Worthington Steel Q3 2024 Earnings Call Transcript

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March 21, 2024

There are 8 speakers on the call.

Operator

Good morning, ladies and gentlemen. My name is Abby, and I will be your conference operator today. At this time, I would like to welcome everyone to the Worthington Steel's Third Quarter 2024 Earnings Conference Call. Today's conference is being recorded and all lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.

Operator

Thank you. And I will now turn the conference over to Melissa Dykstra, Vice President of Corporate Communications and Investor Relations. You may begin.

Speaker 1

Thank you, operator. Good morning, and welcome to Worthington Steel's Q3 fiscal 2024 earnings call. On our call today, we have Jeff Gilmore, Worthington Steel's President and Chief Executive Officer Jeff Klingler, Executive Vice President and Chief Operating Officer and Tim Adams, Vice President and Chief Financial Officer. Before we get started, 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.

Speaker 1

We issued our earnings release yesterday after the market closed. Please refer to it for more detail on those factors that could cause actual results to differ materially. Unless noted as reported, today's discussion will reference non GAAP financial measure, which is just 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 made available later today on worthingtonsfield.com.

Speaker 1

At this time, I will turn the call over to Jeff Gilmore.

Speaker 2

Thanks, Melissa. Good morning, everyone, and welcome. I'd like to start the call today by thanking our 4,600 Worthington Steel employees for the work they do every day to support our customers, shareholders, community and each other. Hard work and dedication led to a great Q3 for Worthington Steel. Over the quarter, I had the opportunity to visit several of our facilities where I experienced our focus on safety and saw transformation in action.

Speaker 2

Transformation, our system of continuous improvement to increase margins, reduce working capital and add capacity is integral to our strategy. Our teams clearly recognize this and incorporate it daily into their work. I've talked with dozens of employees around the company. I am energized by the pride each of them takes and their work and their role in our company. We have a team that is focused and intent on creating value for our shareholders.

Speaker 2

Together, we continue to help our customers ensure the products the world uses every day are stronger, better performing and more durable. In our Q1 as a standalone company, our teams executed on our strategy and continued to make progress on our safety, quality, productivity and sales goals. We are off to a great start, but we have much more to accomplish. I am confident in our team and our strategy and look forward to sharing updates in the future on how we perform. Now I'll turn it over to COO, Jeff Klingler for a look

Speaker 3

at some of the highlights of the quarter.

Speaker 4

Thanks, Jeff. I'd like to begin my remarks by thanking our employees for their continued commitment to safety. As Jeff said, we continue to see positive trends in our safety metrics supported by our SafeWorks program. We use data analytics, ergonomic measurement tools, best practice sharing and daily involvement from our entire team to continuously improve our performance. The same kind of commitment and focus on metrics helps us improve our quality as well, ensuring our customers receive the best possible product and service with every interaction.

Speaker 4

An example of that, in January, Temple received the 0 PPM award from Moly Electric Drives India, recognizing our commitment to manufacturing excellence and quality assurance. Temple provides electrical steel laminations to Moly for use in the electrical motors they supply to Aether Energy's EV 2 wheelers. Congratulations to our Temple team for this achievement. Our integration at Nagel, Germany is going well and we're making great progress in many areas. Along those lines, we are already seeing commitments from our customers for when our recently announced expansions in Canada and Mexico come online.

Speaker 4

We kicked off a multi year ERP implementation at Temple, moving to a solution that's consistent across all divisions. Similar to what we've seen with the rest of our business, we believe this move will help us reduce risk, improve processes and better drive decision making with more real time effective operational and financial data. This is another example of our long term commitment to transformation. On the technology front, TWB has signed a licensing agreement with ArcelorMittal Tailored Blanks for the use of its patented ablation technology in the production of hot form tailored blanks. We will install a fully automated ablation line at the TWB facility in Monroe, Michigan, making Worthington Steel 1 of the only 2 companies in North America to offer this technology to our customers.

Speaker 4

Congratulations to all our teams on these impressive achievements. Now I'll turn it over to Tim Adams.

Speaker 3

Thanks, Jeff, and good morning, everyone. I would also like to thank our employees for staying focused on safety as well as serving our customers during the Q3, our first as an independent public company. As a reminder, with this being our Q1 reporting results as a standalone company, our consolidated results for the Q3 are compared with the prior year data, which were prepared on a carve out basis. For our Q3, we reported net earnings of $49,000,000 or $0.98 per share as compared with $5,400,000 or $0.11 per share in the prior year quarter. Our 3rd quarter results included pre tax separation expenses of $1,000,000 or $0.01 per share as compared with $4,000,000 or $0.06 per share in the prior year quarter.

Speaker 3

I expect this will be the last quarter we recognize expense associated with the separation. Excluding these items, we generated earnings of $0.99 per share in the 3rd quarter compared to $0.17 per share in the prior year quarter. In addition, in the Q3, we had estimated pre tax inventory holding gains of $19,300,000 or $0.29 per share compared to estimated pre tax inventory holding losses of $26,600,000 or $0.40 per share in the prior year quarter, a favorable pre tax swing of $45,900,000 or $0.69 per share. In the 3rd quarter, we reported adjusted EBIT of $66,900,000 which was up $56,200,000 from the prior year quarter of $10,700,000 This increase is primarily due to higher gross margin which benefited from increased material spreads including the impact of estimated pre tax inventory holding gains. Our SG and A was up $3,100,000 from the prior year primarily due to incremental costs associated with being a standalone company.

Speaker 3

Next, I'll provide some content on the market and our shipments. Similar to what we experienced over recent history, steel market pricing was volatile over the quarter. Steel prices increased from $700 per tonne in October to $1100 per tonne in January, then decreased sharply throughout March. The current price for hot rolled steel is approximately $7.50 per ton. We expect estimated inventory holding gains in the 3rd quarter will flip to inventory holding losses in the 4th quarter and we estimate those losses could be approximately $5,000,000 to $10,000,000 on a pre tax basis.

Speaker 3

Net sales in the Q3 were $806,000,000 up 3% from the prior year quarter, primarily due to slightly higher direct pricing combined with increased volumes in both direct and total. We shipped 986,000 tons during the Q3, which was up 4% compared with the prior year quarter. Direct sale tons were up 1% over the prior year quarter. Volumes were up in construction and energy, primarily due to spot orders and continued ramp up of certain business. Direct sale volume to the automotive market was down 4% compared to the prior year quarter.

Speaker 3

The decrease was primarily due to several programs reaching their end of life combined with the replacement platforms experiencing launch delays. Our automotive book of business continues to be healthy. Our technical and commercial teams work closely with our customers to help them overcome challenges and provide solutions that meet their needs resulting in increased collaboration and a strong partnership. We expect to continue growing our leadership position within the automotive industry. Toll tons were up 9% year over year, primarily due to increased tolling with the mills as well as several new automotive programs.

Speaker 3

Direct sale tons made up 55% of our mix in the Q3 compared with 56% in the prior year quarter. Turning to cash flows and the balance sheet. Cash flow from operations was $44,700,000 and free cash flow was $22,300,000 During the Q3, we spent $22,400,000 on capital expenditures related to a variety of projects including the previously announced electrical steel expansions Thursday, we announced a quarterly dividend of $0.16 per share payable on June 28, 2024. In regard to our balance sheet, operating working capital increased $41,500,000 during the Q3 as receivables and inventory increased as a result of higher steel prices partially offset by an increase in accounts payable. We ended the quarter with $60,800,000 of cash, which is down from the Q2 due to the $150,000,000 dividend we paid to our former parent in connection with the separation.

Speaker 3

Our ABL debt at February 29 was $147,000,000 down $28,000,000 from the 2nd quarter. In summary, Worthington Steel had an excellent Q3 and all our teams performed well. Everyone at Worthington Steel continues to be focused on driving stakeholder value on both a near term and long term basis. I'm proud of our teams for their dedication and for their continued commitment to safety. At this point, we would be happy to take your questions.

Operator

Thank you. And we will take our first question from Phil Gibbs with KeyBanc Capital Markets. Your line is open.

Speaker 5

Hey, good morning.

Speaker 3

Good morning, Phil.

Speaker 5

What's the typical volume seasonality for the May quarter? I know it's usually your strongest from a volume perspective given the timing of your customer buying patterns.

Speaker 3

Yes, I think you kind of answered your own question. You're right. It tends to be higher. It's usually our strongest quarter from a volume perspective. Q3 tends to be on the lower side because you got automotive shutdowns in December and Q4 tends to be on the higher side.

Speaker 5

More so just curious on the historical magnitude, is it plus or minus high single digits, low double digits in terms what you expect from a volume pickup?

Speaker 3

I would say it's low single digits. It's not huge. Okay.

Speaker 5

And then from the spin, does your commentary effectively point to the fact that we should use 3Q as a good baseline for the adjustments in your go forward cost structure?

Speaker 3

Yes. I think what you see in there is SG and A is probably a little light. Q3 tends to be a little light because you've got that December month in there. So travel is down, vacations in there. So Q3 from an SG and A perspective is usually down a little bit.

Speaker 3

Plus we had some things that hadn't quite ramped up fully from an SG and A standpoint. So you look at a go forward basis, probably on a little bit higher than what it was in Q3.

Speaker 5

And then as we think about net working capital in the Q4, is that expected to be a user source of cash? And then just update us on the CapEx outlook maybe for the Q4 and last year?

Speaker 3

Yes. Typically what happens when you have inventory holding gains, you're going to build working capital and when you have inventory holding losses, you're going to release. So we would expect to release some working capital in Q4.

Speaker 5

And then on the CapEx side for the Q4 and then maybe for 2025 as we think about some of these growth projects that you're working on in litigation? Yes.

Speaker 3

So what we've been signaling is $100,000,000 for 2024, 2025 and 2016. We've run about $60,000,000 to date in 2024 depending on how the projects come in Q4. I think we're actually going to get pretty close to that $100,000,000 number. We've got some additional CapEx. We've got the ablation project that we announced last week.

Speaker 3

We've got an ERP project that we're doing at Temple. It's probably going to add another $10,000,000 to the $100,000,000 estimate we had in 2025 as well as another $10,000,000 to the $100,000,000 estimate we had for 2026.

Speaker 5

That's really helpful. And then on the ABLATION business win and the operational piece to Monroe, what could it mean for you all in terms of the investment and timing? It sounds like it's spliced a bit into this $20,000,000 pickup in CapEx along with the ERP over the next 2 years following this one. But what does it mean for you financially and how big of a differentiator is it? So just trying to figure out what this possibly means from a mix or a profitability standpoint as you guys put it in play?

Speaker 4

Sure. Good morning, Phil. This is Jeff Klinler. We're obviously very excited about this project. We are only one of 2 companies now that are able to offer this product in North America.

Speaker 4

We do believe that this market opens up new products and new opportunities by about 30% to our existing welded blank market. So again, very excited about this technology and this project. It's going to take from a timing standpoint, by the time you install the equipment and win an award, it's a typical automotive type award cycle that takes about 24 months to get to full production. So it's a little bit out there, but it's we're pretty excited about all the activity that's happening right now and pretty confident we'll fill that line. And in years 34, we expect to feel the full

Speaker 3

benefit. Thank you.

Operator

And we will take our next question from John Tumazos with John Tumazos Very Independent Research. Your line is open.

Speaker 6

Thank you very much for taking my question And thank you for your good efforts for the company. Just for explanation, could you explain what is ablation and what ERP stands for?

Speaker 4

Good morning, John. Jeff Glengler again. I'll take those very quickly. I'm not going to fully explain ablation, but I will tell you it is a patented process that uses lasers to remove the silicon coating prior to welding the press hardened steels so that the weld remains intact.

Speaker 6

That's for electrical steel?

Speaker 4

No, no. That is for Taylor welded blanks for press hardened steel for automotive parts. BRP simply stands for Enterprise Resource Planning System. So it's our computer system.

Speaker 6

How big of a hit is a computer system?

Speaker 3

I think in total those two projects, I'm just going to add lump them both together. They're probably $15,000,000 to $20,000,000 in total. I don't have the breakout for each, but we were using when I was given the CapEx numbers going forward, John, that's basically adding $10,000,000 to the next 2 years to cover both those projects.

Speaker 6

Is ablation part of what you're licensing from ArcelorMittal or is it a separate item?

Speaker 4

It is exactly what we are licensing from. It's their process. We are licensing the ablation process, the patented process for the removal of the aluminum silicon coating.

Speaker 6

You made reference to 4 good projects. Hopefully, they had revenue and profits. Germany expansions in Canada TWB license for ablation, if I'm saying it correctly. Yes. Real roughly in terms of a range, how much are the revenue impacts of these items?

Speaker 6

We as listeners might not comprehend whether they're $10,000,000 in annual sales or 50,000,000 in annual sales or 100. I'd love to get excited and think that they're going to double the company, but I probably need a cold shower.

Speaker 3

No, I understand. It's a good question. I think at the end of the day as we ramp these things up, it's going to take a few years to ramp all of them up. It's going to be more than $100,000,000 a year in revenue for us once they're fully ramped.

Speaker 6

In terms of each one individually, so we can get an idea what are the bump singles versus the big ones?

Speaker 3

Yes. I'm talking about in terms of overall. I would say that the temple projects are the 2 big ones. The ablation is going to be a little bit smaller. We're going to start small there and ramp up.

Speaker 3

I mean, the ablation line is going to be under $10,000,000 whereas you've got those other two projects in Canada and Mexico are $80,000,000 plus each. So right now, we're comfortable saying more than $100,000,000 a year when they're fully ramped up.

Speaker 6

So the temple projects for Canada and Mexico. In Germany, how much is the revenue impact of that expansion?

Speaker 3

That's relatively small. That's probably around Yes, that number. $40,000,000 per year. And then what we're going to do with that Nagold facility in Germany is we're also going to put growth plans in place there as well. We don't have those plans done yet, but we didn't buy it to buy it for what it was.

Speaker 3

It was also to grow our presence in Europe in Electrical Steel.

Speaker 4

I would just add that the customer activity and excitement around our acquisition in Germany has exceeded our expectations after just only a few months. So we're pretty optimistic. We're going to do some good things there.

Speaker 6

They're very green there. They love everything. It's

Speaker 3

a lot better.

Speaker 6

They got rid of nuclear and coal faster than anybody and jumped right into Putin's arms. In terms of the specific machinery, could you just give us a flavor of what kind of machines you're putting in place in Germany, in Canada and Mexico to better understand the nuts and bolts?

Speaker 2

Jeff, why don't you answer that?

Speaker 4

Sure. I'll start with Germany. Germany will be lamination presses. So to stamp electrical steel laminations for traction motors for hybrids and battery electric vehicles. In Mexico, it is more of that same and then of course all the automation equipment that comes along with that as we're making rotors and stator stacks that requires some downstream equipment.

Speaker 4

But the primary addition in Mexico will be EV presses. These are very high end, very technical, very specific pieces of equipment. And then in Canada, it's a little more of a range. We've got furnaces. We've got a slitter that is specifically designed for grain orientated steel to process grain orientated steel.

Speaker 4

But slitter, furnaces, Tranco machines, things that support the production of distributed gap cores and wide miter cut lines for large miter transformer cores as well.

Speaker 2

And John, I just want to add and you're probably already familiar with this. This is machinery and equipment we're already very familiar with. It is part of our core competency and we are making these expansions just due to increased demand. So we have the know how.

Speaker 6

Worthington has come a long way from 1955 and buying a sweater machine. Which of the 10 or more processes that Worthington does are most competitive in which of them are highest value added better profits?

Speaker 2

Well, in terms of first of all, I'm glad you recognize we truly are a niche value add producer. So if we're looking at what's most value add, I think definitely temple and electrical steel laminations, certainly very high value add, a lot of engineering expertise needed to implement that equipment and run it, hence higher margins. I think tailor welded blanks and light weighting solutions, that's also a very unique niche type high value add market, very similar to Temple again, hence the higher margins. And then certainly, John, there's galvanizing that you're familiar with. Ours is a bit different and it's hot rolled substrate.

Speaker 2

That's a differentiator. Cold rolled strip is also very high value add. And why these are all niche type markets that we play in and a big part of our strategy. And then of course, you're very familiar with our pickling operations and saluting operations. And obviously those would be markets that would be a bit more competitive.

Speaker 2

But what we're proud of your comment on 1955 is we really think we have a great story on innovation and it's often not recognized, but we've continued to march up the value add chain over the years and it's why the company has performed so strongly and why we will well into the future.

Speaker 6

I could understand a mill or an auto company with a very large volume tolling utilizing a particular process like a pickler where they might have a bottleneck or need. For something like galvanizing your customers or end customers, why would they buy from Worthington rather than buying from NewCoors Steel Dynamics, Cliffs, U. S. Steel or independent there's a few small independent galvanizers. I guess you're going right to HVAC companies and other galvanized usage for those sales.

Speaker 2

So why would they buy from us specifically? Of course, we're going to be cost competitive with the mills. But why would they buy specifically from us? I'm going to tell you what we hear from the customers. And what we would hear from the customers, it's our service.

Speaker 2

We're very responsive. We're able to be probably a bit more flexible with scheduling and help. Clearly, we have premier quality or we wouldn't continue to see the orders. But I really do think it's our speed, it's our service and it's our flexibility. And John, that's I'm just telling you what I hear from the customers.

Speaker 6

And forgive me if I'm asking too many questions and there's 30 people after me in the queue. I don't want to hog the meeting. But would your galvanized customers tend to be in a relatively close radius to your facility and maybe those big mills would have national customers scattered all over the place that would better lend itself to service and relationships with their neighbors?

Speaker 4

The answer to that is really no. We do tend to sell locally, of course, that makes a lot of sense. But more specifically with our galvanized products, we do ship that product all over the country.

Speaker 6

I should stop and give other people a chance. Thank you very much.

Speaker 3

Thank you, John. John, thanks for your support.

Operator

And we will take our next question from Martin Englert with Seaport Research Partners. Your line is open.

Speaker 7

Hello. Good morning, everyone.

Speaker 3

Hey, Martin.

Speaker 7

Couple of questions on the expansions for electrical seal laminations in Canada and Mexico. If you could just provide an update on any pending equipment deliveries and whether those are on time and how the environment is for staffing up headcount once you start to ramp things in the respective locations?

Speaker 4

Sure. Good morning. This is Jeff Klingler. I'll be happy to take that. Just maybe from an overall quick general update.

Speaker 4

In Mexico, that project is on time and on budget. To date, we've spent about $17,000,000 The building expansion really should be complete here by late spring early summer and we'll be installing the first presses here in just the next couple of months. We've seen and this is really true where we're at all of our expansions. We've seen very positive staffing ability to staff up and a lot of excitement around these projects internally. So that's a lot.

Speaker 4

We don't see any problems there. In Canada, we this expansion similar thing on time, on budget, maybe a little bit delayed due to some land, but we think we're going to be able to catch up. We're talking a month or 2. And then to date, we've spent about $5,000,000 but the ramping is going to start to the spending is going to start to ramp up here through the next few quarters. We're not going to see production at that facility till towards the end of next calendar year.

Speaker 4

But again, there's an awful lot of excitement about the project internally and in the community. So we don't foresee any problems at this point with being able to staff up appropriately.

Speaker 7

Of the remainder of the cap sorry, was there more to add there?

Speaker 2

No, go ahead Martin.

Speaker 7

Okay. Sorry about that. Of the remainder of the CapEx spend for the respective projects, how much of that is fixed pricing versus is there any component that whether it would be incremental equipment buys, all within the scope of what's planned that might still have some variability or inflation risk to the price?

Speaker 3

I think this is Tim Martin. I think most everything is locked in terms of price, right? We negotiated the price and we locked those things in. So I don't think there's much variability there.

Speaker 7

Okay. Any comments or updates on the back log for transformers in Canada and how that's looking?

Speaker 2

Martin, Jeff Gilmore. It continues to be 2 years or greater backlog for transformers. So we're still quite bullish on that market. Again, you've heard me say, it's a market we feel will grow much faster than GDP out the next seven to 10 years and a big driver of why we're making that expansion in Canada. So nothing is slowing down on that front.

Speaker 7

Okay. Anything when you think about the pure EVs or the hybrids as far as what you're seeing with activity and demand? Just reviewing some of the headlines in recent history, it seems like there's a little bit of a pause, but I know you have a diverse mix on legacy platforms as well as hybrid and AV, but still curious what you're seeing?

Speaker 2

Yes. Great question and you're spot on. I mean there's a lot of headlines and certainly these things get a bit politicized especially in an election year. But we still are bullish that the market is going to move away from ICE to hybrid and BEVs. And Martin, you hit the nail on the head.

Speaker 2

There's just not a lot of talk about how much momentum hybrids are getting. We didn't enter this business thinking there was going to be a straight line growth curve from ICE to BEV. We figured there'd be a growth slope. It was going to be bumpy at times because it's a significant innovation. It's a supply chain that needs to be built out.

Speaker 2

But that's going to happen and costs will come down. But there is a lot more tension and a lot of automotive companies that are feeling that hybrid needs to be a bigger piece of that portfolio. And more importantly, if it's internal combustion engine, we produce cold road strip. It's great. If it's hybrid, you need cold road strip for clutch plates, you need electrical steel lamination for electrification.

Speaker 2

If it's BEV, you need electrical steel laminations. My point in sharing that is I don't know that there's anybody else globally that's better positioned to take advantage of that.

Speaker 7

How when you're looking at a hybrid vehicle versus battery EV, how does the electrical steel intensity change from a typical platform? Is it some multiple one versus the other or is it not markedly different?

Speaker 4

Martin, this is Jeff Klingler. That's a tough one to add. It does get marginally more electrical steel intensive as you go to a full electric vehicle. But we have some data, it definitely varies by program, it's going to evolve. But any number of traction motors is a good thing for us in the transition.

Speaker 7

Okay. All right. Appreciate the color. Thank you very much.

Speaker 3

Thank you, Martin.

Operator

And we will take follow-up questions from Phil Gibbs with KeyBanc Capital Markets. Your line is open.

Speaker 5

Thanks very much. For the payments to the parent company done this quarter, is there any residual moving ahead?

Speaker 3

We paid the $150,000,000 dividend on December 1. There's nothing else that we have to do. I mean, we've got some TSAs and some long term agreements, right? We share a campus and we've got some of those types of things. But if you're talking about the dividend specifically that is done, it's paid and we moved on.

Speaker 5

And following all the following the payments in the quarter, can you just remind us what your current liquidity is?

Speaker 3

Yes. We've got ample liquidity. And I think you noted it in your note, our leverage is pretty low and we've got ample liquidity to pursue any of these growth projects from the ABL we put in place.

Speaker 5

And what's the size of the ABL? Can you just remind us of that?

Speaker 3

$550,000,000 ABL.

Speaker 5

And what's the rate on that right now just given all the volatility in interest rates?

Speaker 3

Just under 7%. It's a SOFR plus type arrangement.

Speaker 5

And last one for me is kind of a broad question. I know you're just getting your CLEGS as a standalone company, but given the historical consistency of free cash flow and operating cash flow, is there any thoughts over the midterm to put in a buyback or remain active in the M and A channel or both under consideration?

Speaker 3

Buybacks, we talked a little bit about during Investor Day. It's going to be a way that we return capital to shareholders along with dividends. We have not put anything formal in place. We are still discussing that. So at some point, we would expect to have a buyback program in place.

Speaker 3

And we are continuing to look at M and A opportunities. We haven't really stopped. We've got these big growth CapEx projects. But as we talked about, I mean, we're pretty selective in who we want to buy, right? We're looking for high value added companies that we can bolt on and complement what we have or enter new niches.

Speaker 3

So we're not out of M and A. We've just paused a little bit to get through the spin and we'll crank that effort up and continue to look for companies that match us from a culture standpoint and match us from a high value add standpoint.

Speaker 5

I did actually have one more. You've mentioned in your release that the tolling pricing was up quite nicely year over year. Is that a good baseline to use moving forward or is that just a mix and timing thing?

Speaker 3

It's a mix thing. I mean it's and you got to think about this in 2 ways. So if you do a straight high value added process like galvanizing, it's going to command a higher price per ton than say a split. But then we report ship tons for tolling. So if you do multiple processes to a coil of steel, so you pickle, you gal, then you slit it, that's going to show up as a high invoice or a high priced item, right?

Speaker 3

So it really is a mix situation for us.

Speaker 5

Thank you.

Speaker 3

Hey, Phil, I want to circle back on your question about Q4 and automotive. Our automotive or our volume typically is up in the high single digits. I said low single digits. It's probably closer to high single digits.

Speaker 5

Thank you for the clarification. Appreciate

Speaker 3

it.

Operator

And ladies and gentlemen, that is all of the time we have for questions today. So I will now turn the call back to Mr. Jeff Gillmor for closing remarks.

Speaker 2

Thank you, everybody. Appreciate the participation and the interest in Worthington Steel. Again, very proud of our employees, excited about the progress this quarter and even more excited about what's to come. And we'll look forward to our next call and sharing our progress on our strategy. Have a great weekend everybody.

Speaker 2

Thank you.

Operator

Ladies and gentlemen, this concludes today's call and we thank you for your participation. You may now disconnect.

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