Metallus Inc.

My name is Audra, and I will be your conference operator today. At this time, I would like to welcome everyone to the Metallus fourth quarter 2024 and full year earnings call. Today's conference is being recorded. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press the star key, followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. At this time, I would like to turn the conference over to Jennifer Beeman, Director of Communications and Investor Relations. Please go ahead.

Good morning, and welcome to Metallis' fourth quarter and full year 2024 conference call. I'm Jennifer Beeman, Director of Communications and Investor Relations for Metallis. 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 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. While I am proud of the progress we've made with several of our strategic imperatives, our financial results in 2024 were negatively affected by persistent weak market demand. Without the strategic structural changes to our business model over the past few years and a continuous improvement mindset, the market challenges in 2024 would have had a much more significant negative impact on profitability. In the face of these challenges, we remain focused on what was in our control by enhancing our strong customer relationships and investing in our people through additional training and development opportunities. We made improvements to our world class assets to enhance safety, quality and efficiency. We believe these efforts are key for our long term growth and will better position us in the long run. Additionally, we continue to provide value to our shareholders through our capital allocation strategy. including strategic investments in our business to drive profitable growth, as well as our ongoing share repurchase program. As we begin 2025, I'm encouraged by an improving order book and increase in shipments. But first, let me reflect on safety. In 2024, we strengthen our safety management system. which equips our teams with clear guidelines for risk management, defining roles and responsibilities, reducing hazards, handling incidents, training, and communications, all aimed at continuous improvement. Throughout the year, we dedicated resources to reinforce lockout, tagout, tryout procedures, and enhance our safe work permit processes for non-routine tasks. Our commitment to safety is evident in our investment of approximately $8 million in 2024 and plans to invest approximately $5 million in 2025. Although we recognize that achieving our safety objectives will be a journey, we have achieved some positive improvements. Our OSHA total recordable injury rate declined 7% over the prior year. Our corrective action completion rate related to potential serious injuries improved by 15% compared to 2023. Additionally, we improved our employee engagement in safety with a 36% increase in near-miss reporting and a 60% increase in proactive observations versus the prior year. These measures indicate that we're proactively and continuously addressing safety by maturing our safety management system, meaningfully engaging our employees, improving our hazard recognition skills, and enhancing our equipment. As you would imagine, we have been closely following the trade environment which substantially affects the industry's market behavior and global competitiveness. President Trump recently issued an executive order introducing a tariff of at least 25% on all steel long products, as well as certain derivative steel products, while closing loopholes in existing steel tariffs. These changes are expected to take effect on March 12th 2025. We believe these actions will help level the playing field for the steel industry, reduce imports, which should boost domestic demand. In recent weeks, we've seen a meaningful increase in customer engagement, both new and existing customers, as they proactively manage their supply chains to ensure a secure and stable supply of steel. We stand ready to serve our customers and believe this marks a significant shift in the landscape for the U.S. steel industry. These actions align with our longstanding advocacy for fair trade practices and correcting market distortions. We will continue to monitor developments in the trade environment closely. Turning to the results of the fourth quarter, Net sales increased 6% sequentially, driven by higher shipments and strength in aerospace and defense product demand. Overall, aerospace and defense has been a bright spot for us in a year where we faced weaker demand in other end markets. Consolidated shipments increased 9% sequentially, again, driven by higher aerospace and defense activity, as well as energy and automotive shipments. Turning to our end markets, shipments to our industrial customers declined 6% sequentially, primarily driven by weakness in distribution and heavy equipment. On a positive note, we are seeing an increase in order activity across our distribution and broader industrial customer base in response to the trade environment. On a sequential basis, our shipments to energy customers increased 78%. I'll bet from a low base. However, we are encouraged by the coupling stock and drilling tool opportunities that we are seeing in the energy sector as customers look to reliable domestic supply to meet their drilling and production needs. I'd like to take a moment to talk about some newly launched programs for our energy customers. we have worked closely with offshore well design engineers to utilize our highly engineered material suitable for corrosive environments. Leveraging our advanced capabilities, later this year we plan to produce seamless mechanical tubing specifically for use in tieback casings and couplings for one of the highest producing natural gas wells in the world. As new wells are explored, this specialty product remains at the forefront of innovation. Secondly, we have deepened our relationship with major petrochemical companies and have committed to CapEx investments to expand our offerings. Our well-established supply chains and highly engineered and qualified steel supports critical applications in this market, including high-pressure tubes for low density polyethylene reactors. The TALIS will soon be able to support 15 meter LDPE requirements as plants increase and upgrade their capacity. We've partnered with a highly regarded fabrication and machining operation to build a supply chain with our supply chain partner offering fully assembled LDPE reactors to the petrochemical industry. The high pressure tubes that we provide are one of the very few globally qualified materials for this critical component. We are targeting $20 million in annual sales from these two important energy programs beginning in 2026. These programs demonstrate our commitment to staying connected with our customers in the spirit of collaborative innovation. Moving to automotive. Shipments sequentially increased by 3%. Shipments in the back half of the year were negatively impacted by operational issues at our customers, which have since been resolved. Overall, light vehicle sales remain relatively steady, and we are targeting approximately 40% of our shipment to the automotive sector in 2025. On the topic of electric vehicles, it's widely known that many OEMs have backed off of their 2030 electric vehicle targets. However, we're encouraged to be continuously evolving alongside our customers as they refine their North American EV platforms. For one OEM in particular, we have two power transmission shafts on all nine of their EV models. As a reminder, given our established partnership with our automotive customers, we remain committed to supporting all platforms, internal combustion, hybrid, and electric vehicles. In aerospace and defense, fourth quarter shipments increased as expected to approximately 11,000 tons compared with approximately 3,000 tons in the third quarter. On a full year basis, aerospace and defense sales increased by 17% to nearly $135 million in 2024. This significant sales increase resulted in aerospace and defense representing 12% of total sales in 2024 compared with 8% of the total in 2023. Related to specific projects within the defense sector, we continue to hit important milestones related to the installation of our bloom reheat furnace. This asset is being designed to support the increase of capacity and finishing capability of high quality bar based products used in the production of artillery shells. In the meantime, we are actively developing partnerships in vital defense supply chains. As an example, we were recently awarded a $4 million purchase order for artillery shell canister tubing for the US Army. Additionally, we are enthusiastic about expanding our participation in aerospace and defense and other sectors by leveraging vacuum arc remount and vacuum induction melt steel combined with our unique downstream processing capability. With the support of trusted supply chain partners, we are targeting approximately $30 million of revenue in 2025 using outside VAR and VIM products combined with our rolling and piercing capabilities. Using this process path supports a large defense customers who supply the US military's missile programs. Given the high level of demand for specialty metals, including VAR and VIM products, Metallus is well positioned to increase our participation in this area in the future. Through continued focus and prudent investments, we intend to capitalize on this sustained growth trend for higher value specialty metals used in demanding applications. As we stated last quarter, we expect to grow aerospace and defense sales to over $250 million by 2026. I'd like to provide a quick update on the status of our customer contracts. I am pleased that we've wrapped up our calendar year customer price agreement negotiations, which cover approximately 70% of our 2025 order book. Average base price per ton for customers covered by annual agreements is expected to decrease by low to mid single digits on a percentage basis in 2025 compared with average base price per ton for the full year 2024 mixed dependent. For the remaining 30% of the order book with market spot pricing, we will continue to adjust pricing as demand evolves throughout the year. Our bar product lead times are currently at 10 to 12 weeks, depending on size, and two product lead times are at 10 weeks. Distribution inventory levels appear to be coming down, and some restocking has begun. To wrap up, our focus will continue to be on safety, exceptional customer service, new product development, especially in aerospace and defense, and our CapEx investments, all of which continue to advance our strategic imperatives to drive sustainable profitability and cash flow in all market conditions. Now I'd like to turn the call over to Chris, who will provide more details on our financial performance and outlook.

Thanks, Mike. Good morning, and thank you for joining our earnings call. During 2024, Metallus made significant strides in a variety of areas, including advancing our safety management system and workforce development programs, expanding our participation in high-growth aerospace and defense markets, while continuing to support our automotive, industrial, and energy customers in a challenging demand environment, and investing in our manufacturing facilities and processes to drive efficiency and future growth. These achievements were realized while continuing to return capital to shareholders and maintain a strong balance sheet. Now turning to the fourth quarter of 2024 financial results. From a top line revenue perspective, fourth quarter net sales totaled $240.5 million, a sequential increase of $13.3 million, or 6%, primarily driven by a sequential increase in shipments of 10,300 tons. Mike previously covered the drivers of fourth quarter shipments by end market in his comments. The company reported a gap net loss of $21.4 million in the fourth quarter, or a loss of 50 cents per diluted share. inclusive of a $9.4 million loss on the repurchases of convertible notes and an $8.5 million non-cash mark-to-market pension remeasurement loss. On an adjusted basis, the company reported a net loss in the fourth quarter of $3.3 million or a loss of $0.08 per diluted share. Adjusted EBITDA was $8.3 million in the fourth quarter, a sequential increase of $2.2 million primarily driven by higher shipments and favorable product mix partially offset by higher manufacturing costs. The sequential increase in manufacturing costs of $10.3 million in the fourth quarter was a result of lower cost absorption as well as the recognition of costs previously capitalized into inventory. Melt utilization declined to 56% in the fourth quarter from 60% in the third quarter as a result of the planned annual shutdown maintenance and additional planned downtime to balance inventory with demand. The company's manufacturing assets and team are well positioned to run at a higher rate of utilization beginning in the first quarter as demand begins to recover. Now switching gears to pensions. In the fourth quarter, the company made $5.3 million of required pension contributions, resulting in total required contributions of approximately $43 million in 2024. With the benefit of previous annuitization activities, the pension and retiree medical benefit liability has declined by approximately $150 million since the end of 2023 and declined by approximately $800 million since the end of 2021. As of December 31st, 2024, the underfunded position of the company's pension and retiree medical plans totaled $171 million. As a result of the current underfunded position, funding rules and year-end actuarial assumptions the estimate for required pension contributions in 2025 is approximately $65 million, with a higher proportion of required contributions in the first quarter. Following this elevated level of required pension contributions in 2025, the company is estimating a significant reduction in required contributions in future years based on assumed investment performance. Moving to cash flow and liquidity. During the fourth quarter, operating cash flow was $13.9 million, driven by lower levels of working capital. For the full year, the company generated operating cash flow of $40.3 million. Capital expenditures totaled $15.2 million in the fourth quarter and $64.3 million for the full year, in line with previously stated guidance. Approximately $8 million of the company's capital expenditures in 2024 were supported by government funding. Other important capex spending included safety upgrades such as machine guarding, furnace leak detection, and automated testing equipment. Additionally, the automated grinding line construction and installation at the Harrison facility was a significant project in 2024. This $18 million investment, which is currently being commissioned, will significantly improve the efficiency of our finishing capabilities and is expected to generate over $3 million in savings per year. Additionally, New gauging at one of our seamless mechanical tube piercing mills was upgraded last year to improve first-time quality. Lastly, we continue to invest in maintenance capex across our manufacturing footprint, including items such as rolling mill rolls, tooling, and electrical upgrades. These investments help ensure the reliability and integrity of the company's assets. As it relates to government funding, during the fourth quarter, the company received $8 million of cash funding from the government as part of the previously announced $99.75 million funding agreement in support of the U.S. Army's mission of increasing munitions production. In total during 2024, the company received $53.5 million of the approximate $103 million of total committed funding. Receipt of the remaining $50 million of committed funding is expected throughout 2025 and into 2026 as mutually agreed upon milestones are achieved. As a reminder, this funding will substantially pay for both the new bloom reheat furnace at the company's Faircrest facility, as well as the new roller furnace at the Gambrinus facility. Once commissioned, these investments will support the company's targeted growth in aerospace and defense product sales, as well as support all Metallus customers with more efficient and modern assets. From a total capital expenditure forecast perspective, we're targeting approximately $125 million this year. inclusive of approximately $90 million of CapEx funded by the U.S. government. We've included a slide in the latest investor presentation available on our website to show the timing of anticipated government funding in advance of related CapEx spending. In terms of base CapEx for 2025, our focus includes important safety and maintenance investments, completion of prior year automation projects, and growth CapEx to support anticipated energy product demands that Mike previously highlighted. Switching gears, the shareholder return activities. Throughout 2024, the company continued to make progress on its share repurchase program. In total, the company repurchased 2 million shares of its common stock for $37.6 million last year, reducing outstanding shares by nearly 5%. At the end of 2024, the company had a balance of $102.8 million remaining under its current share repurchase authorization. As it relates to convertible notes, during the fourth quarter, we repurchased $7.8 million of outstanding convertible notes for total cash of $17.2 million. The repurchase premium was driven by an increase in the company's stock price, which was significantly in excess of the instrument's conversion price. As a result of the fourth quarter convertible note repurchases, diluted shares outstanding will decrease by approximately 1 million shares in the first quarter of 2025. The outstanding principal balance of the remaining convertible notes is $5.5 million, and the balance will be settled at or in advance of the December 2025 maturity date. Since the inception of common share repurchases in early 2022, combined with the convertible note repurchase activities, we've reduced diluted shares outstanding by a significant 22% compared to the fourth quarter of 2021. These actions reflect the strength of the company's balance sheets and confidence in through cycle cash flow generation. Switching gears now for an update on our targeted $80 million of profitability improvements in support of achieving our long term through cycle financial targets that were announced in early 2022. As you may recall, our previously communicated objective is to deliver sustainable profitability and cash flow in all business cycles, and 2024 has proven out the business model in a challenging market environment. Over the last several years, the company has implemented the necessary manufacturing, commercial, and process improvement actions to realize its $80 million profitability improvement target. Although it's difficult to see the impact of these actions in a weak demand environment like 2024, these investments and process improvements position the company for profitability improvement in the future. Turning now to the outlook, we anticipate first quarter adjusted EBITDA to be higher than the fourth quarter. Commercially, first quarter shipments are expected to increase on a sequential basis as our order book continues to strengthen, particularly within the industrial end market. We also expect continued strength in aerospace and defense demand and steady shipments across the automotive and energy end markets in the first quarter. Additionally, raw materials surcharge revenue per ton is expected to sequentially increase in the first quarter, driven by a $50 per ton increase in the number one bushland scrap index in February which will impact March surcharge revenue. Given the outcome of the annual customer price agreement negotiations that Mike summarized earlier, combined with weakness in spot pricing carried over from last year, we expect sequentially unfavorable price mix in the first quarter. Operationally, melt utilization is expected to increase to approximately 70% in the first quarter, resulting in improved fixed cost leverage and sequentially lower manufacturing costs. Contributing to the expected sequentially lower first quarter manufacturing costs is approximately $5 million of planned annual shutdown maintenance that occurred in the fourth quarter. In terms of additional assumptions for the full year 2025, depreciation and amortization expense is expected to be approximately $58 million in 2025. SG&A expense is anticipated to be approximately $85 to $90 million this year, excluding IT transformation costs and amortization expense. That interest income is expected to be lower than last year, driven by an anticipated decline in the company's cash balance this year and lower market interest rates. From an income taxes perspective, the rate is expected to be approximately 25% this year. And in terms of the share count, we estimate diluted shares to be approximately $44 million in 2025, adjusted for any share repurchases and equity compensation activity. Regarding cash drivers, in addition to the approximately $65 million of estimated required pension contributions that were discussed earlier, which are more heavily weighted to the first quarter of the year, we expect working capital to be a use of cash in the first quarter driven by higher accounts receivable and inventory given the improving customer order book. As a result, we expect the first quarter of 2025 to be operating cash flow negative with an anticipated improvement in operating and free cash flow as the year continues. Additionally, the timing of approximately $125 million of CapEx is more heavily weighted to the second half of the year. Also, we expect to receive approximately $37 million of government funding this year to support our CapEx investments, with the cash funding more heavily weighted to the first half of the year. As we progress to the first quarter of 2025, we're optimistic about the opportunities that lie ahead. We remain committed to delivering value to our shareholders by driving profitable growth and executing our capital allocation strategy. Thanks to all of our employees, customers, and suppliers for their continued support in achieving our shared objectives. To wrap up, thanks for your interest in Metallus. We would now like to open the call for questions.

Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again. We'll take our first question from John Franzrab at Sedodian Company.

Good morning, everybody, and thanks for taking the questions. I guess I'd like to start with the demand profile in the fourth quarter and coming into the first quarter. I'm curious how much you think of that is attributed to the rebalancing of

demand that you that you saw in the fourth quarter versus maybe um you know the tariff impact we may be seeing in the first quarter can you kind of walk us through what you're seeing there sure john so you know i would i'm very pleased to say that you know our order book is developing in a very healthy way uh you know situations that we haven't seen for two to three quarters um The development and the positive momentum in our order book is really being driven by a couple factors. One is the, what I would call some recapture of automotive business that we've achieved in 2025. A much greater order increase coming from the industrial base. kind of spread heavily orientated to A&D, but kind of spread across the heavy equipment, some rail and other market segments within our industrial base. And then thirdly, what we're seeing is really a restocking coming out of distribution. Distribution really held off the second half of last year in a kind of a hand-in-mouth demand scenario. And inventory levels have gotten fairly low in a number of products. And what we're seeing is those customers come back in. And then I guess the last item really is the trade environment where we're getting a significant number of inquiries from new customers. Old customers that we haven't serviced in a while, and new customers, and I believe that's pretty much attributed to the trade environment expectation going forward as these TIC tariffs get implemented on March 12th.

So, Mike, if I kind of want to summarize what you just said, it sounds like it's a normal rebalance of demand is the first driver, and the anticipation of the trade environment is this secondary driver. Is that the way to kind of look at it from your point of view?

Yeah, I would say the first part really is the recapture of market share, particularly in automotive. And then we have the distribution folks reloading. And then we're seeing much more activity coming out of the industrial base that was pretty weak second half of last year, where there's much more activity there.

Understood.

I mean, we're pretty pleased because we now have, we have a pretty good quarterback log. We have much longer visibility. Our lead times have almost doubled from where they were in the fourth quarter. So, you know, I think, you know, this is more of a normal environment that, you know, we haven't experienced in 2024. So, you know, we're still somewhat in a wait and see how, how the demand evolves over the next two quarters.

Got it. And I might have missed this, but is there any expected downtime in the first quarter?

Actually, we've already experienced downtime. We had, due to the severe cold weather in our region, we had power interruptions early on in January. However, we expect to fully run just with our normal every other week outage activity, maintenance outage activity, but no expected or planned downtime.

Got it. And you mentioned some of this, I guess Chris mentioned it in his closing remarks, about that $80 million target. And I guess it's I guess there's two things. Because the first, the way Chris phrased it, it sounded like all the upgrades were finished and it was really just a matter of volume coming back. But then later on, he mentioned that there's some expected IT upgrades that are going to occur in 2025. So I'm curious, are those two items independent of each other, or is all the necessary upgrades that you planned for for the $80 million target been put in place already?

Well, predominantly the IT transformation upgrades are independent of the other investments. However, all the other investments, particularly the new AGL line, some of the new inspection technology that we've installed, that all requires support from the IT discipline. So they are involved in those projects, but what Chris is referring to is really the IT transformation project, which is totally separate from those other investments.

Okay. One last question, and then I'll let somebody else ask some questions. I'm kind of curious about the share repurchase and the million-dollar lower share count, because I guess as a point of clarification, is that from the average count of 2024, or is that from the fourth quarter number? Because I thought I heard 44 million shares was the number we should use for the full year. So I just want to make sure I got that right.

Yeah, it's John, this is Chris. It's down from the fourth quarter. That activity happened towards the end of the fourth quarter, so there's a little bit of impact in Q4. It's hard to see in the fourth quarter, given that we were in a net loss position from a gap standpoint, but I think 44 on average, on a weighted average basis, is a good estimate for 2025.

Okay, thank you, sir. I'll get back into Q. Thank you, Mike.

Thank you.

We'll move next to Dave Storms at Stonegate.

Morning. Morning, Dave. Morning. Just hoping we could start with seasonality of 2025. Are you expecting anything unusual? Should we plan for maybe a bit of a Q1 bump as customers try to get ahead of some of these tariffs? Anything like that would be very helpful.

Well, I think the restocking is a little bit of a bubble, but then should level out. I still think that People were still waiting to see whether the tariffs get implemented as stated today and how long they last or will they last. So I somewhat expect that there's further demand development in a positive way potentially out there as people look to consume their current inventories that are foreign imported. And look to secure domestic demand going forward.

And Dave, if I could add to that from a timing standpoint, aerospace and defense, we are expecting that to ramp throughout the year as our customers bring their capacity online to ramp up their production. So we're optimistic that we have a strong year in aerospace defense, but it's going to continue to grow throughout 25 and into 26.

Understood. So then with that expected increase in demand, in lead times currently sitting around three months. Should we expect that to increase? And are you seeing any customers maybe ordering a little bit extra to get ahead of those lead times? Or does that feel pretty normal for the industry?

Right now, it feels fairly normal. It's very hard for us to decipher whether people are overordering for security reasons and future demand. But again, I don't think we're back to the, we're not totally back to the 21, 22, 23 type demand from an order book and an order backlog standpoint, but we sure are on our way there. So my crystal ball is not that clear beyond the order book that we have today and the positive conversations that we're having with our customers. and the hard work the sales teams putting forth as well as the business development team in securing additional new product applications in aerospace and defense as well as you know we've gotten some game recapture in energy as well and you know that's all you know we're 60 days into the year um that's all at least you know, send strong positive messages to us right now, but we're going to have to wait and see how it evolves.

Understood. And if I could just ask one more around end markets. I thought you mentioned the prepared remarks that you're targeting 40% of shipments for auto in 2025, which looks to me to be down a little bit year over year if that holds up. Is that a product of a weaker expected OEM market, or maybe a stronger than expected, you know, stronger than historical aerospace and defense industry or industrial market?

Yeah, I mean, it's I mean, you know, when you have weak markets, automotive is pretty steady. So they became they became a larger share of our total shipments in 2024. Going forward, we say 40% because of our view and our understanding of the industrial demand heavily driven by aerospace and defense. And then the activity that we're seeing in energy increasing modestly, again, from a very low level, but increasing. And some of that's driven by we recaptured some market share there. But energy is heavily affected by imports. So the import, the consumption of our end customers working through the import inventories they have,

should drive higher demand from the domestic market and john to add i'm sorry dave to add a little bit there our overall view of shipments in 25 is stronger than 2024 so part of that is the denominator in that calculation yeah by far uh driving the percentage lower but our participation is still being strong so that's all very helpful thank you for taking my questions and good luck thanks dave

And as a reminder, if you would like to ask a question, please press star one. We'll go next to Philip Gibbs at KeyBank Capital Markets.

Hey, good morning.

Hey, Phil.

Question is just on the bridge in Q1. You talked about unfavorable price mix. Is that an absolute impact or, I guess, a per ton impact or both?

It's really, and Chris can probably give you a little bit more clarity, but it's really driven by what we refer to it as a mix within the mix. It's really we had more carbon SBQ sales than we did on the alloy products that we sell. So you tend to see your surcharges are going to be lower affecting your overall revenue. And then the base prices are lower on what I would call the more commodity carbons versus the specialty alloys. We expect as the industrial base continues to improve and the A&D demand continues to increase, that'll drive a richer mix for us on the alloy products versus more the vanilla carbon products.

That makes sense. I'm thinking about the you know, the standard bridge that you all provide in your release in this quarter, like price mix was positive, I can't remember, but maybe $5 million or so, and then you have the manufacturing and you have all those components. Is that price mix expected when you make those comments, is that piece of it expected to be down relative to Q4? You obviously have the manufacturing piece getting better, volumes getting better, spread getting better on the raw material piece, but is that price mix Should we expect that piece to be on an absolute basis down based on the comments?

Yeah.

Okay. That's helpful. And the pension contribution that you talked about, Chris, the 65 million, a lot of that weighted to Q1. Is there any, does that include OPEB as well? I can't remember.

No, it does not. OPEB typically leverages the assets is how we pay most of those. So there's a withdrawal and you pay the contribution. So it's truly the bargaining plan that's driving the majority of that contribution in 2025.

Is there anything that we should be modeling for OPEB cash contributions?

Just kind of a normal level of activity there.

And then on the newer products that you all talked about, on the seamless side. Did you say that that was seamless mechanical tubing or seamless OCTG?

No, it's mechanical tubing.

Okay.

It's basically the missile liner shells and then the specialized canisters that are for smoke artillery shells.

Thank you. And then lastly, there was kind of certainly a soft patch in automotive in the back half. Some of the big three, one in particular trying to take their inventory down. There's a couple right now that do have pretty elevated inventories and maybe some reduction plans in the first half. How are you thinking about the year just in general within automotive? It feels like we've been, in general as a steel industry, underserving that market the last couple quarters, but part of which is related to just inventory rebalancing. And it seems like to me that all else equal should be some sort of pickup, all else equal in auto, maybe Q2, Q3, I don't know. But I guess help us think through kind of what you all see going on there. Thank you.

Yeah, so we kind of – right now our view is if you look at the platforms that we're on and the applications within those platforms, we're well positioned. We see modest increases in automotive demand in 2025. And I think it's really going to be, you know, how interest rates evolve, how people – They're buying habits and patterns on new vehicles. But I just saw a report earlier this morning, I think, one of the other banks saying that they believe the SAR rate is going to go up slightly, maybe a couple hundred thousand units based on early assumptions of activity in February.

Thanks, everyone. Appreciate it.

Thanks, Phil. Thanks.

And that concludes our Q&A session. I will now turn the conference back over to Jennifer for closing remarks.

Great. Thanks everyone for joining us today and that concludes our call.

And again, this does conclude today's conference call. Thank you for your participation. You may now disconnect.