AKS
#Good morning, ladies and gentlemen, and welcome to AK Steel's fourth-quarter and full-year 2015 earnings conference call.
(Operator Instructions) As a reminder, this conference call is being recorded.
With us today are Mr.
<UNK> K.
<UNK>, Chief Executive Officer; Mr.
<UNK> W.
<UNK>, President and Chief Operating Officer; Mr.
<UNK> <UNK>, Vice President, Finance and Chief Financial Officer; and Mr.
<UNK>las O.
<UNK>, General Manager, Investor Relations and Assistant Treasurer.
At this time I will turn the conference over to <UNK>las <UNK>.
Please go ahead, sir.
Thank you, Candace, and good morning, everyone.
Welcome to AK Steel's fourth-quarter 2015 earnings conference call.
In a moment, <UNK> <UNK> will offer his comment on our business.
Following <UNK>'s remarks, <UNK> <UNK> will review our fourth-quarter 2015 results and together we will field your questions.
Our comments today will include forward-looking statements within the meaning of section 21-E of the Securities Exchange Act of 1934.
Included among those forward-looking statements will be any comments concerning our expectations as to future shipments, product mix, prices, costs, operating profit, EBITDA, or liquidity.
Please note that our actual results may differ materially from what is contained in the forward-looking statements provided during this call.
Information concerning factors that could cause such material differences in results is contained in our earnings release issued earlier today.
Except as required by law, the Company disclaims any obligation to update any forward-looking statements to reflect future developments or events.
To the extent that we refer to material information that includes non-GAAP financial measures, the reconciliation information required by Reg G is available on the Company's website at AKSteel.com.
With that, here is <UNK> for his comments.
<UNK>.
Thank you, <UNK>.
As <UNK> indicated earlier, AK Steel reported adjusted net income of $53.8 million, or $0.30 per diluted share, for the fourth quarter of 2015.
This compared to our earnings guidance of a net loss of $0.33 to $0.38, which included an estimate for charges of $0.42 per share related to the temporary idling of the Ashland Works blast furnace and steel-making operations and the impairment of our discontinued insurance operations.
These adjusted results for the fourth quarter represented a substantial improvement compared to net income of $6.7 million, or $0.04 per share, for the third quarter of 2015 and adjusted net income of $26.1 million, or $0.14 per diluted share, in the fourth quarter a year ago.
The recent fourth-quarter improvement reflected the benefit of lower raw material costs, strong automotive demand and our decision to reduce exposure to the carbon steel spot market as part of our margin enhancement strategy.
Also included in the fourth quarter results is a higher than expected LIFO credit, which I will discuss further in a moment.
Looking at shipments, our mix of tons shipped improved in the resent fourth quarter as a result of strong automotive demand and our decision to reduce exposure to the carbon steel spot market.
This resulted in fourth-quarter shipments of approximately 1.66 million tons, which were 215,000 tons, or 12%, lower compared to the third quarter of 2015.
Sales for the fourth quarter were $1.54 billion, which was $167 million lower than the third quarter.
This decrease was driven by a reduction in shipments to the carbon steel spot market, as well as lower spot market pricing, resulting from continued high levels of what we believe are unfairly traded imports.
The sharp reduction in spot market pricing also resulted in sales that were 23% lower than the fourth quarter a year ago.
Our fourth-quarter 2015 results included $7 million of cost associated with planned major maintenance outages.
This compares to roughly $12 million in outage costs in the third quarter of 2015.
Our adjusted EBITDA for the recent fourth quarter was $168.1 million, or $101 million per ton.
As <UNK> mentioned, this was our best quarterly performance in more than seven years.
This also represented an improvement of $48 million, or $37 per ton, compared to the third quarter of 2015 and a $51 million improvement, or $43 per ton, from the fourth quarter a year ago.
The EBITDA increase in the recent fourth quarter, compared to the third quarter of 2015 and the fourth quarter a year ago, was due in part to the effective lower raw material costs combined with strong demand from our automotive customers.
Additionally, our relentless focus on costs and operational improvements helped drive the increase.
In the fourth quarter of 2015, we recorded a LIFO credit of $98.6 million compared to a LIFO credit of $44.8 million for the prior quarter and $5.3 million in the fourth quarter a year ago.
The fourth-quarter LIFO credit was primarily driven by strong operating cost performance and higher shipments.
In the fourth quarter, we had three special charges that are excluded from our adjusted net income.
These special charges totaled $200.9 million, or $1.13 per diluted share, and included a net corridor charge related to pension and post-retirement benefits in the amount of $131.2 million, or $0.74 per diluted share.
This consisted of a pension corridor charge of $144.3 million, partially offset by an OPEB corridor credit of $13.1 million.
The net corridor charge was driven primarily by the weak performance of the financial markets, partially offset by an increase in the discount rates of roughly 30 basis points at year end 2015 compared to year end 2014.
The second charge, as we previously announced, was related to our decision to temporarily idle the Ashland Works hot end operations in December.
We recognize a charge of $28.1 million, or $0.16 per diluted share, supplemental unemployment and other employee benefit costs as well as other expenses incurred to temporarily idle the operations.
The charge reflects the assumption that the temporary idling will likely last throughout 2016.
However, we will reassess market conditions regularly to determine when to restart the Ashland works hot end operations.
The third charge is related to our investment in AFSG, which is the holding company of AK Steel's discontinued insurance operations.
As part of our strategic review to optimize assets, we made a decision to receive a cash distribution of $14 million from AFSG.
In connection with this distribution the remaining investment in AFSG was determined to be impaired and we recognized a non-cash charge to write of the remaining investment of $41.6 million, or $0.23 per diluted share.
AK Steel has no financial obligations to AFSG.
In the fourth quarter of 2014, adjusted net income excluded $7.1 million of cost related to the acquisition of Dearborn Works as well as a pension corridor and OPEB settlement charges of $5.5 million.
Highlighting our results for full year 2015, sales were approximately $6.7 billion, an increase of $187 million, or 3%, compared to 2014, primarily due to the full-year inclusion in our results of Dearborn Works and increased automotive sales.
Shipments for 2015 were nearly 7.1 million tons, an increase of 957,000 tons, or 16%, compared to 2014.
Once again, the increase is mostly due to the acquisition of Dearborn Works, as well as continued strength in the automotive market, partially offset by reduced shipments to the carbon steel spot market.
Moving from sales to our operations, we incurred approximately $51 million in planned maintenance outage costs during 2015, roughly $24 million lower than the prior year.
In 2015 we had no major unplanned mill outages, which is truly a credit to our operation of the plants.
In 2014 we incurred unplanned outage costs of $41 million for our Ashland Works blast furnace.
In addition, last year also included about $45 million in costs related to extreme winter weather conditions.
At the bottom line for 2015, we reported an adjusted net loss of $53.5 million, or $0.30 per share.
This compares to an adjusted net loss of $59.7 million, or $0.40 per share, for 2014.
In addition to the recent fourth-quarter special charges I mentioned, our adjusted results for 2015 excluded a first-quarter charge of $256.3 million, or $1.44 per share, to fully impair our investment in the Magnetation joint venture.
Our adjusted results for 2014 excluded expenses of $31.7 million, or $0.21 per share, related to the acquisition of Dearborn Works, as well as a corridor charge of $5.5 million, or $0.04 per share.
Turning to the balance sheet and the cash flow statement, for the fourth quarter of 2015 our capital investments totaled $27.2 million, bringing our capital investments for the year to $97.3 million.
This reflects our strategy to focus our resources and capital in those areas where markets pay for the value that AK Steel delivers.
In the fourth quarter working capital was a use of cash of $112.8 million.
This was primarily the result of a planned increase in inventory levels as we transition production from Ashland Works to Middletown and Dearborn Works.
For the full year 2015, working capital was essentially flat.
I would note that our credit facility borrowings remain the same from the end of the third quarter to the end of the fourth quarter of 2015.
We actually lowered our borrowings under the credit facility by $55 million in 2015.
I would also note that our total debt pension and other post-retirement employee benefits, or OPEB liabilities, decreased by $124 million in 2015 compared to the end of 2014.
This is partly attributed to our focus to reduce liabilities.
Total liquidity at year end was a solid $700 million.
With no debt maturities until the end of 2018 and the required pension contributions in 2016, the $700 million of liquidity is more than sufficient to meet our needs in 2016.
Although we are very comfortable with our liquidity position, we will continue to further improve our working capital management, as well as focusing on other liquidity enhancing actions.
Now turning to our outlook, we would like to provide you with some data points for 2016.
In the current year, we anticipate capital expenditures to be in the range of $120 million to $140 million, including approximately $40 million of related growth investments.
These growth projects, such as the coating line modifications at our Dearborn Works, which will allow us to produce next-generation advanced high-strength steels, are important pieces for our strategy to focus on higher value and innovative products.
We expect our planned maintenance outages in 2016 will be about the same as the $51 million we had in 2015 and we do not have any major blast furnace maintenance outages planned for the current year.
We expect working capital to be a modest source of cash in 2016 as a result of reduced exposure to the commodities spot market.
With respect to LIFO, we currently do not expect a large LIFO credit in 2016, primarily as a result of more stable raw materials prices.
We anticipate that our pension and OPEB credit for 2016 will be approximately $50 million compared to a credit of $63 million for 2015.
Our 2016 depreciation expense, including our variable interest entities, is expected to total approximately $213 million compared to $216 million in 2015.
Finally, in regard to income taxes, our 2016 book tax rate, as in recent years, will be primarily driven by a function of changes in our LIFO reserve.
In addition, given our NOL tax carry-forward position, we expect that our cash taxes will continue to be very minimal.
Specifically for the first quarter, we see shipments declining marginally from the fourth quarter as continuing strength in the automotive market is more than offset by an expected decline in shipments to the commodity spot market based on current market conditions.
Additionally, we estimate our average selling prices to be about the same as the recent fourth quarter.
The additional insight we are providing reflects the change in our approach to providing earnings guidance.
We'll provide you with as much information as possible going into a quarter as opposed to providing our earnings guidance near the end of the quarter.
Finally, I would like to reiterate <UNK>s remarks.
The AK Steel Management team is very focused in terms of how we want to strategically position AK Steel.
We have a great foundation to work from as we believe our quality, breadth of product, customer service and innovation is industry leading, positioning AK Steel to deliver more value-added products and services while minimizing underperforming assets and low-margin products will take time.
We will continue to discuss our progress and let me assure you this team is acting with a keen sense of urgency in returning the Company to sustainable profitability.
Let me conclude my comments by saying thank you for your interest in AK Steel.
At this time, we would be happy to take your questions.
Yes.
That will be similar as we get a richer mix as we reduce sales to the carbon spot market.
Part of it is you're going to be reducing what you're selling into the carbon spot market, so we will be lower on our hot-rolled and cold-rolled products, so that will be a decline.
We are continuing to see strong command in the automotive business, so we continue to see strength in the market quarter over quarter.
In the fourth quarter, you see a little bit of seasonality with the holidays and that of the demand for the automotive products.
Those are a couple of factors.
In addition, continued growth in our electrical steel products, especially the higher-end, high efficiency electrical steels that we will continue to grow in that market, too.
It is a market mix and a product mix.
As we have been indicating, it is getting away from the commodity side, reducing our exposure there and being more focused on the value-added products.
Bottom line, we need to show it at the bottom line and that is where our goal is to improve it.
We talk about cost reductions but we focus more internally on margin enhancements, which includes cost reductions.
So example, in 2015 some of the initiatives we have taken we worked on reducing our slab costs by changing the burden of how we operate our furnaces to make sure both at the blast furnace site and at our melt shops to get the lowest cost raw material blends to make our slabs.
We've been working on optimizing what we are doing at our melt shops on how we are producing carbon slabs and where we are producing that.
We did that throughout 2015.
On the coal front, actually our AK Coal operations has done a great job in working on becoming very competitive in their capabilities to reduce costs.
Those are a few items that I would say was closer to about $65 million of improvements that we had in 2015 compared to 2014.
In addition, we continue to focus on lowering our overhead cost and then on the Dearborn Works side, as Jamie had mentioned, we had about $59 million in cost-base synergies.
We have a lot of activities there.
Going forward, we will continue to update everyone on how we're progressing in reducing cost because ultimately that is what we need to do as a company is figure out how to reduce cost.
We will also be focused on and communicating what we are doing to improve our product mix and our market mix and to be more focused on those more value-added products.
Good morning.
As we had mentioned, as contract pricing moves.
It will parallel to what is happening in the spot market but it's not to the order of magnitude that you see in the spot market that has been history and continues that way.
The good thing is it doesn't have the volatility and as we look at our products we look at making sure we provide quality service delivery and those new products and the research and innovation for the customers, because that is the thing they are looking for in the future and make sure we are a good supplier to our customers.
If you look at it on the pricing front, it is definitely not the level of what you see declines in the spot market that you would see in the contract side.
And to partially offset that would be some benefits you get on the raw material front.
We've see high iron ore drop.
As you know, we buy our iron ore based on the IODEX component of the pricing for the iron ores based on the IODEX.
That has continued to declined throughout 2015 and still continues to decline here in the first half of 2016 and the forward curve shows it will continue to be pretty weak.
That is actually an advantage we have at AK Steel compared to others.
Scrap has fallen.
That normally will parallel what is happening in spot market pricing.
In addition, we have seen coal prices drop and everyone's well aware what has been happening in the energy markets as we consume a lot of natural gas, so that will be helping us.
I am not saying that the cost reductions on the auto front will offset the pricing.
It will not.
But we do have some opportunities to help overcome some of the price decreases that we have seen in the automotive industry.
I think if you look at the commodity prices of what we are seeing into 2016, we have seen scrap actually move up a little bit and I think that will parallel what happens with the hot-roll pricing and the spot market pricing.
On the coal side, our contracts are annual contracts, calendar year contracts, so we have our pricing completed for 2016 when it comes to the coal side, which is really the main ingredients for making coke.
We do have some of our raw material or our energy cost so some of that we have locked in also.
I would say we don't see as much volatility, but I will never say never, because I was shocked would happen here in 2015 with some of the declines that happened in the energy markets in the raw material markets.
It seems like they have gotten to pretty low lows.
I'd say if you look at the success of AK Steel and it's predecessor company, Armco, the thing we have been focused on is that new product, coming up with new processes, new products for our customers.
My belief is if you are standing still, you are moving backwards because your competition is moving ahead of you.
We always got to be focused on it no matter what the market conditions are.
I have been in the business over 30 years.
It is a cyclical business.
We understand it.
What you've got to do is be smart about how you invest that capital and where you put it.
We believe we are prudent with our capital, how we put into certain products.
Example, investing $29 million at Dearborn to get advanced high-strength steels and some of the other projects I mentioned some growth in our high-efficiency electrical steels and some other products we have going on.
Our focus is, if we are investing the capital are we getting return on it.
So that is where we are focused.
We still have to maintain our equipment and we will look at what we need to maintain and how we need to maintain it and that is always the challenge to keep those cost down as low as possible.
I did want to also, <UNK>, go back on one other comment you were asking about pricing in the future.
If you look at it from an integrated side, an AK Steel side, is pricing would start to rise if the market ---+ spot market prices rise.
Actually that helps us because we are only about fourth or so of our melt is scrap related.
So actually as you see steel prices go up, normally scrap and carbon steel spot market prices parallel each other, so we actually get some margin expansion in the spot market as scrap races rise compared to what happens with those that are [mini-melt].
No doubt also that we have also been hurt as it has come down because we are not 100% scrap based.
We've had some benefits from iron ore and other raw materials but not to the benefit that others have seen that are 100% scrap based.
If you look at imports, looking back over time, normally imports have been about the low 20% of our market.
Look back even earlier, just even a few years ago it was about 20% to 22%.
Currently it has been running around 29%.
We peaked at, I think, a quarter last year around 34%.
Imports have definitely been an issue.
We have taken on several things, actions to address it.
One is the trade cases.
We have three trade cases that have been filed.
We have ---+ countervailing duties have been assumed on all three of those cases and we are still waiting for anti-dumping duties to be assessed in the hot-rolled and cold-rolled cases, which we expect to happen here in February and March.
We believe it has been very effective for China.
As you have seen, if you put the two duties together, the countervailing duties and anti-dumping, those are now totaling over 400%.
They have not been effective for some of the other countries, being more in the single-digit to low double-digit percentages.
A challenge that we are having and we are focused on is what I'll call the wack-a-mole, which is monitoring where the import's coming from and make sure we are seeking all available remedies out there to ensure that we have a level playing field, because the issue is, is not as so much imports coming in.
They have, and always will be, part of our market.
It is really what is the pricing of that material and are they being subsidized or are they selling at low ---+ at unfair levels.
We will also look at any other options that remain out there on the table and addressing imports as they come in because we can't sit still and let imports destroy the steel industry and other related industries.
If you think about the impacts it is having on the steel industry, it also goes out to the mining industry, transportation industry, a lot of other industries they could impact.
Not just our business alone.
It is very important for us and we have a lot of people in Washington helping us to fight these trade cases or fight the unfair trade and address the situations.
When we look at the automotive industry, we are seeing that it's remaining very strong, going up a little bit in 2016 but it looks like most of the auto manufacturers are running pretty much near their capacity, so I don't know if there is really a lot of upside for them to produce a lot more.
But everything we are seeing is showing strong demand in 2016.
That benefits us both on the carbon front and the stainless front, whether it is the chrome or the chrome nickel business, because we have some high-end chrome nickel business also that goes into that market.
We're also seeing still solid demand when it comes to the construction and heating and air-conditioning markets.
We are not a huge player in those markets, but that still is an outlet for the steels to go into.
In regards to imports, we have seen the imports come down, especially from the main countries that we have filed cases against.
We have been seeing the permit applications for imports slowly declining also, so I think there is a lot happening out there.
In regards to at AK, as you are well aware we did idle our blast furnace at Ashland.
We have three blast furnaces and in our Company and we did idle Ashland in December so we have reduced our capacity.
It made no sense to be selling products at the prices that were out there in the marketplace and not getting a return on our products.
Efficiency standards are certainly helping and that is driving the demand for our high value-add product or higher efficiency product.
We are seeing growth in both those markets and our regular growth grain-oriented markets as well.
Both from a volume ---+ certainly from a volume standpoint, they are increasing.
We are certainly seeing some market pressures from a price standpoint but they are holding up very nicely.
That has not been an issue and we are performing very well and increasing our capacity throughout 2016 compared to 2015.
We think with the efficiency standard increases that we have seen, we see even more demand for our products.
We are very content that we are in a very good spot there.
We continue to work from a research and innovation standpoint.
Expect that within this year, we are probably going to bring another advancement in our regular grain oriented that will take another step function improvement and efficiency and we are going to remain the industry leader in producing the most efficient steels that are out there.
That demands some value and there is certainly a lot of folks interested in that.
We are not concerned with that at all.
The comment I would make there, <UNK>, is one of the items we had was a large LIFO credit in the quarter.
That did have an impact and as <UNK> mentioned, we do not expect to have a large LIFO credit as we move forward here into 2016.
That will be primarily depend on what happens with raw material cost that is really the driver for LIFO.
We did have a large LIFO credit.
In regards to, as I mentioned on contract pricing, we do anticipate for the contracts we are negotiating here for the first ---+ it started effective the first of the year, that the auto contracts do have lower pricing and that will be partially offset by some lower raw material cost and energy cost.
We will see some pressure on our margins when it comes to the automotive side, just reflecting the trends we have seen in the spot market.
I wouldn't comment yet of what we are seeing exactly going to happen in the spot market but that it is probably seeing a slight uptick occur with our pricing increase announcement that we made.
Scrap has moved up a little bit here, so we will see what happens over the next two months and what happens in the spot market.
But we are not going to be a major player in the spot market and that is why Jamie commented on the average selling price, because you are going to be taking out the D&C spot tons, a lot of the hot-rolled and cold-rolled tons.
If we had just done that, that would have resulted in a higher average selling price but with the pressures that we are getting from the contract pricing, that will put some downward pressure on it.
Add them all together, it is coming up to roughly a flat average selling price.
(Multiple speakers)
I will take the second one first.
In regards to pension funding, as <UNK> mentioned, we do not have any required pension funding in 2016 and really what will drive in the future is what happens with our asset returns that will drive our required fundings.
We have always taken the approach to do the minimum funding on that in regards to pension funding.
In regards to vertical integration, we are very happy right now with our position where we are at on our raw materials.
We have a little bit of our coal that we get from AK Coal.
The rest we buy in the marketplace.
We are fine with that.
In our vertical integration, we have most of our iron ore we get from close natural resources and also get from Magnetation, our agreement with Magnetation.
We are pleased right now.
As it does fluctuate, all of the contracts have some type of IODEX component in it and other drivers in it for pricing.
We like to float with the market some.
That helps to align with what happens in the market prices.
Our focus is, is where can we invest the money to get a return, as we talked about on our capital investments.
On the raw material front, we see whether it is iron ore or coal or other commodities that there is plenty of capacity and plenty supply out there and we do not see any major changes in the near term for those markets rising.
That is a difficult question only because it is very mix dependent.
We have, as <UNK> mentioned earlier, we are making a small investment that allows us to get more of the TCH or higher efficiency products and we are doing that intentionally because that is an improved, better margin product for us.
However, as we have received more business in the regular grain oriented, we are continuing to fill our units and get more tons out.
So it is really difficult to pin down an exact because RGO versus TCH or NAFTA versus international really changes that very fluidly and we just kind of adjust with that.
It is hard to pinpoint a specific number for you.
But we are filling up our capacity.
We are getting nearly full and that is a great thing for us.
The majority of it is annual contract pricing type of negotiations.
We have increased a fair amount.
More than 10%, probably pushing 20% year over year is what we would anticipate.
<UNK>, this is Jamie.
Let me answer the second part of that.
I would [turn] down and expectations for the large LIFO credit as we get into 2016, just based on an expectation that raw material prices, while they can get lower, they are probably closer to a bottom.
In terms of looking back at 2015, in total the LIFO for the year was almost $200 million.
If you just hold everything flat going forward from 2016, you'd say well, gee, that should be about $50 million per quarter.
Theoretically, you can say costs were may be overstated in the first part of the year and we caught up in the second part of the year and it has to do with LIFO calculations.
I would just look at it going forward and again, like we said in our prepared remarks, the expectation for the 2016 is a much smaller credit.
I would comment, too, if you look at it from the LIFO side, raw materials continue to fall throughout the year.
If you look at where we started at the beginning of the year, where the IODEX was at, where scrap was at, where everything was at, it was much higher and it declined literally every month of every quarter throughout the year, all the way into December and a continued to design decline in December for a lot of the raw materials, which is what was driving our LIFO credit to grow.
Also then, we are getting the benefit to that because that is now what is in our inventory, so as we go into 2016 we do have lower-cost inventories than we came into 2015 with, so we have that benefit too.
If you compare it to fourth quarter, as we indicated we had about a $99 million LIFO credit in the fourth quarter that is reflecting as you are adjusting the values of your inventory to a last- and first-out basis, giving some of that a little bit higher benefit in the fourth quarter.
But if you look forward, if raw materials did not change, then you would ---+ and a lot of other factors of those don't change or volumes, et cetera, that you would be getting rid of most of that LIFO credit.
I don't know if I would say be able to split it.
It is not a simple calculation to say how much of it is turning forward and you get the benefit in lower cost.
I would say is that we've continue to see lower cost.
We see total cost going down next year.
They're calendar year contracts so we will have what we pay for coal, for example this year, we use that inventory as it flows through all of our system and then start having lower coal cost come in, for example.
We will get to the benefits.
Iron ore has continued to fall.
The IODEX has continued decline, so we'll get those benefits.
Scrap has actually started to uptick a little bit which, if that does, that usually means the spot market pricing will start to move upward also.
It is not an easy one to estimate and to split out in the way you are asking.
Sure, and I can take that one.
From an Ashland operational standpoint, we currently have the assumption based on what we tied to our cost that we hit when we idled it, or that we took when we idled it, that the current view would be that it is temporarily idled for the remainder of the year.
That does not mean that, that will be the case it will be an evaluation that we do on an ongoing basis and reviewing the hot-roll price, the raw material prices, the imports and we really have no set number.
It is simply a factor of we would need to have it support sustained profitability in order to resume operation in Ashland.
That is a remains to be determined type of question.
As far as the raw material portion, it is still a work in progress.
As you mentioned, we have a take-or-pay with every aspect of our contracts for raw materials.
However, we have a lot more flexibility than we've have had in the past or probably have ever had.
We are continuing to work with our providers of those raw materials and are making adjustments accordingly and working with them to see our way through that.
There are things that we can do both from the accounts receivable side and even from the accounts payable side to enhance liquidity.
Also, the primary focus is on inventory, making sure we keep inventories aligned with market demand.
Those are some of the actions that we can take and we will continue to take.
Ultimately, it is also on us striving to improve our earnings and lowering our cost.
That is how you get the old-fashioned way of getting a cash generated from your operations and that is our key focus of our entire management team.
As we had mentioned back to one comment that <UNK> had asked earlier, when you look at the raw materials, we did get the benefit of raw materials declining throughout 2015 so as you go into the second half, we were benefited of lower raw material cost there throughout the year and that will carry over into next year.
With that, on behalf of the entire AK Steel management team, I would like to thank you for joining us on today's call.
I can assure you that we will continue take on the challenges head-on and focus on adding value for bondholders and shareholders and we look forward to providing you with an update of our continued progress next quarter.
Thank you.
