Metallus Inc.

during this time, simply press star, then the number one on your telephone keypad. I would now like to turn the conference over to Jennifer Beeman. Please go ahead.

Good morning and welcome to Metallus' second 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 have received a 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 our 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 Metallis website. Where non-GAAP financial information is referenced, additional details and reconciliations to its GAAP equivalent are also included in the release. With that, I'd like to turn the call over to Mike.

Mike? Good morning, everyone. and thank you for joining us. During the second quarter, we focused on what we can control to mitigate the impact of challenged market conditions. Our shipments to the aerospace and defense end market remain strong, and our automotive shipments were steady. Unfortunately, the sluggishness in the industrial and energy end markets seen in the first quarter extended into the second quarter. This weakness is attributed to softening global economic conditions, elevated imports, customer and supply chain inventory positions, as well as scrap price uncertainty. Despite some unfavorable end markets, we remain committed to managing what's in our control by aligning our production with demand, carefully managing our working capital and costs, while investing in our assets and employees for future growth. During the quarter, we maintain positive profitability and operating cash flow, a testament to our business model and disciplined financial management. I am confident that as market dynamics evolve, we are well positioned to take advantage of the demand recovery and anticipate improved profitability. At Metallus, safety is not just a priority, It's a core value. We believe that a safe workplace is a productive and successful one. We have established a comprehensive safety strategy and have set ambitious goals to ensure the well-being of our employees, contractors, and guests. We have made considerable progress in executing our safety strategy, which involves enhancing our safety processes and systems, as well as our physical environment our cultural environment, and our safety capabilities with a strong focus on serious injury and fatality prevention. In the second half of the year, we will continue executing our safety strategy with a focus on comprehensive pre-job safety planning and inspections, maturing our serious injury and fatality prevention programs, continuing to invest in our physical equipment, and equipment guarding upgrades, and targeted injury reduction strategies related to hand injuries and ergonomics. Our safety strategy is having a positive impact as we are observing positive indicators in our employee engagement, hazard identification, and incident prevention. To date, we have allocated $4.5 million towards safety initiatives. As a reminder, our projection for the total annual safety investment was approximately $7 million. Turning to our end markets, as I had mentioned earlier, demand in our industrial and energy markets remain weak. For example, we believe agricultural machinery investments are being delayed in the face of higher prices and interest rates. Industrial distribution inventory levels remain elevated due to lower end customer demand, short lead times, and scrap price uncertainty. Lastly, rail and mining markets are expected to remain soft for the year. Looking at our automotive performance, we saw a sequential 2% increase in shipments. Although there have been and continue to be periodic disruptions in the automotive supply chain, demand has remained resilient. We are pleased to provide our automotive customers with high-quality bar and tube products, as well as manufactured components for internal combustion, hybrid, and electric vehicles. The aerospace and defense market remained strong in the second quarter, despite our initial expectation of a sequential decline due to the timing of customers' orders. That anticipated decline, however, has been delayed by one quarter. And we now expect third quarter shipments in this end market to be lower than those in the second quarter. Earlier, I mentioned the negative impact of imports on our business. To put this in perspective, SBQ imports constituted roughly 10% of the market from 2020 to mid 2022. But this number rose to about 17% from the fourth quarter of 2023 through the first half of this year. Similarly, we continue to be pressured by an elevated level of tubing imports. Turning to our capital investments, we are making significant progress by investing in assets to drive growth, as well as improved product quality, asset reliability, customer service, and cost structure. Earlier this week, we marked a groundbreaking ceremony at our Faircrest still-making plant to celebrate the building of a bloom reheat furnace. The event was attended by numerous local, state, and federal officials, including Ohio's Lieutenant Governor John Husted. It was announced that we have been awarded $3.5 million in grants from JobsOhio to support the planned expansion of our still-making facilities. These grants are intended to facilitate training, modernize equipment, and enhance skills for deploying cutting edge steel technologies. The installation of a continuous bloom reheat furnace will help us meet growing demand from both existing and new customers. We are grateful for the support from the community, the state of Ohio, and our federal government, which will enable us to enhance and optimize our assets increase our capacity of high-quality defense products, and support key training initiatives focused on safety and technology through a workforce development grant. As a reminder, in February, we announced an agreement for up to $99 million in funding from the United States Army to support our national defense efforts. As a reminder, we expect the bloom reheat furnace to be operational in late 2025. During the quarter, we invested $14 million in capital expenditures with further progress on the installation of an automated grinding line, inline saw technology, and new camera inspection technologies. These initiatives are part of our broader strategy to achieve significant cost reductions generate free cash flow, and improve our profitability. While the current demand environment has some challenges, we remain confident in our strategic imperatives and our ability to navigate market volatility. We are committed to driving growth, enhancing profitability, and delivering value to our shareholders. Now I will turn the call over to Chris Westbrooks, who will provide more details on our financial performance.