Steel Dynamics Inc. (STLD) Q4 2017 Earnings Conference Call Transcript

Steel Dynamics, Inc. (STLD -3.16%)
Q4 2017 Earnings Conference Call
Jan. 23, 2018, 10:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good day, and welcome to the Steel Dynamics Fourth Quarter and Annual 2017 Earnings Conference Call. At this time, all participants are in a listen-only mode. After management's remarks, we will conduct a question-and-answer session and instructions will follow at that time. Please be advised that this call is being recorded today, January 23rd, 2018 and your participation implies consent to our recording this call. If you do not agree to these terms, please disconnect.

At this time, I would like to turn the conference over to Tricia Meyers, Investor Relations Manager. Please go ahead.

Tricia Meyers -- Investor Relations

Thank you, Brenda. Good morning, everyone, and welcome to Steel Dynamics Fourth Quarter and Full Year 2017 Earnings Conference Call. As a reminder, today's call is being recorded, and will be available on the company's website for replay later today.

Leading today's call are Mark Millett, President and Chief Executive Officer of Steel Dynamics; and Theresa Wagler, Executive Vice President and Chief Financial Officer. We also have our leaders from the Company's operating platforms, including our Metals Recycling Operations' Russ Rinn, Executive Vice President; our Steel Fabrication Operations' Chris Graham, Senior Vice President, Downstream Manufacturing Group; and our Steel Operations, Glenn Pushis, Senior Vice President, Long Private Steel Group; and Barry Schneider, Senior Vice President, Flat Roll Steel Group.

Some of today's statements, which speak only as of this date, may be forward-looking and predictive, typically preceded by believe, expect, anticipate or words of similar meaning. They are intended to be protected by the Private Securities Litigation Reform Act of 1995 should actual results turn out differently. Such statements involve risks and uncertainties relating to our steel, metals recycling, and fabrication businesses as well as the general business and economic conditions. Examples of these are described in our annually filed SEC Form 10-K under the heading Forward-Looking Statements and Risk Factors, found on the Internet at www.sec.gov and is applicable on any later SEC Form 10-Q. You will also find any reference to non-GAAP financial measures reconciled to the most directly comparable GAAP measures in the press release issued yesterday entitled Steel Dynamics Reports Fourth Quarter and Annual 2017 Results.

And now, I'm pleased to turn the call over to Mark.

Mark Millett -- President and Chief Executive Officer

Super. Thank you, Tricia. Good morning, and happy 2018. Welcome to our Fourth Quarter and Full Year 2017 Earnings Conference Call. We appreciate you sharing your time with us this morning. I'd like to thank the entire SDI team for the dedication and exceptional performance last year. Along with the support of our customers, vendors, and shareholders, we collectively achieved best in class results. Most importantly, we did it safely-safer than ever before. By many measures, 2017 was a record year both operationally and financially: record steel and fabrication shipments, record operating income of $1.1 billion, record EBITDA of $1.4 billion. And the momentum continues. The underlying positive market fundamentals coupled with our own growth initiatives have us really excited for the coming year. But to begin this morning, I ask Theresa to comment on our results.

Theresa Wagler -- Executive Vice President and Chief Financial Officer

Thank you, Mark. Good morning, everyone. I wanted to say thanks and congratulations to the entire SDI family. It really was a tremendous year on many fronts and numerous milestones, as Mark mentioned, were achieved. Record sales of $9.5 billion with increased pricing across all platforms and record steel and fabrication volume, record pre-tax earnings of $935 million and EBITDA of $1.4 billion. And as Mark said, most importantly, we accomplished all of this with record safety performance. To recognize and show appreciation for the tremendous performance of the team, in December we paid a well-deserved $1,000 cash performance bonus to each non-executive, eligible employee totaling just over $7 million.

Full year 2017 net income was $813 million, or $3.36 per diluted share, which included the following items: third and fourth quarter debt refinancing charges totaling $15 million and a one-time tax benefit of $181 million resulting from the revaluation of our deferred tax assets and liabilities in connection with the recently enacted U.S. Federal "Tax Cuts and Jobs Act." Our current estimate for our 2018 effective tax rate, federal and state combined, is between 24 and 25 percent, which is a meaningful decrease for our recent industry where we were closer to 35 percent. Excluding these items, we still achieved record annual net income of $641 million, or $2.65 per diluted share.

For the fourth quarter, our net income of $305 or $1.28 per diluted share, excluding the one-time tax benefit of $0.76 that was unknown and specifically excluded at the time our of guidance and the fourth quarter refinancing cost of $0.02 per diluted share, our fourth quarter 2017 adjusted net income was $0.54 per diluted share. Consolidated fourth quarter 2017 revenues were $2.3 billion, 4% lower than the sequential quarter, while operating income was $196 million representing a 28% sequential decline. Both declines were a result of lower shipments and metal spread in our steel operation.

Specifically, for the fourth quarter, steel shipments decreased 4% sequentially across both in flat roll and long pipe divisions to 2.4 million tons. Steel metal spread also compressed as our average quarterly sales price declined $17 per ton in the fourth quarter, and our average scrap cost consumed only decreased $5. Of note, though, of the $17 decline in average pricing, $9 per ton was actually associated with mix shift, and most of that was within the flat roll growth. Our Columbus and Butler Flat Roll Divisions also successfully completely plan improvement adages, which resulted in less shipments and increased costs in October, reducing fourth quarter earnings by approximately $27 million. The result in fourth quarter operating income of $207 million from our steel operation, about 26% less than the sequential third quarter.

For the full year, our steel operations achieved numerous performance milestones resulting in record volume of 9.7 million tons and operating income of $1.1 billion. Annual metal spread also improved as average sales price increased more than our average scrap cost. For our metals recycling platform, ferrous metal spread stayed steady in the fourth quarter despite lower average quarterly scrap pricing. Conversely, non-ferrous shipments in metal spread improved resulting in fourth quarter 2017 operating income of $22 million. The team's done a great job optimizing costs throughout the business. They achieved full year operating income of $85 million. This is more than double last year's recycling performance. We are effectively levering the strength of our vertically integrated model, which benefits both the steel mills and the scrap operation. The mill's recycling group shipped 63% of their ferrous scrap to our own steel mill. Increasing scrap quality, smelt efficiency and reducing working capital.

In fabrication, our fourth quarter 2017 operating income was $22 million. For the full year, the team issued, again, another year of record shipments, and order backlog remained very healthy. 2017 fabrication operating income was also strong annually, but it declined slightly to $88 million based on higher price steel input. We generate strong cash flow from operations in 2017 of $740 million and free cash flow after fixed asset investment of $575 million. Operational working capital also grew $250 million during the year based on overall market improvement resulting in higher customer accounts and inventory value. Full year capital investments totaled $165 million. We maintained our fourth quarter cash dividend of $0.155 per common share after increasing it 11% in the first quarter of 2017. We repurchased $252 million of our common stock in the year and have $173 million still available pursuant to the $450 million board authorized program, which was initiated in October of 2016.

We believe these actions reflect the strength of our capital structure and liquidity profile and the continued optimism and confidence in our future. Based on our strong cash flow generation, we maintain liquidity of $2.2 billion with $1 billion in cash and $1.2 billion of available funding under our revolving credit facility. The strength of our through-cycle cash generation, coupled with the strong credit and capital structure profile, provides great opportunity for continued organic and transactional growth. We're squarely focused and on track for the continuation of sustainable, optimized value creation. Thank you, Mark.

Mark Millett -- President and Chief Executive Officer

Super, Theresa. Well, concerning safety, the team did a phenomenal job last year achieving the seventh consecutive year of improved safety performance. Each of the platforms set new records. We reduced our total recordable injury rate by a further 18% while two-thirds of our locations were incident free. Clearly, in the safety conversations, actions and programs that are taking place throughout the company are having an impact. The safety and welfare of our employees will remain our number one priority for all time. My sincere thanks go to the entire SDI family for an outstanding job but as always challenge each of us to remain focused and to strive toward our ultimate goal: a zero-incident environment everywhere we work.

As Theresa outlined, the steel platform continued to perform at the top of the industry in 2017. Our production utilization was 92% for the full year and 89% in the fourth quarter, once again markedly better than the domestic industry rate of approximately 74%. This is due in large part to our having one of the most diversified and value-added product portfolios in the industry. With over 11 million tons of annual shipping capability, we still have well over 1 million tons of latent availability as the markets continue to strengthen.

Demand from the construction and energy sectors continues to improve. We're also seeing better demand for our heavy off-road equipment and more general industrial manufacturing accounts. Demand from the automotive sector is still strong, a little off its peak from a historical perspective. It is expected to be incrementally higher than last year.

Fortunately, we continue to gain market share, especially at the Columbus Flat Roll Division with our focus on automotive, direct sales. We also benefit there from our cost-effective access into Mexico, but forecasts continue to show increasing automotive great steel demand. Domestic steel consumption improved about 5% or 6% for the year, but we believe it will grow further in 2018. But steel imports also rose in '17 by over 15% representing over 30% of domestic consumption. This just really has to change. We're considered one of the lowest cost steel producers in the industry. We are ready to compete, and we want to compete. But we must have a level playing field. We can't compete with unfair trade practices such as those occurring today. While I'm pleased with the recent decline in hot roll imports related to the successful past trade cases, and the DOC affirmative decision on Chinese circumvention through Vietnam. The tremendous Chinese-subsidized over capacity remains a problem. In particular, there's still massive imports of structural and fabricated structural coming in from China and historically high imports of coated flat roll along with pipe and tube from Asian countries using Chinese steel.

I believe that after an affirmative national security filing under 232 by the DOC, the president will be provided possible ways to reset the game to enforce the rules. President Trump needs to provide a meaningful remedy that helps maintain and revitalize the US steel industry while the Chinese over capacity issue is being addressed.

But, as usual, we remained focused on things we can control. For example, we continue to position Steel Dynamics for the future through new investment in our existing operations. A few that occurred during 2017 include the $60 million investment to the added galvanizing capacity at our steel West Virginia plant. This value-added service is ramping up well beyond expectations and is expected to provide less than a two year payback. $15 million investment that upgraded our Butler Flat Roll Division's galvanizing line also adding an additional 180,000 tons of value-added coating capacity, this project will have less than a one year payback. A $100 million investment in a new paint line at the Columbus Flat Roll Division began operating in the first quarter of 2017. The new line provides 250,000 tons of annual coating capability and further diversification into some of our highest-margin products.

Complementing the two existing Indiana paint lines, this new line is a state-of-the-art facility, producing high-quality HVAC, appliance products and doublewide steel. Its geographic location also facilitates economic access to the Southern U.S. and Mexican markets. It is on track to be running close to full capacity by end of year 2018 of this year. Columbus continues to be a significant earnings catalyst. The changes the team has already made are transformational, and there are still more to come including production gains, value-add product mix shifts and additional cost savings. The successful market and product diversification achieved over the last 3 years is one of the key differentiators for our improved through-cycle profitability and will continue to benefit the coming years as well.

Despite an improving nonresidential construction trend, long product capacity utilization remained challenged at 75%. Much of the increased demand over the last three years has been absorbed by imports of standard beams and shapes, along with a considerable volume of prefabricated structural steel. Our prefabricated steel imports have increased over 80% in the last five years alone. Nonetheless, the team did a good job, and our long product shipments improved 9% year over year.

But to ensure higher future through-cycle utilization, we are investing in our long product steel mills. We have three specific initiatives to increase the utilization at our Structural and Rail Division, which has been running at an average of 75%.

First, we are growing the production of SBQ quality beams to send to our engineered bar division. That division now has excess rolling capacity. This should improve through-cycle utilization at both facilities. Over the next 18 months, we plan to increase this volume to an annualized rate of close to or above 150,000 tons. We are well on our way there with 29,000 tons transferred just this past quarter.

Second, we further diversified the mill's product offerings and recently began the production of large, unequal length angles and heavy flats. We're just entering the market and plan to sell as much as 100,000 tons annually.

Third, we're investing $75 million to utilize existing access in melting and casting capability there. This expansion will further diversify our product portfolio and market sector exposure through the annual production of 240,000 tons of reinforcing bar, including spooled, custom cut-to-length and smooth bar. Our intended business model should substantially enhance the current supply chain, providing meaningful logistic, yield and working capital benefits to the customer.

In addition, we will be the largest independent rebar supplier in the Midwest region. We plan to begin operations of that facility by the end of 2018. In aggregate, these initiatives provide for over 500,000 tons or over 25% of potential additional annual utilization of our Structural and Rail Division over the next 18 months. We believe this can provide a material improvement in future through-cycle utilization and profitability.

We're also investing $28 million to utilize excess melting and casting capability at our Roanoke Bar Division. We're adding equipment that will allow to multi-strand slitting and rebar finishing of 200,000 tons per year. Similar to our Midwest investment, we expect to have strong market penetration as we will be one of the largest independent producers of reinforcing bar in the Virginia area as well. Equivalent commissioning just started. The team plans to begin selling product at the end of the first quarter 2018.

Our metals recycling platform recorded a tremendous performance in 2017. Despite selling a few non-coil locations during the year, the team was able to maintain value while increasing metal spread and reducing cost throughout the year. The result, annual earnings that more than doubled. Prime scrap flow has been steady, and we expect it to stay that way. The weather did slow the flow of obsolete scrap in December and again in January. This coupled with an uptick in export activity has tightened the market a little, but we expect flows to pick up and the pricing environment to stabilize as the year progresses.

The fabrication platform also delivered an incredibly strong performance with another year of record shipments and strong earning. Our order backlog remains strong. The ongoing strength of this business and continued customer optimism is a solid indicator that the nonresidential construction market is continuing to grow. As an added benefit, our fabrication platform purchased over 330,000 tons of steel from SDI steel mills in 2017. The power of this pull-through volume, when we source steel internally from our mills, is a significant catalyst our steel utilization rates. This pull-through strategy remains one of our focuses for ongoing growth.

We remain confident that the market conditions are in place to benefit steel consumption in 2018. Domestic steel inventory levels have moderated. World steel demand and pricing has structurally improved. Domestic steel demand remains healthy, and we believe consumption will grow in 2018. Our business model and the execution of our long-term strategy continue to strengthen continue to strengthen our financial position through strong cash flow generation demonstrating our sustainability and differentiating us from our competition.

Customer focus, coupled with market diversification and low-cost operating platforms, supports our ability to maintain our best-in-class financial performance and differentiation. The company and the team are poised for continued organic and transactional growth. Our phenomenal team provides the foundation for our success, and I thank each and every one of them for their hard work and remind them safety is always our first priority. We continue to focus on providing superior value for our company, customers, employees, and shareholders alike, and look forward to creating new opportunities for all of us in the years ahead.

So again, thank you for your time today. And Brenda will take questions now.

Questions and Answers:

Operator

Thank you. If you'd like to ask a question, please signal by pressing the * key followed by the digit 1 on your telephone keypad. If you're using speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. If you pressed *1 earlier during today's call, please press *1 again to ensure our equipment has captured your signal. Also, we ask that you please limit yourself to one question to facilitate time for everyone. Any additional questions can be addressed upon reentering the queue. Our first questions come from the line of Brett Levy with Seelaus Capital. Please go ahead with your questions.

Brett Levy -- Seelaus Capital -- Analyst

Hey, guys. Can you just give a little bit of an update on the Section 232 case?

Mark Millett -- President and Chief Executive Officer

Well, I think anything we give might be speculation. I think we're probably as close as anyone to it, but I wouldn't put money on the table other than I think it's going to be positive. Just generally in trade we're very happy, and as we anticipated in our last call, the anti-circumvention ruling against Vietnam was very, very positive. And I think that's going to end up flowing into other countries as well, and Vietnam itself imported about 450,000 tons of coated product, I believe, last year. So that's generally positive. More specifically, the past trade cases have eroded import volumes in certain areas such as hot roll coil, but volumes in general remain incredibly high as the Chinese subsidize those at capacity just remains in place. And I think it's in several years. That is a problem. That is in cold sheet and cold-rolled, galvanized on the flat roll side. Those are at record import levels last year and also in structural. We're still seeing about 1 million tons of just straight bar, straight beams coming in, along with about 1.2 million tons of fabricated or prefabricated structural. So you have about 2.2 million tons of structural imports against a 5 or 6 million ton market. So that is a major issue along with pipe and tube imports from Korea, and that's where I think Section 232 can have the greatest impact. I do believe there'll be a positive remedy in the future. If you just look at yesterday's announcement about washing machines and solar panels, I think it just gives you insight as to the climate and the thinking of the administration. And I am very, very confident that the administration will give a positive ruling for us.

Brett Levy -- Seelaus Capital -- Analyst

And you addressed most of this, but I'm just going to ask for a little more granularity. If you look across your product mix, what are the products that are most likely to be, as your best guess, against the type of investigation and commentary that you heard from the government on 232? What are the product areas that are most likely benefit, and what are the product areas that are least likely to benefit?

Mark Millett -- President and Chief Executive Officer

I think I've already enumerated the three principle areas, Brett. Coated I think will be a big benefit for us, particularly in let's just say Galvalume, you know, building products. Galvalume has been coming around at a high rate. Pipe and tube, although we don't produce pipe and tube directly, obviously the energy market, pipe and tube market, is huge, the largest consumer at least historically of hot-rolled coil. And if that tightens up, hot-rolled coil, which is already tight today, is going to be a very desired commodity. And I think just structural. The prefabricated structural would be huge for us along with just straight structural. But when you have 2.2 million tons of that product coming in, and literally it's a 5 million ton market, I think that would have tremendous impact because obviously our structural products, merchant mill and also Columbus City is running at low utilization or relatively low utilization compared to the flat-roll mills.

Brett Levy -- Seelaus Capital -- Analyst

Thanks very much, guys.

Operator

Our next questions come from the line of Curt Woodworth with Credit Suisse. Please, go ahead with your questions.

Curt Woodworth -- Credit Suisse -- Analyst

Hey, good morning, Mark and Theresa, and congratulations on a great year and a great safety record. So first question is on capital allocation. This is from the balance sheet, and clearly free cash flow capability this year with a lower tax rate would suggest that in addition to acquisitions you have pretty substantial wherewithal to return cash back to the shareholder either through special dividend or increasing, enhancing the share buybacks. So outside of the acquisition opportunities, can you comment on the potential to return capital back to shareholders this year?

Mark Millett -- President and Chief Executive Officer

I think a general strategy is going to be no different this year than the past years. Our absolute focus and priority is organic growth because there we have the most effective capital sort of efficiency and return on our money. Secondly, transactional growth we continue to see opportunities. We're being disciplined and careful, but we see a good opportunity there for great returns. And secondly or thirdly we've continued our sort of positive dividend profile. We will remain conservative there. We recognize as we've said in the past dividends are forever. It's an absolute number. We don't necessarily look at yield but the absolute number, which is today about $145 million. But I would expect to see a continued positive profile there as our through-cycle cash generation profile continues to improve. And we will continue to complete the share repurchase plan we have in place.

Curt Woodworth -- Credit Suisse -- Analyst

Okay. And then with respect to the acquisition opportunities, can you comment on a preference for either growing upstream or downstream? And then there's been obviously more development of HBI capability in the US and discussion of more merchant pig iron development. Would those becoming backward-integrated into raw materials be something that you would entertain or look to partner into?

Mark Millett -- President and Chief Executive Officer

Well, as you know, we've had a lot of experience in that field, and I would suggest we don't see a good use of our cash in the HBI arena or in the merchant pig iron facilities at least as we see it today. Our focus remains in three essential areas. One, steel, obviously-our first and foremost sort of low-cost, efficient steel producers, so wherever we can infuse our culture and our experience to turn around existing operations, strengthen the market, that will be a major continued focus. Folks are extremely good, obviously, at downstream sort of processing, and so that is a focus. And thirdly, pull-through opportunity that we can utilize our own steel and pull-through the supply chain to increase our through-cycle utilization is a focus.

Curt Woodworth -- Credit Suisse -- Analyst

Okay, thank you.

Operator.

Our next questions come from Novid Rassouli with Cowen. Please go ahead with your questions.

Novid Rassouli -- Cowen and Company -- Analyst

Good morning, Mark and Theresa. You had relatively upbeat comments regarding the automotive market both this morning as well as last night in the release. I was just wondering if you could provide some detail regarding some of the commentary in the release last night. You mentioned gaining momentum in the automotive sector and then any comments on developments or progress on the Columbus Automotive Direct Sales initiative.

Mark Millett -- President and Chief Executive Officer

Well, specifically to auto, I think we gained incredible traction. The date before that put sort of a direct auto team together eight, night, ten folks, I think. And it's shifted our focus not away from but parallel to our primary or original sort of supply chain through-processes. But that direct approach has been very, very positive for us. We, I think, shipped about 220,000 tons of automotive from Columbus just last year, which is a massive increase. And we're on platforms to increase that to about 400,000 tons over the next 18 months as new platforms come into play. So, firstly, the capability of the mill down there and then we had a great team, I think is building confidence in the auto producers. And they're also very, very confident about [inaudible] and recognize that partnering with us, you know, that partnership is going to last 5, 10, 15, 20 years. And I think that strengthened our position in automotive.

Theresa Wagler -- Executive Vice President and Chief Financial Officer

I think something else that's unique, Novid, is that some of the European automakers actually really appreciate our sustainability model as well, kind of that old cycle or circle sustainability of our metals recycling. And so I think that helps us in a relationship perspective.

Novid Rassouli -- Cowen -- Analyst

And the auto mix is still around 15%. Is that about right? Of Shipments?

Theresa Wagler -- Executive Vice President and Chief Financial Officer

Yes, that's about right.

Novid Rassouli -- Cowen -- Analyst

And the ultimate target that you guys have a target in mind for the percentage of mix of auto shipments?

Mark Millett -- President and Chief Executive Officer

Well, I think we're pretty well there at Butler. About 30 percent of our output is going into automotive, again, principally through-processes. And I'd like to see automotive at Columbus around about 400 to 420,000 tons and cap it out about there.

Novid Rassouli -- Cowen -- Analyst

Got it. And one last question. If you guys could just help out how you're thinking about metal margins into 1Q and throughout 2018, it looks like we should see a decent uptick in 1Q, but any thoughts around metal margin would be helpful. Thanks.

Mark Millett -- President and Chief Executive Officer

Well, I think, again looking long-term, the scrap environment-Russ can comment more-but we look at it a relatively steady scrap environment through the year going forward. Obviously, it got a little tight on the absolute grades this past month as the weather impacted flow and Turkey came into the market. But absent any massive impact from Turkey, I think we are looking at scrap kind of sideways through the year, and I believe that on the product side, things are going to get tighter than they are today. It's an incredibly good sort of macro environment. You've got just generally a global environment that's been more positive than we've seen it in many years, and you got the stronger demand within their China. Their pricing continues to go up. the Asian arbitrage is not attractive currently. European pricing is probably higher on a delivery basis today than domestic pricing. So the global environment is very positive. You got positive demand trends domestically. Service center inventories are relatively low. Ore is surprisingly buoyant along with coat and coal. So the raw material push for the integrated increased the global cost curve. And I believe imports are going to continue to moderate. So from a pricing perspective, I see prices have continued an upward trend. So spreads in general, longer term, are going to be positive.

Novid Rassouli -- Cowen -- Analyst

Thanks.

Operator

Our next questions come from the line of Matthew Korn with Goldman Sachs. Please go ahead with your questions.

Matthew Korn -- Goldman Sachs -- Analyst

Good morning, everybody. Congratulations on the year. Now let me ask this on recycling. We've been hearing a lot about issues with transportation, the effects there on the scrap markets, scrap rate popping, drivers jumping for better pay, and you've had the weather in the east and the south east apparently wreaking havoc with some equipment in the new year. I guess, first, what's been the effect on your own recycling ops of these transportation stresses, if any? And then, second, how is truck availability, your step changes in freight, or both, how has that affected deliveries or caused any other frictions among the rest of your system, whether internally or among customers?

Russ Rinn -- Executive Vice President of Metals Recycling Operations

This is Russ. Certainly, we experienced the same issues that you talked about. Again, part of it stems back to the change in the rail systems and the different approaches that the major railways are taking-the major railways that serve us-is actually pushing them toward freight auto trucks, which has made it a little bit more demanding and has increased both the cost and the availability. I think long-term we do operate some of our own fleet. We do also operate some of our own railcars, and I think we're well in position to be able to maximize our efforts in it. But I think it is gonna be a problem. We are going to continue to see issues with trying to find and retain drivers both internal to ourselves but also the trucking companies' costs are going to go up as well. So I think it's going to be an industrywide issue that we're all gonna have to face, which is higher freight cost across board.

Matthew Korn -- Goldman Sachs -- Analyst

All right, then let me switch over and ask a little bit of fabrication. You've talked about solid backlog, encouraging customer engagement, etcetera. And I saw your volume's up impressively 25% year over year. Clearly, pricing hasn't been able to keep up though with the benchmarks in steel, and so you're down year over year in dollar terms and operating margin. Can you help me square the health of the market with that profitability crunch? I mean, are your customers undercutting you with cheaper-sourced prefab steel? Are you being more aggressive on price to take the share? What's the situation that's unfolding?

Russ Rinn -- Executive Vice President of Metals Recycling Operations

Well, we have some flexibility in the raw material we use, and there are times when it's advantageous for us to use more flat roll versus merchant. And at the spread that it increased between merchant and flat roll, some of our advantage has deteriorated a bit. The market's healthy. The demand is strong. It's literally just a matter of merchant not keeping pace with flat roll. We leverage flat roll more than our competitors. So our competitors have tended to hang down around with the merchant number and not necessarily allowing us to use as much, increase price as much, as we would care to.

Theresa Wagler -- Executive Vice President and Chief Financial Officer

So, Matt, I would just add, if you think about it, from the fabrication from order or kind of from fitting to order to delivery, it probably adds eight to twelve weeks in that timeframe. And so with that, the steel prices as they're marching up consistently, which flat roll has really done pretty much this year, it's hard to catch up. But then once you've gotten stability, that's where the team with the fabrication side really has the opportunity to pass that through.

Matthew Korn -- Goldman Sachs -- Analyst

Got it. So you think that type of stability both in raw material cost and also, I guess, what pricing you're able to push through, you expect that to show up as you move with the next couple quarters?

Mark Millett -- President and Chief Executive Officer

I think to highlight that business, the team's done a phenome job leveraging our national footprint there. And the year, we've done a record profitability. We had record shipments. The team continues to gain market share, and I think 2018 is going to be a great bump to those folks. And I think it gives, also, a lot of optimism for us because it gives insight into the nonresidential construction arena that continues in our mind to be incredibly strong and growing.

Russ Rinn -- Executive Vice President of Metals Recycling Operations

The fact that the national [inaudible] probably has never been as obvious as we enter '18. Our backlogs in the east in the eastern half of the country are flat, slightly down, while our backlogs in the west up starting meter well over 30 percent higher than they started last year. So we're better positioned to follow it wherever it may be than ever before.

Operator

Okay, our next question comes from the line of David Giuliano with BML. Please, go ahead with your question.

David Giuliano -- BML -- Analyst

Great. Thanks for taking my questions. Obviously, forward looking expectations imply a big rebound in results, which makes sense given everything going on, given your comments on this call. But just to try and make sure we have the timing and the trajectory of that recovery reasonably calibrated, I have four questions. First, given the insights you have on order books product mix, can you give us more color on the magnitude of the expected volume recovery in 1Q '18 versus 4Q '17? I'm just going to rattle these off, and then you can just answer them. Second, I think the steel operation segment, EBITDA per ton in the first quarter of '17 was $176. Given the current environment, given the shifts in your product mix, should we expect 1Q '18 EBITDA per ton to be higher than that $176 figure from the prior year? Third question, can you just remind us again how much of your volume has some pricing lags? I think there's some with two to three month lags. And then the fourth, what's the total expected capital spending for 2018?

Theresa Wagler -- Executive Vice President and Chief Financial Officer

Well, David, I'll try to take these, but I'm afraid we're not going to help build the model of it with detail. I'll start with the order book and the magnitude of change from a volume perspective. We don't give specific guidance related to that, and I think that the folks understand that. But what I would say is that we are expecting volume improvement in the first quarter versus the fourth quarter, one, because of seasonality in the fourth quarter and the second just because we had probably at least 100,000 tons of less flat roll shipments because of the planned outages, which actually were very successfully completed. I think some folks in their writing mentioned that it was longer than anticipated. It wasn't. They were just longer outages because there was some additional work to be done. So all in all on the flat roll, we would expect higher volumes. We think the market's strong, and we expect to see some higher volumes on the product side as well, the magnitude of which we won't provide in the call this morning.

From an EBITDA per ton perspective, again, we tried to give directional guidance, and so we believe that there's definitely a pricing momentum on the flat roll side but hope to see of it on the long product side as well. And SBQ is doing really, really well. We're seeing a lot of strength in that market. And so with that we would expect to see-it would be anticipated to see-higher average pricing, again, with flat roll coming back as well. And on the scrap side, you know scrap side is a little tight right now. So we could see scrap be steady at these higher prices for a bit, but then we see it moderating through the rest of the year. So I would let you all decide what you think will happen in the first quarter.

Related to the lag in orders or flat roll, we're probably closer to 50% now of the volume that is lagging to a CRU index. So that really lags usually about two to three months.

Russ Rinn -- Executive Vice President of Metals Recycling Operations

Somewhere between two to three months, Theresa.

Theresa Wagler -- Executive Vice President and Chief Financial Officer

So that's the lag on the flat rolls right now, and on SBQ it's still very small, maybe 15 percent is tied to some sort of pricing. So otherwise we're definitely still a spot market company. And then as it relates to 2018 capital expenditures, we would expect it to be somewhere around $250 million for the year, and that includes about $80 to $85 million remaining from both the Roanoke rebar investment and then the structural rebar investment as well. And we tend to have about $100 to $120 million that we would call sustaining, and then the rest of that are efficiency projects throughout. Most of it's in steel mills. We have some though in metal recycling and fabrication as well. That could during the year as the team continues to develop projects, but right now that would be our best estimate. I hope that helped.

David Giuliano -- BML -- Analyst

Yeah, that's helpful. Thank you. Not trying to ask you to build a model out of it, just trying to avoid the risk of irrational exuberance. So any color is helpful. I appreciate it, thank you.

Theresa Wagler -- Executive Vice President and Chief Financial Officer

No, I appreciate that too.

Operator

Our next questions come from the line of Seth Rosenfeld of Jeffries. Please go ahead with your questions.

Seth Rosenfeld -- Jefferies -- Analyst

Morning, Mark and Theresa. To the question on your outlook for electrode cost, please. I know you commented on the last quarterly call as well, but can you give us a bit more color on where your 2018 contract settled and both when and by what scale you expect it to hit your P&L? Just thinking back over the last quarter, we saw spot prices for electrode pulled back quite meaningfully in late Autumn and then rally once again. Did that ultimately change your pricing expectations versus when we last spoke? Thank you.

Mark Millett -- President and Chief Executive Officer

I think we are still in live with what we said on the last call. Fortunately, our long standing relationships with the current electrode producers were positive for us. We have committed supply for the year. About roughly half of our supply is sort of contracted on a fixed price for the year while the other half is still on a quarter by quarter basis. The impact to us is probably in the region of about $8 per steel ton year over year, '18 versus last year. So it's still well less than 1% of our commercial cost.

Seth Rosenfeld -- Jefferies -- Analyst

Okay, thank you very much. And separate question, please, going back to the flat steel division, I know for a while now you've been talking about that business basically operating at max utilization. We've continued to see volumes kind of surprise to the upside. If you can comment on what sort of incremental volume growth is realistic in flat, or on the other side of the coin, with the mix improvement at both Butler and Columbus, might that actually lead to lower yields looking forward? Thank you.

Mark Millett -- President and Chief Executive Officer

Well, the team always surprises to the positive. You know, the Butler facility, again, record production last year. That's after 20 plus years of operation, and every year they improve and improve and improve. So Butler I wouldn't say is tapped out. It's still gonna eke out a little bit, but it's getting there. On the Columbus side, our focus the past couple years has been more product development, product diversification, getting to new markets, and we're there today. And also on lowering our cost structure, the shift there will be in productivity across all the different lines. And they're around about 3.1 million tons last year or so, and typically we've been able to get 10% more out of our assets. All right, Barry's smiling at me across the table here, but, again, that's a phenomenal facility. And I'm sure that we could stretch that one yet.

Theresa Wagler -- Executive Vice President and Chief Financial Officer

I would just kind of summarize a little bit, Seth, that those are probably close to 350,000 tons of extra capacity even today on the [inaudible] side. And that's going to improve in value-added mix as we start to ramp up the paint line at Columbus, which is still not being utilized fully. We hope to get there by the middle of 2018. So there's still volume and upgraded margins capability, but also have over 350,000 tons of SBQ, which is our second highest margin product that's available based on 2017 shipments. Then you have about 700,000 tons in the long product line between Structural and Roanoke. So you've close to 1.4 million tons of additional latent capacity that Mark calls it that's still available to us. And that's without additional projects that tend to come about from time to time.

Seth Rosenfeld -- Jefferies -- Analyst

That's great. Thank you very much.

Operator

Our next questions come from the line of Chris Terry with Deutsche Bank. Please proceed with your questions.

Chris Terry -- Deutsche Bank -- Analyst

Hi, Mark and Theresa. A quick question just on the tax rate changes. So you got it to 24% to 25% going forward for the book rate. In terms of the cap exchanges on the 100% capex expensing and the remeasurement you've done now in deferred tax assets and liabilities, how do we think about the cash tax rate going forward? Is that going to be pretty close to the book rate, or is there some deviation over 2018?

Theresa Wagler -- Executive Vice President and Chief Financial Officer

It could be slightly less in 2018 with the expensing of the fixed assets but not appreciably. So I would still say in that range. We're allowing prospective. I think you'll be closer, but there could be some reduction. And, again, it just depends on the capex spend. So right now we've really kind of ignored that, and I would say we're somewhere around 24.5%.

Chris Terry -- Deutsche Bank -- Analyst

Okay, just one other one from me. Just in terms of the talk of NAFTA, and I noticed you were chatting earlier about the plans with the auto exposure at the Columbus mill, how do you think about any potential renegotiations and how that might end up?

Mark Millett -- President and Chief Executive Officer

Again, it'll be a little speculative, but I believe the negotiations are kind of ongoing. I think they met in Montreal just yesterday or today. I do believe. I think if you look at the trade balance and the importance of Canada and Mexico to the US, it'd be an extreme issue for that agreement to be canceled. And I'm sure it's going to be negotiated. I'm sure it's going to be modified to some degree. It's 25 years old, so it probably needs a little tweaking. But we're quite confident that our interaction with Mexico is going to continue to strengthen.

Chris Terry -- Deutsche Bank -- Analyst

Okay, thanks, Mark. Thanks, Theresa. Appreciate it.

Theresa Wagler -- Executive Vice President and Chief Financial Officer

Thank you.

Operator

Our next questions come from the line of Timna Tanners with Bank of America. Please go ahead with your question.

Timna Tanners -- Bank of America -- Analyst

Hey, good morning, everyone. I just wanted to follow up on the cap allocation questions to the extent that you can provide any color there. I know on the last call I had in my notes you were talking about aggressive buybacks while you're waiting to deploy cash in this quarter seemed to slow down. So maybe I misinterpreted but just wanted to ask about that and then see if I can get a little bit more color from you on the types of opportunities you would consider.

Theresa Wagler -- Executive Vice President and Chief Financial Officer

From the aggressive buyback perspective, Timna, we do it both opportunistically and systematically. So it really has to do more with the program that we have in place. So as Mark mentioned in the call earlier, we plan to finish the current authorization of $173 million that's left, and then we'll reevaluate from that point forward depending upon where we are on a transaction basis. We feel just the same as we did back during the first call. So we didn't read anything into that-the fact that we only bought like $15 million back fourth quarter. Mark?

Mark Millett -- President and Chief Executive Officer

Well, and from a standpoint of transactional growth, Timna, again, I'm not going to elaborate any more than the focus is steel. It is [inaudible] processing and pull-through. So a volume type opportunity.

Theresa Wagler -- Executive Vice President and Chief Financial Officer

There are opportunities that are sizable.

Timna Tanners -- Bank of America -- Analyst

And you had said in the past that you could look at several deals adding up to a value that resumes kind of the leverage that you've had in the past with your recent debt metrics, kind of what we calculate to be an 11-year move. Is that still the case?

Theresa Wagler -- Executive Vice President and Chief Financial Officer

I don't know. I haven't calculated the number of years. This is our 25th year anniversary though, so I would say that it tends to work as a completely different company both in size and capability. And so it's natural that our credit metrics have improved because in the past we have not wanted to move shareholders by issuing equity. We really preferred to use the debt market. We're thankful. We're very supportive of them. So I do believe there are deals that will put additional leverage on the company but at a very appropriate position.

Timna Tanners -- Bank of America -- Analyst

Okay, thank you.

Theresa Wagler -- Executive Vice President and Chief Financial Officer

Thanks.

Operator

The next questions come from the line of Michael Gambardella with J.P. Morgan. Please, go ahead with your questions.

Michael Gambardella -- J.P. Morgan -- Analyst

Yes, good morning Theresa and Mark. I have a question. Why did your competitors, Commercial Metals, announce an acquisition of Gerdau Steel? I was wondering how do you view the implication of [steel dynamics] --

Theresa Wagler -- Executive Vice President and Chief Financial Officer

Michael, I'm sorry. You're cutting out. I think you want to ask a question about the CMC acquisition, but we couldn't hear anything after that.

Michael Gambardella -- J.P. Morgan -- Analyst

Yes, on the CMC acquisition, I was just wondering the implications that you see, if any, on your scrap business, the bar business, and the fabrication business going forward?

Mark Millett -- President and Chief Executive Officer

Well, on the scrap business, Michael, there's no real overlap of import. Russ?

Russ Rinn -- Executive Vice President of Metals Recycling Operations

No. I think, from our perspective, I don't think it changes the landscape in a great degree. I think, again, they're not necessarily in our footprint, those acquisitions. And I think, again, as all mills, they'll continue to need scrap, and if we've got it available at the right price, they'll buy it from us. If we don't, they won't.

Mark Millett -- President and Chief Executive Officer

And I think on the product side, Michael, again, the supply and demand balances and change interest, the main plate on the company, so to speak, it is positive that CMC has started to get into a little more sort of coil rebar or spooling, again. That actually helps us. Those customers do like optionality, and I think it's going to improve our profile there.

Michael Gambardella -- J.P. Morgan -- Analyst

And on the fabrication?

Theresa Wagler -- Executive Vice President and Chief Financial Officer

The fabrication is a different type of fabrication, Michael. So what we do in the joint and deck arena isn't what CMC does with their fabrication. So I think there will be no impact. Chris, is that fair?

Chris Graham -- Senior Vice President of Steel Fabrication Operations

Yeah, as we enter the rebar arena, Michael, our push is to supply it to independent, sort of third party fabricators. We're not coupling our output of rebar to actual fabrication itself. So it really sets us aside from our Nucor and CMC competitors in rebar.

Michael Gambardella -- J.P. Morgan -- Analyst

And a final question, just going back to the 232, Mark, what would you think is the best outcome in terms of format for 232?

Mark Millett -- President and Chief Executive Officer

I sat in a conversation with some folks in the industry, and they put a matrix together. And I think there were-I don't know-a dozen different speculative outcomes. And as I suggested to the group, I think it's a formidable place to opine because who the hell knows what is going to be presented. I do believe it's a combination of or individually tariffs and or quotas perhaps, but, again, it's speculative for us to comment.

Michael Gambardella -- J.P. Morgan -- Analyst

I would think quotas, based on historical patterns, is kind of one of the few ways, if not the only way, to get around the circumvention issue, if you include the existing tariffs that are out there quoted on basically everybody. It's the only way to address the circumvention, which I think is the heart of the issue.

Mark Millett -- President and Chief Executive Officer

Barry, do you want to comment?

Barry Schneider -- Senior Vice President of Flat Roll Steel Group

I would agree. We were very excited that the circumvention case got traction like it did. We're hopeful that further cases help that, but in a sense it's much like we mentioned in the past. It's whack-a-mole that you got to go and file all these cases. It takes a lot of time and money to research every one of these. So a 232 would be a broader and swifter action, if it were in fact to cover some of these things. But we're gonna diligently pursue the remedies we're on and things that we can control in the meantime to see what resolution is brought forth by the administration.

Michael Gambardella -- J.P. Morgan -- Analyst

Okay, great. Thank you.

Operator

Our next questions come from the line of Phil Gibbs with KeyBanc. Please, go ahead with your questions.

Phil Gibbs -- KeyBanc Capital Markets -- Analyst

Hey, good morning. Hey, Mark, I had a general question on the energy markets in terms of what you're customers are telling you there, and any color you can provide on the SBQ backlog momentum in that light?

Mark Millett -- President and Chief Executive Officer

The momentum is, I would say, almost incredible at Engineered Bar, and across all spheres or all sectors with the exception of agriculture. I think energy is surprising us, and we're getting some customers back today, particularly in the heavier diameters-the three inch to six inch, which, has gone into the seamless tube, seamless pipe. So that is a good sort of tailwind for us. Off-road equipment, our customer base is indicating some pretty massive growth, like, 20% plus this year as is the truck industry. So I think just generally-and we've always said in the past-Engineered Bar tentatively for us is sort of a bellwether indicator to the steel consuming economy as a whole. And when that kicks in, it brings me a lot of confidence, a lot of optimism going forward.

Phil Gibbs -- KeyBanc Capital Markets -- Analyst

That's great. And any color on the SBG backlogs, Mark, relative to maybe last quarter?

Mark Millett -- President and Chief Executive Officer

Backlogs are up, Glenn?

Glenn Pushis -- Senior Vice President of Steel Operations

Yeah, they're slightly up, but it's robust. It's been a good past six months for sure.

Phil Gibbs -- KeyBanc Capital Markets -- Analyst

Terrific. And Theresa, any color you could provide on the flat roll mix in Q4?

Theresa Wagler -- Executive Vice President and Chief Financial Officer

Yeah, I apologize. So for the fourth quarter the hot roll, NPNO shipments were 869,000 tons. So for the total of the year is 3,530,000 tons. For cold roll, it was 112,000 tons in the quarter for a total of 527,000 tons for the year. And for coated it was 678,000 tons for a total of 2,808,000 tons for the year.

Phil Gibbs -- KeyBanc Capital Markets -- Analyst

Appreciate it. Thanks very much.

Theresa Wagler -- Executive Vice President and Chief Financial Officer

Yeah, thanks.

Operator

The next questions come from the line of Charles Bradford with Bradford Research. Please, go ahead with your questions.

Charles Bradford -- Bradford Research -- Analyst

Good morning. Question about the expansion rebar project at Columbus City. The capital cost, I think you mentioned $80 million more to go, but what's the total cost for that capacity?

Theresa Wagler -- Executive Vice President and Chief Financial Officer

So, Chuck, I'm sorry. I might have confused everyone. There's two rebar projects. The one at Roanoke, which will be starting here in the first quarter, that was $28 million. And then the one at Columbus City in total is $75 million. So it's a total of about $100 and some million for both rebar projects. And so there's some carryover into next year for that capital. So the total for Columbus City is $75 million.

Charles Bradford -- Bradford Research -- Analyst

But given some of your competitors adding new rebar capacity at substantial higher capital costs than what you seem to have, what kind of operating cost advantage do you expect?

Mark Millett -- President and Chief Executive Officer

Significant.

Charles Bradford -- Bradford Research -- Analyst

Because both Nucore and Commercial Metals --

Mark Millett -- President and Chief Executive Officer

Again, I think you hit the nail on the head, Chuck, and that's why organic opportunities for us are so effective. In one half we recognize not only is the installation or the overhead cost low for the installed tons, but they had added utilization. You had 250,000 tons to a mill that's doing 1.3 last year, the overhead across all tons comes down dramatically. So the return is incredibly attractive.

Theresa Wagler -- Executive Vice President and Chief Financial Officer

Yeah, for the structural mill, there's the 500,000 tons of additional full capacity with the three initiatives that Mark mentioned earlier. One is sending the blues to the engineer bar division. The second is the unequaled angle, and the third confluent, is the most significant in volume, is this rebar project, which should come online at the end of this year. If we increase capacity at the structural division by 100,000 that's about $20 to $25 per ton benefit in cost compression across all their volume. So it is really meaningful to have these initiatives in place.

Charles Bradford -- Bradford Research -- Analyst

Do you have a figure for what your total shipments to what AISI calls military and other ordinance might have amounted to last year?

Theresa Wagler -- Executive Vice President and Chief Financial Officer

Chuck, I'm sorry. With what's in front of me, I would have no idea. We'd have no way of guessing.

Charles Bradford -- Bradford Research -- Analyst

I don't think they know either. On an area that may be a little bit more significant, your focus on the automotive, do you have any information on what the difference might be between the steel content of an electric vehicle made by someone like General Motors versus a more standard vehicle maybe in percentage terms or whatever measure you might have?

Mark Millett -- President and Chief Executive Officer

I'm looking around the room. We're all shaking our heads to be specific and not give you a number.

Chris Graham -- Senior Vice President of Steel Fabrication Operations

Mark, I would add that it depends on the type of automobile but also the types of steels. So while flat roll may decrease slightly, we may see an increase in SBG in those cars in the transmissions and the drive trains. As far as the flat roll steel, we do it despite some material changes. So that effect will be a smaller content of steel in most cases, but it does change because without the big engine in there, there's some structural members of the car that are added. So we're more interested what the net changes and the type of parts and where our steels can find happy homes in these cars' future. So while the content may shrink a little bit, we look at opportunities growing both within SBQ and flat roll to fulfill these new needs.

Charles Bradford -- Bradford Research -- Analyst

Thank you very much. Good luck.

Operator

Our next questions come from Sean Wondrack with Deutsche Bank. Please go ahead with your questions.

Sean Wondrack -- Deutsche Bank -- Analyst

Hi, and congratulations on a great year in 2017. Just real quick as I triangulate some of your comments. When we think about moving forward into the next few months with scrap looking to be sort of sideways as you've explained and your lag to basically realizing the higher steel prices, should we expect kind of that dynamic to move in the right direction where you should have steel prices moving a little higher but scrap being kind of more sideways?

Mark Millett -- President and Chief Executive Officer

I think we expect that over the longer term through the year, yes.

Sean Wondrack -- Deutsche Bank -- Analyst

Okay, great, thank you. I just wanted to clear that up. And then just quickly-somebody mentioned it earlier-but your debt metrics are really, really strong at this point. Your one turn net leverage, you generated a ton of free cash flow. You didn't have to share buybacks. Have you guys been discussing with the rating agencies? You're right on the cusp of investment grade. Is there anything we should expect there, or have you been speaking with them? Could you give us any more color there, please?

Theresa Wagler -- Executive Vice President and Chief Financial Officer

Yeah, we have an active dialogue with the agency. We have a really transparent relationship with them, and so I agree with you. Our credit metrics are incredibly strong, and definitely I would say they're investment grade today. And, frankly, when you look at our issuances on the debt market and the capital market, we're getting very good pricing there as well, but the idea that we really are positioned right now into transaction growth and transaction growth that we think could be meaningful, we really do want to use our balance sheet versus our equity when possible. And so I think right now we're in a unique timeframe where we're positioned for growth. We think there's growth opportunity that we're having conversations with them, but we feel pretty good with where we are at the moment.

 

Operator

Okay, thank you. And that concludes our question and answer session. I'd like to turn the call back over to Mr. Millet for any closing remarks.

Mark Millett -- President and Chief Executive Officer

Well, thank you, Brenda, and thank you for those that may still be on the call. I think our outlook and our position as a company is phenomenal as we move into and through 2018. We have a general upward momentum for the markets in general. SDI has been outlined. We have a considerable number of sort of internal catalysts, earnings catalysts, that differentiate us from our peer group, I do believe. And any Section 232 action or infrastructure bill is just going to compound that and be cream on the top. So we're looking for a phenomenal year, and we want to share that with y'all. And any customers and employees, any community members on the call too, thank you for your support. We can't do this without you all, and we were honored just recently by a Fortune Magazine-whatever it was-one of the most admired companies. Again, we have almost 8,000 employees driving us toward that, and thank you all. Have a good day. Be safe.

...

Operator

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

Duration: 68 minutes

Call participants:

Tricia Meyers -- Investor Relations

Mark Millett -- President and Chief Executive Officer

Theresa Wagler -- Executive Vice President and Chief Financial Officer

Russ Rinn -- Executive Vice President of Metals Recycling Operations

Chris Graham -- Senior Vice President of Steel Fabrication Operations

Barry Schneider -- Senior Vice President of Flat Roll Steel Group

Glenn Pushis -- Senior Vice President of Steel Operations

Brett Levy -- Seelaus Capital -- Analyst

Curt Woodworth -- Credit Suisse -- Analyst

Novid Rassouli -- Cowen -- Analyst

Matthew Korn -- Goldman Sachs -- Analyst

David Giuliano -- BML -- Analyst

Seth Rosenfeld -- Jefferies -- Analyst

Chris Terry -- Deutsche Bank -- Analyst

Timna Tanners -- Bank of America -- Analyst

Michael Gambardella -- J.P. Morgan -- Analyst

Phil Gibbs -- KeyBanc Capital Markets -- Analyst

Charles Bradford -- Bradford Research -- Analyst

Sean Wondrack -- Deutsche Bank -- Analyst

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