Metallus Inc.

Thank you for standing by. My name is Mark, and I will be your conference operator today. At this time, I would like to welcome everyone to Metallus Inc. First Quarter 2020 for Earnings Call. All lines have been placed on mute to prevent any background noise. After the speaker remarks, there will be a question and answer session. If you would like to ask a question, simply press star, followed by a number one on your telephone keypad. If you would like to withdraw a question, press star one again. Thank you. I would now like to turn the call over to Jennifer Beeman. Please go ahead.

Good morning, and welcome to Metallus's first quarter 2024 conference call. I'm Jennifer Beeman, Director of Communications and Investor Relations for Metallus. Joining me today is Mike Williams, President and Chief Executive Officer, Chris Westbrooks, Executive Vice President and Chief Financial Officer, and Kevin Rakitic, Executive Vice President and Chief Commercial Officer. You all should receive the copy of our press release, which was issued last night. During today's conference call, we may make forward-looking statements as defined by the SEC. Our actual results may differ materially from those projected or implied due to a variety of factors, which we describe in greater detail in yesterday's release. Please refer to our SEC filings, including the most recent Form 10-K and Form 10-Q, and the list of factors included in our earnings release, all of which are available on the Metallus website. Where non-GAAP financial information is referenced, additional details and reconciliations to its GAAP equivalent are also included in the earnings release. With that, I'd like to turn the call over to Mike. Mike?

Good morning, and thank you for joining us today. Before I cover our performance in the first quarter, I wanted to reflect on the progress we've made over the past several years. If you've been following us, You know that we have significantly transformed our business with a focus on through cycle profitability and positive operating cash flow in all business cycles. We recognize the need to build a model capable of withstanding volatility, whether substantial or minor, in any of our markets or the broader macroeconomic landscape. Our performance in the first quarter of 2024 is evidence that our efforts have proven effective. Given the sequential increase in profitability and continued solid cash generation, despite the softer demand environment, primarily from our industrial distribution and energy customers. Additionally, we continue to return capital to shareholders via our share repurchase program. In fact, our board just authorized an additional $100 million share repurchase program, which reinforces our board's confidence in our ability to generate through-cycle profitability and positive operating cash flow while maintaining a strong balance sheet. Our efforts to further diversify our portfolio are also yielding results as we continue to identify new opportunities for growth in the aerospace and defense and market. where we have also won significant programs and continue to build our portfolio of offerings. Turning to safety, our mission remains firm, to be recognized as having the safest specialty metals operation in the world. Our goal is for all employees to finish each and every day injury and incident free. In 2024, we anticipate investing approximately $7 million toward continued safety training and equipment enhancements. In fact, our dedicated focus on preventing potential serious injuries has yielded positive results with our team completing corrective actions related to near-miss incidents in a timely manner. This is a direct result of effective investigations and enhanced root cause analysis. Additionally, Several key initiatives were launched in the first quarter related to improving our safety governance processes, as well as standardizing and enhancing the lockout, tagout, tryout program. We continue to build our capabilities through technical and leadership training, including hazardous identification skill building training. We recently held our annual Iron Shield competition. which invites our employees and crews to submit innovative safety projects that aim to improve the well-being of our workforce. In total, over 100 projects were submitted for consideration this year. The winning project prioritized safety and efficiency at our quench and temper lines in our Gambrinus facility. The team utilized video technology for furnace pre-inspections prior to planned outages. By affixing a video camera to an in-process material, the camera captured images of the inner workings of the furnace, enabling real-time analysis of asset conditions, thus reducing the possibility of failures. Not only does this process eliminate unplanned downtime and reduce costly maintenance, but it enables our teams to safely adjust our operations as needed. I congratulate this cross-functional team for their creativity, collaboration, and follow-through. Turning to the financial results, first quarter net sales and shipments saw a slight sequential decline of 2% with pockets of strength, consistency, and some softness that I will discuss shortly. Our sequential profitability improvement was driven by strong product mix and lower manufacturing costs. In the first quarter, our metal utilization improved to 72% from 58% in the fourth quarter as we balanced our production to changing demand and year-end outages. Moving to our markets, in our industrial end market, shipments increased by 4% compared with the prior quarter. Shipments to both industrial OEM and distribution customers improved in the fourth quarter but remains below optimal levels as an inventory correction persists among our distribution customers. We continue to maintain close contact with our customers to support their needs in this environment. Automotive shipments were relatively consistent when compared with the fourth quarter. We continue to experience a steady pull from our diversified automotive customers for both long products and manufactured components. Through our concentrated efforts, growth in our aerospace and defense market continues. Net sales increased by 5% sequentially and 166% on a year-over-year basis. We currently participate in over 20 different defense-related programs in a variety of applications, such as missiles, bombs, artillery, gun barrels, and ground support equipment. We are currently providing value-added processing services for multimetals, including stainless and other high-alloy steels. We also recently began new trials of titanium processing for select defense and high-value oil and gas and renewable energy applications. Thanks to the capabilities of our rolling mill and tube making assets, employee metallurgical expertise, and comprehensive knowledge of material processing and conversion, we have the ability to streamline supply chain lead times by several months. This enables us to expedite the integration of essential materials into the defense supply chain, ensuring timely availability when needed most. We recently had the honor of hosting members of the US Air Force, along with an important defense customer, to discuss process innovations for weapons systems critical to national defense. We are grateful for this collaboration as we continue to support the Department of Defense's mission. Our energy customers continue to demonstrate strict capital discipline as North American oil and gas demand remains challenged for the foreseeable future. We continue to engage with our customers in this important end market as our products are critical to their many demanding applications. In terms of our strategic comparatives, we remain on track to achieve our targeted $80 million of profitability improvements expected between 2022 and 2026. To date, we have achieved approximately 75% of our targeted profitability improvements with continued focus on manufacturing excellence as well as administrative process simplification. I want to thank our employees for their hard work, our customers for their enduring trust, our suppliers for their partnership, and our shareholders for their steadfast support. Now I would like to turn the call over to Chris.