Q1 2024 Russel Metals Inc Earnings Call
Good morning, ladies and gentlemen, and welcome to our 2024 first quarter results call for Russel metals.
This call will be hosted by Marty Jurafsky Executive Vice President and Chief Financial Officer, and John Reid, President and Chief Executive Officer of Russell Metals, Inc. Today's presentation will be followed by a question and answer period at that time. If you have a question. Please press star one on your telephone keypad.
I will now turn the meeting over to Marty Jurafsky. Please go ahead.
Martin Leb Juravsky: Great. Thank you operator, and good morning, everyone I plan on providing an overview of the Q1 2024 results. If you want to follow along I'll be.
Martin Leb Juravsky: Referencing the Powerpoint slides that are on our website just go into the Investor Relations section and it's located in the conference call sub menu. If you go to page three you can read our cautionary statement on forward looking information.
Martin Leb Juravsky: So let me start with a little perspective on.
In Q1, and I think about the quarter and kind of highlights two key things.
Martin Leb Juravsky: First how we performed during periods of steel price volatility.
Martin Leb Juravsky: Over the past couple of quarters, the benchmarks for sheet and plate have swung up and down by a fair amount of probably around 20% give or take and I don't really have we generated solid margins earnings and returns over the past few quarters, but he has been with relatively low volatility as compared to the underlying steel price environment.
Martin Leb Juravsky: In the past steel price volatility has occasionally led to significant inventory impairments and margin compression and I think we're starting to see the benefits of our business changes with more of those opportunities on the come second.
Martin Leb Juravsky: There've been a lot of behind the scenes initiatives that provide us with a springboard for the balance of 2024 and beyond.
Martin Leb Juravsky: We have a series of our equipment upgrade and facility Modernizations that are starting to come to fruition in Q2, Q3 Q4 and beyond.
Martin Leb Juravsky: Two we've set the stage for further enhancements to our debt structure that should lead to more flexibility and a lower cost capital structure and three we are continuing to look at new potential acquisition opportunities. In addition to the extensive planning that is being done for the Samuels acquisition.
Speaker Change: So let me now.
Speaker Change: Go through some of the materials and lets start with market conditions on page five.
Speaker Change: That said earlier, we've seen the underlying steel prices exhibit a fair amount of volatility over the past while that said.
Speaker Change: Hot rolled sheet prices appear to have somewhat stabilized after hitting a trough in late March. The other interesting observation is that when we look at the trough price points that had been experienced over the past 18 months HRC prices have bottomed at levels that are well above historical troughs.
Speaker Change: This speaks to the steel producers demonstrating some degree of discipline at the same time that demand is reasonable.
Speaker Change: For plate.
Speaker Change: We have seen prices taper off over the past several quarters. If we look back a few quarters ago, the spread between plate and sheet was well outside of the historical norm as we look at the prevailing environment. The spread has come back to a level that makes more sense given the industry cost curve.
Speaker Change: Taking all that together, we're looking at price levels today that are relatively healthy by historical comparisons.
Speaker Change: On supply chain inventories they have bounced around a bit but remain in check and last and more most importantly demand is reasonably solid across our business.
Speaker Change: If we go to page six we have a snapshot of our historical results.
Speaker Change: The start for 2024 was very similar to the end of 2023, we generated significant cash flow from operations and continue to have a very strong balance sheet and that gives us flexibility to pursue a range of opportunities if.
Speaker Change: If we look across the various charges going from top left revenues for the quarter $1 1 billion, which was up from 1 billion. In Q4, EBITDA was $84 million EBITDA margin was 8% earnings per share were <unk> 82 cents. All of these were up slightly from Q4.
Speaker Change: Our annualized return on investment invested capital came in at 19% and remains above our minimum target return over a cycle and we continue to be first quartile within our industry.
Speaker Change: Lastly in terms of capital structure, what you see in the bottom right. We have net cash position of $277 million versus net debt of almost $500 million at the end of 2019, and we have a multi dimensional approach to using that dry powder.
Speaker Change: Traditionally overtime.
Speaker Change: Going to our more detailed financial results on page seven from.
Speaker Change: From an income statement perspective, I covered several of the high level items on the previous page, but a few other items to note.
Speaker Change: Revenues of $1 1 billion was up 4% from Q4. Some of this was the impact of the volume recovery in Q1.
Speaker Change: Versus Q4 is that normally evolves from a seasonal perspective on gross margins all segments were up a little bit and I will discuss these in more detail in a minute.
Speaker Change: Interest expense came down to zero as we are generating interest income on our growing cash reserve.
Speaker Change: Our Q1 results were impacted by a few non operating type items stock based comp was.
Speaker Change: As nil for the quarter versus $7 million expense in Q4, we had a $3 million reversal in our in our inventory.
Speaker Change: Inventory in our <unk> reserves.
Speaker Change: Again, the proactive inventory management.
Speaker Change: Has reduced much of the <unk> risks that we have experienced in the past.
Speaker Change: From a cash flow perspective in Q1, we used $66 million for working capital, which was mostly the seasonal pickup in accounts receivable and a decline in accounts payable as a result of the timing of our annual very variable compensation that gets paid out in Q1.
Speaker Change: No major changes in inventory for the quarter.
Speaker Change: Capex of $24 million was in line with our tracking to be greater than $100 million.
Speaker Change: For this year is our key discretionary projects continue to advance.
Speaker Change: In the quarter, there were no big projects, but rather a series of projects, including the installation of new lasers, and Winnipeg, the near completion of our Greenfield location in Saskatoon as well as the commencement of a project to expand our Texarkana facility.
Speaker Change: From a balance sheet perspective, we are net cash position $277 million, which as I said earlier as a result of our strong position will be completing the redemption of our $150 million, 6% notes today.
Speaker Change: There are other debt structure enhancements that are in the works that should unfold in the coming quarters.
Speaker Change: As I said in the past and manage the company with a conservative investment grade type credit bias and this approach should give us better financial flexibility and reduce our capital cost on a go forward basis, our liquidity is near $1 billion.
Speaker Change: One item to note is that the Canadian dollar did weaken in the quarter, which did have an impact on our OCI account in translating our U S based financial results into Canadian dollars in the quarter, we picked up <unk> 39000 shares under our NCI, which brings the total to $3 5 million shares since we put the program in.
Speaker Change: Place in August of 2022, and our average purchase price cumulatively to date is $35 56 per share our book value per share continued to go up in his almost $20 per share notwithstanding our share buybacks in the quarter.
Speaker Change: Lastly, we have declared a 5% increase in our quarterly dividend to <unk> 42 per share and I'll discuss that in more detail a little bit later on.
Speaker Change: On page eight we show our EBITDA variance analysis between last quarter and this quarter.
Speaker Change: Looking at service centers the volumes were a positive pick up from Q4 and our margins were also up there was a $13 million increase in operating expenses, which was a bit out of the norm as it was a combination of variable compensation tied to financial results the implications from FX movements and some not.
Speaker Change: Non recurring costs related to the Samuels acquisition.
Speaker Change: Energy field stores was up $3 million as it continued to benefit from a solid energy environment steel distributors was down $2 million. There was also a $5 million unfavorable variance in other than it was a number of all relatively modest items, we had a favorable impact from the lower mark to market on our stock based comp, but it was more than offset by nor.
Speaker Change: Immel seasonal decline in our Thunder Bay terminal operations, Samuel acquisition costs, and a few other small items.
Speaker Change: Our service centers on the next page, but our overall results were pretty good in a quarter that experienced a fair amount of price volatility in.
Speaker Change: In energy field stores, we're continuing to see solid performance Q1 revenues and earnings were up as a result of good market conditions distributors revenues and earnings were down due to some delays with inbound shipments and more conservative procurement due to those market conditions that said our margins did improve albeit on a lower revenue.
Speaker Change: On page 10, we are showing a deeper dive on some of the metrics for metals Service Center business top right graph is past five years for ton shipped the Q1 2024 volumes were up 4% versus Q4, but down 6% versus this time last year. The Q1 2023 comparison point.
Speaker Change: Did benefit from <unk>.
Speaker Change: Very strong demand and unusually good period last quarter, whereas Q1 2024 was solid but it was also impacted early on in the quarter by some weather related shipping constraints that did occur in January.
Speaker Change: On the bottom left graph, we have the revenue and cost of goods sold per ton revenue per ton or price realizations increased by $52.
Speaker Change: Versus a $7 increase in our cost of goods sold which resulted in a $44 per ton pickup in margin that is shown in the bottom right graph.
Speaker Change: For Q1, our gross margin was $487 per ton, which remains higher than our historical average of closer to $300. As we've said many times in the past our investment initiatives should lead to higher average margins and lower volatility associated with those margins over the cycle.
Speaker Change: On page 11, we have illustrated our inventory turns this chart shows the inventory turns by quarter for each segment energy and read service centers in Green and steel distributors in yellow. In addition, the black line is the average for the entire company overall, our inventory turns improved from three eight turns.
Speaker Change: At December 31 to three nine for this quarter by sector. Our service centers improved to four six turns our energy field stores came up to $3 two.
Speaker Change: Our steel distributors declined a little bit to two four.
Speaker Change: On page 12, we have the impact of inventory turns on inventory dollars.
Speaker Change: Overall for the quarter there wasn't a big change it was very comparable at March 31 versus December 31 in.
Speaker Change: In service centers tonnage was slightly lower in cost per tonne was slightly higher than at year end.
Speaker Change: On page 13.
Speaker Change: The overall impact on capital utilization and returns.
Speaker Change: Our capital deployment moved up to about $1 4 billion because of an increase in working capital and an increase in PP&E as a result of our incremental spending on a variety of projects more importantly, our returns continue to be industry, leading with last 12 months return on invested capital at 23%.
Speaker Change: If we go to page 14, I have an update of our capital structure.
Speaker Change: The continuation of our strong free cash flow and disciplined approach to utilization gives us a lot of flexibility on the left table. Our cash position was $575 million at March 31, which is up $174 million from this time last year, our equity base increased to $1 $7 billion in spite of our share buyback.
Speaker Change: The chart on the right shows our book value per share, which is almost $20 per share, which is a little over $2 increase since this time last year.
Speaker Change: On page 15, we have an update on our capital allocation priorities.
Speaker Change: Given our strong balance sheet, we continue to have this multi pronged approach as we've always said for investment purposes, we're trying to see average returns greater than 15% over the cycle and as already discussed we have delivered well above that target for extended period of time the ongoing initiatives are threefold.
Speaker Change: Identification and pursuit of value added projects, we have over 40 projects on the go right now and as everyday as every week goes by we're identifying more and more interesting opportunities.
Speaker Change: Facility Modernizations, we have five on the go that are tracking for completion at various times in late this year and early next year as I mentioned earlier Saskatoon as probably the first one on the come.
Speaker Change: And we're very excited about all of those initiatives.
Speaker Change: In total our Capex project pipeline is greater than $200 million.
Speaker Change: As large as it's ever been and the key thing for US as it continues to advance the opportunity for high return high margin low volatility type projects that serve our customers and serve our communities in which we operate.
Speaker Change: In terms of acquisitions, we are continuing to work on the Samuel deal as we've said publicly we are continuing our dialog with the competition Bureau to resolve their concerns related to a narrow segment of product in a specific geography as much as I would like to go into more detail, it's not appropriate to be more specific at this time in addition.
Speaker Change: We are actively looking at other acquisition opportunities that are coming available and our interesting complements to our existing platform.
Speaker Change: In terms of returning capital to shareholders.
Speaker Change: Adopted a flexible approach over the last few years for dividends, we are announcing a 5% increase in our quarterly dividend to take it to <unk> 42 per share, which will be payable on June 14th of this year. We believe the increase make sense as we have a strong capital structure as well as continued strong earnings and cash flow for the NCI be weak.
Speaker Change: <unk> 339 shares last quarter as I said earlier since we put this in place in August of 2022, we've acquired three 5 million shares at an average price of $35 56 per share and we expect to continue to utilize the NCI.
Speaker Change: On an opportunistic basis.
Speaker Change: If we compare our last 12 months of activity of our NCI b versus our new dividend run rate they are each plus or minus about $100 million.
Speaker Change: So we are close to a balance between the two forms of capital repatriation.
Speaker Change: In the past and that 50%, 50% is not a hardwired target, but it's a good litmus test for us of trying to be somewhat more balanced in terms of returning capital to shareholders.
Speaker Change: On page 16, I want to provide a longer term context around returning capital to shareholders on the top left graph you see our historical dividend profile with.
Speaker Change: With the just announced increased to 42 per share per quarter from the 40% level, which was an increase from 38 at this time last year, we are showing that if we can successfully grow the underlying business, which we think we have that could and should lead to a cadence for dividend growth.
Speaker Change: On the bottom left you see our quarterly NCI b activity since we put in place in middle of 2022.
Speaker Change: Illustrates that we don't have a fixed approach to the program on a daily or weekly or quarterly basis, but we view it as an opportunistic way to buy shares at a discount to our view of intrinsic value and we have been more aggressive at certain price points than others. When you look at the bottom right chart the impact of the NCI B has been a gradual.
Speaker Change: Reduction of our share count over the past couple of years and on the top right chart, the aggregation of dividends versus the NCI be shows that over the past couple of years. There has been that more balanced approach that I mentioned earlier.
Speaker Change: In closing I want to use the graphical illustration on page 17 to discuss some approaches that we've change to our business over the last couple of years. The left chart is where we have been in the past in terms of delivering results and there has been a very conscious effort to re engineer.
Speaker Change: Our earnings profile, we operate a mature business that encounters some element of cyclicality.
Speaker Change: However over the last several years, we've consistently said that one of the outcomes of our portfolio changes should be to raise the cycle floor raise the ceiling reduce the volatility through the cycle as well as grow the business.
Speaker Change: In many ways Q1 illustrates this objective as we navigated through large swings in steel prices and managed to generate really good results in spite of that steel price volatility backdrop. In addition, with the ongoing initiatives to both reinvest internally and grow externally, we'll continue down this path to illustrate.
Speaker Change: Rated on that right hand chart.
Speaker Change: In closing on behalf of John and other members of the management team I would like to express our appreciation to everyone within the Russell family for your contributions to our performance and future success that concludes my introductory remarks. So operator, please feel free to open the line for questions.
Speaker Change: Thank you ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press star followed by one on your Touchtone phone you will hear three tone prompt acknowledging our request and your questions will be pulled in the order. They are received should you wish to decline from the polling process. Please press star followed by two if.
Speaker Change: If you are using a speaker phone please lift the handset before pressing any Q1 moment. Please for your first question.
Speaker Change: Your first question comes from Michael <unk> TD Securities Michael. Please go ahead.
Michael: Thanks, Good morning.
Michael: Hey, Michael Good morning.
Michael: So just want to start with the service centers segment and a question about the gross margins there.
Michael: You did see quarter over quarter improvement in service centers gross margins.
Michael: In Q1, just given the way steel prices progressed through Q1, and the way they've traded through the first part of Q2 wondering if you can provide some commentary on your expectations for Q2 2024 service centers gross margins.
Speaker Change: Yes, well, it's a fair question, Mike because Youre right Q1 was higher than Q4 on average, but in some ways won't you appears through the quarter. Obviously, there was some steel price volatility as we got into February and March So some of the dynamic unfolded that the.
Speaker Change: The margins did come off during the quarter compared to where they were at the beginning of the quarter.
Speaker Change: Depending obviously what happens on steel prices for the rest of Q2, and Q3 and Q4 that will obviously flow through in terms of timing. There is the lag effect that we have talked about in the past in terms of what happens in the steel market and how that flows through to our margins, but for purposes of looking at.
Speaker Change: The exit point of Q1, and the entry point of Q2 margins were a little lower at the end of the quarter than at the beginning of the quarter.
Speaker Change: Okay. That's helpful. Thank you.
Speaker Change: And then if we look at volumes and service centers.
Speaker Change: No.
Speaker Change: Saw some improvement sequentially.
Speaker Change: On a year over year basis stuff, we're looking at it from that perspective.
Speaker Change: Tons shipped in the first quarter were down wondering how we should think about that on a year over year basis in the second quarter.
Speaker Change: Yes, so one of the interesting things Mike as we look in some ways is similar to your question on margins. We obviously have more granular information on when we look internally and see what's going on in the market more than a quarterly basis. When we look at stuff monthly or weekly for that matter.
Speaker Change: We had a really really strong March of 2023 that was very unusual well above the norm.
Speaker Change: But it was an outlier. So if we remove the March of 2023 dynamic we're pretty much tracking where we would have been any other month over month comparison, comparing a month in 2024 to one months in 2023. So if you look at Q1 as a reference point, that's a pretty good rep.
Speaker Change: <unk> point in terms of volume leading into Q2.
Speaker Change: Yes, Mike.
Mike: To add onto that as well Marty mentioned it earlier, but we really had some odd weather dynamics that were excessive in Q1. So we lost a lot of shipping days across a lot of locations as well and so if you go back to days, we actually ship volume to really nice pretty steady there.
Speaker Change: Okay. That's helpful. Thank you.
Speaker Change: And then maybe just.
Speaker Change: Steel distributors segment, the referenced to oversee shipping delays that you saw can you elaborate on that situation and maybe as a follow on to just better understanding what was happening there.
Speaker Change: If you could talk about whether the situation has been resolved and what the implications are if any for the for an impact in the second quarter.
Speaker Change: Yes so.
Speaker Change: This really ties into all of the geopolitical events that are happening in the middle East and <unk>.
Speaker Change: Product coming through the Suez Canal and through.
Speaker Change: Sensitive political areas, there's been delays and so that reference was to the part of the business that brings in a product from.
Speaker Change: From export markets and might have to re navigate its routes coming into North America. So that was just a reflection of some of those issues that everybody is encountering for product coming in through that part of the world.
Speaker Change: Okay, and I mean, I realize there's still a geopolitical issue. So my earlier question about whether it's resolved.
Speaker Change: In that sense, there are still issues in the world, but I guess.
Speaker Change: Presumably.
Speaker Change: As a REIT roots readjust themselves things would normalize just wondering if that has happened yet as far as the flow of product coming in and if we do see any impact in Q2 or is this sort of back to normal now that perhaps things of adjusted.
Speaker Change: Mike I think we've normalized we rerouted and so there is a sequential coming behind it now and so as you would have a pattern to it so the rerouting again through at all for three weeks four weeks or so now that we're back on track. So I don't think youll see that carry into Q2.
Mike: Got it alright, I will get back in the queue. Thank you.
Speaker Change: Great. Thanks, Mike.
Mike: Ladies and gentlemen, as a reminder, should you have a question. Please press star one on your Touchtone phone.
Speaker Change: Your next question comes from Jonathan Law Mirrors, Laurentian Bank Jonathan. Please go ahead.
Speaker Change: Thank you.
Speaker Change: Just a follow up on the gross margin per ton.
Speaker Change: So nice improvement.
Speaker Change: From Q4 to Q1 despite.
Speaker Change: Lower market prices.
Speaker Change: My question is were there any specific value add projects that started to contribute positively to the margin in Q1 versus Q4.
Speaker Change: And was there some benefit from just.
Speaker Change: Smart tactical moves in the operation can you just tell us a little bit more about what happened sequentially.
Speaker Change: Yes, Jonathan So there was not one specific project and value add but we had multiple projects coming online in Q4 that really ramped up in Q1. So we started to see that additional pool, there plus things that they had been working on with a heavy equipment. We added additional shifts. So we started to see that bullet growth as well so it allowed us to expand that margin during the <unk>.
Speaker Change: <unk>.
Speaker Change: So we were real pleased with that and we continue to see that growing and so we think thats.
Speaker Change: Okay. Thank you and for the value add projects that you have planned for the balance of 2024 can you provide us a sense of.
Jonathan: How those are weighted across your business divisions.
Speaker Change: Primarily in the MSC is there any for the energy.
Speaker Change: <unk> business.
Speaker Change: Yes.
Speaker Change: It's almost all of it's in the metal service centers.
Speaker Change: And it's probably fair to say to John in terms of our geographic mix.
Speaker Change: There was some projects that were done in Canada. This year, but there's probably more of a skewing to U S. Based service centers, where some of that is undertaking over the next little bit.
John Gregory Reid: Okay Marty during your prepared remarks you.
John Gregory Reid: You reiterated that.
John Gregory Reid: On the balance sheet you are looking at other enhancements.
John Gregory Reid: What youre working on there.
Martin Leb Juravsky: We have the one series of notes that are callable debt were callable in March and so that transaction in terms of the par call is happening today, we have another series of legacy high yield notes that are par callable in October and it wouldn't be unreasonable to think that given our fee.
John Gregory Reid: <unk> position that those also get cleansed out of our system and in conjunction with <unk>.
John Gregory Reid: Legacy high yield capital structure evolving to a more traditional investment grade capital structure. Some of that will go into what is our new bank debt arrangement look like in terms of having a more traditional investment grade type structure.
John Gregory Reid: At all parts of our capital structure, so part of it as kind of cleaning up some of the legacy stuff in terms of the term notes and our capital structure, and then restarting again with a more traditional more flexible.
John Gregory Reid: Covenant Lite approach and frankly lower cost that goes with that.
Speaker Change: Okay. Thank you one more question in the notes to the financial statements on the Samuel acquisition.
Speaker Change: There is a note that Russell is made of timing commitment to the Bureau.
Speaker Change: Are you able to explain what that timing commitment is.
Speaker Change: What we've effectively.
Speaker Change: Done with that timing commitment as we've undertaken to keep the dialogue going with them as we try and address their issues and concerns and that goes back to why we made our disclosure that wasn't going to close in Q2, which was our original target.
Speaker Change: So one closed in Q2, so we've made that timing commitments to the competition Bureau that will continue to work with them and we can't be more specific because we don't know exactly what the timing is going to look like other than we have flexibility to work with them.
Speaker Change: Cooperative manner as we can.
Speaker Change: Top line thanks for your comments.
Speaker Change: Okay. Thank you thanks Jonathan.
Speaker Change: Thank you. Your next question comes from Michael <unk> TD Securities. Michael. Please go ahead.
Michael: Thanks for taking the follow ups.
Michael: So just on the energy field stores segment talked about opening.
Michael: <unk>.
Michael: Some new sites in Q1.
Michael: Can you talk about where those are located and also talk about any plans for additional energy field stores over the rest of the year.
Speaker Change: Yes, predominantly western Canada.
Michael: Through our Costco Division, where we've taken on some new business and a new contract there.
Michael: And then through the rest of the year.
Michael: Fairly short term leases when we do those and so we're consistently looking at both the U S and Canada at those and then if there is any viable acquisition opportunities in the energy field store will look at those as well.
Michael: Okay, maybe that feeds into the next question just about acquisitions I think Marty you mentioned a couple of times that.
Martin Leb Juravsky: Beyond working to complete the Samuel acquisition you are looking at other.
Michael: Things can you provide a little bit more detail around.
Martin Leb Juravsky: The types of things you'd be looking at me, John just mentioned energy field stores as a possibility so.
Michael: Gather it's both service centers and energy field stores, maybe you can comment on that.
Michael: The kinds of characteristics in size and whatnot anything you can offer up it would be helpful.
Speaker Change: Yes, it's a good question Mike.
Speaker Change: Say that.
Speaker Change: It's pretty robust stuff that is becoming available again.
Speaker Change: The characterization of its as John said is there's some stuff on our energy field stores that are interesting. There's some stuff that is within our metal service centers that are interesting and frankly, there is one or two adjacencies that are popping up as well.
Speaker Change: And all of those things are under consideration none of them are what I would characterize is huge in of themselves, but they're all incrementally interesting and an aggregation are things that we would.
Speaker Change: We're spending some time thinking our way through and looking at very carefully and thats sort of in some ways.
Speaker Change: It represents there are ideal profile is somewhat in the past we always use the baseball analogy of where we are on our value added initiatives being the fourth inning of a nine inning ballgame.
Speaker Change: Well in some ways. The other baseball analogy on acquisitions as these are singles and doubles the types of things that we're looking at.
Speaker Change: Easily fit within what we're doing complementary to what we're doing adjacencies that are might be in different product mixes or different target customers, but very similar to what we're doing right now where they can be standalone segments. So.
Speaker Change: And Thats, both on the energy field stores as well as the service center side.
Speaker Change: Does that get to your question Mike.
Speaker Change: Right.
Mike: Very helpful. I appreciate it and then I will leave it there.
Speaker Change: Thanks, Mike.
Speaker Change: Thank you, ladies and gentlemen, as a final reminder, should you have a question. Please press star one on your Touchtone phone. Your next question comes from Kevin <unk> Stifel. Kevin. Please go ahead.
Kevin: Thanks, Good morning, everyone.
Kevin: Good morning, Kevin.
Kevin: And just a quick one for me I'm just curious here at.
Kevin: Probably a solid center recently published study.
Kevin: Increased steel prices by both new core.
Kevin: I'm wondering if you have if you've seen any impacts that bond.
Kevin: Early days.
Kevin: What what are your thoughts.
Kevin: With the C are you the trends that are moving out there that are public indexes with nucor and others now having it published price. They do this in other products and its been very successful whether it be in their loan products.
Kevin: They've done it for years, so they're obviously.
Kevin: That's kind of the bar.
Kevin: For what the market is doing trend wise and so it has proven very effective in other products, we will see in flat roll, how effectively becomes and if it holds water.
Kevin: Thus far it seems to again add some.
Kevin: Credibility and validity.
Kevin: Indexes that are published out there. So thus far it seems to be working we will watch it closely but it is something that I've never seen done in.
Kevin: 30, plus years in the business.
Kevin: Flat rolled so but again I think it's a.
Kevin: I think it's something that's necessary needed for the industry Sofas. This worked well I think it will help stabilize some of the Mou.
Kevin: Ambiguity around pricing.
Speaker Change: That's really helpful. Thank you and I'll kind of get away.
Speaker Change: Thanks, Kevin.
Speaker Change: Thank you there are no further questions at this time. Please proceed.
Speaker Change: Great. Thank you operator, and I appreciate everyone very much for joining our call. If you have any questions. Please feel free to reach out any time, otherwise we look forward to staying in touch during the balance of the quarter. Thanks, everyone.
Speaker Change: Thank you ladies and gentlemen. This concludes your conference call for today, we thank you for participating and ask that you. Please disconnect your lines.
Speaker Change: Okay.