off this year for us. I think the overall trends, if oil and gas continue to be hugely favorable for the next 20 years, but there will be periods where our friends in the oil and gas field will not spend as much as they do in other times. Brent Thielman - D.A. Davidson & Co., Research Division: Sure. And can you remind me what exactly you were doing for gas last year?

So when you think about all the developments going on, whether it be in Bakken or out west or the Marcellus Shale, all that is pretty virgin area. So therefore, all of the support services in all aspects, whether it be pipelines, upstream drilling, maintenance, all require facilities to work from. And they have to be fairly localized. So we were supplying -- and our competitors were supplying lots of buildings that would fall into kind of the manufacturing category that would be used for warehousing and support and maintenance activities for all aspects of the -- I'm sorry, of the drilling, the production and the transportation of gas into pipeline systems. Brent Thielman - D.A. Davidson & Co., Research Division: Okay, that's helpful. And just thinking about Q4, obviously, you made a comment in the last couple of years, you've seen a seasonal uptick. Is it your expectation that volumes or revenues, or however you want to phrase it, will be more consistent with Q3?

So -- it won't surprise you that we hadn't expected a 10.7 decline in starts to have the impact on our third quarter, but it did, right? And we expect it to actually have a third quarter that was a year-over-year improvement across the line. And that didn't come out. So I'm more than a little reluctant to get too far over my skis in fourth quarter even though everything points in a northerly direction. Brent Thielman - D.A. Davidson & Co., Research Division: Okay, no, that's fair. And then just on I guess from sort of the margin expectation as well, I mean, you have this impact of lower pricing levels. But I think before, you were thinking some more complex projects would flow through. Does the combination of those things sort of offset each other as you think about margins into Q4?

I tell you, I really do believe when I look at the shipping schedule, particularly in the Buildings group, that we will continue -- we will see the benefit of some of the work that they have been winning. I will tell you that we've seen an improvement in what we refer to as for production work, which means that there are things that people want right now. I will tell you that the higher complexity work, which often times attracts some of the margins I talked about in the last quarter, sometimes a little slower to get out the door. But overall, I mean we're expecting improvement. I mean, we're expecting the Buildings group to show improvement, and I know that team is working very hard to produce it. Brent Thielman - D.A. Davidson & Co., Research Division: Okay. Appreciate that. And then just last one. Mark, I'm sorry, if I missed it, but did you provide what the organic growth for the quarter was?

We did.

Yes, I did. Yes. In volume it was 5.8%.

[Operator Instructions] And I'm showing no further questions at this time. I'd like to turn the conference back to management for any closing remarks.

Well, I thought we start -- okay, very good. Well, again, thank you very much for listening in the call. We try to provide more data for you, both in terms of scripts as well as submission that we have put on our site. But please don't hesitate to call us if you have any further questions. Thank you. Good night.