Global Brass and Copper Holdings' CEO Discusses Q4 2013 Results - Earnings Call Transcript

| About: Global Brass (BRSS)

Global Brass and Copper Holdings, Inc. (NYSE:BRSS)

Q4 2013 Results Earnings Conference Call

March 19, 2014 09:30 AM ET


Scott Hamilton - General Counsel

John Walker - Non-Executive Chairman

John Wasz - President and CEO

Robert Micchelli - Chief Financial Officer


Josh Berman - William Blair

Sal Tharani - Goldman Sachs


Good day, ladies and gentlemen. And welcome to the Global Brass and Copper 4Q 2013 Results Conference Call. My name is Su, and I’ll be your operator for today. At this time, all participants are in listen-only mode. We will conduct question-and-answer session towards the end of this conference. (Operator Instructions).

As a reminder, this call is being recorded for replay purposes. I’d now like to turn the call over to Mr. Scott Hamilton, General Counsel. Please proceed, sir.

Scott Hamilton

Good morning, everyone. And thank you for joining us to discuss Global Brass and Copper’s fourth quarter and full year 2013 financial results. My name is Scott Hamilton, and I am Global Brass and Copper’s General Counsel. Joining me on the conference call today are John Walker, our Non-Executive Chairman; John Wasz, our President and Chief Executive Officer; and Robert Micchelli, our Chief Financial Officer.

For anyone who is not able to listen to today’s entire call, an archived version of this call will be available later this morning. Please visit the Investor Relations section of our corporate website at to access the replay.

Before beginning our discussions, we want to make you aware that our prepared remarks and responses to questions may include forward-looking statements that involve risks and uncertainties. These may include statements about our current expectations or forecasts of market and economic conditions, our business activities, prospects, strategies and future business and financial performance.

Actual results could differ materially from any forward-looking statements made by us. Information concerning factors that could cause actual results to differ from those in the forward-looking statements may be found in Global Brass and Copper Holdings’ Perspective Supplement filed with the Securities and Exchange Commission on January 24, 2014 and the company’s annual report on Form 10-K filed with the SEC under the Risk Factors sections of each of these filings and other filings with the SEC.

In addition, our comments today refer to non-GAAP financial measures such as consolidated adjusted EBITDA; segment adjusted EBITDA, adjusted sales, and adjusted diluted earnings per common share.

Reconciliations to the most directly comparable GAAP financial measures are provided in our earnings release for the fiscal quarter ended December 31, 2013, that we furnished with the SEC and is posted to our website.

We believe these non-GAAP measures provide useful information for evaluating our business performance. This information should be considered as supplemental in nature and should not be considered in isolation or as a substitute for the related financial information prepared in accordance with GAAP. In addition, these non-GAAP financial measures may not be the same as similarly entitled measures reported by other companies.

Please be advised that the content of this conference call contains time-sensitive information that is accurate only as of the day of this live broadcast on March 19, 2014. Global Brass and Copper Holdings, Inc. undertakes no obligations to revise or update any forward-looking statements to reflect events or circumstances after the date of this conference call except as maybe required by law.

Now that we have covered these cautionary comments, I would like to turn it over to John Walker.

John Walker

Thank you, Scott. Good morning, everyone. And thank you for joining us on today’s call. I’m going to begin by providing some brief remarks on Monday’s management announcement. I will then turn the call over to John Wasz, our President and newly elected Chief Executive Officer to provide a brief overview of our performance for the quarter, as well as greater detail on our business and segment level results and trends followed by a discussion of business drivers going forward. Afterwards, Bob Micchelli, our Chief Financial Officer, will review our financials in more detail.

As you saw on our press release on Monday, I have retired from my positions as Chief Executive Officer. I am very pleased that John Wasz, has been elected by the Board of Directors as Chief Executive Officer and we also assume to see on the Board and I will continue as the member of Board as the Non-executive Chairman.

Importantly, this transition announcement is in accordance with the Board of Directors’ long standing succession planning process and we feel very fortunate to be executing this succession plan from a position of strength. Since the formation of Global Brass and Copper, we have worked diligently to assemble our strong management team with deep industry experience including John Wasz who joined as Olin Brass’s President in 2010 setting stage for the seamless leadership transition. Over the years John Wasz has [put an integrated role] working with me and shaping the strategic direction at Global Brass and Copper and ongoing execution of the company’s long-term strategy.

More recently since taking on the role as Chief Operating Officer and President of GBC, John Wasz has established a strong track record of leadership overseeing critical initiatives such as restructuring our operations and developing sustainable platforms for growth. As we look ahead the Board and I have the utmost confidence in John Wasz and the entire leadership team to drive GBC to new heights through long-term profitable growth.

It has truly been my distinct time of serving as a CEO since our formation in 2007. And I would like to thank our Board for the opportunity to play a role in the success of GBC. Our transformation and financial success would not have been possible without the efforts of every one of our dedicated employees and their unwavering support and commitment to positively influence the long-term future of this business. (Inaudible) on team GBC.

And with that I will now turn the call over to John Wasz to discuss our recent performance and business in greater detail. John?

John Wasz

Thank you, John. Good morning everyone. I am truly excited to lead GBC to the next phase of growth and value creation. Alongside John Walker we spent considerable time in the past several years on key initiatives to drive long-term profitable growth and business expansion, while furthering our operation excellence initiative. This strategy remains unchanged and with the strong employees across the company a culture of teamwork continuous improvement and a focus on creating customer value GBC has built over the years we are confident as we move ahead.

With that let me start with a few details from the fourth quarter financial results which Bob will provide more color on momentarily.

First, we did face some challenges in the fourth quarter which we will talk about here later. But looking at volume growth, volumes were up 3.4% during the fourth quarter compared to the prior year, primarily attributable to continued demand across a number of our key end-markets including building and housing, munitions, automotive and coinage.

Adjusted sales in the fourth quarter, our non-GAAP revenue measure which reflects our value-added premium over metal replacement cost recovery, increased 4.4% on a year-over-year basis. Consolidated adjusted EBITDA during the fourth quarter, our non-GAAP profitability measure was $21.1 million, a slight increase compared to the fourth quarter of 2012.

Looking at the full year, we are reasonably pleased with our financial results which were in line with our previously outlined yearly guidance range. As you know, 2013 marked the transformative year for Global Brass and Copper as we brought the company to the public markets with the successful IPO and listing on the New York Stock Exchange.

Moving on, let me provide detail on each of our 3 business segments Olin Brass, Chase Brass, and A.J. Oster. Overall performance across the GBC enterprise driven by strong volume from Olin Brass and steadily improving demand across key end-markets, while we remain enthusiastic by the long-term fundamentals of the business, consolidated adjusted EBITDA remained relatively flat as a result of multiple factors during the fourth quarter.

First, as previously discussed, we continue to make prudent investments in our business to bolster our future growth, improve our IT infrastructure, and drive our continuous improvement initiatives which on a quarter-over-quarter comparative basis increased our fixed cost.

Second and similar to last quarter, we had several one-time gains in 2012, making for tough year-over-year comparisons. Lastly, although we continue to make progress, our operational performance was below performance targets and our expectations at our largest facility in East Alton further impacting margin performance.

Now let me review in more detail each segment. Olin Brass fourth quarter 2013 shipment volumes increased 7.3%, largely driven by greater demand in the building and housing, munitions, automotive, coinage markets. Partially offsetting this was lower demand in the electronics/electrical components end market as well as lower volumes to A.J. Oster.

As a reminder, intercompany transactions are eliminated in our consolidated GBC results. Excluding sales to A.J. Oster, Olin Brass fourth quarter unit volumes increased 9%. Overall, the automotive end market has consistently grown over the past several quarters and munitions demand continues to be solid in this segment as overall commercial demand is more than offsetting reduced military demand.

Although Olin Brass volumes increased during the quarter, the operating segment continued to be challenged by operational issues, largely associated with the ramping up of volumes and equipment reliability, which negatively impacted our productivity and cost within our rolling mill in East Alton. Although we have ample capacity within our strip business, we struggled with unexpected equipment outages on key pieces of equipment, which resulted in inefficient product flow through the facility and added labor and maintenance costs.

It is important to note that we are in the second full year of our four to five year comprehensive total preventative and maintenance program, which has and will continue to improve equipment reliability. Our cupping operation also located in East Alton, which is operating at full capacity at a solid production quarter, but was challenged to meet the unprecedented cupping demand in the first part of the first quarter due to unexpected downtime on a few process.

These issues along with other weather related operational issues in the first quarter have challenged our operating teams in the first part of 2014. However, I’m pleased to report that we have recently re-commissioned idle [press] in cupping and our new manufacturing leadership in the cupping operation is making solid progress on further driving our manufacturing excellence and total preventative maintenance program in our fab and cupping operation.

In the rolling operation, we continue to make solid progress in our manufacturing excellence initiatives including total preventative maintenance and through disciplined investments in capital and people to improve the efficiency of our supply chain, increase recovery and streamline operations that longer term will reduce costs and increase the profitability of the business.

While we were disappointed in not achieving the anticipated productivity and recovery improvements in the fourth quarter, we continue to be encouraged by the foundational improvement that will have a positive impact on operational performance as we move through 2014.

Lastly, on a year-over-year comparative basis, profit margins were also negatively impacted by tighter scrap spreads, a mix shift whereby more volume went through our downstream businesses and the mix of these product sales within the various end use segments was less rich when compared to the fourth quarter of 2012.

Looking at Chase Brass, fourth quarter 2013 shipment volumes declined 2.3% as compared to the fourth quarter of 2012. The decrease in shipment volumes was the result of the decline in domestic demand within the electronics/electrical component end markets, resulting from one customer shutting down the U.S. factory and buying finished product from Asia. This decrease in volume was partially offset by higher demand in transportation and building and housing end markets which was also dampened by foreign competition.

And while we understand the lag effect of the timing for our products going into homes as compared to certain building and housing business segments, we remain encouraged by the growth in the building and housing segment. It is our view that the continued shipments Chase Brass’s green products which I will discuss momentarily, solidly positions the business for incremental growth as the building in household industry further improves.

Overall, while volume in Chase was lower this quarter, we are pleased we are able to sustained profitability in this segment, highlighting the growth of Eco Brass, the strength of the value proposition to our customers and the ongoing focus on optimizing the efficiency of our supply chain.

As we move ahead into 2014, although negatively impacted by the weather as well in the first quarter, we are encourage by our progress in our supply chain and manufacturing initiatives and anticipate improving business environment as housing continues to slowly improve.

A.J. Oster’s fourth quarter 2013 shipment volumes increased 2.6%, resulting from steady improvement and the higher demand in the automotive segment which was offset by lower demand in the electronics/electrical components end markets.

As we move through the first quarter of 2014, the A.J. Oster team has re-launched its growth initiative aimed at expanding the breadth and depth of its product portfolio to further exploit their strong reputation and capability in distributing red metals; and secondly to expand into other metals where they can create customer value through high quality, high service and technical metallurgical expertise.

Lastly, we expect A.J. Oster to continue to benefit from demand for its products from its facilities strategically located in Central Mexico.

Overall our results for the fourth quarter and full year 2013 reflect continued steady improvement as demand continues to strengthen across key end markets. And although the first quarter of 2014 has been negatively impacted by inclement weather in each of our segment, we are optimistic that a continued slow and steady recovery across our end markets will lead to stronger demand levels and enhanced profitability as we move through 2014.

As a reminder, around the seasonality of the business across all three segments, volume shipments have historically been the softest in the fourth quarter as a result of lower demand due to customer shutdowns for the holidays and year-end maintenance plans and year-end inventory focus by customers.

Moving on, let me provide you with an update on some of our key strategic initiatives related to new product development as we look ahead to 2014. First, Eco Brass, our Chase Brass lead-free product offering shipments exceeded our expectations in 2013 and in the fourth quarter. This offering which meets the new federal water standard put into effect January 2014 represents a solid margin enhancement opportunity and complements our existing products, enhancing the value proposition of the [package] of products we provide our customers in the building and housing segment.

In addition, this offering provides us with exclusive rights for the production and sale of lead-free brass rod under the Eco Brass and Green Dot brand name through 2027. As we move through the first part of 2014, we remain encouraged by the activity around our Eco Brass product lines and are anticipating further conversions from leaded to lead-free products requirements from our customers.

Within our Olin Brass segment CuVerro, an antimicrobial material product line continues to make commercialization progress in 2013. Although a longer term opportunity for Olin Brass and GBC, we continue to be encouraged by our continued discussions within the healthcare industry, the growth of our existing list of exclusive CuVerro affiliates who make their products using CuVerro, and early interest and excitement as we begin to commercialize our CuVerro product to a variety of market segments outside of healthcare.

Looking forward, we still have a lot of market develop and consumer awareness work ahead of us with CuVerro, both within the healthcare industry and other targeted industries. However we will continue to deploy resources and investment into this exciting growth opportunity.

Lastly there remains a compelling opportunity for GBC within the coinage market as a group of U.S. house members reintroduce legislation in the second half of 2013 for the potential replacement of paper dollars with dollar coins.

In summary, as we look back on 2013, we are pleased with the solid performance across the entire Global Brass Copper Enterprise, which could not have happened without the efforts and team work from our focused employees across the business; thank you.

Overall GBC business segment has very strong brand equity and an earned reputation for quality, efficiency and solid customer service. 2014 will be an exciting and challenging year for GBC. As I noted, the early part of the first quarter was [plagued] by bad weather across the Midwest and East Coast, which along with the operational issues in East Alton negatively impacted the performance of our operating sites.

That said I am encouraged by the resilience and focused improvement efforts of the employees across our company and the improvement projects being accomplished. The strength of our value proposition, the new product growth opportunities and what appears to be a steady improvement in our external markets.

With that, I will turn the call over to Bob Micchelli, our CFO for a more detailed view of our financials.

Robert Micchelli

Thank you John and good morning everyone. For the fourth quarter of 2013, our unit volume increased 3.4% from 117.1 million pounds to 121.1 million pounds compared to the previous year due to higher demand in the building and housing, automotive, munitions and coinage end markets. These increases were partially offset by lower demand in the electronics/electrical components end markets resulting from increased competition from foreign imports and customer sourcing their finished products offshore, which resulted in reduced demand for brass rod in the United States.

Volume growth in the building and housing end market was also dampened by foreign competition. For the full year 2013, volumes increased 3.9% to 523 million pounds compared to 503 million pounds in 2012. Net sales increased by $16.6 million or 4.2% from $396.2 million for the fourth quarter of 2012 to $412.8 million for the fourth quarter of 2013.

Net sales were driven by an increase in volume, as well as a result of higher sales of unprocessed metal in the fourth quarter 2013 as compared to 2012. These increases were partially offset by lower metal prices and lower average selling prices. Metal prices reflect replacement cost recovery from the customer, whereas the sales prices reflect the pricing component of adjusted sales, which we define as the excess of net sales over to metal cost recovery component of net sales.

Adjusted sales, our non-GAAP revenue measure increased by $5.4 million or 4.4% from $122.3 million for the fourth quarter of 2012 to $127.7 million for the fourth quarter of 2013. Higher volume increased adjusted sales by $5.6 million, which was partially offset by lower average selling prices which decreased adjusted sales by $0.2 million.

For the full year 2013, net sales increased 6.5% to $1,758.5 million compared to $1,650.5 million in 2012, while adjusted sales increased 4.6% from $524.9 million to $549.3 million.

Gross profit decreased by $3.4 million or 8.1% from $41.8 million for the fourth quarter of 2012 to $38.4 million for the fourth quarter of 2013. Gross profit in both the fourth quarter 2013 and fourth quarter 2012 includes unrealized gains on derivative contracts, LIFO gains and depreciation expense.

The net impact relative to these non-cash items reduced gross profit by $1.7 million in the fourth quarter 2013 as compared to the same period in 2012. Several other offsetting factors decreased gross profit by an additional $1.7 million in the fourth quarter of 2013 as compared to the same period 2012. This included higher manufacturing conversion cost of $3.8 million and lower average selling prices which contributed $300,000 to the decrease. These factors were partially offset by higher volume which increased gross profit by $1.5 million and lower shrinkage costs due to lower metal costs and higher yields of $0.8 million.

SG&A expenses decreased by $1.3 million or 6.7%, from $19.5 million for the fourth quarter of 2012 to $18.2 million for the fourth quarter of 2013.

The management advisory fees for the fourth quarter of 2012 were $300,000, as a remainder, we terminated our management services agreement with affiliates of the KPS funds earlier in 2013 and therefore do not have any such fees in the fourth quarter of 2013 and will not have them going forward.

We incurred professional fees for accounting tax, legal and consulting services related to costs incurred as a publicly traded company and costs related to the follow on public offerings of $1.4 million in the fourth quarter of 2013. We incurred similar fees related to our public company readiness effort of $1.3 million during the fourth quarter of 2012.

Additionally in the fourth quarter of 2013 we recognized $200,000 related to the share-based compensation resulting from the grant of equity awards to certain employees, members of our management and Board of Directors.

Several other factors contributed to the remaining $1.3 million decrease in SG&A in the fourth quarter of 2013 as compared to the same period in 2012, salaries benefits and incentive compensations increased by $900,000 and other professional fees for accounting tax, legal and consulting services decreased by $400,000.

Net income attributable to GBC decreased by $1.3 million from $7.5 million or $0.36 per diluted share for the fourth quarter of 2012 to $6.2 million or $0.29 per diluted share for the fourth quarter of 2013. This decline was due to the decrease in gross profit, partially offset by the decrease in SG&A and the decrease in the provision for income taxes. However, adjusted diluted earnings per common share of $0.25 were flat compared to last year.

For the full year of 2013 net income was $10.4 million to $0.49 per diluted share compared to $12.5 million or $0.59 per diluted share in 2012. Consolidated adjusted EBITDA increased by $100,000 or 0.5% from $21 million for the fourth quarter of 2012 to $21.1 million for the fourth quarter of 2013.

This increase was due to higher volume, lower shrinkage cost due to lower metal cost and higher yields, a decrease in salaries benefits and incentive compensation and a decrease in other professional fees for common tax legal and consulting services, partially offsetting the increase were higher manufacturing conversion cost and lower average selling prices. On a full year basis, consolidated adjusted EBITDA was $118 million in 2013, a 2.3% increase compared to consolidated adjusted EBITDA of $115.4 million for the full year of 2012.

GBC ended the year with cash of $10.8 million, borrowings of $5.5 million under our asset-based revolving lending facility, senior secured notes of $375 million and $194 million of borrowing availability under our ABL facility. During the fourth quarter of 2013, net cash provided by operating activities was $22.9 million driven by earnings and working capital improvements. During the fourth quarter, we also initiated a quarterly cash dividend.

During the full year of 2013, the company reported net cash provided by operating activities of $27.4 million driven by earnings partially offset by working capital changes.

Looking at GBC’s three reportable segments, fourth quarter performance was as follows. Olin Brass volumes increased to $68.9 million or 7.3% during the quarter, while segment adjusted EBITDA decreased by $0.5 million compared to the fourth quarter of 2012.

The decrease was due primarily to higher manufacturing conversion costs due to product mix and operational issues, which adversely impacted product flow and yield at Olin Brass. Partially offsetting the increase were higher volume, higher average selling prices including increases in selling prices to A.J. Oster which are eliminated in our consolidated results and partially offset by a shift in product mix, lower shrinkage cost due to lower metal cost and higher yields, a decrease in salaries benefits and incentive compensation, a decrease in other professional fees for accounting, tax, legal and consulting services and the net increase in other adjustments including the calculation of segment adjusted EBITDA.

Chase Brass volumes decreased to $46.4 million or 2.3% during the quarter, while segment adjusted EBITDA increased slightly as compared to the fourth quarter of 2012. The increase was due primarily to higher average selling prices, lower shrinkage cost due to lower metal costs and higher yields, a decrease in salaries benefits and incentive compensation, a decrease in other professional fees for accounting, tax, legal and consulting services, partially offset by a decrease in volume and increase in manufacturing conversion costs, additional expenses associated with our continuous improvement efforts, marketing, product development and development of our information systems, as well as a net [decrease] in other adjustments included in the calculation of segment adjusted EBITDA.

A.J. Oster volumes increased to $15.5 million or 2.6% during the quarter, while segment adjusted EBITDA decreased by 700,000 as compared to the fourth quarter of 2012. The decrease was due to lower average selling prices, higher prices on purchases from Olin Brass, which resulted in higher conversion costs, which are eliminated in our consolidated results, a decrease in other professional fees for accounting, tax, legal and consulting services partially offset by higher volume and an increase in other adjustments included in the calculation of segment adjusted EBITDA.

Before I turn the call back to John Wasz for a few closing comments, I want to briefly discuss our 2014 outlook. As a reminder, we are focused on positioning our business for success over long term and our ability to provide guidance as constrained by our short lead times and the tendency of our shipment volume to lag published market indicators.

Let me also remind you that, the first half of the year for GBC is typically stronger compared to the second half of the year, this holds true for Chase which has historically had a stronger shipments in the first quarter, while Olin Brass -- A.J. Oster and Olin Brass typically have more robust second and third quarters. Across all three segments volume shipments have historically been softest in the fourth quarter.

That said, as stated in our press release today, in 2014, we expect shipment volume to range from 537 million to 548 million pounds, adjusted sales to range from $573 million to $584 million and consolidated adjusted EBITDA to range from $122 million to $127 million. With that I’ll turn the call back over to John Wasz.

John Wasz

Thank you, Bob. Overall, despite pockets of uncertainty in the global markets, were encouraged by the positive trending indicators across key end markets such as building and housing. We believe we’re well positioned to capitalize on key growth markets and demand for new and existing products. As always, we’re focused on executing our core strategies to position us for sustainable profitable growth while at the same time maximizing our shareholder value.

This concludes our prepared remarks for today. Operator, will you now begin our question-and-answer session?

Question-and-Answer Session


Thank you. (Operator Instructions). And your first question comes from Josh Berman, William Blair.

Josh Berman - William Blair

Hi, good morning.

John Wasz

Good morning.

Josh Berman - William Blair

First thing, could you just talk about munitions end market for a second? I guess, what drove strength on the commercial side from munitions? We check, FBI background checks and the data was down from much of the back half of 2013. So, just trying to reconcile the disconnect there.

John Wasz

Yes, I think as far as from a commercial standpoint, we see very strong demand within the fourth quarter and our order book and activity levels in the first quarter remain strong. As we take a look at it, I think you can’t look at any -- the FBI statistics on background checks for a month or two months or three months, I think you got to look at the trend over several years. And the way we’re looking at it is essentially saying okay background checks in 2000 were 7 million or so and in 2012, they were almost 14 million.

So, the number of firearms in the United States is at a much higher level today than it was 10 years ago. And the folks who have these firearms are using them. So the annual consumption rate of munitions from a commercial standpoint, I think is at a bit of a new normal.

Josh Berman - William Blair

Got it. Thanks. And then, in Chase in the fourth quarter, it has one customer on the electronics end market that I think you said shut down or stopped ordering in that quarter or did you say volume -- given that [such] volume would have been in Chase excluding that one customer?

John Wasz

Yes, you are looking at, 1 million a month, plus or minus.

Josh Berman - William Blair

Yes, okay. Alright, thank you.


Thank you. And your next question comes from Sal Tharani, Goldman Sachs.

Sal Tharani - Goldman Sachs

Thank you. Can you give us some idea on visibility of how much you have in terms of your guidance?

John Wasz

I am sorry, Sal, could you….

Sal Tharani - Goldman Sachs

I am sorry, your order book is for your guidance that you are comfortable with it...

John Wasz

Got it. Okay. So first of all Sal, from a -- and I think we’ve kind of walked through this before, we will walk it through again is at the big meal Olin Brass the strip mill, we have the longest lead times from an order entry standpoint. And looking at our backlog, we feel good about where we are. I think as we look at, and we will talk about this in a minute regarding some of the weather issues in the first quarter, but we are looking at anywhere from 6 weeks to 12 weeks as far as lead times there. At Chase, which is a little bit less, their value proposition of customers is built upon speed and flexibility, and their order entry to delivery time is about a week. So they lean heavily on their forecasting and their communication with their customers. And then A.J. Oster being in the distribution space is again inside a week.

Sal Tharani - Goldman Sachs

And in terms of seasonality, should we expect first quarter to be slightly weaker this time because of weather and then second quarter, sort of have a pent-up demand? I know 1H will be better than 2H, I mean generally it is. But should we just factor in a little bit of weather impact for the first quarter?

John Wasz

Yes. I think Sal, first of all in the first quarter; I think you should expect impact on weather. We can’t lay it all on weather in East Alton. I mean we’ve had some operational issues in the fourth quarter. And in the first quarter we struggled in our cupping operation as we were running our copping presses around the clock 24/7. Fortunately, we’ve done some good work. We’ve got new leadership on the manufacturing shop floor and the cupping operation is really driving the total preventative maintenance program. And as we move through February into March, we are seeing those facilities operating and equipment operating much better.

That said, across the Midwest East, we experienced weather-related issues, both at East Alton and within Montpelier, which is going to impact the first quarter. I think also we are still trying to assess what I would refer to as aftershocks of the weather, the displacement of trucking across the United States, as well as having to eat some additional utility cost in the first quarter and essentially a bit of a pause in the order book as people inevitably couldn’t get to work, and I think just started to throttle back of it.

In the last couple of weeks, we have seen a rebound in our activity level. We’ve seen an uptick, a noticeable uptick in the last couple of weeks as far as booking rate. But I think that’s not going to really manifest itself into probably late second quarter in some of the businesses and second quarter in others.

Sal Tharani - Goldman Sachs

Okay. Thank you very much.


Thank you. (Operator Instructions). Thank you. And your next question comes from Sal Tharani, Goldman Sachs.

Sal Tharani - Goldman Sachs

Thank you. John, we still hear a lot about imports coming in and there was I think an article in AMM couple of days ago about that. I was just wondering if we have seen quite a bit of [fed] cases in the steel segment, I was wondering if those imports have reached a critical point where the brass industry is thinking in those terms.

John Wasz

Yes Sal. Let’s talk about it from a brass rod standpoint. If you look at the imports from a year-over-year basis in total, they’re up de minimisly 1% or 2%. But if you kind of peel back away into where is the stuff coming from, obviously you see a pretty sizable year-over-year increase in imports coming in from South Korea. It’s I think just a little bit more than 10%.

So, we continue to look at that and come up with solutions to be able to counteract that. It’s focused largely at one specific segment, one specific set of customer rather. From an overall trade standpoint, we continue to explore that, but nothing to report or nothing significant at this point in time.

On the strip side, we’re pretty steady here at about 18%, 19% from an import standpoint and we’re comfortable with that.

Sal Tharani - Goldman Sachs

Has this 18%, 19% increased over the year or it’s been like that for a while?

John Wasz

No, it’s steady, it’s been relatively steady. It moves a couple of points here or there every now and then, but the strip imports have been relatively steady.

Sal Tharani - Goldman Sachs

Okay, great. Thanks a lot.

John Wasz

Sure. Thanks.


Thank you. And I will now hand the call over to Scott Hamilton for closing remarks.

Scott Hamilton

I’d like to thank everyone for joining us today and for your continued interest and support in Global Brass and Copper Holdings. We look forward to speaking with you again during our first quarter conference call. Thanks again. And have a great day.


Thank you for your participation in today’s conference. This concludes presentation. You may now disconnect. Good day.

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