Question-and-Answer Session
Operator
(Operator instructions) Your first question comes from David Yuschak – SMH Capital.
David Yuschak – SMH Capital
As you know we’ve been more positive on non-residential construction than probably a lot of people, but I’m looking at your tons shipped year over year up 3.5%, backlog growth that had been a pleasant surprise for you as well as intersegment sales and I’m wondering where is the headwind?
Where is this kind of black hole that people have been expecting and kind of squeeze on steel margins that you could get because of business being so bad? I was looking at the numbers in this quarter and what you’re showing here in the way of activity for backlog and intersegment sales, Norm, it’s tough to see the headwinds are as headwindy as you might want to suggest.
Norman C. Chambers
That’s a great question and as you know the aggregate numbers from McGraw-Hill continue to be really low. And when we cut that data, it’s clear that the end markets that we serve, where frankly metal buildings and components are better suited for, are very strong right now.
What’s weak is the commercial and the retail. But even with that, it strikes us that the weakness was more prevalent in that area, which is the commercial and retail in 2007 in the second quarter and third quarter. Because our Components Group deals a lot in that aspect and their demand has really been quite encouraging.
David Yuschak – SMH Capital
Does the intersegment sales strength in the quarter help, did that help you also a lot in getting the EBIT margins where they were in the quarter. Because that intersegment sales was better than what you produced in the third quarter last year which is seasonally your strongest period of time.
Norman C. Chambers
It was good and it really speaks to the level of integration and the value chain that we have. The hub and spoke and the synergies from the RCC acquisition are beginning to take hold in the second phase of this thing now. And you know we are seeing real benefits there and we’re still just beginning to scrape the surface of that.
David Yuschak – SMH Capital
So this intersegment sales are kind of a reflection of that?
Norman C. Chambers
Yes sir.
David Yuschak – SMH Capital
So that looking at your second half, that should even get better if we have a positive environment for spending then?
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