Worthington Steel, Inc.

Hello and welcome to Worthington Steel's third quarter 2025 earnings call. 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, and if you would like to ask a question during this time, simply press star 1 on your telephone keypad. I would now like to turn the call over to Melissa Dykstra, VP Corporate Communications and Investor Relations. You may begin.

Thank you, Operator. Good morning and welcome to Worthington Steel's third quarter fiscal year 2025 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 details 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 standalone 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 WorthingtonSteel.com. And I'll turn it over to Jeff Gilmore.

Good morning and thank you for joining us. I'd like to start today's call with a heartfelt thank you to the Worthington Steel team. In a quarter filled with uncertainty and change, our employees showed remarkable flexibility and resilience. I'm proud of all they did this quarter to focus on what they could control while maintaining a strong commitment to safety and serving our customers. In the third quarter, we generated adjusted EBITDA of $41.9 million compared with $82.8 million in the prior year quarter. Earnings per share came in at 27 cents versus 98 cents per share in the same period last year. Results were impacted by both lower volumes and lower average selling prices. As we expected, many of the headwinds from Q2 continued into the third quarter as customers managed uncertain macroeconomic conditions. However, we saw signs of improvement during the last month of the quarter, and we believe most of the volume improvement at the end of the quarter was due to fundamental demand improvements rather than a buy-ahead effort to beat potential steel price increases. Taking a look at our key markets, Our shipments to automotive were down 3% in the third quarter. Given the level of current uncertainty, we are cautiously optimistic about the North American auto market in calendar year 2025. Calendar year 2024 ended the year at 15.4 million units produced, solid given the challenges occurring late in the year, but still below pre-COVID levels. The latest calendar year 2025 forecasts are showing flat bills on a year-over-year basis at approximately 15.3 million units produced. However, there's likely some upside to that forecast due to lower interest rates and lower inflation. Our commercial teams continue to aggressively pursue and win new incremental automotive business. Our shipments to the construction market were down on a year-over-year basis. We believe part of the decrease compared to last year was due to lower demand resulting from economic uncertainty. When looking at the overall construction market for calendar year 2025, we see it as more of a first half, second half story. In the first half of 2025, we expect the construction market to be fairly flat, then begin gaining momentum later in the year. Certainly, the construction market will benefit from interest rate cuts in 2025, which we are keeping a close eye on. We expect the agriculture market to rain soft for a while. The ag industry continues to be held back by interest rates, commodity prices, and tariffs that further delay farmers' decisions to purchase new equipment. Demand in the heavy truck market continues to be slow, but we are starting to see signs of improvement. Based on what we see today, we think the heavy truck market will show GDP-type growth for the rest of calendar year 2025. Overall, we sense a bit of unease in some supply chains as customers deal with the current uncertainty. However, we are seeing normal buying patterns from many of our customers. In the long term, we have the right strategy and solid growth plans. First, we remain bullish on the first pillar in our strategy, focused investments in the electrical steel market. AI initiatives and more data centers mean more demand for power and the infrastructure to carry it. There's a two-year backlog on transformers, which use the electrical steel cores we make, and the need for power is expected to grow at more than 6% per year over the next 15 years. 2024 saw the continued surge in electrified vehicles, particularly hybrids. Worthington is in a very good position to benefit from this preference as we process steel for both the clutch plate and the electrical motor laminations in hybrids. Additionally, we have made excellent progress for closing on our 52% ownership stake in Seedem, a leading European electrical steel lamination manufacturer. A few weeks ago, Tim and I had the opportunity to tour Seedem facilities in Italy and Switzerland and to meet the local management teams and many other employees. I was impressed by Seedem's culture and how closely their values and approach to people match Worthington's philosophy. Seatham's technical expertise and know-how will add to our electrical steel laminations offering and strengthen our position as a market leader. I am excited to have the folks at Seatham combine their expertise with Worthington. We hope to close on this transaction in the next few months. Our second strategic growth pillar includes a strong commercial focus, strategic CapEx, and acquisitions. Our capital investments in the expansion of our electrical steel capabilities in Canada and Mexico continue to move forward. In Mexico, where we manufacture electrical steel laminations for use in industrial motors and electrified vehicles, we have installed the first five presses and testing is underway. We remain on track to begin production late this calendar year. Construction of our expansion in Canada, where we manufacture transformer cores, continues to move forward. We expect to begin production early in calendar year 2026. We have new commercial initiatives underway to grow, share, and volume. We are just starting to see the effects of this effort. All the while, we continue to consider M&A opportunities that complement our business and fit both our strategy and our culture. The third pillar of our growth strategy is the transformation, our systematic approach to making base business improvements. The transformation mindset is part of our ongoing workflow, and simply put, if we find something that's good, We look for ways to double it. If we find something bad, we find ways to cut it in half. This quarter, teams came together across the company using collaboration, standard work, and data analytics to reduce press changeover times, work-in-progress inventory, and streamline HR functions. This is just a sampling of the transformation activities happening throughout the company and can lead to reductions in both working capital and cost. while at the same time increasing efficiency and capacity. Before I conclude my remarks, I'd like to touch on a few highlights from the quarter. This quarter, our teams continue to grow market share with new automotive OEM business, which ramps up over the next coming months. In January, our electrical steel operation was awarded the Best Supplier of the Year award by Molle, a leading global automotive parts manufacturer. This marks The third consecutive year, our team, based mainly in India, has been honored by Model A for their exceptional performance in quality, delivery, and support of new product development. I'd like to congratulate them on this achievement. We collaborated with Cleveland Cliffs to develop a lightweighting solution to reduce weight and optimize cost and battery trays for electric vehicles. A battery in an electric vehicle typically represents 20 to 25% of the vehicle's overall weight, and our tailor-welded blank solution helps OEMs achieve weight savings. Our Mexico steel processing joint venture, Servicero, commissioned its new slitter in Monterey and is now running production orders. Lastly, Worthington Steel leadership team kicked off our AI journey. We are exploring how to incorporate AI into our operating model, the Worthington business system, expanding our advanced analytics portfolio with targeted experimentation and introducing generative AI education for our corporate and functional employees. To summarize, due to the amount of uncertainty in many markets, we are cautiously optimistic about the near term. However, we think clarity will improve as the year moves forward, and we are more optimistic about the second half of 2025. I believe we are well positioned to grow our business. Once again, I offer my thanks to the entire Worthington Steel team for keeping safety, quality, performance, and our customers front and center each and every day. Now I'll turn things over to Tim Adams to discuss financials.