Earnings call transcript: Worthington Steel beats Q4 2024 expectations

Worthington Steel Inc. reported robust financial results for the fourth quarter of fiscal year 2024, significantly surpassing analyst expectations. The company’s earnings per share (EPS) reached $1.05, exceeding the forecast of $0.69 by 52.17%, while revenue came in at $833 million, up from the expected $725 million. This positive performance led to a notable stock price increase of 19.54% in premarket trading. According to InvestingPro data, the company maintains strong profitability with a P/E ratio of 11.1x and an attractive EV/EBITDA of 6.88x, suggesting the stock may be undervalued compared to peers.

Key Takeaways

• Worthington Steel’s Q4 EPS of $1.05 exceeded forecasts by 52.17%.
• Revenue of $833 million surpassed expectations by 14.88%.
• Stock price surged 19.54% in premarket trading following the earnings release.
• The company is expanding its presence in the electrical steel market.
• Worthington Steel anticipates continued market share growth in the automotive sector.

Company Performance

Worthington Steel demonstrated strong operational performance in Q4 2024, with adjusted EBITDA slightly increasing to $87 million from $86.5 million in the previous year. Despite a 9% decrease in net sales year-over-year, the company managed to improve its EPS from $1.06 to $1.10. The reduction in sales was partially due to a 5% decrease in shipped tons. However, strategic initiatives in the electrical steel market and automotive sector helped offset these declines. InvestingPro analysis reveals the company operates with a moderate level of debt and maintains sufficient cash flows to cover interest payments, with a healthy current ratio of 1.75.

Financial Highlights

• Revenue: $833 million, a 9% decrease year-over-year.
• Earnings per share: $1.10, up from $1.06 last year.
• Adjusted EBITDA: $87 million, slightly higher than the previous year.
• Cash flow from operations: $54 million.
• Free cash flow: $8 million.
• Net debt: $114 million.

Earnings vs. Forecast

Worthington Steel’s Q4 earnings of $1.05 per share significantly outperformed the forecasted $0.69, marking a 52.17% surprise. Revenue also exceeded expectations, coming in at $833 million compared to the anticipated $725 million. This strong performance reflects the company’s effective cost management and strategic market positioning.

Market Reaction

Following the earnings announcement, Worthington Steel’s stock price experienced a substantial increase, rising 19.54% in premarket trading to $31.39. This surge reflects investor confidence in the company’s ability to outperform expectations and capitalize on growth opportunities, particularly in the electrical steel and automotive markets. InvestingPro research indicates the company maintains a solid financial health score of 2.89 (rated as "GOOD"), with particularly strong scores in profit (3.83) and cash flow (3.1) metrics. For deeper insights into Worthington Steel’s valuation and growth potential, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.

Outlook & Guidance

Looking ahead, Worthington Steel remains optimistic about market conditions. The company expects inventory holding gains of $5-10 million in Q1 FY2026 and anticipates benefiting from market improvements due to potential steel tariffs. Strategic focus will continue on the electrical steel and electrification markets, with planned capital expenditures of $100 million in fiscal 2026.

Executive Commentary

CEO Jeff Gilmore stated, "We are improving our processes and gaining market share," highlighting the company’s strategic initiatives. CFO Tim Adams added, "With a strong balance sheet, a focused strategy, and an agile team, Worthington Steel is well equipped to create value." These statements underscore the company’s confidence in its growth prospects.

Risks and Challenges

• Fluctuating steel prices could impact profitability.
• Supply chain disruptions may affect production schedules.
• Economic pressures in the agricultural market could influence demand.
• Potential tariffs may alter competitive dynamics.
• Global economic uncertainties could impact market conditions.

Q&A

During the earnings call, analysts inquired about the company’s market share gains in the automotive sector and the competitive landscape of the Taylor Welded Blanks joint venture. Worthington Steel’s management provided insights into their strategic initiatives to optimize operations and enhance competitiveness in these areas.

Full transcript - Worthington Steel Inc (WS) Q4 2025:

Operator: Good morning, and welcome to Worthington Steel’s Fourth Quarter twenty twenty five Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question and answer session. I will now turn the call over to Melissa Dykstra, Vice President of Corporate Communications and Investor Relations. Please go ahead.

Melissa Dykstra, Vice President of Corporate Communications and Investor Relations, Worthington Steel: Thank you, operator. Good morning, and welcome to Worthington Steel’s fourth quarter fiscal year twenty twenty five earnings call. On our call today, we have Jeff Gilmore, Worthington Steel’s President and Chief Executive Officer and Tim Adams, Vice President and Chief Financial Officer. Before we begin, I’d like to remind everyone that certain statements made today are forward looking within the meaning of the 1995 Private Securities Litigation Reform Act. These statements are subject to risks and uncertainties that could cause actual results to differ from those suggested.

We issued our earnings release yesterday after the market closed. Please refer to it for more detail on the factors that could cause actual results to differ materially. Unless noted as reported, today’s discussion will reference non GAAP financial measures, which adjust for certain items included in our GAAP results and which are presented on a stand alone basis. You can find definitions of each non GAAP measure and GAAP to non GAAP reconciliations within our earnings release. Today’s call is being recorded and a replay will be available later today on wirthingtonsteel.com.

Now I’ll turn it over to Jeff Gilmore.

Jeff Gilmore, President and Chief Executive Officer, Worthington Steel: Good morning. Thank you for joining us. First, I want to thank our incredible Worthington Steel team. Once again, they demonstrated resilience, flexibility and an unwavering commitment to safety and serving our customers. In the fourth quarter, we generated adjusted EBITDA of $87,000,000 compared with $86,500,000 in the prior year quarter.

Earnings per share were $1.1 compared to $1.06 in the same period last year. While the macroeconomic environment remained mixed Worthington Steel employees stayed focused on execution and we made important strategic progress. Let me begin with a look at what we saw across our end markets. In automotive, our volume strengthened in the fourth quarter. We continue to gain market share in the overall automotive market and I commend our commercial teams and everyone involved for their commitment to fulfilling the needs of our automotive customers.

The construction markets we serve, which include fencing, culvert and metal buildings were down slightly year over year. We saw an uptick in heavy truck because we have gained some share in that market. The agricultural market, however, continues to face pressure. Energy demand and the need for transformer cores continue to grow as the world relies more and more on artificial intelligence and electrified vehicles. Transformer core growth is also fueled by the need to replace aging electrical infrastructure as more than half of the transformers in use today reach the end of their useful life.

Now let’s talk about the progress we’re making on our long term strategy. We continue to execute against a roadmap that’s built on three pillars: focused investments in the rapidly growing electrical steel market margin accretive growth using a strong commercial focus combined with strategic CapEx and acquisitions and base business improvements to improve margins, reduce working capital and to add incremental capacity through our transformation. Starting with our capital investments, we continue to progress on our electrical steel expansions in Mexico and Canada. Testing is underway on the five presses in Mexico and we are preparing for initial production later this calendar year. Electrified vehicle adoption continues to make gains globally with current estimates projecting that hybrids and BEVs will make up more than two thirds of global market share by 02/1930.

Our Canada transformer core expansion project remains on track to begin production in early calendar year twenty twenty six. The transformer market in The U. S. Is expected to double over the next ten years to meet the growing demand for electrification. On the acquisition front, I’m pleased to share that we closed on our acquisition of a 52% ownership stake in CEDUM on June 3.

CEDUM is a European electrical steel lamination manufacturer and electric motor die casting expert. This move marks a significant step in enhancing our position in the European electric motor lamination market and strengthening our ability to support global automotive and industrial motor customers. CEDIM brings strong technical capabilities and expertise in tooling and automation systems for electric motor laminations that will benefit our electrical steel operations globally. Beyond those capabilities, what truly excites us is the cultural fit. Their people first values mirror our own Worthington philosophy.

We are thrilled to welcome the Seedim team into the Worthington family. From a commercial perspective, we continue pursuing growth opportunities in select markets and our team continues to gain market share, fill open capacity and exceed customer expectations. Our team deserves high praise for their ability to collaborate with our suppliers and customers this quarter as they manage through potential supply chain disruptions due to the idling of several mill locations. They worked hard to ensure an uninterrupted supply for our customers. This quarter Worthington Steel was named a 2024 Supplier of the Year by General Motors, marking our fourth time in the past five years achieving this distinction.

And we were recognized as a partner level supplier in the John Deere Achieving Excellence program for the thirteenth consecutive year, Deere and Company’s highest supplier rating. These awards validate our commitment to quality, innovation and service for our customers. Now looking at continuous improvement to our base business, which we call transformation. Looking for ways to get better is part of our DNA. Across the company, teams are reducing changeover times, optimizing working capital, improving safety and streamlining operations.

We have added another tool to our transformation tool belt, artificial intelligence. We kicked off our AI journey in earnest this quarter and we see AI as a force multiplier that will elevate our work. AI will become an expectation at Worthington Steel and we believe that will help us be more productive, improve quality and unlock new value for our customers. Together, these actions strengthen our competitive advantage and give us a clear path to margin expansion, high returns on capital and long term value creation. I’m pleased with how well our team is executing on our strategy despite some headwinds.

We are focused on what we can control, what we can improve and what we can do to serve our customers all with an eye towards safety. On the governance front, we announced yesterday the addition of Mark Davis to our Board of Directors. Mark brings an extensive background in finance, mergers and acquisitions and corporate governance. He will be a tremendous asset to Worthington Steel as we continue to grow. As I conclude my remarks, I want to reiterate the cautious optimism we mentioned last quarter.

We still sense a bit of uncertainty around policy and the overall macro economy, but our team continues to find ways to win. We are improving our processes and gaining market share. We are embracing AI to unlock even more potential in our business and I firmly believe we have the right strategy, strong customer relationships and most importantly the right people. Although we have only been a standalone company for eighteen months, we are celebrating seventy years of heritage this year. And for me, that means celebrating the people who fuel our momentum.

Our employees are the true strength behind Worthington Steel. Together, we are building the most innovative, customer focused and efficient steel processor in North America and beyond, one that’s purpose built for the next seventy years. Now I’ll turn it over to Tim Adams to walk through the financials.

Tim Adams, Vice President and Chief Financial Officer, Worthington Steel: Thank you, Jeff, and good morning, everyone. For the fourth quarter, we are reporting earnings of $55,700,000 or $1.1 per share as compared with earnings of $53,200,000 or $1.06 per share in the prior year quarter. There were several unique items that impacted our quarterly results. First, the current quarter results include $1,700,000 or $01 per share of pretax restructuring charges related to two discrete items. The first was $800,000 of severance expense associated with our previously announced closure of Warmington Samuel Coil Processing’s Toll Pickling facility in Cleveland.

Production at the Cleveland Pickling facility effectively ended in May. The second discrete item was a restructuring expense of $900,000 associated with the previously announced early retirement program at our Taylor Welded Blank joint venture. Additionally, in the current quarter, we recognized a $4,000,000 gain in miscellaneous income associated with a currency hedge on the CDM purchase price. Finally, the prior year quarter results included recognition of the final unfavorable tax court ruling related to a Temple pre acquisition matter for which we were indemnified by the former owners of Temple. The net impact to earnings is zero.

However, we recognized $2,800,000 of miscellaneous income related to the indemnity receivable and an additional $2,800,000 of tax expense. Excluding these unique items, we generated earnings of $1.05 per share in the current quarter compared with $1.06 per share in the prior year quarter. In the fourth quarter, we had estimated pretax inventory holding gains of $20,800,000 or $0.31 per share compared to estimated pretax inventory holding losses of $3,400,000 or $05 per share in the prior year quarter, a favorable pretax swing of $24,200,000 or $0.36 per share. In the fourth quarter, we reported adjusted EBIT of $70,100,000 which was down $300,000 from the prior year quarter adjusted EBIT of $70,400,000 This decrease in adjusted EBIT is primarily due to lower gross margin and lower equity earnings at Serviacero, partially offset by a year over year decrease in SG and A expense. Gross margin was $4,000,000 lower than the prior year quarter, primarily due to unfavorable tolling margins offset by increased direct spreads.

Toll processing margins were down $8,100,000 impacted by lower toll volumes and an unfavorable toll processing mix. Direct volume was flat year over year, while direct spreads were up $3,400,000 primarily due to the impact of year over year pretax inventory holding gains. Direct spreads, excluding the impact of estimated holding gains, were down primarily due to a shift in direct product mix to lower value added products and market compression in the spread between hot rolled products and higher value added products. SG and A decreased $4,800,000 over the prior year fourth quarter, primarily due to a $3,300,000 decrease in compensation and benefit costs as well as lower bad debt expense. In the prior year, we recognized $1,700,000 of bad debt expense due to an isolated matter as compared with $100,000 of income in the current year quarter.

Equity earnings from Serviacero decreased due to lower direct volumes and spreads as well as the impact of exchange rate movements. Next, I will provide some perspective on our market and our shipments. The market pricing for hot rolled coil began the calendar year at just under $700 per ton. Once steel tariffs of 25% were implemented, the price of hot rolled jumped to $950 per ton in March and April, but dropped back to approximately $850 per ton in June. With the recent announcement of 50% tariffs on imported steel, we may see additional upward pressure on steel prices.

Given that many of our contracts use lagging index based pricing mechanisms, we expect to generate inventory holding gains in the first quarter of fiscal twenty twenty six. We estimate those gains could be approximately 5,000,000 to $10,000,000 as compared with the $20,800,000 of estimated holding gains in the fourth quarter of twenty twenty five. Net sales in the quarter were $833,000,000 down $78,000,000 or 9% from the prior year quarter, primarily due to lower direct selling prices and, to a lesser extent, lower toll volumes and an unfavorable toll processing mix. We shipped approximately 982,000 tons during the quarter, which was down 5% compared with the prior year quarter. Direct sales volume made up 60% of our mix in the current year quarter as compared with 58% in the prior year quarter.

Direct sale volume was flat compared with the prior year quarter, and we experienced pluses and minuses across various markets as customers continue to navigate uncertainty during the quarter. Automotive was a bright spot during the current quarter. Our shipments to the automotive market were up 5% compared to the prior year quarter. As we noted in prior quarters, we have one share in the automotive market. The new programs have begun to ship, and we expect to show incremental volume from the new programs over the next few quarters.

This additional automotive volume more than offset the continued year over year challenges faced by one of our Detroit three OEM customers. We continue to be optimistic the OEM is making progress towards optimizing their commercial strategy, leading to a more normal build schedule later in calendar twenty twenty five. Similar to last quarter, our year over year shipments to the remaining D3 grew despite a small drop in OEM unit production. Our teams continue to work collaboratively with our automotive customers to deliver mutually beneficial solutions. We look forward to expanding our long term relationships with our automotive customers.

We also saw volume increases in the heavy truck market due to market share gains despite an apparent slowdown in the truck and trailer market. These results reflect our successful execution in targeted markets, particularly where we pursue a strategy to support key customers. Volume increases in the automotive and heavy truck markets were offset by reductions in the construction and ag markets. Construction volume was down 5% year over year, but consistent with historic fourth quarter levels. Our ag volumes were down 40% compared with the prior year quarter, primarily due to the expected softness in the agricultural equipment market as well as increased competition in the grain bin sector, resulting in spread compression.

While tariffs have introduced additional uncertainty and competition has intensified in the ag market, we responded with strategic pricing discipline and remain well positioned to adapt quickly as conditions evolve. Toll processing tons were down 11% year over year for several reasons. First, we saw slowness in some automotive tolling programs that are platform specific. Second, we began to show a reduction in volume associated with the wind down of Worthington Samuel Coil Processing’s toll pickling facility in Cleveland, which we idled in Q4. Finally, we were impacted by several customer decisions.

For example, one customer changed the program from toll processing to direct sale, while another customer elected to resource the toll processing program to capture freight savings. When end market demand picks up, we expect our toll processing volumes to increase. However, as we discussed last quarter, we expect to see a decrease of approximately 100,000 annual toll processing tons, primarily as a result of the WFCP consolidation from Cleveland to Twinsburg. Turning to cash flows and the balance sheet. Cash flow from operations was $54,000,000 and free cash flow was $8,000,000 During the quarter, we spent $46,000,000 on capital expenditures related to a variety of projects, including the previously announced electrical steel expansions.

In addition, we purchased a building for our Columbus, Ohio headquarters and expect to move into the building next summer when renovations are complete. Capital expenditures for fiscal twenty twenty five totaled $130,400,000 and we expect CapEx for fiscal twenty twenty six to be approximately $100,000,000 Our disciplined capital investments are aligned with long term priorities, particularly in electrical steel and maintaining our key equipment in market ready condition to support growth and customer needs even in uncertain markets. On a trailing twelve month basis, we generated $100,000,000 of free cash flow. Wednesday, we announced a quarterly dividend of $0.16 per share payable on 09/26/2025. We ended the quarter with $38,000,000 of cash and our outstanding debt as of May 31 was $152,000,000 resulting in net debt of $114,000,000 The increase in net debt over the third quarter of fiscal twenty twenty five is primarily the result of our funding of the CEDIM acquisition with the funds held in restricted cash as of May 31.

We closed on the CEDIM acquisition on June 3, acquiring a 52% controlling ownership interest. With this addition, we broadened our electrical steel capabilities and customer base in Europe. CEDEM will be consolidated in our results going forward. Integration is already underway with joint teams identifying commercial and operational synergies. We are confident the integration is progressing as planned and view Sedem as a natural extension of our electrification growth strategy.

Thank you to both the Needham and Worthington teams for their hard work to finalize the transaction. Finally, I would like to say thank you to everyone at Worthington Steel for making safety the highest priority at every facility and for driving results in a dynamic market. With a strong balance sheet, a focused strategy and an agile team, Worthington Steel is well equipped to create value and act decisively as opportunities arise. I want to thank our entire team for their hard work during our first full year as an independent company and for their dedication to our philosophy and our shareholders. At this point, we would be happy to take your questions.

Operator: Our first question comes from the line of Samuel McKinney with KeyBanc Capital Markets. Please go ahead.

Tim Adams, Vice President and Chief Financial Officer, Worthington Steel: Hey, good morning and congrats on the great quarter.

Jeff Gilmore, President and Chief Executive Officer, Worthington Steel: Thanks, Sam.

Samuel McKinney, Analyst, KeyBanc Capital Markets: Starting on fourth quarter gross margin up nearly three fifty basis points quarter on quarter and it was the best figure you guys have posted in two years. Talk us through how you achieved the richer mix of direct tons and stronger metal spreads despite the macro headwinds that you’re still facing in some key end markets?

Tim Adams, Vice President and Chief Financial Officer, Worthington Steel: Hey Sam, this is Tim. Let’s parse that a little bit. So fourth quarter in terms of volume is typically our strongest quarter, Right? So when you look year over year, we were fairly flat on volume. But quarter over quarter, we were up quite a bit.

Right? And I think that’s an indication of the market is solid across a lot, right? It’s not hugely up or hugely down, but solid across a lot of industries. I think when it comes to the spreads or the gross margin, I think you have to back out inventory holding gains and losses. So once you do that, I think what we saw was spread compression, in both quarters, Q3 and Q4, because of product mix.

We had a richer product mix, in Q3 versus Q4. And year over year, we had a richer product mix in the prior year. I think the other thing you’re seeing there is you’re seeing compression on market spreads from a, just a high value add versus hot roll. So hot dip to hot roll spread or cold roll to hot roll spread. So you’re seeing some compression there.

Samuel McKinney, Analyst, KeyBanc Capital Markets: Well, thanks, Tim. And that leads into my next question, which is that galvanized spreads, like you said, still relatively compressed with demand still cautious on tariff uncertainty, interest rates. And how do you view that market as we move into fiscal year twenty twenty six? Yeah.

Jeff Gilmore, President and Chief Executive Officer, Worthington Steel: Cautiously optimistic. You’ll hear that a lot, unfortunately, Sam. But look, we’re in a period where there’s not a lot of clarity with the tariffs. Because of the tariffs and not having a lot of clarity, you’re not seeing much movement on interest rates either. So demand has been a bit muted across several markets that use a lot of galvanized.

At the same time, there’s been 4,500,000 tons of galvanized capacity that’s been added over the last several years, and you had quite a bit of imports coming in. So that’s certainly compressed that spread you’re referring to between hot rolled and galvanized, and it just creates a more competitive environment. I think we’re working through that. And why I’m cautiously optimistic we’ll begin to see improvements there. And it’s really a couple of things.

Think when we put the 25% tariffs in place that didn’t have a very significant impact on market pricing or on imports, raising that to 50% certainly will. At the same time, a lot of anti dumping cases that have been pushed through, and that’s going to limit the amount of galvanized coming in as well. So just those things alone, you’ll start to see that spread recover. And then as we work through the tariffs and I believe firmly we will, but we’re not going to see any significant movement on interest rate cuts until that’s done. But as we move through that, you certainly are going to start to see demand pick up.

You got the big beautiful bill coming behind it. And so there’s money to be spent, things will pick up, and that certainly will help drive that spread as well.

Samuel McKinney, Analyst, KeyBanc Capital Markets: Okay. Thanks, Jeff. And then last one for me. I know throughout the course of fiscal year twenty twenty five, you guys dealt with some destocking from the automotive OEMs. With the understanding that they’re probably not going to build up a huge amount of inventory anytime soon, I mean, how can you guys continue to be successful in that end market?

I know you noted the new market share wins.

Jeff Gilmore, President and Chief Executive Officer, Worthington Steel: Yes. Good question, Sam. Fortunately and not a surprise, we clearly are watching forecasts closely, historical forecasts. We get great information on build rates. We have sales and operation planning meetings.

And so to your point, we didn’t see or feel any type of significant pull ahead this quarter. And the reality is, if you look at the Detroit three, is the easiest example I can get, whether it be Ford or GM or Stellantis, this is all published publicly, build rates were down quite a bit. And we were down less than half. And why we performed well this quarter as far as volume goes specifically in that market, which was up 5% automotive, is market share gains. Our team again, I gave them high praise in my comments.

We’ve been talking about this over the last few quarters. We picked up significant market share in automotive. And we will continue over the next few quarters to see that additional market share trickle in. And we had also mentioned one of our larger customers was struggling a little bit. They were late on several launches, and they were not nearly as aggressive as others on pricing and incentives, and it cost market share.

We saw a bit of a rebound here last month from that customer and so far into this month. I think, again, cautiously optimistic there. It’s going to continue to progress, but it’s going to take a few quarters. But that’s why our volume was very strong specifically to automotive. And in addition, again, not necessarily this quarter, but as you look out the future, that specific OEM buys the most of our value added products.

And the Tier 1s we support that buy a significant amount of value added products support that specific customer. So Tim talks about mix. We’re cautiously optimistic as we start moving into second and third quarter along with the volume we can start seeing a more favorable product mix. I don’t anticipate a great deal of that right now. Again, that will trickle in over the quarters to come, Sam.

Okay, great. Thanks, Jeff. You got it.

Operator: Our next question comes from the line of John Tumazos with John Tumazos Very Independent Research. Please go ahead.

John Tumazos, Analyst, John Tumazos Very Independent Research: Thank you for taking my question. Could you describe the competitive dynamics in the Taylor welded blanks business? Who else makes them besides ArcelorMittal? Are there trading companies in that business? I’m surprised that you have to take early retirements there.

Jeff Gilmore, President and Chief Executive Officer, Worthington Steel: Yeah. John, so interesting market. There are several players globally, not several players in North America. Obviously, there is Arcelor middle tailor blanks, and then there’s Worthington Steel with tailor welded blanks. And it’s not an area where the trading partners would play.

You’re familiar with this business. It is highly technical, so the barriers of entry are high, which is why I don’t think you’ve seen a significant amount of players in North America. That business is truly specific to part consolidation and lightweighting. And we’ve seen significant growth at Taylor welded blanks really specifically over the last five years. I would tell you, AMTV has seen the same with significant focus on lightweighting over the last ten years.

You’re just continuing to see more and more of those specialized parts going into the Body and White. And the future is bright for both A and TB and I think well, not think, I know for TWB as well with ultra high strength steels and specifically press hardened steels, those parts are becoming more sought after. And AMTB was able to work with company join high strength parts. You recall, we mentioned three months ago that we reached a licensing agreement with them for what’s called the ablation process. That’s what’s used to weld press hardened steel together.

OEMs certainly want more than one player. We knew that. AMTB knew that. So it’s a wonderful opportunity for us both to pursue competitively. Why that’s growing?

If you look at the nature of that product, John, and again, I talk about it being highly technical. This press hardened steel is heated up to temperatures that make it much more formidable. And then when it goes through the actual hot stamping, it retains its strength. And why that’s important, you’re able to take what several parts today and now create one and one that’s lighter. And so there are savings on the weight that the customer is buying, freight that they’re paying and scrap.

And then when it gets to the assembly line, it takes out significant cost for the automotive company because you’re assembling one part versus what was several parts. And it’s a critical component, and and this is probably the most important. It it there’s huge safety concerns. It’s it’s a critical part of the body in white. And what it will do is it protects the passenger and the battery if there’s to be any type of crash.

And then further, because of the light weighting, you’re taking out significant miles per gallon in the vehicle. So a lot less emissions if it’s an internal combustion engine. If it’s hybrid or battery electric, obviously, is important, and lighter weight will increase range. But that’s why those products are becoming so popular.

John Tumazos, Analyst, John Tumazos Very Independent Research: So if the products are growing, why are you feeding out your people?

Jeff Gilmore, President and Chief Executive Officer, Worthington Steel: I didn’t understand that, John. Could you repeat that for me, please?

John Tumazos, Analyst, John Tumazos Very Independent Research: You described how the products are growing. So then why were you taking early retirements?

Jeff Gilmore, President and Chief Executive Officer, Worthington Steel: TWB? TWB took early retirements simply because we’ve made a couple significant acquisitions in there. And, John, part of the part part of your assumptions making any acquisitions is is SG and A. You know our philosophy, and we try to stick to our philosophy. That’s never something that we wanna cut too deep into.

We like to embrace the companies that we buy. It it takes time, John, to identify top talent. And rather than going in and, with a a, you know, impulsive risk or putting a family in stress, this is a way to go about doing that that much more aligns with our philosophy. And as this grows, again, we just got the license, John. We just put our first ablation line in.

So certainly, there will be that opportunity for the business to grow. And as it grows and we need to scale up, we won’t have a problem doing so.

Operator: I will now turn the call back over to Jeff Gilmore, President and CEO, for any closing remarks.

Jeff Gilmore, President and Chief Executive Officer, Worthington Steel: First, again, I want to thank our team for an exceptional job. I could not be more proud of all of them. We are exceeding my expectations, which are high for myself and the team, and truly appreciate everybody that’s been listening in today and asking questions and showing interest in Worthington Steel. We had an exceptional quarter. Again, I want to continue to use cautiously optimistic, but our base business has never been stronger.

And as we work through some of the headwinds that we’ve faced, we are well positioned to take advantage of any opportunity in the growth that’s coming. Thank you.

Operator: That concludes our call today. Thank you all for joining. You may now disconnect.

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