Reliance Steel & Aluminum Co. (RS) Q2 2012 Earnings Report, Transcript and Summary

Good morning, ladies and gentlemen, and welcome to the Reliance Steel & Aluminum 2012 Second Quarter Conference Call and Webcast. [Operator Instructions] It is now my pleasure to turn the floor over to your host, Chairman and CEO, David Hannah. Sir, the floor is yours.

Thank you and good morning, and thank all of you for joining our conference call for the second quarter and 6-month period ended June 30, 2012. Gregg Mollins, our President and COO; and Karla Lewis, our Executive VP and CFO, are also here with me today. After completion of this call, a printed transcript, including Regulation G reconciliations, will be posted on our website at www.rsac.com in the Investor Information section. This conference call may contain forward-looking statements relating to future financial results. Our actual results may differ materially as a result of factors over which Reliance Steel & Aluminum Co. has no control. These risk factors and additional information are included in the company's annual report on Form 10-K for the year ended December 31, 2011, and other reports on file with the Securities and Exchange Commission. For the 2012 second quarter, we reported net income of $108.8 million or $1.44 per diluted share. That's up 10% from the 2011 second quarter, and down 6% from the 2012 first quarter. Sales for the 2012 second quarter were $2.21 billion, up 8% from the 2011 second quarter, and down 3% from the 2012 first quarter. And for the 6 months ended June 30, 2012, net income was $225 million, up 18%, compared with net income of $191 million for the 2011 6-month period. Earnings per diluted share were $2.98 for the 6 months ended June 30, 2012. That's up 17% from $2.54 per diluted share for the 2011 6-month period. Sales for the 2012 first half were $4.5 billion, up 14% from 2011 first half sales of $3.96 billion. We sold 1.15 million tons of metal in the 2012 second quarter. That was down 2.3% from the 2012 first quarter, but up 10% from the 2011 second quarter. For the first half of 2012, we sold 2.32 million tons of metal. That's up 11.8% from the 2011 first half. Also, our toll processing businesses have processed 2.78 million tons of metal in the 2012 first half, and that's up 20% from the 2011 first half. The average price per ton sold in the second quarter was $1,921, and it was down 1.6% from the 2012 first quarter. And it was down 2.2% from the 2011 second quarter. For the 2012 second quarter, carbon steel sales were 52% of our net sales dollars, aluminum was 15%, stainless steel was 15%, alloy was 11%, toll processing was 2%, and miscellaneous other sales were 5%. Now compared to the first quarter of 2012, our carbon steel sales of 921,000 tons in the second quarter were down 1.7%, with the average price per ton down 1.9%. Our aluminum tons sold of 62,000 were down 0.6%, with average prices down 1.2%. Stainless tons sold of 60,000 were down 0.6%, with average prices up 1.5%. And alloy tons sold of 77,000 were down 13.2%, with average prices up 3.4%. Now the larger decrease in alloy tons sold and the increase in the average prices for alloy sales were the result of reduced OCTG sales in the second quarter compared to the first quarter, as OCTG prices are generally lower than our other alloy product prices. The reduction in OCTG sales in the second quarter is a normal seasonal occurrence. Consistent with the first quarter, we saw the most strength in the energy, that being oil and gas; aerospace; farm and heavy equipment; and the auto markets. We service the auto markets primarily through our toll processing operations. In general, demand during the first quarter was helped by increasing prices and slightly better economic expectations. The second quarter business climate was hampered by a downward pricing trend for most all the metals we sell. Contributing to this, from the carbon steel perspective, were declining scrap prices, ample domestic supply and high import levels that needed to be absorbed. Lower LME Aluminum prices and reduced nickel surcharges were responsible for the drop in common alloy aluminum and stainless steel prices, respectively. Add to this the increased uncertainty surrounding Europe, China and the U.S. fiscal cliff issues, and you get a more skittish economic environment where the momentum we gained in the first quarter was slowed during the second quarter. Nonetheless, we were pleased with our second quarter results, which were in line with our expectations, although not at the high end. At the operating income level, our second quarter 2012 profit was up 1% over the first quarter of 2012, and up 12% from the 2011 second quarter. Our balance sheet remains strong and provides a solid foundation for our operations and our growth strategies, both organic and by acquisition, that we expect to continue. Our operating cash flow for the 2012 second quarter was $84.4 million, compared to $15.9 million in the 2011 second quarter. We're very fortunate that Reliance has such a broad range of products, substantial customer diversification and wide geographic footprint. Those attributes have helped us achieve industry-leading operating results on a consistent basis. As I mentioned earlier, economic uncertainty will most likely persist through the third quarter, which is seasonally softer even under normal circumstances. Carbon steel prices should be at or near the bottom, which should be the case for aluminum and stainless steel also, with the possibility of some modest increases near the end of the quarter. Given these expectations and considering the third quarter will have 1 less shipping day, we currently estimate earnings per diluted share in a range of $1.15 to $1.25 for the 2012 third quarter. On July 24, 2012, our Board of Directors increased the regular quarterly cash dividend 67% from $0.15 to $0.25 per share of common stock. The dividend is payable on September 14 to shareholders of record, August 17, 2012. We've increased our dividend 18 times since our IPO in 1994, and we've paid quarterly dividends for 53 consecutive years. Once again, we believe we have ample liquidity and sufficient cash flow from operations to continue our growth strategies and support increased cash dividends going forward. During the second quarter, effective April 1, we further extended our footprint in the energy market with the acquisition of National Specialty Alloys, a processor and distributor of premium stainless steel and nickel alloy bars and shapes. They're based in Houston and they have 3 additional U.S. facilities. Also in April, our Precision Strip subsidiary purchased the assets of Worthington Steel Vonore plant in Tennessee, which expands our toll processing coverage into that area. Most recently, effective June 30, we acquired from Samuel Son and Co., Limited substantially all of the assets of Airport Metals Australia, based in Melbourne, which enhances our ability to service important aerospace customers in that area. Reliance has significant earnings capacity with our broad and diverse product base and wide geographic footprint that positions us well in our industry. We also have meaningful exposure to industries that are poised for growth in the years ahead. Most importantly, though, we have an exceptional group of managers and employees that have the experience and the drive to continue our successful growth strategies and operational excellence. Thanks to them and to you for your support. Gregg will now comment further on our operations and market conditions. Gregg?

Thank you, Dave, and good morning. As Dave pointed out, we were pleased with our results in the second quarter. Demand was pretty strong in most all of the major industries and regions. Tons were down slightly in the second quarter as compared to the first quarter, but up over 10% compared to the second quarter of 2011. Business has been moving in the right direction despite the turmoil in global financial markets and the economic uncertainty here in North America. For the most part, price increases that were announced early in the first quarter began to decline in March. Our FIFO margins for the second quarter were 25.4%, compared to 25.6% in the first quarter. Inventory turn on a same-store basis, excluding Continental, McKey Perforating and National Specialty Alloys, was 4.3 turns in dollars and 4.6 turns in tons, down slightly from our first quarter. From a demand standpoint, we feel pretty good about most all of the major industries that we support and their outlook going forward. Oil and natural gas continue to be one of our strongest markets, and although many of our customers, such as the oil tool manufacturers, have solid backlogs, these backlogs can be drawn in or pushed out by the oil companies. We sense a little slowing here, but it's difficult to determine if it's the typical summer slowdown or something deeper. We shall see. But either way, this segment is very profitable at Reliance and will continue to be. Commercial aerospace build rates have increased and our companies that support this space are doing extremely well. Heavy industries such as agricultural and mining equipment, barge and tank manufacturers, transmission towers and railcars are still doing well but, here again, we sense a little slowing with OEMs rethinking their inventory positions. Automotive, supported by our toll processing businesses in the U.S. and Mexico, are doing extremely well and the future here looks bright. Our operations are running flat out, with plans on the table to expand at least one of our toll processing plants. Non-residential construction is showing signs of life, mainly through industrial construction projects throughout North America. Needless to say, there are many uncertainties that lie ahead, but this is all part of being in the service center business, and our management teams and their employees in the field are well-equipped to take on these challenges. As for pricing, on carbon steel products, prices began their steady decline in March after 2 increases were announced in January and February. All carbon products were affected, with flat-rolled, plate and mini-mill products affected the most, and beams the least. Several factors drove these discounts, not the least of which was a major surge in imports, declining scrap prices and a strengthening dollar. Needless to say, with these factors in play, we were very pleased to see that our FIFO gross profit margins only declined by 0.2% in quarter 2 compared to quarter 1. In our opinion, that was a terrific job. As for aluminum, Midwest spot ingot has traded in the $0.95 to $1.05 per pound range over the past 3 months. Aerospace sheet and plate is still tight with mill lead times at 16 to 18 weeks on an allocation basis. The 5% price increase announced in April is firmly in place. Life is good in aerospace. General engineering aluminum plate has softened somewhat in the last few months, with lead times dropping to 7 to 9 weeks from 13 to 16 weeks in the first quarter. Imports have become more aggressive, especially with the decline in demand in Europe, making the U.S. even more attractive. Common alloy sheet demand is good. Our tons sold on a same-store basis in the first half of 2012 versus 2011 is up double digits, and mill lead times are 8 to 10 weeks. We like what we see in our aluminum business. Stainless steel and nickel surcharges have been in steady decline since April, and are close to $0.76 per pound for August. We believe nickel is at or near bottom, and with a little luck, will start trending up shortly. Demand in stainless flat-rolled is also up double digits in tons sold in the first half of 2012 versus '11. Bar and tube, which yields much higher margins, is up roughly 5%. To conclude, we believe Reliance is well-positioned to take full advantage of any and all opportunities that may arise in the near future. Our customers are being very cautious, but we feel they are doing the right thing. Prices on most all products have come down since March, and everything you hear or read in the media is negative regarding the world economies. However, we don't believe business is as bad as it is being depicted. 2012 same-store tons were up 8.6% in our first half as compared to last year's first half, and we believe 2013 tons will be up from 2012. We are in uncertain times and no one has a crystal ball that paints a clear picture of what lies ahead. What we do know is that we have good people that know how to service the daylights out of our customers. We have a rich product mix that rivals any and all of our competition. We have an outstanding balance sheet, and we know how to use it. I'll now turn the program over to Karla to review the financials. Karla?

Thanks, Gregg, and good morning, everyone. Our same-store sales, which exclude the sales of our 2011 and 2012 acquisitions, were up 1.4% in the 2012 first quarter compared to the 2011 second quarter, with a 7.1% increase in tons sold and a 5.6% decrease in our average selling price. Same-store sales compared to the 2012 first quarter were down 3.8%, with a 1.8% decrease in tons sold and a 2.5% decrease in our average selling price. And our same-store sales for the 2012 first half were up 7%, with an 8.6% increase in tons sold and a 1.6% decrease in our average selling price compared to the 2011 first half. Our 2012 volumes are up from 2011 due to slowly improving end demand, as well as the incremental sales from our acquisitions and strategic asset purchases. Although our selling prices are lower in the 2012 periods than in 2011 because of general metal costs, the average selling prices at our newly acquired companies are higher than the company average due to the specialty nature of their products and processing capabilities. For the 2012 first half, our gross profit margin was 25.5% compared to 25.7% in the 2011 first half. And on a quarterly basis, our gross profit margin jumped around a bit with 2012 second quarter gross profit margin of 25.8%, compared to 24.9% in the 2011 second quarter and 25.3% in the 2012 first quarter. This was impacted mainly by our LIFO adjustments, as well as pricing trends for our products. Our 2012 second quarter LIFO adjustment was a credit, or income, of $7.5 million compared to a LIFO charge, or expense, of $25 million in the 2011 second quarter and expense of $7.5 million in the 2012 first quarter. For the 2012 first half, we have no LIFO adjustment compared to a charge of $45 million in the 2011 first half. Our LIFO adjustment is included in cost of sales and, in effect, reflects cost of sales at current replacement costs. We currently estimate our 2012 full year LIFO adjustment at 0, down from a $30 million charge or expense that we had estimated at the end of the 2012 first quarter. As of June 30, 2012, our actual LIFO adjustment would be a credit of $12.7 million, which indicates that our new estimate anticipates that mill prices will be above current prices at the end of the year. As a percentage of sales, our 2012 first half SG&A expenses were 15.7%, compared to 16.0% for the 2011 first half. Our current fixed cost structure can support significantly higher volumes. And we anticipate that our SG&A expense as a percentage of sales will continue to fall as our volumes improve. However, changes in our selling prices also impact this measure. Operating income for the 2012 first half was $370.8 million or 8.2% of sales, improved from $320.4 million or 8.1% of sales in the 2011 first half. And although our gross profit margins were slightly lower in 2012, our effective expense management and high-return acquisitions allowed us to achieve a slightly higher operating income return. Depreciation and amortization expense increased by $7.5 million in the 2012 first half compared to the 2011 first half, mainly due to our acquisitions, as well as depreciation expense on our recent capital expenditures. Our other income of $3 million for the 2012 first half was down $1.3 million from the 2011 first half. On a quarterly basis, we had more significant variances, with a negative $10 million swing from the 2012 first quarter to the second quarter reducing earnings per diluted share by $0.08. The variances are mainly due to foreign currency fluctuations on our inter-company loans, as well as the timing of insurance proceeds and investment returns on our life insurance assets and gains on our fixed asset sales. Our 2012 first half effective income tax rate was 33.8%, compared to our 2011 first half rate of 34.2%, with the decrease mainly attributable to our higher foreign taxable income in 2012. In the 2012 first half, we provided cash from operations of $21.2 million, compared to using cash from operations of $85.5 million in the 2011 first half. And although we increased our working capital in both periods to meet improved demand levels, higher metal prices in 2011 consumed more cash than in 2012. Our accounts receivable balance increased $98.6 million from the 2011 year end because of increased sales, and our days sales outstanding rate in 2012 is 41.5 days, down slightly from 41.9 days in the 2011 first half. Our FIFO inventory levels increased $183.4 million and our accounts payable and other liabilities decreased $14.8 million at June 30 of '12 from year end 2011. Our inventory turn rate declined to 4.1x for the 2012 first half, compared to 4.4x for 2011. We spent $86.8 million for capital expenditures in the 2012 first half, which included the buyout of 3 facilities that we previously leased, as well as purchases of land, buildings and processing equipment to improve and expand our existing capabilities. Our outstanding debt at June 30, 2012 was $1.53 billion, up from $1.33 billion at year-end 2011. We had net borrowings of $200 million in the 2012 first half and used $112 million to fund our acquisitions of McKey Perforating and National Specialty Alloys, as well as the purchase of the Vonore assets from Worthington and the Airport Metals assets from Samuel. We had $845 million outstanding on our $1.5-billion credit facility at June 30, 2012. Our net debt to total capital ratio at June 30, '12, was 29.9%, up slightly from the 28.4% at December 31, 2011. The covenants in our credit facility require us to maintain a debt-to-capital ratio of less than 60% and an interest coverage ratio of at least 3x. Our interest coverage ratio at June 30 was 10.4x. Our liquidity position is strong and provides us with significant flexibility to provide shareholder value through continued growth of the company, as well as through the recent dividend increase. Cash used to fund our quarterly dividend will increase from $11 million per quarter to about $19 million, which is well within our comfort zone. Thank you, and we will now open the discussion for questions.

[Operator Instructions] Our first question today is coming from Chris Brown.

This is Timna Tanners and Chris from Bank of America Merrill Lynch. I just was interested in the LIFO change, and you point out helpfully that, that indicates that you're expecting prices to kind of be at these levels by year end. Can you talk to us about what changed from the first quarter to the second quarter, give us a little bit more color on what changed in your conviction about pricing levels and maybe business activity?

I think, in general, Timna, the price decreases this year, even though we had seen some softening, I think, at the time that we had our first quarter call, the decrease has seemed a little deeper and went on for a little longer, as they're still going on, than we had originally anticipated. So the credit -- I think Karla mentioned in her remarks that there was almost a $13 million credit in our actual LIFO calculation. So that number got to be bigger than we expected it to be, so we thought that the right thing to do would be to adjust our view that at the end of the year, basically, we wouldn't have a LIFO adjustment. It'd be 0 for the year. Which contemplates then, as you said, that between now and the end of the year, we would have to have some increase in price compared to the average prices in our inventory today to eat up, so to speak, that $13 million credit.

And remember our product diversity too, so that's not all just in carbon, which I think lots of times we get focused on. A lot of that income is also coming from the lower aluminum prices that have continued, and anticipates improvement across all of the different products we sell.

So is it fair to say you're more confident in your non-carbon business appreciating rather than carbon? Is that a read I should take away from what you just said?

No, no.

I don't think so. I think we're -- we really feel probably equally that -- across all the products that we're at or near the bottom on aluminum. Now when we talk about aluminum in this context, we're primarily talking about common alloy aluminum, as it's driven by the LME and the Midwest spot. And the nickel, of course, is what's driving the stainless, so I think we feel pretty much the same about all those products.

Okay. And my other question is really, since you continue to point out that you have fairly low leverage, that you have a lot of room on your balance sheet and you've been acquisitive, can you talk about your latest thinking there? And do you think that given the challenges and margin pressure in the industry, that would-be sellers are getting more thoughtful about maybe what kind of multiple they ask for, now that there's been a couple years of kind of more difficult operating environment?

Yes. I don't know, Timna, that they're thinking as much about the multiples that they're looking for. I think that they're still -- most of us, and I'll put us in the same category, we're not performing at the levels that we would like to perform because we see what potential is out there and most of that potential, the big catalyst, as we've talked before, is in that non-res side, so -- and that touches, particularly, on the carbon steel side that anybody that's dealing in plate and bars and structurals and beams, that's a big deal for all of us. So I think, unless somebody has to sell today, I think their thinking is still, "Let's just wait until our numbers look a little bit better and some of this uncertainty maybe gets taken away." Uncertainty in the market just doesn't bode well for people making big decisions, whether it's buying or selling, very honestly. So I think there's just too much uncertainty out there. There's some activity. Certainly, most of what we've seen has been in the energy-related areas, and that's a -- they have a good story to tell. The business is good, and many of those companies are making record profits. So they're feeling good about looking at their profits and, of course, they've got all these hockey-stick projections going wild that you have to just ignore, because things will be volatile even in that area. There's -- I think long term, it's a really good place to be, but there's going to be some ups and downs along that path. So that's probably the one area, more than any other, where we've seen people willing to sell, but I think it's because their results are good and they have a great story to tell given the climate for them.

Okay. So when you're saying buyers and sellers may be a little more tepid, you'd put yourselves in that category as well.

Yes. I think, depending upon what we're looking at. Certainly, if you're looking at somebody that's huge in carbon plate, bars and structurals, there's certainly more uncertainty there than in some of the other products. We think we have more visibility in the aerospace side and the energy and the oil and gas side, and certain other businesses, if they touch more the heavy equipment and that ag, that type of thing then, I think we're more comfortable there. On the more construction-related stuff, you're going to be a little more cautious.

Our next question today is coming from Michelle Applebaum.

It's Michelle Applebaum from Steel Market Intelligence. I wanted to ask you about the dividend. It's a really nice bump and I wasn't able to do the math fast enough to see if you've ever increased it that much before. But it looks like your payout ratio has been typically kind of -- in most years, you're cyclical but kind of a little bit below 10. And this is a much bigger number and I don't know if we're cyclically depressed right now or not, to tell you the truth. I know I'm supposed to know that. Should we read this as a bigger payout ratio? Or should we read this as confidence that the EPS is going to be higher rather than lower? Or should we read this as M&A is a little bit more challenging? I'm sorry, I'm not raining on your parade, but how do I -- I can do the math a lot of different ways, so what math should I be doing here?

Well, first off, I think if you look at our payout ratio, it's been -- in the early 2000s it was actually up over 20% for a number of years. And then in the area around 2006, maybe throw '05 in there, too -- '05, '06, '07, '08, it dropped into single-digits because we were making a lot of money at that point in time and we didn't really increase the dividend all that much, although we do have a history of increasing it. To answer your first question, no, we've never increased the dividend this much in the past. We've been -- we've had some pretty significant increases when we split the stock and maintained the dividend rate, but that might have been a 30% increase or something like that on a 3-for-2 split. So how should you read it? From a payout ratio standpoint, our average over the -- from 2000, so that would be over the last 11, 12 years, I guess, is about -- just about 11%. And like I said, it ranges from in the mid-single digits, all the way up into the high 20s. We think that -- we've got great confidence in this company and we think our earnings and our earnings per share and our cash flow are still depressed. We're not anywhere near what we think we can do. Again, the big catalyst there being improvements in the non-res side and that will come. We're confident of that. We just can't tell you exactly when. The other thing is we have great confidence in our cash flow and it should not -- the only thing that you mentioned that you should not think is that you should not think that it's some substitute because we're running out of ideas on the acquisition side. That's not the case. We have low liquidity -- I mean, high liquidity, low leverage on the balance sheet right now. We feel very confident that any deal that comes in front of us, we can take advantage of. We would be able to execute if it's a deal that we wanted to do. So we're not concerned at all about that and we believe we're going to continue to acquire. And as you know, most of the companies in our industry are privately owned and operated and you just wait until the owners are ready to go. You can't force them to sell their companies. So hopefully, when they do make that decision, they'll be talking to us. So did I leave anything out of all that list of possibilities that you gave?

Yes. I mean, I guess the only thing was that I was looking back -- your payout ratio was lower in the '90s. And I guess maybe that's what's relevant...

Yes. It's been low. And I guess overall, Michelle, what we felt is that the company has grown a tremendous amount since our IPO, and it grew a lot even before that. But most of our growth has been over the last 17, 18 years after the IPO. And we just -- we still have some pent-up earnings and pent-up cash flow that we're very confident will come back to us soon. And the dividend just hasn't kept up with the growth of the company, and we think this is the right thing to do.

Okay, great. That's terrific. And can I ask a second question?

Sure.

Okay. I thought I heard Gregg say something about imports have been picking up is this -- that was sort of current, but my specific question is more on the sheet side. And I know that's not your biggest product, and relative to the industry, you have much less exposure than average to sheet, and good for you. But I was wondering, since there has been a, I don't know, I guess it looks like 4% of the sheet price increase is holding, and sheet prices overseas have gone down by a faster pace in the last 3 weeks. Just wondering if you were seeing, when you said, "We're seeing imports picked up," are you seeing more imports offers in sheet specifically since our good fortune the last 3 weeks relative to the world? And two, what did he mean when he said that?

Okay. Let me drop back a half a step. My comments were really referring to imports in the second quarter and the first quarter. They were the highest levels in the -- since 2008, and much too high in a variety of products, that including plate and flat rolled, and certainly beams and mini-mill products. So we saw an onslaught in the first and second quarter. Today, as we sit in this room in July, okay, import licenses are going down. The price spread between the United States, even though China's market has deteriorated from a pricing standpoint, it's still not attractive for buyers here in the United States to take advantage of that. So I would not expect to see third quarter or fourth quarter import volumes anywhere near what they were in the first and second quarter of this year. I think we're seeing them going down and thank God for that, because they were at ridiculous levels in the first and second quarter. So I don't know if that clears up my remarks...

I mean, the licenses refer to imports that are coming in like today. The licenses are a current indicator. And I'm just -- I'm picking your brain for the forward book and you're telling me -- you're giving -- I'm interested in the fourth quarter outlook. So you don't think sheet is -- on a scale of 1 to 10, with 8 getting closer to the tipping point, you don't think it's anywhere near the tipping point? You think we're still far away?

I think that it's not likely that company service centers in particular in the United States are going to go out on a limb to buy imports that would arrive in the fourth quarter. And they'd have -- if they were to do that, they'd have to be buying today, okay? And I think that the people that are -- that had been buying the imports in the past are probably going to sit on the sidelines.

Okay. So we're -- we still have wiggle room on pricing.

Yes.

Our next question today is coming from Luke Folta. Martin Englert - Jefferies & Company, Inc., Research Division: This is Martin Englert with Jefferies & Company in for Luke. I had a few questions, I guess, on the thoughts of the buying patterns of your customer base since some recent channel checks that we've done with distributors. Many of them noted that customers, end users, were buying lower quantities of metal but more frequently, were more apprehensive to plan longer term and also more tightly managing their inventories, partially due to the uncertainty of the upcoming election. I guess, to that extent, can you talk about what you've been seeing, if anything, regarding that? And comment on channel inventories, what's expected there?

We've been seeing exactly what you just described. Our guide -- I think I pointed out in some of my remarks that our customers are being very cautious. They're rethinking their inventory positions. We've gotten letters from companies that have IE [ph] in the ag business and whatnot, just stating, "Don't panic, but we are looking at our inventories and we're going to be buying less quantity and more frequently," which, Luke, as you know, following our company and whatnot, it plays right into our hands because we enjoy the quick turnaround process material business. It helps our margins and we're very -- we consider ourselves to be pretty good at that line of work. So the more companies buy smaller quantities and buy them more frequently, the better we like it. But they are -- our customers throughout all the industries that we're servicing are being very cautious. Whether that has to do with the election, I really don't know. My gut tells me that some of it has to do with the election, but we shall see.

The thing -- one of the things that really changes their behavior, and it might be the thing that changes it more than anything else, Luke, is -- or Martin, is the -- is just price changes. Customers, if they aren't convinced that the prices are going up, they'll wait to buy what they need until down the road, a week, a month or 2 months. If the prices are going up, they'll buy it today to the extent that they need it. So I think that's the thing that we've seen over the years changes their behavior more than anything else, but then you put on this general uncertainty in the economy, the election and all the other things we're dealing with. That just makes it a little more fragile. Martin Englert - Jefferies & Company, Inc., Research Division: Okay. And then one other question if I may. For the -- some of the other companies that are in the metals space that have reported to date, I guess, they've had maybe a relatively more cautious outlook on some of the end markets there. And I noticed you noted some possible slowing within heavy equipment and some of the other end markets. Can you talk about maybe how you're positioned from a diversification standpoint among your product offerings, that you seem to be, I guess, maybe a little bit more optimistic on a relative basis? As an example, maybe, are you seeing more strength within non-ferrous versus carbon products?

Yes. I think and we -- the information is out there that shows a chart that has all of our products on it. And I think as we mentioned earlier, we're 52% carbon, but within that carbon group it's very broken up, and plate and bar and structurals and tube is bigger than sheet, certainly. So I think different companies have different outlooks because of the complexion of their own companies and where they're selling their products. And for us, we're essentially half carbon and half non-ferrous and most other companies don't have that kind of balance. And then if you look deeper within aluminum or within stainless steel, you find even more diversification, where in stainless for example, I think 2/3 of our sales in stainless are not in stainless sheet; they're in stainless bar and tube. So when you think about where that's going, a lot of that goes into the energy end of things, goes into the ag and so it -- we all can have different outlooks at different times, based upon where our products are going. It wasn't too awfully long ago, if you were a big carbon flat-rolled service center and the auto industry was recovering back in 2010, I guess, you were feeling pretty good. And we weren't feeling real good because carbon flat-rolled and the auto industry is not a big -- is not a big deal for us. So it just changes with the industry -- the end-use industries that are either growing or contracting.

Our next question today is coming from Aldo Mazzaferro.

It's Aldo from Macquarie. I don't want to beat the pricing question to death, but I just had another little question on there. That -- your comment about the customer uncertainty and the way they typically react when they're uncertain is to back off a little bit on inventory, does that imply that you're not really seeing much success in the market today on the announced price increases, those $40-or-so flat-rolled increases that were put out around the 4th of July?

No. Actually, some, not all, of that $40 has stuck, okay? And we have been able to pass those through, which we do at time of announcement. And so the answer to that is really no, Aldo. We were skeptical probably like you were and everybody else on that $40. Was the timing right? Certainly, when demand is improving and price increases are announced, that's a much better arena to be than when demand is not doing as well and price increases are announced. But I was very proud, as was all 3 of us here, that the move was made because it was -- it dropped below $600. Certainly, the producers aren't making money in that area, and they need to. We want them to. So we were pleased that they did make that announcement. I wouldn't be at all surprised, as I'm sure you wouldn't either, if there was another announcement that was to follow it up to maybe get that from $25 a ton out of the $40 back up to the $40. I don't know, that's very likely [ph].

But do you think the market can handle that with the euro weakening a little and the Asian prices falling sharply? Do you think they'll put themselves in the position to get pushed by imports again? Or are we not there yet, I guess? I guess that's what you said to Michelle.

Yes, I don't think we're there yet, okay? If the $40 had stuck in its entirety, which it did not, and if there was another $40 announcement that was made and that stuck, that would open the door, okay? But at this point in time, I just don't think that domestic buyers, service center guys would -- are going to take the risk, okay, when it's not very attractive to begin with. But that's just our opinion.

Okay. Dave, if I could ask just one more question, and this might be a little off the wall, but as a big toll processor, it strikes me that you might possibly have some interest in that large Thyssen mill for sale. I'm wondering if that's -- if you do have any interest, and maybe whether it's completely out of your bailiwick. Or what might be your plans regarding a major acquisition? Like would it be something like that?

We'd like to do another major acquisition but not that one. No, that's out of our area of expertise there, Aldo. And plus, we'd dependent upon a whole bunch of our competitors to make that successful, I think, if any service center company was thinking of that, but no. That's not something -- I think that's a little bit too far away from what we're comfortable with.

Our next question today is coming from Richard Garchitorena. Richard Garchitorena - Crédit Suisse AG, Research Division: It's Richard from Crédit Suisse. So I just wanted to get a little color on some of the acquisitions, the most recent one, the Airport Metals, and it looks like you spent about $82 million so far in acquisitions including National Specialty, as well as Airport Metals. Any chance that you can give us some details around, is that going to be all aluminum margins similar to the rest of Bralco, that type of thing?

With respect to the Airport Metals deal? Richard Garchitorena - Crédit Suisse AG, Research Division: Yes.

Yes, it's a very small operation. The revenues are there -- there are what, you want to say, $10 million thereabouts, but what -- and the major supplier to that operation -- kind of how that thing came together is our Bralco operation here in -- our main here Bralco operation in Southern California was, I think, the main supplier to that Airport Metals operation over in Melbourne. So there was a relationship there and we just felt that under our ownership we could do more with that operation and we were able to break it loose out of the Samuel ownership. We talked to Wayne and next thing you know, we were putting a deal together. So we think it's good for us. It brings us closer to some customers that we're trying to deal with from a pretty long distance. And we think that, that activity plus the base business that Airport Metals has over there, it's not going to be a $100 million business for us, but we were very confident that it's going to be multiples of what it is today. Richard Garchitorena - Crédit Suisse AG, Research Division: Okay. So I guess, a follow-up to that, we shouldn't think that you're really looking internationally to grow as well as domestically. Or is it just wherever there's like -- the opportunity presents itself? Is that really how we should think about it?

Yes. I think what you just said about wherever the opportunity presents itself, we'll look at all the different opportunities and sniff them -- sniff it out and see how it feels. I still believe that you're going to see the more significant deals that we do will be North American transactions. It's not because we're not interested in the international area. We have grown there quite a bit in number, but it's -- they're all very small. And what we've found with a lot of the -- well, I think probably almost every international deal that we've looked that we haven't done is that the risks are higher and the returns are lower, in general. The expectations of reasonable profit levels are significantly lower than what we expect for our company here. So where we've grown internationally, we've grown in specialty products, because there was a real need for that, and with those products, we feel that we have a good chance of getting the kinds of returns that we want. But the risks are still higher there, so we've gone internationally primarily when domestic customer relationships or North American customer relationships have asked us to follow them into different parts of the world to support their expansions into those different areas. And we think that's a good way to go, but would we foresee ourselves being a large general line service center somewhere else in the world? Probably not. Richard Garchitorena - Crédit Suisse AG, Research Division: Great. That's very helpful. And then just one other question. In terms of CapEx, you've spent about $87 million so far this year. And I think in the last quarter, you said -- I mean, the overall budget was $250 million for the year, but how should we think about it? I guess it's going to be coming down for the -- from that level or...

We probably won't get to the $250 million, but we'll continue to spend this year, and usually we do have a slower start with our spending because we communicate those things and we dig in to the projects or to the expenditures that have been submitted to us, probably during the first quarter of the year. And then we -- most of the spending starts after that. But we'll -- there's some projects included, bigger expenditures included in the $250 million. And we won't -- we may start the expenditures for something but maybe not finish it until next year so...

And just because something gets approved at the beginning of the year in that $250 million budget, that doesn't mean everything is automatically started then. And as things come up during the year and if there's a big new project, it's reassessed again to make sure it's the right time to do it and the right place to spend the money.

Our next question today is coming from John Tumazos.

In terms of the 8.6% same-store unit volume gain, in relation to a couple of the other metrics that downtick, are you saying: a, that business is good, period; or b, that your customers are cautious because they read or hear from experts that they should be scared; or c, that problems in Europe or China or somewhere really are translating into weaknesses in business? Excuse me for putting this humorously.

Can we pick more than one of those, because I think...

You guys are smarter than me. Excuse me if I didn't ask my question as well as I should have.

I think, John, that probably all of those are true to a certain extent. Certainly, we think business is better this year than it was last year. And I would say every one of our businesses, but for maybe a non-res business here and there, they're doing better this year than they did last year. And maybe some of the non-res ones might be off a little because they had some big projects last year that didn't repeat this year, a piece of business here or there. But overall, our businesses are doing better than they did last year, pretty much in all the industries that we touch. And certainly, the real growth has been in the energy-related stuff and the ag-related, the auto-related, the appliance-related, and the aerospace. So those are the areas where we've really -- they've more than made up for some of the decreases in maybe the non-res side. Are people afraid of what's going on in Europe? Yes, I think the momentum that we had in the first quarter certainly slowed down, and we're going to continue to perform above last year's levels, we believe, but we did see during the second quarter, and still see today, more apprehension as we go forward. And the customers are being cautious. Again, prices have come down. There's more uncertainty. We've got our own election as well as whatever impact Europe will have, and nobody really knows what the impact here will be of all that. We've been talking about Europe for the better part of 2 years now. So all of that stuff is making people just more anxious, and -- but overall, when we've step back and looked at our business, our business is better. And we think it's going to be better again next year.

Dave, if I could ask a question about the dividend hike versus a share repurchase. Did you raise the dividend because the dividend payout has 100% certainty, while a share repurchase depends on the stock market going down and the stock price staying low, which it may not, and that sometimes the shares offered aren't very many -- you have to have a seller to buy. And then you got all these legal blackout windows. You can't buy the day before you report earnings so that -- is it -- should I infer that there's 100% certainty you're going to deliver that dividend, well not 100%, but 100% intent to deliver it, where executing share repurchase is cumbersome or -- just elaborate as to why it was the dividend, as opposed to buybacks, as you've bought stock back so consistently and brilliantly over the last 18 years.

I think, John, we are certainly more confident in the dividend. We think it would've had and should have a more positive impact on the stock long-term. We did talk to a lot of our shareholders and got their feelings. And a lot of what we've heard from shareholders and investors in general is that they were more in line with the higher dividend as opposed to a share repurchase. They think it's better for the company long-term and we would've -- I think, to have the same impact on the stock with a share repurchase plan, we would have used a lot more money in a shorter period of time. And then there's the uncertainty, as you pointed out, versus the dividend where it's -- I mean, it is what it is and we think that going forward we'll still be able to continue to increase dividends, as we've done in the past, when it's appropriate to do so. So it just seemed to be a more attractive and more prudent thing for us to do.

And I think, to Dave's comments earlier too, from a long-term standpoint, really positioning the company at a yield level given the strength of our business and our earnings now and going forward, it seemed like a better decision.

Our next question today is coming from Sohail Tharani.

Sohail Tharani from Goldman Sachs. Dave or Gregg, can you just give some color on the product mix you have? One of the perception out in the investor is that your -- all of your products are fully tied to the market price, spot price, maybe LME on aluminum or nickel or all the carbon steel. Are there products you have, or if you can give us percentages, is more resilient to price increases, maybe the heat-treated plate in aluminum, where prices don't change? Because one of the things people talk about is if plate comes down $200 in the spot market, your inventory just devalues $200 a ton and stock gets under pressure and people don't understand. Can you give us some color on that?

Well, certainly, you mentioned and probably -- that's [ph] the one commodity that we stock, that being the heat-treat plate and bar and sheet that go into the aerospace industry. That really is -- that product is priced on basically supply/demand fundamentals as they apply to the commercial aircraft makers such as Boeing and Airbus. So that really -- the LME ingot pricing and Midwest spot really doesn't have any much -- not any but much, meaning to pricing of that product.

And that represents, Sohail, a little more than 1/3 of our aluminum dollars, or I guess, probably and...

5% of total revenue.

And then you have aluminum bar and tube, which isn't as volatile as the sheet.

Right. It's common alloy...

Alloy sheet, and that's over 1/3 of our aluminum business as well.

So -- and when you get into stainless steel or where we stock some of the 316 stainless, although 304 would certainly dominate our flat-rolled side and our bar side, but we get into the 316s that -- the PH grades on stainless steel bars. And those are all aero -- not all, but much aerospace and energy-related, and again don't follow the commodities such as 304 would.

And about 2/3 of our stainless business is other than sheet. It's either plate or bar and tube.

Right, so -- and then when you get into carbon products, alloys don't seem to follow -- we separate alloy from our carbon. The 52% of that's carbon and I think 11% is alloy. And alloy typically doesn't -- now, that can be volatile though, okay? You got SBQ product and you know what's happening there, Sohail, with respect to increases in supply over the next 18 months by all the major SBQ producers, so that could be hit. But in general though, okay, it does not fluctuate anywhere close to what would happen with your basic mini-mill product or plate, bar and structural, out of the regular carbon side. So we're proud of the rich mix that we have. We probably don't tout it as much as we should. But we've aligned ourselves into that mix purposefully, since our IPO back in '94. We wanted to deemphasize the -- in particular the carbon flat-rolled market we want -- we've grown in that but as a percentage of our revenue, it has not. And we went after the bar, the plate, okay, the SBQ product lines, the alloys and all of those and certainly the aerospace market with a vengeance, okay, to really get into a richer product mix that yields higher margins. That was our plan. Hopefully, we've done a reasonably good job of it.

Great. I have one more question to you. In another question, you mentioned about the behavior of the buying pattern of your customers. How is it on your end? Are you more careful? Or because your inventory tons are already so good, that you are business as usual in this environment in terms of your purchasing behavior?

Yes, we do the same thing basically as our customers do, okay? We're cautious. We saw the prices going down. They went down further, frankly, than we anticipated, but we try -- especially on our A and B items that are very commodity driven, okay, we try to keep those turning as quickly as possible. But we actually do that in all the markets, but in particular, when our customers are doing it, we're doing the same thing. And where we get caught up with a little bit is some of the specialty products. Aerospace is strong, okay? Do we have a little bit more in the pipeline on inventory in aerospace than we normally have? Yes. Do we have the sales to support it? Yes. So, no. Our buying patterns are -- historically, they're pretty -- we do the same thing over and over and over again, but when we get in times like this, we're even more cautious. Because we didn't expect that it to go as low as it has. But I have to tell you, to reiterate what we've said earlier, we're pretty confident that steel prices, aluminum prices, and stainless steel prices have -- are at or near bottom and we should be able to -- the mills should be able to do something about that price-wise, sometime in the not-too-distant future, on a positive side.

Our next question today is coming from Mark Parr.

It's Mark Parr with KeyBanc Capital Markets. One question, and I apologize because I haven't been able to be on the entire call. Gregg, did you give us an update on lead times for heat-treat aluminum plate? And could you kind of talk a little bit about what -- I know that market was tight at the end of the first quarter. I mean, is it getting tighter? Is it staying the same? Is it getting a little looser?

Yes, it's about the same and the lead times, Mark, are about the same as they were in the fourth quarter on heat-treat aerospace plate, which is about 16 to 18 weeks. But I emphasize, okay, that, that 16 to 18 week is lead times on an allocation basis. So if you just called the mill and you haven't been buying aerospace plate in the past and you wanted to buy and yet you're a recognized distributor of Kaiser or Alcoa or who have you, okay, and you wanted to buy aerospace plate, and you didn't have any past background with it, the likelihood of your getting that plate is slimmer or none, so -- but if you're a recognized distributor and have been purchasing that for quite some time like we have, okay, then they provide you with an allocation depending on what your buying patterns had been in the past. So for us, it's a good thing because we've been buying a lot from those mills. We're their largest service center customers and they provide us with ample allocation from a pounds point of view. But if you haven't bought it in the past, you're kind of up you-know-what creek.

Any thoughts on the growth momentum for that product? Is there improved supply that you're getting? And how much growth do you think that product could provide for you guys on the second half?

God, that's a tough question to answer, Mark. I'd have to say in the second half of this year, our volumes will be pretty close to what they were in the first half. What happens in 2013, as build rates -- because there's generally a lag when they say they're going to, instead of manufacturing 3.5 737s, and I'm just throwing numbers out, in a monthly period, they're going to take that to 5 units instead of 3.5 a month. There's a lag there of about 12 to 16 months. So we think that we'll begin -- I think we're probably going to be flat in the second half of this year compared to the first half, which is good. I mean, it's a great rate. We're very happy to have that, thank you. But we expect that there'll be some increases in volumes in 2013 and beyond.

[Operator Instructions] Our next question today is coming from John Ockerman. Timothy P. Hayes - Davenport & Company, LLC, Research Division: It's Tim Hayes, Davenport. A question on the -- your inventory level during the quarter. It looks overall, from what we can tell, that inventory level, pretty much the same in terms of units. Is that fair to conclude?

Yes, by way of like tons in stock? Timothy P. Hayes - Davenport & Company, LLC, Research Division: Yes, tonnage.

Yes.

Yes. On a same-store -- anyway, yes. The answer is correct.

It's probably compared to the end of March because we did bring NSA, in particular, in during the quarter. It came in, in April. And same-store maybe for tons are down slightly.

Slightly, yes.

But overall, they're pretty constant with what they were at the end of March. Timothy P. Hayes - Davenport & Company, LLC, Research Division: Any particular category where the inventories were brought down much more so, say, I guess, the first float would be carbon versus the non-ferrous?

The flat-rolled. Flat-rolled, our volumes would be lower than they are in, say, some of the specialty alloys that are supporting energy, natural gas and oil, as well as aerospace. So the flat-rolled inventories are turning well, okay? You have to also understand, when we acquire -- companies that support the energy business, which we've been acquiring more so than not in that particular sector, that the product lines are much more specific to companies like Halliburton, Schlumberger, Baker Hughes, what have you. And they'd turn much less than say flat-rolled. Flat-rolled, you're going to turn at a minimum 6x. You're never going to get there when you're dealing with specialty items that flow into the energy and even the aerospace business for that matter. So when we bought like Continental, which was a company that was -- probably is on a run rate now between $450 million and $500 million, and their inventory turns are less than robust in our opinion. But it takes a little while for them to understand, work with their suppliers, get on JIT programs, making-whole programs, et cetera, et cetera. It generally takes a couple of years to make the swing. We have the same issue with Jorgensen. They reacted quicker than most. But Continental is going to get there, but they're just not there right this minute. And worldwide the same issue, and have the same issue with National Specialty. Timothy P. Hayes - Davenport & Company, LLC, Research Division: So then within the non-ferrous, any more detail on the inventory position during the quarter for, say, aluminum plate inventory versus, say, I don't know, stainless bar and tube?

Well, our aluminum plate inventory would be higher and intentionally actually on aerospace-related contractual business that we have with the likes of Boeing and Goodrich and Airbus. So that would not turn as quickly, say, the common alloy aluminum that we do business with. So plate would be -- aluminum plate would be fairly similar in turns as compared to your example of stainless steel bar and tube. They would be -- that would be of the similar nature, and to throw out a number, that would be somewhere between 4 and 4.5 turns on those 2 products. Timothy P. Hayes - Davenport & Company, LLC, Research Division: Right. And I guess just to be clear on the change in tonnage, end of March to end of June. Did the plate go up, down, stay the same? And sort of the same question on the stainless bar and tube.

I'd say both of them were pretty -- if they adjusted one way or the other, it was fractional.

Yes. It was -- overall, our total tons were flat at June compared to March. There was a little shift where overall stainless went down a little bit, and basically, the offset was in aluminum.

Our next question today is coming from Tony Rizzuto. Anthony B. Rizzuto - Dahlman Rose & Company, LLC, Research Division: It's Tony from Dahlman Rose. Just a couple of questions here. Do you guys have a buyback authorization already in place?

Yes.

Yes, we do...

Yes, we do. Anthony B. Rizzuto - Dahlman Rose & Company, LLC, Research Division: Okay, good. And I just want to drill down a little bit on general engineering. I think, Gregg, you indicated that lead times had come in pretty significantly and I think I heard you say imports is a factor. I was wondering if you could provide a little bit more detail about what you see is really driving that market and the end markets here that may be softening a bit on the margin. Just any kind of thoughts you have there would be appreciated.

So, okay, our biggest end-use market on the general engineering, Tony, is the semiconductor equipment makers, okay? And I believe that they're the largest -- that particular industry is probably the largest consumer of general engineering plate than any other industry that does utilize it. Mold-making would be there, as well, but mold-making is doing well because automotive is doing well, okay? So we've noticed a slowdown in the last couple, 2, 3 months in the semiconductor equipment makers. Their build-to-book ratio has been below 1, and 1:1 is parity and anything over 1 it means that they're booking more than they're shipping, which really is a good thing. That's what we like, but it's been below that the last 90 days. So it's not earth-shattering but there has been a slowdown in that market. And we service that primarily out of our Northern California operations. Our Valex operations is involved in that also and we also service quite a bit out of the Northeast, the Boston, Massachusetts area as well. So the lead times dropped from 13 to 16 weeks down to basically 9 weeks. And -- but there has been a lot of pressure from offshore material coming into the United States. That -- it's been coming into the United States but not in huge quantities, because they were also shipping the product into Europe. But now, obviously, with what's going on in Europe, they're not shipping much into that so they're diverting it into the United States. So we're seeing more availability of offshore general engineering plate here in North America today than we have in a very, very long time. Anthony B. Rizzuto - Dahlman Rose & Company, LLC, Research Division: Okay, Gregg. And just a further -- just a follow-up there. Now it's the plate. Any other shapes that are involved in there? Would it be some tubing as well in those semiconductor plants? Or is that not something you do? It's just more the machining plate for those fabricating operations?

Yes, we would supply some of the stainless steel tubing that goes into the -- actually the fab shops that are made by Intels and the like. And unfortunately, we're not doing much of that domestically anymore. We're doing all of that in Korea and China, not all of it, but a good chunk of it. But really when we talk that particular industry, it really is 95% of our comments are centered around general engineering heavy plate.

We have a subsidiary called Valex, Tony, that we've had for quite some time, actually since 1986. And they electro-polish this high-grade 316L stainless tube and they actually build valves and fittings and manifolds out of it. And we sell those products, as well as miles and miles of electro-polished tube, into the fabs -- the Intel fabs and those kinds of things, all over the world.

Our last question today is coming from Arun Viswanathan.

Basically, I had a couple of questions. So on energy, have you noticed any slowing, I guess, in the last couple of months with either commodity prices coming down or inventories or anything like that?

We have seen a little slowing, nothing major, okay? I could kind of compare it to going 100 miles an hour down the freeway and dropping down to 90, okay? That's really a comparison, so yes, we have noticed a little bit of slowing. They were going, I mean, gangbusters, okay, for a long time and we weren't surprised to see it. We anticipated it. We have some very good dialogue, especially with the oil tool manufacturers that we have multiyear contracts with. And so they have us in the loop. Will that come back? Yes, I think, it's all kind of a product of what you're paying per barrel. And when you're doing $110, $120, $130 a barrel, you better believe everybody is running 25 hours a day, okay? We are seeing some more activity with offshore drilling, which is really good because generally speaking, when they get an approval to build a rig, okay, whether it be for Chevron, BP, or what have you, okay, that's a very, very long, okay, commitment. So they'll be pumping there nonstop for 4 or 5 years, and the metal that goes in there, a majority of that comes from one of our operations that goes in there, so -- but we're seeing more activity there. There's a delay obviously, to build the rigs, set them up and drill, but we're seeing more quotations and more conversations that we're having with our suppliers about that.

And overall, the energy area, while, as Gregg pointed out, it slowed a little bit and probably a lot of that slowing was related to the natural gas activities, where with purchased dry gas that slowing has slowed down -- I mean, that activity has slowed down. But overall, as he also pointed out, it's still -- I mean, we're still going 90 miles an hour. So it's very, very good and it's above last year's levels.

Great. And I guess I just wanted to understand, are you guys -- would you prefer this kind of uncertain/falling price environment when you can take some market share maybe from little guys? Or is it better to have a healthier price environment overall and everybody's fat and happy?

No. We don't like this environment. We like it when prices are going up and we like it when activity is more robust. And that's -- we're going to do much better then. And it's not that this is a bad environment. It's still better than last year, which was better than the year before that, which was a whole bunch better than the year before that. So no, we -- if we had our choice, this would not be it.

Okay. And then the last question I had was just on imports. I mean, there has been some duty talk out there. And what's your guys' position on the overall import side? I mean, do we need to see a little bit more support, I guess, from a government standpoint? Or is it just come what may? I guess the market will act like the market.

We do need more support from the government to make this a level playing field, a more fair situation. We've needed that for quite some time. We don't dabble in the import area very much at all. We are very loyal to our domestic suppliers and we intend -- we will always be that way. So we certainly have to know what's going on in the import environment, but it does have an impact on our suppliers and it has an impact on our business as well. And we wish that it was better controlled. And I think our mill suppliers in all the different products are not bashful about getting involved with filing trade-related suits when it's appropriate to do so, and they should.

All right. I'm sorry. I had one more question, was on aerospace. I guess we've had some issues with supply chain fulfillment, just problems with customers not necessarily wanting to build inventory. Has that continued to affect your business, or not really?

Aerospace is great for us. It's been good and it's even better now and we think the future there is one of the brightest spots that we have in the company. So no, it's -- we're very much encouraged by our exposure to the aerospace industry.

There was an overhang and that may be what you're referring to, that Boeing had quite a bit of inventory, okay, in stock for quite some time. And that overhanged the industry and it was a little bit problematic. But that situation was corrected sometime in the first part of the second half of last year, and so that's no longer an issue at all. So as Dave pointed out, the lead times are long. You got to plan accordingly. Buying inventories 16 to 18 weeks out is not the greatest thing in the world, okay, but we've gotten used to it. We've been doing it for years. It's part of the...

We like it when it's tight.

Yes, exactly. Aerospace is awesome. We wish we had more of it.

We have no further questions in the queue.

Terrific. Thanks again for your support and your comments and questions. And we look forward to talking to you again 3 months from now. Have a good day. Bye-bye.

Thank you, ladies and gentlemen. This does conclude today's conference call. You may disconnect your phone lines at this time, and have a wonderful day. Thank you for your participation.